Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Expand Its Price Manipulation Rule To Address Additional Instances of Improper Behavior, 19998-19999 [E7-7492]
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19998
Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices
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 received nor
solicited written comments on the
proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
will take effect upon filing with the
Commission pursuant to Section
19(b)(3)(A)(i) of the Act 9 and Rule 19b–
4(f)(1) thereunder,10 because it
constitutes a stated policy, practice, or
interpretation with respect to the
meaning, administration, or
enforcement of an existing rule.
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
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 the CBOE. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–CBOE–2007–35 and should
be submitted on or before May 11, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E7–7554 Filed 4–19–07; 8:45 am]
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–2007–35 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55625; File No. SR–CHX–
2007–08]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing of Proposed Rule Change To
Expand Its Price Manipulation Rule To
Address Additional Instances of
Improper Behavior
April 12, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
• Send paper comments in triplicate
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
to Nancy M. Morris, Secretary,
notice is hereby given that on March 21,
Securities and Exchange Commission,
2007, the Chicago Stock Exchange, Inc.
100 F Street, NE., Washington, DC
(‘‘CHX’’ or ‘‘Exchange’’) filed with the
20549–1090.
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
All submissions should refer to File
change as described in Items I, II and III
Number SR–CBOE–2007–35. This file
below, which Items have been
number should be included on the
subject line if e-mail is used. To help the substantially prepared by the CHX. The
Commission is publishing this notice to
Commission process and review your
solicit comments on the proposed rule
comments more efficiently, please use
only one method. The Commission will change from interested persons.
post all comments on the Commission’s
sroberts on PROD1PC70 with NOTICES
Paper Comments
11 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
10 17
VerDate Aug<31>2005
18:52 Apr 19, 2007
Jkt 211001
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
CHX 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 CHX has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
BILLING CODE 8010–01–P
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 15
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rule relating to price manipulation to
address two separate instances of
improper activity: (1) Manipulative
conduct consisting of a single event (in
addition to a series of events, as the
current rule contemplates) and (2)
manipulation based upon the entry of
orders as opposed to that based solely
upon the entry of trades. The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and https://
www.chx.com/rules/
proposed_rules.htm.
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Through this proposal, the Exchange
seeks to amend its rule relating to price
manipulation to address two separate
instances of improper activity: (1)
Manipulative conduct consisting of a
single event (in addition to a series of
events, as the current rule contemplates)
and (2) manipulation based upon the
entry of orders as opposed to that based
solely upon the entry of trades.3
As an initial matter, the Exchange
believes that these changes to the rule
would appropriately establish that
improper price manipulation could
occur, in certain circumstances, when
orders are entered at successively higher
or lower prices, not just upon the
execution of a series of trades at
successively higher or lower prices.
Order-based manipulation, sometimes
called spoofing, may be intended to take
advantage of algorithms or electronic
traders who focus on changes to the bid
or offer in trading. In such situations,
3 The proposal would also expand the rule to
address conduct by persons associated with a
participant firm, in addition to the firm’s partners,
directors, officers and registered employees.
E:\FR\FM\20APN1.SGM
20APN1
Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices
19999
the bad actor may enter higher, nonmarketable bids (offers) in one market
center in order to induce market
participants to lift an offer (hit a bid)
which he has posted in the same or
different market center.4
Additionally, the Exchange believes
that the proposed changes to the rule
would appropriately establish that
improper price manipulation could
occur, in certain circumstances, when a
single execution occurs (or a single
order is entered) at a price higher than
(or lower than) the current market. A
single trade that is executed at a
significantly higher or lower price at the
end of the trading day, for example,
could be used to establish a price which
does not reflect the true state of the
market in that security, to the benefit of
a participant firm.
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 self-regulatory
organization 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.
submissions should refer to File
Number SR–CHX–2007–08 and should
be submitted on or before May 11, 2007.
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:
SECURITIES AND EXCHANGE
COMMISSION
2. Statutory Basis
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–CHX–2007–08 on the
subject line.
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act,5 in general, and Section
6(b)(5) of the Act,6 in particular, in that
it is 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 by expanding the price
manipulation rule to address additional
instances of improper behavior.
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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange did not solicit or
receive any written comments with
respect to the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
sroberts on PROD1PC70 with NOTICES
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
4 Other order-based manipulative activity might
occur with the upcoming implementation of the
new market data revenue allocation formula under
Regulation NMS—which, in general, requires that
market data revenue be allocated based upon both
quoting and trading activity in each market. The
entry of orders (which are designed not be
executed) could be used to create a false,
misleading, or artificial appearance of quoting
activity in a particular security within a particular
market.
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
VerDate Aug<31>2005
18:52 Apr 19, 2007
Jkt 211001
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–7492 Filed 4–19–07; 8:45 am]
BILLING CODE 8010–01–P
[Release No. 34–55635; File No. SR–ISE–
2007–16]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change, as Modified by
Amendment No. 1, Relating to Options
Based on Commodity Pool ETFs
April 16, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’)1 and Rule 19b–4 2 thereunder,
Paper Comments
notice is hereby given that on February
• Send paper comments in triplicate
21, 2007, the International Securities
to Nancy M. Morris, Secretary,
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’)
Securities and Exchange Commission,
filed with the Securities and Exchange
Station Place, 100 F Street, NE.,
Commission (‘‘Commission’’) the
Washington, DC 20549–1090.
proposed rule change as described in
All submissions should refer to File
Items I and II below, which Items have
Number SR–CHX–2007–08. This file
been substantially prepared by the
number should be included on the
Exchange. On March 26, 2007, ISE filed
subject line if e-mail is used. To help the
Amendment No. 1 to the proposed rule
Commission process and review your
change.3 This order provides notice of
comments more efficiently, please use
the proposed rule change as modified by
only one method. The Commission will
Amendment No. 1 and approves the
post all comments on the Commission’s
proposed rule change on an accelerated
Internet Web site (https://www.sec.gov/
basis.
rules/sro.shtml). Copies of the
I. Self-Regulatory Organization’s
submission, all subsequent
Statement of the Terms of Substance of
amendments, all written statements
the Proposed Rule Change
with respect to the proposed rule
change that are filed with the
The Exchange proposes to amend
Commission, and all written
certain rules to permit the listing and
communications relating to the
trading of options on equity interests
proposed rule change between the
Commission and any person, other than issued by trust issued receipts (‘‘TIRs’’),
partnership units (‘‘Partnership
those that may be withheld from the
Units’’),4 and other entities (referred
public in accordance with the
collectively herein as ‘‘Commodity Pool
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
7 17 CFR 200.30–3(a)(12).
the Commission’s Public Reference
1 15 U.S.C. 78s(b)(1).
Room. Copies of such filing also will be
2 17 CFR 240.19b–4.
available for inspection and copying at
3 Amendment No. 1 replaces and supersedes the
the principal office of the Exchange. All original filing in its entirety.
comments received will be posted
4 As set forth in ISE Rule 2127, a ‘‘Partnership
Unit’’ means a security (a) that is issued by a
without change; the Commission does
partnership that invests in any combination of
not edit personal identifying
futures contracts, options on futures contracts,
information from submissions. You
forward contracts, commodities and/or securities;
should submit only information that
and (b) that is issued and redeemed daily in
you wish to make available publicly. All specified aggregate amounts at net asset value.
PO 00000
Frm 00124
Fmt 4703
Sfmt 4703
E:\FR\FM\20APN1.SGM
20APN1
]]>Agencies
[Federal Register Volume 72, Number 76 (Friday, April 20, 2007)]
[Notices]
[Pages 19998-19999]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-7492]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55625; File No. SR-CHX-2007-08]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change To Expand Its Price
Manipulation Rule To Address Additional Instances of Improper Behavior
April 12, 2007.
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 March 21, 2007, the Chicago Stock Exchange, Inc. (``CHX'' 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 CHX.
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\ CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rule relating to price
manipulation to address two separate instances of improper activity:
(1) Manipulative conduct consisting of a single event (in addition to a
series of events, as the current rule contemplates) and (2)
manipulation based upon the entry of orders as opposed to that based
solely upon the entry of trades. The text of the proposed rule change
is available at the Exchange, the Commission's Public Reference Room,
and https://www.chx.com/rules/proposed_rules.htm.
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 CHX 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 CHX 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Through this proposal, the Exchange seeks to amend its rule
relating to price manipulation to address two separate instances of
improper activity: (1) Manipulative conduct consisting of a single
event (in addition to a series of events, as the current rule
contemplates) and (2) manipulation based upon the entry of orders as
opposed to that based solely upon the entry of trades.\3\
---------------------------------------------------------------------------
\3\ The proposal would also expand the rule to address conduct
by persons associated with a participant firm, in addition to the
firm's partners, directors, officers and registered employees.
---------------------------------------------------------------------------
As an initial matter, the Exchange believes that these changes to
the rule would appropriately establish that improper price manipulation
could occur, in certain circumstances, when orders are entered at
successively higher or lower prices, not just upon the execution of a
series of trades at successively higher or lower prices. Order-based
manipulation, sometimes called spoofing, may be intended to take
advantage of algorithms or electronic traders who focus on changes to
the bid or offer in trading. In such situations,
[[Page 19999]]
the bad actor may enter higher, non-marketable bids (offers) in one
market center in order to induce market participants to lift an offer
(hit a bid) which he has posted in the same or different market
center.\4\
---------------------------------------------------------------------------
\4\ Other order-based manipulative activity might occur with the
upcoming implementation of the new market data revenue allocation
formula under Regulation NMS--which, in general, requires that
market data revenue be allocated based upon both quoting and trading
activity in each market. The entry of orders (which are designed not
be executed) could be used to create a false, misleading, or
artificial appearance of quoting activity in a particular security
within a particular market.
---------------------------------------------------------------------------
Additionally, the Exchange believes that the proposed changes to
the rule would appropriately establish that improper price manipulation
could occur, in certain circumstances, when a single execution occurs
(or a single order is entered) at a price higher than (or lower than)
the current market. A single trade that is executed at a significantly
higher or lower price at the end of the trading day, for example, could
be used to establish a price which does not reflect the true state of
the market in that security, to the benefit of a participant firm.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\5\ in general, and Section 6(b)(5) of the Act,\6\ in
particular, in that it is 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 by expanding the
price manipulation rule to address additional instances of improper
behavior.
---------------------------------------------------------------------------
\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 does not believe that the proposed rule change will
impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange did not solicit or receive any written 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 self-regulatory organization 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CHX-2007-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CHX-2007-08. 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 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-CHX-2007-08 and should be submitted on or before May 11,
2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-7492 Filed 4-19-07; 8:45 am]
BILLING CODE 8010-01-P
