Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change Regarding Quarterly Options Series, 67663-67665 [E6-19725]

Download as PDF Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices 1. Because the Trusts do not limit their investments to ‘‘eligible trust securities,’’ the Trusts do not qualify for the exemption in paragraph (c) of rule 19b–1. Therefore, applicants request an exemption under section 6(c) from section 19(b) and rule 19b–1 to the extent necessary to permit capital gains earned in connection with the sale of portfolio securities to be distributed to Unitholders along with the Series’ regular distributions. In all other respects, applicants will comply with section 19(b) and rule 19b–1. 2. Applicants state that their proposal meets the standards of section 6(c). Applicants assert that any sale of portfolio securities would be triggered by the need to meet Series’ expenses, Installment Payments or by requests to redeem Units, events over which the Sponsor and the Series have no control. Applicants further state that, because principal distributions must be clearly indicated in accompanying reports to Unitholders as a return of principal and will be relatively small in comparison to normal dividend distributions, there is little danger of confusion from failure to differentiate among distributions. given prominent notice of the impending termination or amendment at least 60 days prior to the date of termination or the effective date of the amendment, provided that: (a) No such notice need be given if the only material effect of an amendment is to reduce or eliminate the sales charge payable at the time of an exchange, to make one or more New Series eligible for the Exchange Privilege, Conversion Offer or Rollover Privilege, or to delete a Series which has terminated; and (b) no notice need be given if, under extraordinary circumstances, either (i) there is a suspension of the redemption of Units of the Series under section 22(e) of the Act and the rules and regulations promulgated under that section, or (ii) a Series temporarily delays or ceases the sale of its Units because it is unable to invest amounts effectively in accordance with applicable investment objectives, policies, and restrictions. 3. An investor who purchases Units under the Exchange Privilege, Conversion Offer or Rollover Privilege will pay a lower sales charge than that which would be paid for the Units by a new investor. Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: C. Net Worth Requirement pwalker on PROD1PC61 with NOTICES A. DSC and Waiver of DSC Under Certain Circumstances 1. Each Series offering Units subject to a DSC will include in its prospectus the disclosure required in Form N–1A relating to deferred sales charges, modified as appropriate to reflect the differences between UITs and open-end management investment companies, and a schedule setting forth the number and date of each installment payment. 2. Any DSC imposed on Units issued by a Series will comply with the requirements of subparagraphs (1), (2) and (3) of rule 6c–10(a) under the Act. B. Exchange Privilege, Conversion Offer and Rollover Privilege 1. The prospectus of each Series offering exchanges, rollovers, or conversions and any sales literature or advertising that mentions the existence of the Exchange Privilege, Conversion Offer or Rollover Privilege will disclose that the Exchange Privilege, Conversion Offer or Rollover Privilege is subject to modification, termination or suspension without notice, except in limited cases. 2. Whenever the Exchange Privilege, Conversion Offer or Rollover Privilege is to be terminated or its terms are to be amended materially, any holder of a security subject to that privilege will be VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 Applicants will comply in all respects with the requirements of rule 14a–3, except that the Series will not restrict their portfolio investments to ‘‘eligible trust securities.’’ D. Purchase and Sale Transactions Between a Terminating Series and a New Series 1. Each sale of Qualified Securities by a Terminating Series to a New Series will be effected at the closing price of the securities sold on a Qualified Exchange on the sale date, without any brokerage charges or other remuneration except customary transfer fees, if any. 2. The nature and conditions of such transactions will be fully disclosed to investors in the appropriate prospectus of each Terminating Series and New Series. 3. The Trustee of each Terminating Series and New Series will review the procedures discussed in the application relating to the sale of securities from a Terminating Series and the purchase of those securities for deposit in a New Series, and make such changes to the procedures as the Trustee deems necessary to ensure compliance with paragraphs (a) through (d) of rule 17a– 7. 4. A written copy of these procedures and a written record of each transaction pursuant to this order will be maintained as provided in rule 17a–7(g). PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 67663 For the Commission, by the Division of Investment Management, under delegated authority. Nancy M. Morris, Secretary. [FR Doc. E6–19739 Filed 11–21–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] In the Matter of Digital Gas, Inc.; Order of Suspension of Trading November 17, 2006. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Digital Gas, Inc. (‘‘Digital’’), because of questions raised regarding the accuracy and adequacy of publicly disseminated information concerning, among other things, Digital’s announced agreement with Techno Rubber, Inc. and Digital’s assets. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the abovelisted company is suspended for the period from 9:30 a.m. EST, November 17, 2006, through 11:59 p.m. EST, on December 4, 2006. By the Commission. Nancy M. Morris, Secretary. [FR Doc. 06–9332 Filed 11–17–06; 11:31 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54762; File No. SR–CBOE– 2006–93] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change Regarding Quarterly Options Series November 16, 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 November 8, 2006, the Chicago Board Options 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\22NON1.SGM 22NON1 67664 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices Exchange, Incorporated (‘‘CBOE’’ or ‘‘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 and order to solicit comments on the proposed rule change from interested persons and to grant accelerated approval to the proposed rule change. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its rules regarding the opening of Quarterly Options Series to limit the number of strike prices that the Exchange may open for Quarterly Options Series and make minor clarifications. The text of the proposed rule change is available on the Exchange’s Web site (http:// 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. pwalker on PROD1PC61 with NOTICES A. Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 11, 2006, the SEC approved CBOE’s proposal to add language to CBOE Rule 24.9 that would permit the listing and trading of Quarterly Options Series based on an underlying index.3 That language did not include a limit on the number of strike prices that may be opened for a Quarterly Options Series. In the instant filing, Exchange proposes to add such a limit. The purpose of the proposed rule change is to amend CBOE Rule 24.9 (‘‘Terms of Index Option Contracts’’) to (1) Limit the number of strike prices that the Exchange may open for Quarterly 3 See Securities Exchange Act Release No. 54123 (July 11, 2006), 71 FR 40558 (July 17, 2006) (approving SR–CBOE–2006–65) (‘‘Pilot Program Approval Order’’). VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 Options Series to five strike prices above or below the value of the underlying index, (2) clarify that the Exchange may open for trading additional Quarterly Options Series of the same class when the Exchange deems such action necessary to maintain an orderly market or meet customer demand, and (3) clarify that the opening of any new Quarterly Options Series will not affect the previously opened series of options of the same class. 1. Statutory Basis CBOE 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.4 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 5 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest. B. Statement of 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. Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposal. III. Commission Findings and Order Granting Accelerated Approval of Proposed Rule Change 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 exchange.6 In particular, the Commission believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act,7 which requires, among other things, that the rules of the Exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the 4 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 6 In approving the proposed rule, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). 5 15 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Currently, under CBOE Rule 24.9, at the time the Exchange initially lists strike prices for a QOS, the Exchange may list strike prices that are within $5 from the closing price of the underlying index on the preceding trading day. The Exchange may open for trading additional strike prices if the current market price of the underlying index moves substantially from the exercise prices of those QOS that already have been opened for trading on the Exchange. The exercise price of each such additional QOS is required to be reasonably related to the current index value of the underlying index at or about the time such additional series is opened for trading on the Exchange. The CBOE rules define the term ‘‘reasonably related to the current index value of the underlying index’’ to mean that the exercise price is within thirty percent of the current index value. However, despite this ‘‘reasonably related’’ requirement, the current language of CBOE Rule 24.9 also permits the Exchange to open for trading additional strike prices that are more than thirty percent away from the current index value, ‘‘provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate, or individual customers or their brokers.’’ 8 Thus, as currently in effect, CBOE Rule 24.9 effectively does not limit the number of additional strike prices that may be opened for a QOS based on an underlying index. In this filing, the Exchange proposes to eliminate the requirement that strike prices at the time of initial listing must be within $5 from the closing price of the underlying security on the preceding trading day. Instead, the proposal would limit the Exchange to listing no more than five strike prices above and five strike prices below the value of the underlying index at about the time the QOS is opened for trading on the Exchange. In addition, the proposal would restrict the additional strike prices that may be opened on a QOS. The proposal would permit the Exchange to open additional strike prices that are above (or below) the value of the underlying index, provided that the total number of strike prices above (or below) the value of the underlying index is no greater than five. For example, assume that when a particular QOS was initially listed, the Exchange opened the 8 CBOE E:\FR\FM\22NON1.SGM Rule 24.9(a)(2). 22NON1 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Notices pwalker on PROD1PC61 with NOTICES maximum number of strike prices permitted by the rule: five above and five below the value of the underlying index at that time. If the index value subsequently increased such that only two strike prices were above the value of the underlying index, the Exchange would be permitted to open up to three additional strike prices above the value of the index. (In this example, the Exchange would not be permitted to open any additional strike prices below the value of the underlying index because it may only add strike prices provided that the total number of open strike prices on that side of the underlying index value remains five or fewer.) The provisions of CBOE Rule 24.9 requiring that the exercise price of additional series must be ‘‘reasonably related’’ to the value of the underlying index, unless ‘‘demonstrated customer interest’’ exists for a series with an exercise price more than 30% away from the current index value, would remain in place, but would be limited by the five above/five below restriction. Although the proposal is more permissive in the range of strike prices that may be opened at the time of initial listing, the proposal to limit additional strike prices renders CBOE Rule 24.9(a)(2) more restrictive overall in the number of strike prices that may be opened on the Exchange. Therefore, the Commission believes the proposal should not raise any capacity or regulatory concerns not already discussed in the order approving the QOS pilot program.9 For these reasons, the Commission believes that the proposed rule change is consistent with the Act. The Exchange has requested that the Commission approve the proposed rule change prior to the thirtieth day after publication of notice of the filing in the Federal Register. The Commission believes that accelerated approval is appropriate because the proposal adds a restriction on the number of strike prices that may be opened on the Exchange, thus lessening the impact of the QOS on the limited quote traffic capacity of the Exchange and the Options Price Reporting Authority, while still permitting the Exchange to list an appropriate range of strike prices in order to respond to market conditions and customer demand. Accordingly, the Commission finds good cause, consistent with Section 19(b)(2) of the 9 For the same reason, the Commission does not view the proposed rule change as an expansion of the pilot program, and therefore the proposal does not trigger the requirement under the terms of the Pilot Program Approval Order that the Exchange submit a pilot program report. See Pilot Program Approval Order, 71 FR at 40561. VerDate Aug<31>2005 22:25 Nov 21, 2006 Jkt 211001 Act,10 to approve the proposed rule change prior to the thirtieth day after publication of the notice of filing thereof in the Federal Register. 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: 67665 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,11 that the proposed rule change (SR–CBOE–2006– 93) is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Nancy M. Morris, Secretary. [FR Doc. E6–19725 Filed 11–21–06; 8:45 am] BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2006–93 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. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54761; File No. SR–CBOE– 2006–85] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Definition of Quarterly Index Expiration or QIX November 16, 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 October Number SR–CBOE–2006–93. This file 20, 2006, the Chicago Board Options number should be included on the subject line if e-mail is used. To help the Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Commission process and review your Exchange Commission (‘‘Commission’’) comments more efficiently, please use only one method. The Commission will the proposed rule change as described post all comments on the Commission’s in Items I and II below, which Items have been prepared by the Exchange. Internet Web site (http://www.sec.gov/ The Exchange has designated this rules/sro.shtml). Copies of the proposal as non-controversial under submission, all subsequent Section 19(b)(3)(A)(iii) of the Act 3 and amendments, all written statements Rule 19b–4(f)(6) thereunder,4 which with respect to the proposed rule renders the proposed rule change change that are filed with the effective upon filing with the Commission, and all written Commission. The Commission is communications relating to the publishing this notice to solicit proposed rule change between the Commission and any person, other than comments on the proposed rule change from interested persons. those that may be withheld from the 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 CBOE proposes to amend the Room. Copies of such filing also will be definition of ‘‘Quarterly Index available for inspection and copying at the principal office of the Exchange. All Expiration or QIX’’ in CBOE Rule 24.1(s). The text of the proposed rule comments received will be posted change is available on the Exchange’s without change; the Commission does Web site (http://www.cboe.com), at the not edit identifying personal Exchange’s Office of the Secretary, and information from submissions. You at the Commission’s Public Reference should submit only information that you wish to make available publicly. All Room. submissions should refer to File No. 11 Id. SR–CBOE–2006–93 and should be 12 17 CFR 200.30–3(a)(12). submitted on or before December 13, 1 15 U.S.C. 78s(b)(1). 2006. 2 17 CFR 240.19b–4. 3 15 10 15 PO 00000 U.S.C. 78s(b)(2). Frm 00125 Fmt 4703 4 17 Sfmt 4703 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). E:\FR\FM\22NON1.SGM 22NON1

Agencies

[Federal Register Volume 71, Number 225 (Wednesday, November 22, 2006)]
[Notices]
[Pages 67663-67665]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19725]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54762; File No. SR-CBOE-2006-93]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Order Granting Accelerated Approval 
to a Proposed Rule Change Regarding Quarterly Options Series

November 16, 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 November 8, 2006, the Chicago Board Options

[[Page 67664]]

Exchange, Incorporated (``CBOE'' or ``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 and 
order to solicit comments on the proposed rule change from interested 
persons and to grant accelerated approval to the proposed rule change.
---------------------------------------------------------------------------

    \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 amend its rules regarding the opening of Quarterly 
Options Series to limit the number of strike prices that the Exchange 
may open for Quarterly Options Series and make minor clarifications. 
The text of the proposed rule change is available on the Exchange's Web 
site (http://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.

A. Statement of the Purpose of, and Statutory Basis for, the Proposed 
Rule Change

1. Purpose
    On July 11, 2006, the SEC approved CBOE's proposal to add language 
to CBOE Rule 24.9 that would permit the listing and trading of 
Quarterly Options Series based on an underlying index.\3\ That language 
did not include a limit on the number of strike prices that may be 
opened for a Quarterly Options Series. In the instant filing, Exchange 
proposes to add such a limit.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 54123 (July 11, 
2006), 71 FR 40558 (July 17, 2006) (approving SR-CBOE-2006-65) 
(``Pilot Program Approval Order'').
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to amend CBOE Rule 24.9 
(``Terms of Index Option Contracts'') to (1) Limit the number of strike 
prices that the Exchange may open for Quarterly Options Series to five 
strike prices above or below the value of the underlying index, (2) 
clarify that the Exchange may open for trading additional Quarterly 
Options Series of the same class when the Exchange deems such action 
necessary to maintain an orderly market or meet customer demand, and 
(3) clarify that the opening of any new Quarterly Options Series will 
not affect the previously opened series of options of the same class.
1. Statutory Basis
    CBOE 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.\4\ Specifically, the Exchange believes the proposed 
rule change is consistent with the Section 6(b)(5) \5\ requirements 
that the rules of an exchange be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and to protect 
investors and the public interest.
---------------------------------------------------------------------------

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

B. Statement of 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. Comments on the Proposed Rule Change Received From Members, 
Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposal.

III. Commission Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    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 exchange.\6\ In 
particular, the Commission believes that the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act,\7\ 
which requires, among other things, that the rules of the Exchange be 
designed to promote just and equitable principles of trade, 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.
---------------------------------------------------------------------------

    \6\ In approving the proposed rule, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Currently, under CBOE Rule 24.9, at the time the Exchange initially 
lists strike prices for a QOS, the Exchange may list strike prices that 
are within $5 from the closing price of the underlying index on the 
preceding trading day. The Exchange may open for trading additional 
strike prices if the current market price of the underlying index moves 
substantially from the exercise prices of those QOS that already have 
been opened for trading on the Exchange. The exercise price of each 
such additional QOS is required to be reasonably related to the current 
index value of the underlying index at or about the time such 
additional series is opened for trading on the Exchange. The CBOE rules 
define the term ``reasonably related to the current index value of the 
underlying index'' to mean that the exercise price is within thirty 
percent of the current index value.
    However, despite this ``reasonably related'' requirement, the 
current language of CBOE Rule 24.9 also permits the Exchange to open 
for trading additional strike prices that are more than thirty percent 
away from the current index value, ``provided that demonstrated 
customer interest exists for such series, as expressed by 
institutional, corporate, or individual customers or their brokers.'' 
\8\ Thus, as currently in effect, CBOE Rule 24.9 effectively does not 
limit the number of additional strike prices that may be opened for a 
QOS based on an underlying index.
---------------------------------------------------------------------------

    \8\ CBOE Rule 24.9(a)(2).
---------------------------------------------------------------------------

    In this filing, the Exchange proposes to eliminate the requirement 
that strike prices at the time of initial listing must be within $5 
from the closing price of the underlying security on the preceding 
trading day. Instead, the proposal would limit the Exchange to listing 
no more than five strike prices above and five strike prices below the 
value of the underlying index at about the time the QOS is opened for 
trading on the Exchange.
    In addition, the proposal would restrict the additional strike 
prices that may be opened on a QOS. The proposal would permit the 
Exchange to open additional strike prices that are above (or below) the 
value of the underlying index, provided that the total number of strike 
prices above (or below) the value of the underlying index is no greater 
than five. For example, assume that when a particular QOS was initially 
listed, the Exchange opened the

[[Page 67665]]

maximum number of strike prices permitted by the rule: five above and 
five below the value of the underlying index at that time. If the index 
value subsequently increased such that only two strike prices were 
above the value of the underlying index, the Exchange would be 
permitted to open up to three additional strike prices above the value 
of the index. (In this example, the Exchange would not be permitted to 
open any additional strike prices below the value of the underlying 
index because it may only add strike prices provided that the total 
number of open strike prices on that side of the underlying index value 
remains five or fewer.) The provisions of CBOE Rule 24.9 requiring that 
the exercise price of additional series must be ``reasonably related'' 
to the value of the underlying index, unless ``demonstrated customer 
interest'' exists for a series with an exercise price more than 30% 
away from the current index value, would remain in place, but would be 
limited by the five above/five below restriction.
    Although the proposal is more permissive in the range of strike 
prices that may be opened at the time of initial listing, the proposal 
to limit additional strike prices renders CBOE Rule 24.9(a)(2) more 
restrictive overall in the number of strike prices that may be opened 
on the Exchange. Therefore, the Commission believes the proposal should 
not raise any capacity or regulatory concerns not already discussed in 
the order approving the QOS pilot program.\9\ For these reasons, the 
Commission believes that the proposed rule change is consistent with 
the Act.
---------------------------------------------------------------------------

    \9\ For the same reason, the Commission does not view the 
proposed rule change as an expansion of the pilot program, and 
therefore the proposal does not trigger the requirement under the 
terms of the Pilot Program Approval Order that the Exchange submit a 
pilot program report. See Pilot Program Approval Order, 71 FR at 
40561.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission approve the proposed 
rule change prior to the thirtieth day after publication of notice of 
the filing in the Federal Register. The Commission believes that 
accelerated approval is appropriate because the proposal adds a 
restriction on the number of strike prices that may be opened on the 
Exchange, thus lessening the impact of the QOS on the limited quote 
traffic capacity of the Exchange and the Options Price Reporting 
Authority, while still permitting the Exchange to list an appropriate 
range of strike prices in order to respond to market conditions and 
customer demand. Accordingly, the Commission finds good cause, 
consistent with Section 19(b)(2) of the Act,\10\ to approve the 
proposed rule change prior to the thirtieth day after publication of 
the notice of filing thereof in the Federal Register.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

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:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml);
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2006-93 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-2006-93. 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 Exchange. All comments received will be posted 
without change; the Commission does not edit identifying personal 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File No. SR-CBOE-2006-93 and should be submitted on or before December 
13, 2006.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-CBOE-2006-93) is hereby 
approved on an accelerated basis.
---------------------------------------------------------------------------

    \11\ Id.
    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
[FR Doc. E6-19725 Filed 11-21-06; 8:45 am]
BILLING CODE 8011-01-P