Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Regarding Allocation of Stocks to CBSX DPMs, 68659-68660 [E6-19982]

Download as PDF Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November • Send paper comments in triplicate 20, 2006, the Chicago Board Options to Nancy M. Morris, Secretary, Exchange, Incorporated (‘‘CBOE’’ or Securities and Exchange Commission, ‘‘Exchange’’) filed with the Securities Station Place, 100 F Street, NE., and Exchange Commission Washington, DC 20549–1090. (‘‘Commission’’) the proposed rule All submissions should refer to File change as described in Items I, II, and Number SR–CBOE–2006–88. This file III below, which Items have been number should be included on the substantially prepared by the Exchange. subject line if e-mail is used. To help the The Commission is publishing this Commission process and review your notice to solicit comments on the comments more efficiently, please use proposed rule change from interested only one method. The Commission will persons. post all comments on the Commission’s I. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ Statement of the Terms of Substance of rules/sro.shtml). Copies of the the Proposed Rule Change submission, all subsequent amendments, all written statements The Exchange submits this rule with respect to the proposed rule change filing to modify its rules relating change that are filed with the to the allocation of stocks for the Commission, and all written Exchange’s proposed stock-trading communications relating to the facility, CBSX. The text of the proposed proposed rule change between the rule change is set forth below. Additions Commission and any person, other than are in italics; deletions are in [brackets]. those that may be withheld from the Chicago Board Options Exchange, public in accordance with the Incorporated provisions of 5 U.S.C. 552, will be available for inspection and copying in Rules the Commission’s Public Reference * * * * * Room. Copies of such filing also will be RULE 53.54. [Conditions on the] available for inspection and copying at Allocation of Securities to [STOC] the principal office of the CBOE. All CBSX DPMs comments received will be posted without change; the Commission does (a) CBSX [The STOC DPM not edit personal identifying Committee] may establish [(i) information from submissions. You restrictions applicable to all STOC should submit only information that DPMs on the concentration of securities you wish to make available publicly. All allocable to a single STOC DPM and to submissions should refer to File affiliated STOC DPMs and (ii)] Number SR–CBOE–2006–88 and should minimum eligibility standards be submitted on or before December 18, applicable to all [STOC] CBSX DPMs 2006. which must be satisfied in order for a [STOC] CBSX DPM to receive For the Commission, by the Division of allocations of securities, including but Market Regulation, pursuant to delegated not limited to standards relating to authority.9 adequacy of capital and number of Nancy M. Morris, personnel. Secretary. (b) CBSX shall determine, for each [FR Doc. E6–19976 Filed 11–24–06; 8:45 am] security in which CBSX begins trading, BILLING CODE 8011–01–P which CBSX DPM should be allocated such security. Factors to be considered in making such determinations may SECURITIES AND EXCHANGE include, but are not limited to, any one COMMISSION or more of the following: Performance, volume, capacity, market performance [Release No. 34–54792; File No. SR–CBOE– commitments, operational factors, 2006–96] efficiency, competitiveness, expressed preferences of issuers, and the best Self-Regulatory Organizations; interest of CBSX. Alternatively, in Chicago Board Options Exchange, instances where multiple securities are Incorporated; Notice of Filing of being allocated at one time, CBSX may Proposed Rule Change Regarding allocate such securities utilizing a draft Allocation of Stocks to CBSX DPMs where the draft selection order for the November 20, 2006. eligible CBSX DPMs is determined Pursuant to Section 19(b)(1) of the randomly by CBSX. Securities Exchange Act of 1934 sroberts on PROD1PC70 with NOTICES Paper Comments 1 15 9 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 16:58 Nov 24, 2006 2 17 Jkt 211001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00131 Fmt 4703 Sfmt 4703 68659 (c) Prior to the commencement of trading on CBSX, all securities that will initially trade on CBSX (pursuant to a rollout schedule determined by CBSX) shall be allocated as follows: (1) CBSX will randomly set a draft rotation for all CBSX DPMs. (2) The top 500 securities (based on a twelve-month average daily volume) will be selected by the DPMs (one by one) in the established rotation order. (3) Any additional securities selected by CBSX to initially trade on CBSX shall be allocated equally among the CBSX DPMs in a random fashion by CBSX. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 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 In September 2006, the Commission approved Exchange Chapters 50–55 governing the trading of non-option securities on the Exchange.3 The Exchange, via a separate rule filing, will be proposing to further modify Chapters 50–55 in connection with the establishment of the CBOE Stock Exchange (‘‘CBSX’’). CBSX will be a facility of the Exchange and will serve as the Exchange’s vehicle for trading non-option securities. CBSX would be a separate legal entity (a Delaware Limited Liability Company) that is owned by the Exchange and several strategic partners. The Exchange is also submitting rule filings proposing to establish CBSX as a facility of the Exchange and proposing to allow CBSX to appoint CBSX DPMs. The purpose of this filing is to adopt rules that would allow for the allocation of stocks to CBSX DPMs (the Exchange expects that the filing allowing appointment of 3 See Securities Exchange Act Release No. 54422 (September 11, 2006), 71 FR 54537 (September 15, 2006) (approving SR–CBOE–2004–21). See also Securities Exchange Act Release No. 54526 (September 27, 2006), 71 FR 58646 (October 4, 2006) (approving SR–CBOE–2006–70). E:\FR\FM\27NON1.SGM 27NON1 68660 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Notices CBSX DPMs will become effective prior to approval of this filing). Any such appointments and allocations would be contingent on Commission approval of rules governing CBSX DPM trading procedures and obligations. Initial CBSX DPM stock allocations would be handled pursuant to proposed modified CBOE Rule 53.54. For the initial launch, and potentially in instances where CBSX seeks to commence trading a number of new securities at one time, CBSX would conduct a ‘‘draft’’ for eligible CBSX DPMs to select available stocks. The draft order would be determined randomly. In connection with the initial launch, the draft would only apply to the first 500 securities selected.4 After that point, all of the remaining securities slated for trading on CBSX would be allocated randomly by CBSX to the CBSX DPMs equally. CBSX would utilize proposed CBOE Rule 53.54 for future stock allocations as well. In those cases, a draft could be employed or CBSX could allocate the stocks based on any one or more of the following: Performance, volume, capacity, market performance commitments, operational factors, efficiency, competitiveness, expressed preferences of issuers, and the best interest of CBSX. The ability to allocate stocks to CBSX DPMs ahead of the launch of the CBSX facility would allow the Exchange and the CBSX DPM firms to be prepared to commence trading on CBSX immediately upon approval of CBSX trading rules and pursuant to a robust rollout schedule. The Exchange seeks to launch the CBSX facility on February 5, 2007. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act 5 in general and furthers the objectives of Section 6(b)(5) of the Act 6 in particular in that it serves to remove impediments to and perfect the mechanism of a free and open market because it will help the Exchange manage the initial launch of trading on CBSX. sroberts on PROD1PC70 with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that this proposed rule change would not impose any burden on competition that is not 4 Telephone conversation between Angelo Evangelou, Assistant General Counsel, CBOE, and Nathan Saunders, Special Counsel, Division of Market Regulation, Commission, November 20, 2006. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:58 Nov 24, 2006 Jkt 211001 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 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 Exchange consents, the Commission will: (A) By order approve the 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: 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–2006–96 on the subject line. 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 Number SR–CBOE–2006–96 and should be submitted on or before December 18, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–19982 Filed 11–24–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54791; File No. SR–CHX– 2006–31] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Participant Fees and Credits November 20, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October Paper Comments 23, 2006, the Chicago Stock Exchange, • Send paper comments in triplicate Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with to Nancy M. Morris, Secretary, the Securities and Exchange Securities and Exchange Commission, Commission (‘‘Commission’’) the 100 F Street, NE., Washington, DC proposed rule change as described in 20549–1090. Items I, II, and III below, which Items have been prepared by the CHX. On All submissions should refer to File November 15, 2006, the CHX filed Number SR-CBOE–2006–96. This file Amendment No. 1 to the proposed rule number should be included on the subject line if e-mail is used. To help the change.3 The CHX has designated this proposal as one establishing or changing Commission process and review your comments more efficiently, please use 7 17 CFR 200.30–3(a)(12). only one method. The Commission will 1 15 U.S.C. 78s(b)(1). post all comments on the Commission’s 2 17 CFR 240.19b–4. Internet Web site (http://www.sec.gov/ 3 The purpose of Amendment No. 1 is to provide rules/sro.shtml). Copies of the further clarity as to the proposed NTM Fee submission, all subsequent Schedule changes, by providing additional commentary with respect to: (i) The provisions of amendments, all written statements the NTM Fee Schedule that are impacted; (ii) the with respect to the proposed rule amounts of the fees established by such provisions; change that are filed with the (iii) the basis for certain changes or references to Commission, and all written these provisions; and (iv) the correction of certain rule change marking. communications relating to the PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 E:\FR\FM\27NON1.SGM 27NON1

Agencies

[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Notices]
[Pages 68659-68660]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-19982]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54792; File No. SR-CBOE-2006-96]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Regarding 
Allocation of Stocks to CBSX DPMs

 November 20, 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 20, 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 substantially 
prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange submits this rule change filing to modify its rules 
relating to the allocation of stocks for the Exchange's proposed stock-
trading facility, CBSX. The text of the proposed rule change is set 
forth below. Additions are in italics; deletions are in [brackets].

Chicago Board Options Exchange, Incorporated

Rules

* * * * *

RULE 53.54. [Conditions on the] Allocation of Securities to [STOC] CBSX 
DPMs

    (a) CBSX [The STOC DPM Committee] may establish [(i) restrictions 
applicable to all STOC DPMs on the concentration of securities 
allocable to a single STOC DPM and to affiliated STOC DPMs and (ii)] 
minimum eligibility standards applicable to all [STOC] CBSX DPMs which 
must be satisfied in order for a [STOC] CBSX DPM to receive allocations 
of securities, including but not limited to standards relating to 
adequacy of capital and number of personnel.
    (b) CBSX shall determine, for each security in which CBSX begins 
trading, which CBSX DPM should be allocated such security. Factors to 
be considered in making such determinations may include, but are not 
limited to, any one or more of the following: Performance, volume, 
capacity, market performance commitments, operational factors, 
efficiency, competitiveness, expressed preferences of issuers, and the 
best interest of CBSX. Alternatively, in instances where multiple 
securities are being allocated at one time, CBSX may allocate such 
securities utilizing a draft where the draft selection order for the 
eligible CBSX DPMs is determined randomly by CBSX.
    (c) Prior to the commencement of trading on CBSX, all securities 
that will initially trade on CBSX (pursuant to a rollout schedule 
determined by CBSX) shall be allocated as follows:
    (1) CBSX will randomly set a draft rotation for all CBSX DPMs.
    (2) The top 500 securities (based on a twelve-month average daily 
volume) will be selected by the DPMs (one by one) in the established 
rotation order.
    (3) Any additional securities selected by CBSX to initially trade 
on CBSX shall be allocated equally among the CBSX DPMs in a random 
fashion by CBSX.
* * * * *

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

    In its filing with the Commission, 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 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
    In September 2006, the Commission approved Exchange Chapters 50-55 
governing the trading of non-option securities on the Exchange.\3\ The 
Exchange, via a separate rule filing, will be proposing to further 
modify Chapters 50-55 in connection with the establishment of the CBOE 
Stock Exchange (``CBSX''). CBSX will be a facility of the Exchange and 
will serve as the Exchange's vehicle for trading non-option securities. 
CBSX would be a separate legal entity (a Delaware Limited Liability 
Company) that is owned by the Exchange and several strategic partners. 
The Exchange is also submitting rule filings proposing to establish 
CBSX as a facility of the Exchange and proposing to allow CBSX to 
appoint CBSX DPMs. The purpose of this filing is to adopt rules that 
would allow for the allocation of stocks to CBSX DPMs (the Exchange 
expects that the filing allowing appointment of

[[Page 68660]]

CBSX DPMs will become effective prior to approval of this filing). Any 
such appointments and allocations would be contingent on Commission 
approval of rules governing CBSX DPM trading procedures and 
obligations.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 54422 (September 11, 
2006), 71 FR 54537 (September 15, 2006) (approving SR-CBOE-2004-21). 
See also Securities Exchange Act Release No. 54526 (September 27, 
2006), 71 FR 58646 (October 4, 2006) (approving SR-CBOE-2006-70).
---------------------------------------------------------------------------

    Initial CBSX DPM stock allocations would be handled pursuant to 
proposed modified CBOE Rule 53.54. For the initial launch, and 
potentially in instances where CBSX seeks to commence trading a number 
of new securities at one time, CBSX would conduct a ``draft'' for 
eligible CBSX DPMs to select available stocks. The draft order would be 
determined randomly. In connection with the initial launch, the draft 
would only apply to the first 500 securities selected.\4\ After that 
point, all of the remaining securities slated for trading on CBSX would 
be allocated randomly by CBSX to the CBSX DPMs equally.
---------------------------------------------------------------------------

    \4\ Telephone conversation between Angelo Evangelou, Assistant 
General Counsel, CBOE, and Nathan Saunders, Special Counsel, 
Division of Market Regulation, Commission, November 20, 2006.
---------------------------------------------------------------------------

    CBSX would utilize proposed CBOE Rule 53.54 for future stock 
allocations as well. In those cases, a draft could be employed or CBSX 
could allocate the stocks based on any one or more of the following: 
Performance, volume, capacity, market performance commitments, 
operational factors, efficiency, competitiveness, expressed preferences 
of issuers, and the best interest of CBSX.
    The ability to allocate stocks to CBSX DPMs ahead of the launch of 
the CBSX facility would allow the Exchange and the CBSX DPM firms to be 
prepared to commence trading on CBSX immediately upon approval of CBSX 
trading rules and pursuant to a robust rollout schedule. The Exchange 
seeks to launch the CBSX facility on February 5, 2007.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \5\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \6\ in particular in that it serves to 
remove impediments to and perfect the mechanism of a free and open 
market because it will help the Exchange manage the initial launch of 
trading on CBSX.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange believes that this proposed rule change would not 
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 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 Exchange consents, the Commission will:
    (A) By order approve the 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:

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-2006-96 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-2006-96. 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 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 Number 
SR-CBOE-2006-96 and should be submitted on or before December 18, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-19982 Filed 11-24-06; 8:45 am]
BILLING CODE 8011-01-P