Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Exposure Period for Crossing Orders in the Hybrid Trading System, 9184-9186 [E6-2439]

Download as PDF 9184 Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices exchange.8 In particular, the Commission believes that the proposal is consistent with section 6(b)(5) of the Act,9 which requires that the rules of an exchange be designed to prevent fraudulent and manipulative acts and Electronic Comments practices, to promote just and equitable principals of trade, to remove • Use the Commission’s Internet impediments to and perfect the comment form at (http://www.sec.gov/ mechanism of a free and open market rules/sro.shtml); or and a national market system, and in • Send an e-mail to rulegeneral, to protect investors and the comments@sec.gov. Please include File public interest. Number SR–CBOE–2006–16 on the The Commission believes the subject line. Program, by providing CBOE MarketMakers with the ability to adjust their Paper Comments quotation sizes to correspond to the liquidity in the underlying primary • Send paper comments in triplicate market, provides a reasonable method to Nancy M. Morris, Secretary, for Market-Makers to manage their risks Securities and Exchange Commission, when the primary market disseminates 100 F Street, NE., Washington, DC a 1-up market. The Commission notes 20549–1090. that the Program has been operating on All submissions should refer to File a pilot basis for almost 18 months and Number SR–CBOE–2006–16. This file that, after evaluating quotation data number should be included on the relating to the Program, the CBOE subject line if e-mail is used. To help the believes that the Program is functioning Commission process and review your as intended. The Commission also notes comments more efficiently, please use that, even though Market-Makers will only one method. The Commission will have the ability to quote 1-up when the post all comments on the Commission’s underlying primary market disseminates a 1-up market, Market-Makers should Internet Web site (http://www.sec.gov/ have an incentive to display competitive rules/sro.shtml). Copies of the quotations with significant size because submission, all subsequent the CBOE’s matching algorithm for amendments, all written statements allocating incoming orders in CBOE’s with respect to the proposed rule Hybrid Trading System is based in part change that are filed with the of the size of the Market-Maker’s Commission, and all written quotation at the best price. communications relating to the The Commission finds good cause, proposed rule change between the 10 Commission and any person, other than pursuant to section 19(b)(2) of the Act, for approving the proposed rule change those that may be withheld from the prior to the thirtieth day after public in accordance with the publication in the Federal Register. The provisions of 5 U.S.C. 552, will be Program is scheduled to expire on available for inspection and copying in February 17, 2006, and as such, to allow the Commission’s Public Reference the Program to continue to operate Section. Copies of such filing also will without interruption, the Commission be available for inspection and copying believes it is appropriate to accelerate at the principal office of the CBOE. All approval. The Commission notes that no comments received will be posted comments were received in connection without change; the Commission does with the approval of the Program on a not edit personal identifying pilot basis or the approval of the information from submissions. You extension of the pilot period for the should submit only information that you wish to make available publicly. All Program. Accordingly, the Commission finds that good cause exists, pursuant to submissions should refer to File 11 Number SR–CBOE–2006–16 and should section 6(b)(5) of the Act, to approve the proposal on an accelerated basis. be submitted on or before March 15, 2006. V. Conclusion It is therefore ordered, pursuant to IV. Commission’s Findings and Order section 19(b)(2) of the Act,12 that the Granting Accelerated Approval of Proposed Rule Change cprice-sewell on PROD1PC66 with NOTICES arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities VerDate Aug<31>2005 14:35 Feb 21, 2006 Jkt 208001 8 In approving this proposal, the Commission has considered its impact on efficiency, competition, and capial formation. See 15 U.C.C. 78c(f). 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78s(b)(2). 11 15 U.S.C. 78f(b)(5). 12 15 U.S.C. 78s(b)(2). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 proposed rule change (SR–CBOE–2006– 16), is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Nancy M. Morris, Secretary. [FR Doc. E6–2437 Filed 2–21–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53278; File No. SR–CBOE– 2006–09] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Exposure Period for Crossing Orders in the Hybrid Trading System February 13, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 30, 2006, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the CBOE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to decrease the exposure period for crossing orders in its Hybrid Trading System (‘‘Hybrid’’) from 10 seconds to 3 seconds. The text of the proposed rule change is provided below (additions are italicized; deletions are [bracketed]). Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 6.45A.—Priority and Allocation of Equity Option Trades on the CBOE Hybrid System (a)–(e) No change. * * * Interpretations and Policies: .01 Principal Transactions: Order entry firms may not execute as principal against orders they represent as agent unless: (i) Agency orders are first 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\22FEN1.SGM 22FEN1 Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices exposed on the Hybrid System for at least [ten (10)]three (3) seconds, (ii) the order entry firm has been bidding or offering for at least [ten (10)]three (3) seconds prior to receiving an agency order that is executable against such bid or offer, or (iii) the order entry firm proceeds in accordance with the crossing rules contained in Rule 6.74. .02 Solicitation Orders. Order entry firms must expose orders they represent as agent for at least [ten (10)]three (3) seconds before such orders may be executed electronically via the electronic execution mechanism of the Hybrid System, in whole or in part, against orders solicited from members and non-member broker-dealers to transact with such orders. * * * * * Rule 6.45B—Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System (a)–(d) No change. * * * Interpretations and Policies: .01 Principal Transactions: Order entry firms may not execute as principal against orders they represent as agent unless: (i) Agency orders are first exposed on the Hybrid System for at least [ten (10)]three (3) seconds, (ii) the order entry firm has been bidding or offering for at least [ten (10)]three (3) seconds prior to receiving an agency order that is executable against such bid or offer, or (iii) the order entry firm proceeds in accordance with the crossing rules contained in Rule 6.74. .02 Solicitation Orders. Order entry firms must expose orders they represent as agent for at least [ten (10)]three(3) seconds before such orders may be executed electronically via the electronic execution mechanism of the Hybrid System, in whole or in part, against orders solicited from members and non-member broker-dealers to transact with such orders. * * * * * cprice-sewell on PROD1PC66 with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. VerDate Aug<31>2005 14:35 Feb 21, 2006 Jkt 208001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE rules provide that an order entry firm may not execute an order it represents as agent with a facilitation or solicited order (referred to herein as ‘‘crossing orders’’) using Hybrid unless it first complies with the 10-second exposure requirement. Specifically, order entry firms may not execute a facilitation cross unless (i) the agency order is first exposed on Hybrid for at least 10 seconds, (ii) the order entry firm has been bidding or offering for at least 10 seconds prior to receiving the agency order that is executable against such bid or offer, or (iii) the order entry firm proceeds in accordance with the floorbased open outcry crossing rules contained in CBOE Rule 6.74, ‘‘Crossing’’ Orders. Similarly, order entry firms may not execute a solicitation cross unless the agency order is first exposed on Hybrid for at least 10 seconds. During this 10 second exposure period for crossing orders, other members may enter orders to trade against the exposed order. The Exchange proposes to shorten the duration of the exposure period contained in the rules governing such transactions, as set forth in Interpretations and Policies .01 and .02 to CBOE Rules 6.45A, Priority and Allocation of Equity Option Trades on the CBOE Hybrid System, and 6.45B, Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System, from 10 seconds to 3 seconds. This shortened exposure period is fully consistent with the electronic nature of Hybrid. Market participants on the CBOE have implemented systems that monitor any updates to the CBOE market including any changes resulting from orders being entered into Hybrid and can automatically respond based on pre-set parameters. Thus, an exposure period of 3 seconds will permit exposure of orders on the CBOE in a manner consistent with the Exchange’s electronic market. By reducing the exposure time from 10 seconds to 3 seconds, the CBOE believes that members will be able to provide liquidity to their customers’ orders on a timelier basis, thus providing investors with more speedy executions. Timely and accurate executions are consistent with the principles under which Hybrid was developed. PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 9185 2. Statutory Basis The Exchange believes the proposed rule change is consistent with section 6(b) of the Act 3 in general and furthers the objectives of section 6(b)(5) of the Act 4 in particular in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the proposed rule change will provide investors with more timely execution of their options orders, while ensuring that there is an adequate exposure of all crossing orders in the CBOE marketplace. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the CBOE consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 3 15 4 15 E:\FR\FM\22FEN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 22FEN1 9186 Federal Register / Vol. 71, No. 35 / Wednesday, February 22, 2006 / Notices Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2006–09 on the subject line. Paper Comments cprice-sewell on PROD1PC66 with NOTICES • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53287; File No. SR–Phlx– 2006–10] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Imposing Licensing Fees in Connection with the Firm-Related Equity Option and Index Option Fee Cap February 14, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 All submissions should refer to File notice is hereby given that on February Number SR–CBOE–2006–09. This file 2, 2006, the Philadelphia Stock number should be included on the subject line if e-mail is used. To help the Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission process and review your Commission (‘‘Commission’’) the comments more efficiently, please use proposed rule change as described in only one method. The Commission will Items I, II and III below, which Items post all comments on the Commission’s have been prepared by the Phlx. The Internet Web site (http://www.sec.gov/ Phlx has designated this proposal as one rules/sro.shtml). Copies of the establishing or changing a due, fee, or submission, all subsequent other charge imposed by a selfamendments, all written statements regulatory organization pursuant to with respect to the proposed rule section 19(b)(3)(A)(ii) of the Act 3 and change that are filed with the Rule 19b–4(f)(2) thereunder,4 which Commission, and all written renders the proposal effective upon communications relating to the filing with the Commission. The proposed rule change between the Commission is publishing this notice to Commission and any person, other than solicit comments on the proposed rule those that may be withheld from the change from interested persons. public in accordance with the I. Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of available for inspection and copying in the Proposed Rule Change the Commission’s Public Reference The Phlx proposes to amend its Room. Copies of such filing also will be schedule of fees to adopt a license fee available for inspection and copying at of $.10 for options traded on the the principal office of the CBOE. All following products: 5 (1) State Street comments received will be posted Global Advisors’, a division of State without change; the Commission does Street Bank and Trust Company not edit personal identifying (‘‘SSGA’’), streetTracks based on the information from submissions. You Dow Jones & Co., Inc. (‘‘Dow Jones’’) should submit only information that Global Titans 50 IndexSM, traded under you wish to make available publicly. All the symbol DGT; (2) SSGA’s submissions should refer to File streetTracks based on the Dow Jones Number SR–CBOE–2006–09 and should Wilshire 5000 IndexSM, traded under be submitted on or before March 15, the symbol TMW; (3) BGI’s iShares Dow 2006. Jones Select Dividend IndexSM, traded under the symbol DVY; (4) iShares Dow For the Commission, by the Division of Jones U.S. Total Market IndexSM, traded Market Regulation, pursuant to delegated 5 under the symbol IYY; (5) iShares Dow authority. Jones U.S. Basic Materials IndexSM, Nancy M. Morris, traded under the symbol IWM; (6) Secretary. iShares Dow Jones U.S. Consumer [FR Doc. E6–2439 Filed 2–21–06; 8:45 am] Services Sector IndexSM, traded under BILLING CODE 8010–01–P 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 5 This fee will be charged only to Exchange Members. 2 17 5 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 14:35 Feb 21, 2006 Jkt 208001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 the symbol IYC; (7) iShares Dow Jones U.S. Financial Sector IndexSM, traded under the symbol IYF; (8) iShares Dow Jones U.S. Financial Services Sector IndexSM, traded under the symbol IYG; (9) iShares Dow Jones U.S. Healthcare Sector IndexSM, traded under the symbol IYH; (10) iShares Dow Jones U.S. Industrial Sector IndexSM, traded under the symbol IYJ; (11) iShares Dow Jones U.S. Consumer Goods Sector IndexSM, traded under the symbol IYK; (12) iShares Dow Jones U.S. Real Estate Sector IndexSM, traded under the symbol IYR; (13) iShares Dow Jones U.S. Technology Sector IndexSM, traded under the symbol IYW; (14) iShares Dow Jones U.S. Telecommunications Sector IndexSM, traded under the symbol IYZ; (15) iShares Dow Jones U.S. Utilities Sector IndexSM, traded under the symbol IDU; and (16) First Trust’s ETF based on the Dow Jones Select Microcap IndexSM, traded under the symbol FDM, (collectively ‘‘Dow Jones products’’) 6 to be assessed per contract side for equity option ‘‘firm’’ transactions (comprised of equity option firm/proprietary comparison transactions, equity option firm/ proprietary transactions and equity option firm/proprietary facilitation transactions). This license fee will be imposed only after the Exchange’s $60,000 ‘‘firm-related’’ equity option and index option comparison and transaction charge cap, described more fully below, is reached. Currently, the Exchange imposes a cap of $60,000 per member organization 7 on all ‘‘firm-related’’ 6 ‘‘Dow Jones’’ and ‘‘SSGA’s streetTracks based on the Dow Jones Global Titans 50 IndexSM’’, ‘‘SSGA’s streetTracks based on the Dow Jones Wilshire 5000 IndexSM’’, ‘‘BGI’s iShares Dow Jones Select Dividend IndexSM’’, ‘‘iShares Dow Jones U.S. Total Market IndexSM’’, ‘‘iShares Dow Jones U.S. Basic Materials IndexSM’’, ‘‘iShares Dow Jones U.S. Consumer Services Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Financial Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Financial Services Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Healthcare Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Industrial Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Consumer Goods Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Real Estate Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Technology Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Telecommunications Sector IndexSM’’, ‘‘iShares Dow Jones U.S. Utilities Sector IndexSM’’, and ‘‘First Trust’s ETF based on the Dow Jones Select Microcap IndexSM’’, are service marks of Dow Jones & Company, Inc. and have been licensed for use for certain purposes by the Philadelphia Stock Exchange, Inc. The Dow Jones products are not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such product(s). 7 The firm/proprietary comparison or transaction charge applies to member organizations for orders for the proprietary account of any member or nonmember broker-dealer that derives more than 35% of its annual, gross revenues from commissions and principal transactions with customers. Member E:\FR\FM\22FEN1.SGM 22FEN1

Agencies

[Federal Register Volume 71, Number 35 (Wednesday, February 22, 2006)]
[Notices]
[Pages 9184-9186]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2439]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53278; File No. SR-CBOE-2006-09]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Relating to the 
Exposure Period for Crossing Orders in the Hybrid Trading System

February 13, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 30, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the CBOE. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to decrease the exposure period for crossing orders 
in its Hybrid Trading System (``Hybrid'') from 10 seconds to 3 seconds. 
The text of the proposed rule change is provided below (additions are 
italicized; deletions are [bracketed]).

Chicago Board Options Exchange, Incorporated Rules

* * * * *
Rule 6.45A.--Priority and Allocation of Equity Option Trades on the 
CBOE Hybrid System
    (a)-(e) No change.
    * * * Interpretations and Policies:
    .01 Principal Transactions: Order entry firms may not execute as 
principal against orders they represent as agent unless: (i) Agency 
orders are first

[[Page 9185]]

exposed on the Hybrid System for at least [ten (10)]three (3) seconds, 
(ii) the order entry firm has been bidding or offering for at least 
[ten (10)]three (3) seconds prior to receiving an agency order that is 
executable against such bid or offer, or (iii) the order entry firm 
proceeds in accordance with the crossing rules contained in Rule 6.74.
    .02 Solicitation Orders. Order entry firms must expose orders they 
represent as agent for at least [ten (10)]three (3) seconds before such 
orders may be executed electronically via the electronic execution 
mechanism of the Hybrid System, in whole or in part, against orders 
solicited from members and non-member broker-dealers to transact with 
such orders.
* * * * *
Rule 6.45B--Priority and Allocation of Trades in Index Options and 
Options on ETFs on the CBOE Hybrid System
    (a)-(d) No change.
    * * * Interpretations and Policies:
    .01 Principal Transactions: Order entry firms may not execute as 
principal against orders they represent as agent unless: (i) Agency 
orders are first exposed on the Hybrid System for at least [ten 
(10)]three (3) seconds, (ii) the order entry firm has been bidding or 
offering for at least [ten (10)]three (3) seconds prior to receiving an 
agency order that is executable against such bid or offer, or (iii) the 
order entry firm proceeds in accordance with the crossing rules 
contained in Rule 6.74.
    .02 Solicitation Orders. Order entry firms must expose orders they 
represent as agent for at least [ten (10)]three(3) seconds before such 
orders may be executed electronically via the electronic execution 
mechanism of the Hybrid System, in whole or in part, against orders 
solicited from members and non-member broker-dealers to transact with 
such orders.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the CBOE included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CBOE has prepared summaries, set forth in sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE rules provide that an order entry firm may not execute an 
order it represents as agent with a facilitation or solicited order 
(referred to herein as ``crossing orders'') using Hybrid unless it 
first complies with the 10-second exposure requirement. Specifically, 
order entry firms may not execute a facilitation cross unless (i) the 
agency order is first exposed on Hybrid for at least 10 seconds, (ii) 
the order entry firm has been bidding or offering for at least 10 
seconds prior to receiving the agency order that is executable against 
such bid or offer, or (iii) the order entry firm proceeds in accordance 
with the floor-based open outcry crossing rules contained in CBOE Rule 
6.74, ``Crossing'' Orders. Similarly, order entry firms may not execute 
a solicitation cross unless the agency order is first exposed on Hybrid 
for at least 10 seconds. During this 10 second exposure period for 
crossing orders, other members may enter orders to trade against the 
exposed order.
    The Exchange proposes to shorten the duration of the exposure 
period contained in the rules governing such transactions, as set forth 
in Interpretations and Policies .01 and .02 to CBOE Rules 6.45A, 
Priority and Allocation of Equity Option Trades on the CBOE Hybrid 
System, and 6.45B, Priority and Allocation of Trades in Index Options 
and Options on ETFs on the CBOE Hybrid System, from 10 seconds to 3 
seconds. This shortened exposure period is fully consistent with the 
electronic nature of Hybrid. Market participants on the CBOE have 
implemented systems that monitor any updates to the CBOE market 
including any changes resulting from orders being entered into Hybrid 
and can automatically respond based on pre-set parameters. Thus, an 
exposure period of 3 seconds will permit exposure of orders on the CBOE 
in a manner consistent with the Exchange's electronic market.
    By reducing the exposure time from 10 seconds to 3 seconds, the 
CBOE believes that members will be able to provide liquidity to their 
customers' orders on a timelier basis, thus providing investors with 
more speedy executions. Timely and accurate executions are consistent 
with the principles under which Hybrid was developed.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act \3\ in general and furthers the objectives of 
section 6(b)(5) of the Act \4\ in particular in that it is designed to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
In particular, the proposed rule change will provide investors with 
more timely execution of their options orders, while ensuring that 
there is an adequate exposure of all crossing orders in the CBOE 
marketplace.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the CBOE consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 9186]]

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2006-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2006-09. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the CBOE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-CBOE-2006-09 and should be submitted on or before March 
15, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-2439 Filed 2-21-06; 8:45 am]
BILLING CODE 8010-01-P