Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend CBOE Rule 8.7 Relating to Bid/Ask Differentials, 38435-38437 [E6-10530]
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38435
Federal Register / Vol. 71, No. 129 / Thursday, July 6, 2006 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated the
foregoing rule change as a ‘‘noncontroversial’’ rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 8 and
Rule 19b–4(f)(6) thereunder 9 because
the rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; or (iii) become operative
for 30 days from the day on which it
was filed, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest. The Exchange asserts
that this proposed rule filing does not
raise any additional or substantive
issues from those raised when the
Exchange sought to implement the Pilot
Program. The Exchange also asserts that
the information provided in the Pilot
Program Reports supports the
representations made at that time.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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:
jlentini on PROD1PC65 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BSE–2006–24 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–BSE–2006–24. 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 (https://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 BSE. 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–BSE–2006–24 and should
be submitted on or before July 27, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–10533 Filed 7–5–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54067; File No. SR–CBOE–
2006–57]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Amend CBOE Rule 8.7
Relating to Bid/Ask Differentials
June 29, 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 June 21,
2006, the Chicago Board Options
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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 Exchange. The CBOE
has filed this proposal pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder,4 which
renders the proposal effective upon
filing with the Commission. 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
The Exchange proposes to amend
CBOE Rule 8.7, ‘‘Obligations of MarketMakers,’’ relating to bid/ask differentials
in Hybrid and Hybrid 2.0 classes. The
text of the proposed rule change appears
below. Additions are italicized.
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 8.7—Obligations of Market-Makers
Rule 8.7. (a) No change.
(b) No change.
(i)–(iii) No change.
(iv) To price options contracts fairly
by, among other things, bidding and/or
offering in the following manner:
(A) No change.
(B) No change.
(C) Option Classes Trading on the
Hybrid Trading System and Hybrid 2.0
Platform. Except as provided in
subparagraphs (i) and (ii) below, option
classes trading on the Hybrid Trading
System and the Hybrid 2.0 Platform may
be quoted electronically with a
difference not to exceed $5 between the
bid and offer regardless of the price of
the bid. The provisions of Rule
8.7(b)(iv)(A) shall apply to any quotes
given in open outcry in Hybrid classes
and Hybrid 2.0 classes.
i. The $5 bid/ask differential stated in
subparagraph (C) above shall not apply
to at-the-money series or in-the-money
series where the quote width on the
primary market of the underlying
security, or the quote width calculated
by the Exchange or its agent for various
indices pursuant to Interpretation .08, is
wider than $5. For these series, the bid/
ask differential may be as wide as the
quote width on the primary market of
the underlying security or calculated by
the Exchange or its agent, as applicable.
10 17
8 15
U.S.C. 78s(b)(3)(A)(iii).
9 17 CFR 240.19b–4(f)(6).
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U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
06JYN1
38436
Federal Register / Vol. 71, No. 129 / Thursday, July 6, 2006 / Notices
For purposes of this subparagraph (C)(i),
‘‘in-the-money series’’ are defined as
follows: for call options, all strike prices
below the offer or last sale in the
underlying security (whichever is
higher); and for put options, all strike
prices above the bid or last sale in the
underlying security (whichever is lower);
and
ii. No change.
(c)–(e) No change.
* * * Interpretations and Policies:
.01–.13 No change.
*
*
*
*
*
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
Exchange 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
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
jlentini on PROD1PC65 with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The CBOE proposes to amend CBOE
Rule 8.7(b)(iv)(C)(i) relating to bid/ask
differentials in the Hybrid Trading
System and Hybrid 2.0 Platform classes.
Specifically, the CBOE proposes to
revise the text of CBOE Rule
8.7(b)(iv)(C)(i) to include an
interpretation of the meaning of ‘‘in-themoney’’ series and to include ‘‘at-themoney’’ series within the provisions of
that paragraph.
Recently, the CBOE amended its Rule
8.7 to provide, among other things, an
exception to the general requirement
that option classes trading on the
Hybrid Trading System and the Hybrid
2.0 Platform may be quoted
electronically with bid/ask differentials
not to exceed $5 between the bid and
offer regardless of the price of the bid.5
One exception to this general
requirement is that the $5 bid/ask
differential does not apply to in-themoney series where the quote width on
the primary market of the underlying
security, or the quote width calculated
5 See Securities Exchange Act Release No. 53229
(February 6, 2006), 71 FR 7095 (February 10, 2006)
(notice of filing and immediate effectiveness of File
No. SR–CBOE–2006–12).
VerDate Aug<31>2005
17:01 Jul 05, 2006
Jkt 208001
by the Exchange or its agent for various
indices pursuant to Interpretation .08 of
CBOE Rule 8.7, is wider than $5. For
these in-the-money series, the bid/ask
differential may be as wide as the quote
width on the primary market of the
underlying security or the quote width
calculated by the Exchange or its agent,
as applicable.
The CBOE proposes to include in the
text of CBOE Rule 8.7(b)(iv)(C)(i) an
interpretation of the meaning of ‘‘in-themoney’’ series. The Exchange proposes
that, for call options, ‘‘in-the-money’’
series include all strike prices below the
offer or last sale in the underlying
security, whichever is higher, and for
put options, ‘‘in-the-money’’ series
include all strike prices at or above the
bid or last sale in the underlying
security, whichever is lower. The CBOE
believes that its proposed interpretation
is consistent with the definition of ‘‘inthe-money’’ series included in the
Options Disclosure Document (‘‘ODD’’),
‘‘Characteristics and Risks of
Standardized Options.’’ 6
The CBOE also proposes to amend
paragraph (b)(iv)(C)(i) of CBOE Rule 8.7
to state that the $5 bid/ask differential
also will not apply to at-the-money
series where the quote width on the
primary market of the underlying
security, or the quote width calculated
by the Exchange or its agent for various
indices pursuant to Interpretation .08 of
CBOE Rule 8.7, is wider than $5. The
Exchange proposes that, for these at-themoney series, the bid/ask differential
may be as wide as the quote width on
the primary market of the underlying
security or the quote width calculated
by the Exchange or its agent, as
applicable.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations under the
Act applicable to a national securities
exchange and, in particular, the
requirements of Section 6(b) of the Act.7
Specifically, the Exchange believes the
proposed rule change is consistent with
the requirements under Section 6(b)(5)
of the Act 8 that the rules of a national
securities exchange be designed to
promote just and equitable principles of
trade, to prevent fraudulent and
6 In the ODD, ‘‘in-the-money’’ series are defined
as: ‘‘A call option is said to be in the money if the
current market value of the underlying interest is
above the exercise price of the option. A put option
is said to be in the money if the current market
value of the underlying interest is below the
exercise price of the option.’’
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
manipulative acts and, in general, to
protect investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The 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
The Exchange neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated the
proposed rule change as one that: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
days from the date of filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest. In addition, as required under
Rule 19b–4(f)(6)(iii),9 the CBOE
provided the Commission with written
notice of its intention to file the
proposed rule change, along with a brief
description and the text of the proposed
rule change, at least five business days
prior to filing the proposal with the
Commission. Therefore, the foregoing
rule change has become effective
pursuant to Section 19(b)(3)(A) of the
Act 10 and Rule 19b–4(f)(6)
thereunder.11
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
the rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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:
9 17
CFR 240.19b–4(f)(6)(iii).
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6).
10 15
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06JYN1
Federal Register / Vol. 71, No. 129 / Thursday, July 6, 2006 / Notices
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2006–57 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 No.
SR–CBOE–2006–57. 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 (https://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 the filing also will be
available for inspection and copying at
the principal office of the Exchange. 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 No.
SR–CBOE–2006–57 and should be
submitted on or before July 27, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–10530 Filed 7–5–06; 8:45 am]
jlentini on PROD1PC65 with NOTICES
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54065; File No. SR–CBOE–
2006–54]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change to
Retroactively Credit Certain DPM
Linkage-Related Transaction Fees
June 29, 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 May 31,
2006, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons, and is
granting accelerated approval to the
proposed rule change.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule to retroactively credit
Designated Primary Market-Makers
(‘‘DPMs’’) for certain fees they incur in
executing orders under the Intermarket
Options Linkage Plan (‘‘Linkage’’). The
text of the proposed rule change is
available on the Exchange’s website
(https://www.cboe.com), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
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
Exchange 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
Exchange has prepared summaries, set
forth in sections A, B and C below, of
the most significant aspects of such
statements.
1 15
12 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:01 Jul 05, 2006
2 17
Jkt 208001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00082
Fmt 4703
Sfmt 4703
38437
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend the CBOE Fees
Schedule to retroactively establish
certain fee relief that was provided
prospectively in a previous CBOE rule
change filing, SR–CBOE–2006–44
(‘‘Previous Filing’’).3
In the Previous Filing, the Exchange
amended Section 21 of the CBOE Fees
Schedule to enhance the credits
provided to DPMs under the DPM
Linkage Fees Credit Program
(‘‘Program’’). Under the enhanced
Program established by the Previous
Filing, the Exchange credits DPMs for
certain fees they incur related to the
execution of: (i) Outbound principal
acting as agent (‘‘P/A’’) orders; and (ii)
outbound Principal orders on behalf of
orders that are for the account of a
broker-dealer (‘‘P orders’’). The purpose
of the Program is to offset the additional
costs DPMs incur in routing orders to
other exchanges in order to obtain the
National Best Bid or Offer (‘‘NBBO’’).
The Previous Filing established the
enhanced Program as of May 18, 2006.
In this filing, the Exchange proposes to
extend this fee relief retroactively back
to all applicable transactions occurring
since May 1, 2006, a total of 13 business
days.
2. Statutory Basis
The Exchange states that the proposed
rule change is consistent with Section
6(b) of the Act 4 in general, and furthers
the objectives of Section 6(b)(4) of the
Act 5 in particular, in that it is designed
to provide for the equitable allocation of
reasonable dues, fees, and other charges
among CBOE members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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
The Exchange states that no written
comments were solicited or received
3 See Securities Exchange Act Release No. 53866
(May 25, 2006), 71 FR 31237 (June 1, 2006) (Notice
of Filing and Immediate Effectiveness of File No.
SR–CBOE–2006–44).
4 15 U.S.C. 78f(b).
5 15 U.S.C. 78f(b)(4).
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]]>Agencies
[Federal Register Volume 71, Number 129 (Thursday, July 6, 2006)]
[Notices]
[Pages 38435-38437]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10530]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54067; File No. SR-CBOE-2006-57]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Amend CBOE Rule 8.7 Relating to Bid/Ask Differentials
June 29, 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 June 21, 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
Exchange. The CBOE has filed this proposal pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend CBOE Rule 8.7, ``Obligations of
Market-Makers,'' relating to bid/ask differentials in Hybrid and Hybrid
2.0 classes. The text of the proposed rule change appears below.
Additions are italicized.
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 8.7--Obligations of Market-Makers
Rule 8.7. (a) No change.
(b) No change.
(i)-(iii) No change.
(iv) To price options contracts fairly by, among other things,
bidding and/or offering in the following manner:
(A) No change.
(B) No change.
(C) Option Classes Trading on the Hybrid Trading System and Hybrid
2.0 Platform. Except as provided in subparagraphs (i) and (ii) below,
option classes trading on the Hybrid Trading System and the Hybrid 2.0
Platform may be quoted electronically with a difference not to exceed
$5 between the bid and offer regardless of the price of the bid. The
provisions of Rule 8.7(b)(iv)(A) shall apply to any quotes given in
open outcry in Hybrid classes and Hybrid 2.0 classes.
i. The $5 bid/ask differential stated in subparagraph (C) above
shall not apply to at-the-money series or in-the-money series where the
quote width on the primary market of the underlying security, or the
quote width calculated by the Exchange or its agent for various indices
pursuant to Interpretation .08, is wider than $5. For these series, the
bid/ask differential may be as wide as the quote width on the primary
market of the underlying security or calculated by the Exchange or its
agent, as applicable.
[[Page 38436]]
For purposes of this subparagraph (C)(i), ``in-the-money series'' are
defined as follows: for call options, all strike prices below the offer
or last sale in the underlying security (whichever is higher); and for
put options, all strike prices above the bid or last sale in the
underlying security (whichever is lower); and
ii. No change.
(c)-(e) No change.
* * * Interpretations and Policies:
.01-.13 No change.
* * * * *
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 Exchange 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 Exchange 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
The CBOE proposes to amend CBOE Rule 8.7(b)(iv)(C)(i) relating to
bid/ask differentials in the Hybrid Trading System and Hybrid 2.0
Platform classes. Specifically, the CBOE proposes to revise the text of
CBOE Rule 8.7(b)(iv)(C)(i) to include an interpretation of the meaning
of ``in-the-money'' series and to include ``at-the-money'' series
within the provisions of that paragraph.
Recently, the CBOE amended its Rule 8.7 to provide, among other
things, an exception to the general requirement that option classes
trading on the Hybrid Trading System and the Hybrid 2.0 Platform may be
quoted electronically with bid/ask differentials not to exceed $5
between the bid and offer regardless of the price of the bid.\5\ One
exception to this general requirement is that the $5 bid/ask
differential does not apply to in-the-money series where the quote
width on the primary market of the underlying security, or the quote
width calculated by the Exchange or its agent for various indices
pursuant to Interpretation .08 of CBOE Rule 8.7, is wider than $5. For
these in-the-money series, the bid/ask differential may be as wide as
the quote width on the primary market of the underlying security or the
quote width calculated by the Exchange or its agent, as applicable.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 53229 (February 6,
2006), 71 FR 7095 (February 10, 2006) (notice of filing and
immediate effectiveness of File No. SR-CBOE-2006-12).
---------------------------------------------------------------------------
The CBOE proposes to include in the text of CBOE Rule
8.7(b)(iv)(C)(i) an interpretation of the meaning of ``in-the-money''
series. The Exchange proposes that, for call options, ``in-the-money''
series include all strike prices below the offer or last sale in the
underlying security, whichever is higher, and for put options, ``in-
the-money'' series include all strike prices at or above the bid or
last sale in the underlying security, whichever is lower. The CBOE
believes that its proposed interpretation is consistent with the
definition of ``in-the-money'' series included in the Options
Disclosure Document (``ODD''), ``Characteristics and Risks of
Standardized Options.'' \6\
---------------------------------------------------------------------------
\6\ In the ODD, ``in-the-money'' series are defined as: ``A call
option is said to be in the money if the current market value of the
underlying interest is above the exercise price of the option. A put
option is said to be in the money if the current market value of the
underlying interest is below the exercise price of the option.''
---------------------------------------------------------------------------
The CBOE also proposes to amend paragraph (b)(iv)(C)(i) of CBOE
Rule 8.7 to state that the $5 bid/ask differential also will not apply
to at-the-money series where the quote width on the primary market of
the underlying security, or the quote width calculated by the Exchange
or its agent for various indices pursuant to Interpretation .08 of CBOE
Rule 8.7, is wider than $5. The Exchange proposes that, for these at-
the-money series, the bid/ask differential may be as wide as the quote
width on the primary market of the underlying security or the quote
width calculated by the Exchange or its agent, as applicable.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to a
national securities exchange and, in particular, the requirements of
Section 6(b) of the Act.\7\ Specifically, the Exchange believes the
proposed rule change is consistent with the requirements under Section
6(b)(5) of the Act \8\ that the rules of a national securities exchange
be designed to promote just and equitable principles of trade, to
prevent fraudulent and manipulative acts and, in general, to protect
investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The 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
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated the proposed rule change as one that:
(i) Does not significantly affect the protection of investors or the
public interest; (ii) does not impose any significant burden on
competition; and (iii) does not become operative for 30 days from the
date of filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest. In
addition, as required under Rule 19b-4(f)(6)(iii),\9\ the CBOE provided
the Commission with written notice of its intention to file the
proposed rule change, along with a brief description and the text of
the proposed rule change, at least five business days prior to filing
the proposal with the Commission. Therefore, the foregoing rule change
has become effective pursuant to Section 19(b)(3)(A) of the Act \10\
and Rule 19b-4(f)(6) thereunder.\11\
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\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate the rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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 38437]]
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2006-57 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 No. SR-CBOE-2006-57. 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 (https://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 the filing
also will be available for inspection and copying at the principal
office of the Exchange. 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 No. SR-
CBOE-2006-57 and should be submitted on or before July 27, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-10530 Filed 7-5-06; 8:45 am]
BILLING CODE 8010-01-P
