Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To List for Trading Options on Commodity Pool Units, 19993-19997 [E7-7494]
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Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices
above would allow for access to such
opportunities if readily available.
Moreover, a member would need to
conduct best execution evaluations on a
regular basis, at a minimum quarterly,
that include its use of any router
incorporating the features described
above.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act 8
in general and furthers the objectives of
Section 6(b)(4) of the Act 9 in particular
in that it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges among CBOE
members and other persons using its
facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of 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
Because the foregoing rule change
establishes or changes a due, fee, or
other charge imposed by the Exchange,
it has become effective pursuant to
Section 19(b)(3)(A) of the Act 10 and
Rule 19b–4(f)(2) 11 thereunder. 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.
sroberts on PROD1PC70 with NOTICES
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:
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
10 15 U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(2).
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–2007–34 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.
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–7493 Filed 4–19–07; 8:45 am]
BILLING CODE 8010–01–P
[Release No. 34–55630; File No. SR–CBOE–
2007–21]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Order Granting Accelerated Approval
of a Proposed Rule Change, as
Modified by Amendment No. 1, To List
for Trading Options on Commodity
Pool Units
April 13, 2007.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
CBOE included statements concerning
the purpose of and basis for the
proposed rule change. The text of these
1 15
9 15
18:52 Apr 19, 2007
SECURITIES AND EXCHANGE
COMMISSION
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 2 thereunder,
All submissions should refer to File
notice is hereby given that on February
Number SR–CBOE–2007–34. This file
22, 2007, the Chicago Board Options
number should be included on the
subject line if e-mail is used. To help the Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
Commission process and review your
and Exchange Commission
comments more efficiently, please use
(‘‘Commission’’) the proposed rule
only one method. The Commission will
change as described in Items I and II
post all comments on the Commission’s below, which Items have been
Internet Web site (https://www.sec.gov/
substantially prepared by the Exchange.
rules/sro.shtml). Copies of the
On March 26, 2007, CBOE filed
submission, all subsequent
Amendment No. 1 to the proposed rule
amendments, all written statements
change.3 This order provides notice of
with respect to the proposed rule
the proposed rule change as modified by
change that are filed with the
Amendment No. 1 and approves the
Commission, and all written
proposed rule change on an accelerated
communications relating to the
basis.
proposed rule change between the
I. Self-Regulatory Organization’s
Commission and any person, other than
Statement of the Terms of Substance of
those that may be withheld from the
the Proposed Rule Change
public in accordance with the
The Exchange proposes to amend
provisions of 5 U.S.C. 552, will be
CBOE Rules 4.18 Interpretation and
available for inspection and copying in
Policy .01, 5.3 Interpretation and Policy
the Commission’s Public Reference
Room. Copies of such filing also will be .06, 5.4 Interpretation and Policy .08,
8.9, and 15.1 Interpretation and Policy
available for inspection and copying at
.04 to permit the listing and trading of
the principal office of CBOE. All
options on securities issued by Trust
comments received will be posted
Issued Receipts (‘‘TIRs’’), partnership
without change; the Commission does
units (‘‘Partnership Units’’), and other
not edit personal identifying
entities whose value is based on
information from submissions. You
underlying commodity interests
should submit only information that
(referred to collectively herein as
you wish to make available publicly. All ‘‘Commodity Pool Units’’).
submissions should refer to File
The text of the proposed rule change
Number SR–CBOE–2007–34 and should is available at the CBOE, the
be submitted on or before May 11, 2007. Commission’s Public Reference Room,
and https://www.cboe.com.
For the Commission, by the Division of
8 15
VerDate Aug<31>2005
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 replaces and supersedes the
original filing in its entirety.
2 17
12 17
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statements may be examined at the
places specified in Item III below. The
CBOE has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
sroberts on PROD1PC70 with NOTICES
1. Purpose
The CBOE states that the proposed
rule change is based on a proposal by
the American Stock Exchange LLC
(‘‘Amex’’).4
The purpose of this proposed rule
change is to enable the listing and
trading on the Exchange of options on
Commodity Pool Units that trade,
directly or indirectly, in commodity
futures products. Commodity Pool Units
may hold or trade in one or more types
of investments that may include any
combination of securities, commodity
futures contracts, options on commodity
futures contracts, swaps and forward
contracts. The shares of the Commodity
Pool Units are securities registered with
the Commission and the offer and sale
of those shares are subject to the
Commission’s regulatory oversight. The
investments held, directly or indirectly,
within the Commodity Pool Units are
subject to the Commodity Exchange Act
(‘‘CEA’’) due to their status as a
‘‘commodity pool.’’ 5 Therefore, the
trading of the assets and/or investment
(e.g., futures and options on futures)
held within the Commodity Pool Units
is regulated by the Commodity Futures
Trading Commission (‘‘CFTC’’).6
4 See Securities Exchange Act Release No. 55547
(March 28, 2007), 72 FR 16388 (April 4, 2007) (SR–
Amex–2006–110) (approving listing criteria
covering options on securities issued by entities
holding commodity derivatives). CBOE’s proposed
rule text includes a definition of ‘‘Partnership
Units’’ that parallels the definition in Amex’s rules.
See Interpretation and Policy .10 to CBOE Rule 5.4.
CBOE notes that, although the proposed definition
of ‘‘Partnership Units’’ includes a broad universe of
securities, including those of entities that invest in
physical commodities. The current filing, like the
Amex proposal, proposes to list and trade options
only on Commodity Pool Units that invest in a
combination of commodity derivative products, and
not in physical commodities.
5 The term ‘‘[commodity] pool means any
investment trust, syndicate or similar form of
enterprise operated for the purpose of trading
commodity interests.’’ 17 CFR 4.10(d)(1). A
commodity interest is ‘‘(1) Any contract for the
purchase or sale of a commodity for future delivery;
and (2) Any contract, agreement or transaction
subject to Commission regulation under Section 4c
or 19 of the [Commodity Exchange] Act.’’ 17 CFR
4.10(a).
6 The manager or operator of a ‘‘commodity pool’’
is required to register, unless applicable exclusions
apply, as a commodity pool operator (‘‘CPO’’) and
as a commodity trading advisor (‘‘CTA’’) with the
CFTC and become a member of the National
Futures Association (‘‘NFA’’).
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18:52 Apr 19, 2007
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Currently, CBOE Rule 5.3
Interpretation and Policy .06 provides
that securities deemed appropriate for
options trading shall include shares or
other securities (‘‘Units’’) that are
principally traded on a national
securities exchange or through the
facilities of a national securities
association and reported as a NMS
security, and that (i) Represent interests
in registered investment companies (or
series thereof) organized as open-end
management investment companies,
unit investment trusts or similar entities
that hold portfolios of securities
comprising or otherwise based on or
representing investments in indexes or
portfolios of securities (or that hold
securities in one or more other
registered investment companies that
themselves hold such portfolios of
securities); or (ii) represent interests in
a trust that holds a specified non-U.S.
currency deposited with the trust when
aggregated in some specified minimum
number may be surrendered to the trust
by the beneficial owner to receive the
specified non-U.S. currency and pays
the beneficial owner to receive the
specified non-U.S. currency and pays
the beneficial owner interest and other
distributions on deposited non-U.S.
currency, if any, declared and paid by
the trust.
The Exchange proposes to amend
Interpretation and Policy .06 to its Rule
5.3 to expand the type of options to
include the listing and trading of
options based on Commodity Pool Units
that may hold or invest, directly or
indirectly, in commodity futures
products, including, but not limited to,
commodity futures contracts, options on
commodity futures contracts, swaps and
forward contracts. As part of this
revision to Rule 5.3 Interpretation and
Policy .06, the Exchange proposes to
add paragraph (ii)(F) requiring for
Commodity Pool Units that a
comprehensive surveillance sharing
agreement be in place with the
marketplace or marketplaces with last
sale reporting that represent(s) the
highest volume in such commodity
futures contracts and/or options on
commodity futures contracts on the
specified commodities or non-U.S.
currency, which are utilized by the
national securities exchange where the
underlying Commodity Pool Units are
listed and traded.
As set forth in the proposed
amendment to Interpretation and Policy
.06 to CBOE Rule 5.3, Commodity Pool
Units must be traded on a national
securities exchange or through the
facilities of a national securities
association and must be an ‘‘NMS
stock’’ as defined under Rule 600 of
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Frm 00119
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Sfmt 4703
Regulation NMS. In addition,
Commodity Pool Units must meet either
(i) the criteria and guidelines under
CBOE Rule 5.3 and Interpretation and
Policy .01; or (ii) be available for
creation or redemption each business
day from or through the issuing trust,
investment company, commodity pool
or other issuer in cash or in kind at a
price related to net asset value. In
addition, the issuing trust, investment
company, commodity pools or other
issuer is obligated to issue Units in a
specified aggregate number even if some
or all of the investment assets required
to be deposited have not been received
by the issuing trust, investment
company, commodity pool or other
issuer, subject to the condition that the
person obligated to deposit the
investment assets has undertaken to
deliver the investment assets as soon as
possible and such undertaking is
secured by the delivery and
maintenance of collateral consisting of
cash or cash equivalents satisfactory to
the issuer of Units which underlie the
option as described in the Units’
prospectus.
Under the applicable continued
listing criteria in Interpretation and
Policy .08 to CBOE Rule 5.4, the
Exchange shall not open for trading any
additional series of option contracts on
Units that were initially approved for
options trading pursuant to
Interpretation and Policy .06 to Rule 5.3
if such Units either (i) Cease to be an
‘‘NMS stock’’ as provided in paragraph
(f) of Interpretation and Policy .01 of
Rule 5.4 (an ‘‘NMS stock’’ is defined in
Rule 600 of Regulation NMS of the Act);
or (ii) are halted from trading in their
primary market.
In addition, the Exchange shall
consider the suspension of opening
transactions in any series of options of
the class covering Units in the following
circumstances: (1) Following the initial
twelve-month period beginning upon
the commencement of trading in the
Units on a national securities exchange
or through the facilities of a national
securities association and are defined as
an ‘‘NMS stock’’ under Rule 600 of
Regulation NMS, there are fewer than 50
record and/or beneficial holders of such
Units for 30 or more consecutive trading
days; or (2) the value of the index or
portfolio of securities, non-U.S.
currency, or portfolio of commodities
including commodity futures contracts,
options on commodity futures contracts,
swaps, forward contracts and/or options
on physical commodities on which the
Units are based is no longer calculated
or available. In addition, the Exchange
is proposing to amend Rule 5.4
Interpretation and Policy .08, by adding
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sroberts on PROD1PC70 with NOTICES
new paragraph (d), which provides the
Exchange with the ability to determine
that it will not open additional series of
options on Units if such events occur or
conditions exist that in the opinion of
the Exchange make further dealing in
such options on the Exchange
inadvisable. The Exchange notes that
this proposed paragraph is based on a
parallel provision in Commentary .07(4)
to Amex Rule 916.
The Exchange is also proposing to
amend Interpretation and Policy .01 to
its Rule 4.18 to require members to
establish, maintain and enforce written
policies and procedures to prevent the
misuse of material, nonpublic
information it might have or receive in
a related security, option or derivative
or in the applicable related commodity,
commodity futures or options on
commodity futures or any other related
commodity derivatives.
The Exchange is further proposing to
amend CBOE Rule 8.9 to require that
Market-Makers for options in
Commodity Pool Units file with the
Exchange upon request a list identifying
all accounts for, among other things,
physical commodities, physical
commodity options, commodity futures
contracts, options on commodity futures
contracts, any other derivatives based
on such commodity in which the
Market-Maker may have directly or
indirectly engaged in trading activities
or over which he exercises investment
discretion.7 In addition, the proposed
revision to Rule 8.9 further requires that
no Market-Maker shall engage in trading
in, among other things, physical
commodities, physical commodity
options, commodity futures contracts,
options on commodity futures contracts,
any other derivatives based on such
commodity in an account which has not
been reported in a manner prescribed by
the Exchange.8
In addition, the Exchange proposes to
amend Interpretation and Policy .04 to
CBOE Rule 15.1 to require MarketMakers to make available to the
Exchange such books and records or
other information pertaining to
transactions in the applicable physical
commodity, physical commodity
options, commodity futures contracts,
options on commodity futures contracts,
or any other derivatives on such
commodity, as may be requested by the
Exchange.
7 The Exchange is proposing to add the phrase
‘‘for options on’’ in two places in the first sentence
of CBOE Rule 8.9(a) to clarify that Rule 8.9(a)
governs Market-Makers in options on Units (versus
Market-Markets in the Unit underlying the option).
8 The Exchange is proposing to add the phrase
‘‘trading in’’ to the last sentence of CBOE Rule
8.9(a) to clarify the conduct governed by the rule.
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19:42 Apr 19, 2007
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The Exchange represents that it has an
adequate surveillance program in place
for options based on Commodity Pool
Units. The Exchange may obtain trading
information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges who are members or affiliates
of the ISG and has entered into
numerous comprehensive surveillancesharing agreements with various
commodity futures exchanges
worldwide. Prior to listing and trading
options on Commodity Pool Units, the
Exchange represents that it would either
have the ability to obtain specific
trading information via ISG or through
a comprehensive surveillance sharing
agreement with the primary exchange or
exchanges where the particular
commodity futures and/or options on
commodity futures are traded.
The addition of Commodity Pool
Units would not have any effect on the
rules pertaining to position and exercise
limits.9 The Exchange also represents
that the margin requirements for options
on Commodity Pools Units would be
evaluated for each product the Exchange
anticipates listing. Any new margin
rules deemed necessary will be filed
separately with the Commission.
This proposal is necessary to enable
the Exchange to list and trade options
on an expanding range of Commodity
Pool Units that the Commission has
approved for trading, including the DB
Commodity Index Tracking Fund (the
‘‘DBC Fund’’), the United States Oil
Fund, L.P. (the ‘‘Oil Fund’’) and the
PowerCommodity Pool ETFs DB G10
Currency Harvest Fund (the ‘‘DBV
Fund’’).10
The DBC Fund is a Commodity TIR 11
and tracks the performance of the
Deutsche Bank Liquid Commodity
IndexTM—Excess Return while the Oil
Fund is a Partnership Unit and tracks
the spot price of West Texas
Intermediate light, sweet crude oil
delivered to Cushing, Oklahoma.
The DBC Fund is a ‘‘feeder fund’’ that
invests substantially all of its assets in
the DB Commodity Index Tracking
Master Fund, and the Master Fund in
turn maintains a portfolio of exchange9 See
CBOE Rules 4.11 and 4.12.
Securities Exchange Act Release Nos.
53105 (January 11, 2006), 71 FR 3129 (January 19,
2006) (approving the listing and trading of the DB
Commodity Index Tracking Fund); 53582 (March
31, 2006), 71 FR 17510 (April 6, 2006) (approving
the listing and trading of Units of the United States
Oil Fund, L.P.); and 54450 (September 14, 2006), 71
FR 51245 (September 21, 2006) (approving the
listing and trading of the PowerShares DB G10
Currency Harvest Fund).
11 The offering of DBC Fund shares is registered
with the Commission under the Securities Act of
1933 and its most recent Form 10–Q was filed with
the Commission on November 14, 2006.
10 See
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19995
traded futures on aluminum, gold, corn,
wheat, heating oil and light, sweet crude
oil. The Index is derived from the prices
of those futures contracts. The Master
Fund’s portfolio is managed on an
ongoing basis by DB Commodity
Services LLC, a registered CPO and
CTA, so that the value of the portfolio
closely tracks the value of the Index
over time.
The DBV Fund is also a Commodity
TIR 12 and a ‘‘feeder fund’’ that invests
substantially all of its assets in the
PowerCommodity Pool ETFs DB G10
Currency Harvest Master Fund, and the
Master Fund in turn maintains a
portfolio of exchange-traded futures on
foreign currencies that comprise the G–
10 countries. The Index is derived from
the prices of those futures contracts. The
Master Fund’s portfolio is managed on
an ongoing basis by DB Commodity
Services LLC, a registered CPO and
CTA, so that the value of the portfolio
closely tracks the value of the Index
over time.
Unlike the DBC and DBV Funds, the
Oil Fund 13 does not invest through a
master-feeder structure but rather trades
directly in futures on crude and heating
oil, natural gas, gasoline and other
petroleum-based fuels, options on such
futures contracts, forward contracts on
oil and other over-the-counter
derivatives based on the price of oil,
other petroleum-based fuels, the futures
contracts described above, and the
indexes based on any of the foregoing.
The Oil Fund’s portfolio is managed by
Victoria Bay Asset Management LLC
with the aim of tracking the West Texas
Intermediate light, sweet crude oil
futures contract listed and traded on the
New York Mercantile Exchange
(‘‘NYMEX’’).
The Exchange believes that it is
reasonable to expect that other types of
Commodity Pool Units will be
introduced for trading in the near
future. The proposed amendment to the
Exchange’s listing criteria for options on
Commodity TIRs and Partnership Units
is necessary to ensure that the Exchange
will be able to list options on
Commodity Pool Units that have been
recently launched as well as any other
similar Commodity Pool Units that may
be listed and traded in the future.
12 The offering of DBV Fund shares is registered
with the Commission under the Securities Act of
1933 and its most recent Form 10–Q was filed with
the Commission on November 14, 2006.
13 The offering of Oil Fund shares is registered
with the Commission under the Securities Act of
1933 and its most recent Form S–1 was filed with
the Commission on January 19, 2007.
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2. Statutory Basis
Paper Comments
The Exchange believes that, with the
commencement of trading of
Commodity Pool Units on the Exchange,
amending its rules to accommodate the
listing and trading of options on
publicly traded shares of other
securities that hold and/or manage
portfolios or baskets of commodity
futures contracts, options on commodity
futures contracts, swaps, forward
contracts, options on physical
commodities, options on non-U.S.
currency, and/or securities will benefit
investors by providing them with the
same valuable risk management tool
that is currently available with respect
to other publicly traded Units (or
Exchange Traded Funds) whose
investment assets consist of securities.
Accordingly, the Exchange believes that
the proposed rule change is consistent
with the requirements of Section 6(b) of
the Act 14 in general, and furthers the
objectives of Section 6(b)(5),15 of the Act
in particular, in that it would remove
impediments to and perfect the
mechanism of a free and open market in
a manner consistent with the protection
of investors and the public interest.
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
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
with respect to the proposed rule
change.
III. 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:
sroberts on PROD1PC70 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–CBOE–2007–21 on the
subject line.
14 15
U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
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18:52 Apr 19, 2007
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system and, in general, to protect
investors and the public interest.
Surveillance
The Commission notes that Exchange
has represented that it has an adequate
surveillance program in place for
options based on Commodity Pool
All submissions should refer to File
Units. The Exchange may obtain trading
Number SR–CBOE–2007–21. This file
information via the ISG from other
number should be included on the
exchanges who are members or affiliates
subject line if e-mail is used. To help the of the ISG and has entered into
Commission process and review your
numerous comprehensive surveillance
comments more efficiently, please use
sharing agreements with various
only one method. The Commission will commodity futures exchanges
post all comments on the Commission’s worldwide. Prior to listing and trading
Internet Web site (https://www.sec.gov/
options on Commodity Pool Units, the
rules/sro.shtml). Copies of the
Exchange represented that it will either
submission, all subsequent
have the ability to obtain specific
amendments, all written statements
trading information via ISG or through
with respect to the proposed rule
a comprehensive surveillance sharing
change that are filed with the
agreement with the exchange or
Commission, and all written
exchanges where the particular
communications relating to the
commodity futures and/or options on
proposed rule change between the
commodity futures are traded. In
Commission and any person, other than addition, the Exchange represented that
those that may be withheld from the
the addition of Commodity Pool Unit
public in accordance with the
options will not have any effect on the
provisions of 5 U.S.C. 552, will be
rules pertaining to position and exercise
available for inspection and copying in
limits 19 or margin.
the Commission’s Public Reference
Listing and Trading of Options on
Room. Copies of the filing also will be
Commodity Pool Units
available for inspection and copying at
the principal office of the CBOE. All
The Commission notes that, pursuant
to the proposed rule change, a
comments received will be posted
Commodity Pool Unit will be subject to
without change; the Commission does
the provisions of CBOE Rules 5.3 and
not edit personal identifying
5.4, and the Interpretation and Policy
information from submissions. You
thereto, as applicable. These provisions
should submit only information that
you wish to make available publicly. All include requirements regarding initial
and continued listing standards, the
submissions should refer to File
Number SR–CBOE–2007–21 and should creation/redemption process for
be submitted on or before May 11, 2007. Commodity Pool Units, and trading
halts. All Commodity Pool Units must
IV. Commission Findings and
be traded through a national securities
Accelerated Approval
exchange or through the facilities of a
national securities association, and must
After careful consideration, the
be ‘‘NMS stock’’ as defined under Rule
Commission finds that the proposed
600 of Regulation NMS.20
rule change is consistent with the
The Commission believes that this
requirements of the Act and the rules
proposal is necessary to enable the
and regulations thereunder applicable to
a national securities exchange 16 and, in Exchange to list and trade options on an
expanding range of Commodity Pool
particular, the requirements of Section 6
Units currently approved for trading
of the Act.17 Specifically, the
and that it is reasonable to expect other
Commission finds that the proposed
types of Commodity Pool Units to be
rule change is consistent with Section
introduced for trading in the future.
18 which requires,
6(b)(5) of the Act,
This proposal would help ensure that
among other things, that the rules of a
the Exchange will be able to list options
national securities exchange be
on Commodity Pool Units that have
designed to remove impediments to and
been recently launched as well as any
perfect the mechanism of a free and
other similar Commodity Pool Units
open market and a national market
that may be listed and traded in the
future 21 thereby offering investors
16 In approving this proposed rule change, the
greater option choices.
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
17 15 U.S.C. 78f.
18 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
19 See
CBOE Rules 4.11 and 4.12.
CFR 242.600(b)(47).
21 17 CFR 240.19b–4(e).
20 17
E:\FR\FM\20APN1.SGM
20APN1
19997
Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,22 for approving the proposed rule
change, as modified by Amendment No.
1, prior to the thirtieth day after the date
of publication of notice in the Federal
Register. The Commission notes that the
proposal is consistent with the
Exchange’s listing and trading standards
in CBOE Rules 5.3 and 5.4, and the
Commission has recently approved a
similar proposal, after publishing it for
a full comment period and receiving no
comments.23 Therefore, the Commission
does not believe that the proposed rule
change, as amended, raises novel
regulatory issues. Consequently, the
Commission believes that it is
appropriate to permit investors to
benefit from the flexibility afforded by
trading these products without delay.
Accordingly, the Commission finds
that there is good cause, consistent with
Section 6(b)(5) of the Act,24 to approve
the proposal, as amended, on an
accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,25 that the
proposed rule change (SR–CBOE–2007–
21), as modified by Amendment No. 1,
be, and is hereby approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.26
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–7494 Filed 4–19–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55637; File No. SR–CBOE–
2007–35]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Increase the Class
Quoting Limit in Several Option
Classes
April 16, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
22 15
U.S.C. 78s(b)(2).
Securities Exchange Act Release No. 55547
(March 28, 2007), 72 FR 16388 (April 4, 2007) (SR–
Amex–2006–110).
24 15 U.S.C. 78s(b)(5).
25 15 U.S.C. 78s(b)(2).
26 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
sroberts on PROD1PC70 with NOTICES
23 See
VerDate Aug<31>2005
18:52 Apr 19, 2007
Jkt 211001
notice is hereby given that on April 10,
2007, 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 CBOE.
The Exchange has designated this
proposal as one constituting a stated
policy, practice, or interpretation with
respect to the meaning, administration,
or enforcement of an existing rule under
Section 19(b)(3)(A)(i) of the Act,3 and
Rule 19b–4(f)(1) 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.
40, depending on the trading activity of
the particular product.
Rule 8.3A, Interpretation .01(c)
provides a procedure by which the
President of the Exchange may increase
the CQL for a particular product. In this
regard, the President of the Exchange
may increase the CQL in exceptional
circumstances, which are defined in the
rule as ‘‘substantial trading volume,
whether actual or expected.’’ 6 The
effect of an increase in the CQL is
procompetitive in that it increases the
number of market participants that may
quote electronically in a product. The
purpose of this filing is to increase the
CQL in the following option classes as
described below:
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
American Home Mortgage Investment
Corp. (AHM) ..............
Dendreon Corporation
(DNDN) .....................
Imergent Inc. (IIG) ........
Accredited Home Lenders Holding (LEND) ...
Novastar Financial, Inc.
(NFI) ..........................
Neurochem, Inc.
(NRMX) .....................
CBOE proposes to increase the class
quoting limit in several option classes.
The text of the proposed rule change is
available on CBOE’s Web site (https://
www.cboe.com), at the CBOE’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,
CBOE included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The CBOE has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE Rule 8.3A, Maximum Number
of Market Participants Quoting
Electronically per Product, establishes
class quoting limits (‘‘CQLs’’) for each
class traded on the Hybrid Trading
System.5 A CQL is the maximum
number of quoters that may quote
electronically in a given product and the
current levels are established from 25–
3 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
5 See Rule 8.3A.01.
4 17
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Frm 00122
Fmt 4703
Sfmt 4703
Option class
Current
CQL
New
CQL
25
30
25
25
40
30
35
45
30
40
25
35
The trading volume in these option
classes recently has increased
substantially. Increasing the CQL in
these classes will enable the Exchange
to enhance the liquidity offered, thereby
offering deeper and more liquid
markets.
2. Statutory Basis
Accordingly, 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.7 Specifically, the Exchange
believes the proposed rule change is
consistent with the Section 6(b)(5) 8
requirements that the rules of an
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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
6 ‘‘Any actions taken by the President of the
Exchange pursuant to this paragraph will be
submitted to the SEC in a rule filing pursuant to
Section 19(b)(3)(A) of the Exchange Act.’’ Rule
8.3A.01(c).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
E:\FR\FM\20APN1.SGM
20APN1
]]>Agencies
[Federal Register Volume 72, Number 76 (Friday, April 20, 2007)]
[Notices]
[Pages 19993-19997]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-7494]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55630; File No. SR-CBOE-2007-21]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 1, To List for
Trading Options on Commodity Pool Units
April 13, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on February 22, 2007, 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 and II below, which Items have been substantially
prepared by the Exchange. On March 26, 2007, CBOE filed Amendment No. 1
to the proposed rule change.\3\ This order provides notice of the
proposed rule change as modified by Amendment No. 1 and approves the
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 replaces and supersedes the original filing
in its entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend CBOE Rules 4.18 Interpretation and
Policy .01, 5.3 Interpretation and Policy .06, 5.4 Interpretation and
Policy .08, 8.9, and 15.1 Interpretation and Policy .04 to permit the
listing and trading of options on securities issued by Trust Issued
Receipts (``TIRs''), partnership units (``Partnership Units''), and
other entities whose value is based on underlying commodity interests
(referred to collectively herein as ``Commodity Pool Units'').
The text of the proposed rule change is available at the CBOE, the
Commission's Public Reference Room, and https://www.cboe.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the CBOE included statements
concerning the purpose of and basis for the proposed rule change. The
text of these
[[Page 19994]]
statements may be examined at the places specified in Item III below.
The CBOE has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The CBOE states that the proposed rule change is based on a
proposal by the American Stock Exchange LLC (``Amex'').\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 55547 (March 28,
2007), 72 FR 16388 (April 4, 2007) (SR-Amex-2006-110) (approving
listing criteria covering options on securities issued by entities
holding commodity derivatives). CBOE's proposed rule text includes a
definition of ``Partnership Units'' that parallels the definition in
Amex's rules. See Interpretation and Policy .10 to CBOE Rule 5.4.
CBOE notes that, although the proposed definition of ``Partnership
Units'' includes a broad universe of securities, including those of
entities that invest in physical commodities. The current filing,
like the Amex proposal, proposes to list and trade options only on
Commodity Pool Units that invest in a combination of commodity
derivative products, and not in physical commodities.
---------------------------------------------------------------------------
The purpose of this proposed rule change is to enable the listing
and trading on the Exchange of options on Commodity Pool Units that
trade, directly or indirectly, in commodity futures products. Commodity
Pool Units may hold or trade in one or more types of investments that
may include any combination of securities, commodity futures contracts,
options on commodity futures contracts, swaps and forward contracts.
The shares of the Commodity Pool Units are securities registered with
the Commission and the offer and sale of those shares are subject to
the Commission's regulatory oversight. The investments held, directly
or indirectly, within the Commodity Pool Units are subject to the
Commodity Exchange Act (``CEA'') due to their status as a ``commodity
pool.'' \5\ Therefore, the trading of the assets and/or investment
(e.g., futures and options on futures) held within the Commodity Pool
Units is regulated by the Commodity Futures Trading Commission
(``CFTC'').\6\
---------------------------------------------------------------------------
\5\ The term ``[commodity] pool means any investment trust,
syndicate or similar form of enterprise operated for the purpose of
trading commodity interests.'' 17 CFR 4.10(d)(1). A commodity
interest is ``(1) Any contract for the purchase or sale of a
commodity for future delivery; and (2) Any contract, agreement or
transaction subject to Commission regulation under Section 4c or 19
of the [Commodity Exchange] Act.'' 17 CFR 4.10(a).
\6\ The manager or operator of a ``commodity pool'' is required
to register, unless applicable exclusions apply, as a commodity pool
operator (``CPO'') and as a commodity trading advisor (``CTA'') with
the CFTC and become a member of the National Futures Association
(``NFA'').
---------------------------------------------------------------------------
Currently, CBOE Rule 5.3 Interpretation and Policy .06 provides
that securities deemed appropriate for options trading shall include
shares or other securities (``Units'') that are principally traded on a
national securities exchange or through the facilities of a national
securities association and reported as a NMS security, and that (i)
Represent interests in registered investment companies (or series
thereof) organized as open-end management investment companies, unit
investment trusts or similar entities that hold portfolios of
securities comprising or otherwise based on or representing investments
in indexes or portfolios of securities (or that hold securities in one
or more other registered investment companies that themselves hold such
portfolios of securities); or (ii) represent interests in a trust that
holds a specified non-U.S. currency deposited with the trust when
aggregated in some specified minimum number may be surrendered to the
trust by the beneficial owner to receive the specified non-U.S.
currency and pays the beneficial owner to receive the specified non-
U.S. currency and pays the beneficial owner interest and other
distributions on deposited non-U.S. currency, if any, declared and paid
by the trust.
The Exchange proposes to amend Interpretation and Policy .06 to its
Rule 5.3 to expand the type of options to include the listing and
trading of options based on Commodity Pool Units that may hold or
invest, directly or indirectly, in commodity futures products,
including, but not limited to, commodity futures contracts, options on
commodity futures contracts, swaps and forward contracts. As part of
this revision to Rule 5.3 Interpretation and Policy .06, the Exchange
proposes to add paragraph (ii)(F) requiring for Commodity Pool Units
that a comprehensive surveillance sharing agreement be in place with
the marketplace or marketplaces with last sale reporting that
represent(s) the highest volume in such commodity futures contracts
and/or options on commodity futures contracts on the specified
commodities or non-U.S. currency, which are utilized by the national
securities exchange where the underlying Commodity Pool Units are
listed and traded.
As set forth in the proposed amendment to Interpretation and Policy
.06 to CBOE Rule 5.3, Commodity Pool Units must be traded on a national
securities exchange or through the facilities of a national securities
association and must be an ``NMS stock'' as defined under Rule 600 of
Regulation NMS. In addition, Commodity Pool Units must meet either (i)
the criteria and guidelines under CBOE Rule 5.3 and Interpretation and
Policy .01; or (ii) be available for creation or redemption each
business day from or through the issuing trust, investment company,
commodity pool or other issuer in cash or in kind at a price related to
net asset value. In addition, the issuing trust, investment company,
commodity pools or other issuer is obligated to issue Units in a
specified aggregate number even if some or all of the investment assets
required to be deposited have not been received by the issuing trust,
investment company, commodity pool or other issuer, subject to the
condition that the person obligated to deposit the investment assets
has undertaken to deliver the investment assets as soon as possible and
such undertaking is secured by the delivery and maintenance of
collateral consisting of cash or cash equivalents satisfactory to the
issuer of Units which underlie the option as described in the Units'
prospectus.
Under the applicable continued listing criteria in Interpretation
and Policy .08 to CBOE Rule 5.4, the Exchange shall not open for
trading any additional series of option contracts on Units that were
initially approved for options trading pursuant to Interpretation and
Policy .06 to Rule 5.3 if such Units either (i) Cease to be an ``NMS
stock'' as provided in paragraph (f) of Interpretation and Policy .01
of Rule 5.4 (an ``NMS stock'' is defined in Rule 600 of Regulation NMS
of the Act); or (ii) are halted from trading in their primary market.
In addition, the Exchange shall consider the suspension of opening
transactions in any series of options of the class covering Units in
the following circumstances: (1) Following the initial twelve-month
period beginning upon the commencement of trading in the Units on a
national securities exchange or through the facilities of a national
securities association and are defined as an ``NMS stock'' under Rule
600 of Regulation NMS, there are fewer than 50 record and/or beneficial
holders of such Units for 30 or more consecutive trading days; or (2)
the value of the index or portfolio of securities, non-U.S. currency,
or portfolio of commodities including commodity futures contracts,
options on commodity futures contracts, swaps, forward contracts and/or
options on physical commodities on which the Units are based is no
longer calculated or available. In addition, the Exchange is proposing
to amend Rule 5.4 Interpretation and Policy .08, by adding
[[Page 19995]]
new paragraph (d), which provides the Exchange with the ability to
determine that it will not open additional series of options on Units
if such events occur or conditions exist that in the opinion of the
Exchange make further dealing in such options on the Exchange
inadvisable. The Exchange notes that this proposed paragraph is based
on a parallel provision in Commentary .07(4) to Amex Rule 916.
The Exchange is also proposing to amend Interpretation and Policy
.01 to its Rule 4.18 to require members to establish, maintain and
enforce written policies and procedures to prevent the misuse of
material, nonpublic information it might have or receive in a related
security, option or derivative or in the applicable related commodity,
commodity futures or options on commodity futures or any other related
commodity derivatives.
The Exchange is further proposing to amend CBOE Rule 8.9 to require
that Market-Makers for options in Commodity Pool Units file with the
Exchange upon request a list identifying all accounts for, among other
things, physical commodities, physical commodity options, commodity
futures contracts, options on commodity futures contracts, any other
derivatives based on such commodity in which the Market-Maker may have
directly or indirectly engaged in trading activities or over which he
exercises investment discretion.\7\ In addition, the proposed revision
to Rule 8.9 further requires that no Market-Maker shall engage in
trading in, among other things, physical commodities, physical
commodity options, commodity futures contracts, options on commodity
futures contracts, any other derivatives based on such commodity in an
account which has not been reported in a manner prescribed by the
Exchange.\8\
---------------------------------------------------------------------------
\7\ The Exchange is proposing to add the phrase ``for options
on'' in two places in the first sentence of CBOE Rule 8.9(a) to
clarify that Rule 8.9(a) governs Market-Makers in options on Units
(versus Market-Markets in the Unit underlying the option).
\8\ The Exchange is proposing to add the phrase ``trading in''
to the last sentence of CBOE Rule 8.9(a) to clarify the conduct
governed by the rule.
---------------------------------------------------------------------------
In addition, the Exchange proposes to amend Interpretation and
Policy .04 to CBOE Rule 15.1 to require Market-Makers to make available
to the Exchange such books and records or other information pertaining
to transactions in the applicable physical commodity, physical
commodity options, commodity futures contracts, options on commodity
futures contracts, or any other derivatives on such commodity, as may
be requested by the Exchange.
The Exchange represents that it has an adequate surveillance
program in place for options based on Commodity Pool Units. The
Exchange may obtain trading information via the Intermarket
Surveillance Group (``ISG'') from other exchanges who are members or
affiliates of the ISG and has entered into numerous comprehensive
surveillance-sharing agreements with various commodity futures
exchanges worldwide. Prior to listing and trading options on Commodity
Pool Units, the Exchange represents that it would either have the
ability to obtain specific trading information via ISG or through a
comprehensive surveillance sharing agreement with the primary exchange
or exchanges where the particular commodity futures and/or options on
commodity futures are traded.
The addition of Commodity Pool Units would not have any effect on
the rules pertaining to position and exercise limits.\9\ The Exchange
also represents that the margin requirements for options on Commodity
Pools Units would be evaluated for each product the Exchange
anticipates listing. Any new margin rules deemed necessary will be
filed separately with the Commission.
---------------------------------------------------------------------------
\9\ See CBOE Rules 4.11 and 4.12.
---------------------------------------------------------------------------
This proposal is necessary to enable the Exchange to list and trade
options on an expanding range of Commodity Pool Units that the
Commission has approved for trading, including the DB Commodity Index
Tracking Fund (the ``DBC Fund''), the United States Oil Fund, L.P. (the
``Oil Fund'') and the PowerCommodity Pool ETFs DB G10 Currency Harvest
Fund (the ``DBV Fund'').\10\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release Nos. 53105 (January 11,
2006), 71 FR 3129 (January 19, 2006) (approving the listing and
trading of the DB Commodity Index Tracking Fund); 53582 (March 31,
2006), 71 FR 17510 (April 6, 2006) (approving the listing and
trading of Units of the United States Oil Fund, L.P.); and 54450
(September 14, 2006), 71 FR 51245 (September 21, 2006) (approving
the listing and trading of the PowerShares DB G10 Currency Harvest
Fund).
---------------------------------------------------------------------------
The DBC Fund is a Commodity TIR \11\ and tracks the performance of
the Deutsche Bank Liquid Commodity IndexTM--Excess Return
while the Oil Fund is a Partnership Unit and tracks the spot price of
West Texas Intermediate light, sweet crude oil delivered to Cushing,
Oklahoma.
---------------------------------------------------------------------------
\11\ The offering of DBC Fund shares is registered with the
Commission under the Securities Act of 1933 and its most recent Form
10-Q was filed with the Commission on November 14, 2006.
---------------------------------------------------------------------------
The DBC Fund is a ``feeder fund'' that invests substantially all of
its assets in the DB Commodity Index Tracking Master Fund, and the
Master Fund in turn maintains a portfolio of exchange-traded futures on
aluminum, gold, corn, wheat, heating oil and light, sweet crude oil.
The Index is derived from the prices of those futures contracts. The
Master Fund's portfolio is managed on an ongoing basis by DB Commodity
Services LLC, a registered CPO and CTA, so that the value of the
portfolio closely tracks the value of the Index over time.
The DBV Fund is also a Commodity TIR \12\ and a ``feeder fund''
that invests substantially all of its assets in the PowerCommodity Pool
ETFs DB G10 Currency Harvest Master Fund, and the Master Fund in turn
maintains a portfolio of exchange-traded futures on foreign currencies
that comprise the G-10 countries. The Index is derived from the prices
of those futures contracts. The Master Fund's portfolio is managed on
an ongoing basis by DB Commodity Services LLC, a registered CPO and
CTA, so that the value of the portfolio closely tracks the value of the
Index over time.
---------------------------------------------------------------------------
\12\ The offering of DBV Fund shares is registered with the
Commission under the Securities Act of 1933 and its most recent Form
10-Q was filed with the Commission on November 14, 2006.
---------------------------------------------------------------------------
Unlike the DBC and DBV Funds, the Oil Fund \13\ does not invest
through a master-feeder structure but rather trades directly in futures
on crude and heating oil, natural gas, gasoline and other petroleum-
based fuels, options on such futures contracts, forward contracts on
oil and other over-the-counter derivatives based on the price of oil,
other petroleum-based fuels, the futures contracts described above, and
the indexes based on any of the foregoing. The Oil Fund's portfolio is
managed by Victoria Bay Asset Management LLC with the aim of tracking
the West Texas Intermediate light, sweet crude oil futures contract
listed and traded on the New York Mercantile Exchange (``NYMEX'').
---------------------------------------------------------------------------
\13\ The offering of Oil Fund shares is registered with the
Commission under the Securities Act of 1933 and its most recent Form
S-1 was filed with the Commission on January 19, 2007.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable to expect that other
types of Commodity Pool Units will be introduced for trading in the
near future. The proposed amendment to the Exchange's listing criteria
for options on Commodity TIRs and Partnership Units is necessary to
ensure that the Exchange will be able to list options on Commodity Pool
Units that have been recently launched as well as any other similar
Commodity Pool Units that may be listed and traded in the future.
[[Page 19996]]
2. Statutory Basis
The Exchange believes that, with the commencement of trading of
Commodity Pool Units on the Exchange, amending its rules to accommodate
the listing and trading of options on publicly traded shares of other
securities that hold and/or manage portfolios or baskets of commodity
futures contracts, options on commodity futures contracts, swaps,
forward contracts, options on physical commodities, options on non-U.S.
currency, and/or securities will benefit investors by providing them
with the same valuable risk management tool that is currently available
with respect to other publicly traded Units (or Exchange Traded Funds)
whose investment assets consist of securities. Accordingly, the
Exchange believes that the proposed rule change is consistent with the
requirements of Section 6(b) of the Act \14\ in general, and furthers
the objectives of Section 6(b)(5),\15\ of the Act in particular, in
that it would remove impediments to and perfect the mechanism of a free
and open market in a manner consistent with the protection of investors
and the public interest.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 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 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 with respect to the proposed rule change.
III. 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-CBOE-2007-21 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-2007-21. 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 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-2007-21 and should be submitted on or before May 11, 2007.
IV. Commission Findings and Accelerated Approval
After careful consideration, 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 \16\ and, in particular, the requirements of Section 6 of the
Act.\17\ Specifically, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\18\ which
requires, among other things, that the rules of a national securities
exchange be designed 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.
---------------------------------------------------------------------------
\16\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\17\ 15 U.S.C. 78f.
\18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Surveillance
The Commission notes that Exchange has represented that it has an
adequate surveillance program in place for options based on Commodity
Pool Units. The Exchange may obtain trading information via the ISG
from other exchanges who are members or affiliates of the ISG and has
entered into numerous comprehensive surveillance sharing agreements
with various commodity futures exchanges worldwide. Prior to listing
and trading options on Commodity Pool Units, the Exchange represented
that it will either have the ability to obtain specific trading
information via ISG or through a comprehensive surveillance sharing
agreement with the exchange or exchanges where the particular commodity
futures and/or options on commodity futures are traded. In addition,
the Exchange represented that the addition of Commodity Pool Unit
options will not have any effect on the rules pertaining to position
and exercise limits \19\ or margin.
---------------------------------------------------------------------------
\19\ See CBOE Rules 4.11 and 4.12.
---------------------------------------------------------------------------
Listing and Trading of Options on Commodity Pool Units
The Commission notes that, pursuant to the proposed rule change, a
Commodity Pool Unit will be subject to the provisions of CBOE Rules 5.3
and 5.4, and the Interpretation and Policy thereto, as applicable.
These provisions include requirements regarding initial and continued
listing standards, the creation/redemption process for Commodity Pool
Units, and trading halts. All Commodity Pool Units must be traded
through a national securities exchange or through the facilities of a
national securities association, and must be ``NMS stock'' as defined
under Rule 600 of Regulation NMS.\20\
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\20\ 17 CFR 242.600(b)(47).
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The Commission believes that this proposal is necessary to enable
the Exchange to list and trade options on an expanding range of
Commodity Pool Units currently approved for trading and that it is
reasonable to expect other types of Commodity Pool Units to be
introduced for trading in the future. This proposal would help ensure
that the Exchange will be able to list options on Commodity Pool Units
that have been recently launched as well as any other similar Commodity
Pool Units that may be listed and traded in the future \21\ thereby
offering investors greater option choices.
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\21\ 17 CFR 240.19b-4(e).
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[[Page 19997]]
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\22\ for approving the proposed rule change, as modified by
Amendment No. 1, prior to the thirtieth day after the date of
publication of notice in the Federal Register. The Commission notes
that the proposal is consistent with the Exchange's listing and trading
standards in CBOE Rules 5.3 and 5.4, and the Commission has recently
approved a similar proposal, after publishing it for a full comment
period and receiving no comments.\23\ Therefore, the Commission does
not believe that the proposed rule change, as amended, raises novel
regulatory issues. Consequently, the Commission believes that it is
appropriate to permit investors to benefit from the flexibility
afforded by trading these products without delay.
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\22\ 15 U.S.C. 78s(b)(2).
\23\ See Securities Exchange Act Release No. 55547 (March 28,
2007), 72 FR 16388 (April 4, 2007) (SR-Amex-2006-110).
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Accordingly, the Commission finds that there is good cause,
consistent with Section 6(b)(5) of the Act,\24\ to approve the
proposal, as amended, on an accelerated basis.
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\24\ 15 U.S.C. 78s(b)(5).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\25\ that the proposed rule change (SR-CBOE-2007-21), as modified
by Amendment No. 1, be, and is hereby approved on an accelerated basis.
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\25\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-7494 Filed 4-19-07; 8:45 am]
BILLING CODE 8010-01-P
