Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Amending Its Obvious Error Rule for Equity Options, 44892-44894 [E7-15543]

Download as PDF 44892 Federal Register / Vol. 72, No. 153 / Thursday, August 9, 2007 / Notices The orders routed as a result of an NMS Cross Order will be added to the Exchange’s other order routing products and will be charged at a rate of $0.0020 per share if a firm uses its own give-up on another market center and $0.0060 per share if a firm used a BeX provided give-up on another market center. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of section 6(b) of the Act,10 in general, and furthers the objectives of section 6(b)(4) of the Act,11 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among Exchange members and issuers and other persons using Exchange facilities. 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 has neither solicited nor received comments on the proposed rule change. mstockstill on PROD1PC66 with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has been designated as a fee change pursuant to section 19(b)(3)(A)(ii) of the Act 12 and Rule 19b–4(f)(2) thereunder,13 because it establishes or changes a due, fee, or other charge imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(4). 12 15 U.S.C. 78s(b)(3)(A)(ii). 13 17 CFR 240.19b–4(f)(2). VerDate Aug<31>2005 18:25 Aug 08, 2007 change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments [Release No. 34–56190; File No. SR–CBOE– 2007–04] • 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–BSE–2007–32 on the subject line. Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Amending Its Obvious Error Rule for Equity Options Paper Comments August 2, 2007. • 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–BSE–2007–32. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the BSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BSE–2007–32 and should be submitted on or before August 30, 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 February 21, 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 Exchange. On July 2, 2007, the CBOE submitted Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–15545 Filed 8–8–07; 8:45 am] BILLING CODE 8010–01–P 14 17 Jkt 211001 SECURITIES AND EXCHANGE COMMISSION PO 00000 CFR 200.30–3(a)(12). Frm 00074 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend CBOE Rule 6.25, which is the Exchange’s rule applicable to the nullification and adjustment of transactions in equity options, to revise its obvious error provision related to ‘‘no bid’’ series. The Exchange is also proposing to make a non-substantive change by adding a cross-reference within the text of Rule 6.25. Below is the text of the proposed rule change. Proposed new language is in italics and proposed deletions are in [brackets]. Chicago Board Options Exchange, Incorporated Rules Rule 6.25—Nullification and Adjustment of Equity Options Transactions RULE 6.25. This Rule governs the nullification and adjustment of transactions involving equity options. Rule 24.16 governs the nullification and adjustment of transactions involving index options and options on ETFs and HOLDRs. Paragraphs (a)(1), [and] (2) 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 1 supersedes and replaces the original filing in its entirety. The substance of Amendment No. 1 is incorporated into this notice. 2 17 E:\FR\FM\09AUN1.SGM 09AUN1 Federal Register / Vol. 72, No. 153 / Thursday, August 9, 2007 / Notices and (5) of this Rule have no applicability to trades executed in open outcry. (a) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified if, in addition to satisfying the procedural requirements of paragraph (b) below, one of the following conditions is satisfied: (1) No change. (2) No Bid Series. Electronic transactions in series quoted no bid on the Exchange will be nullified provided: (i) The bid in that series immediately preceding the execution was, and for five seconds prior to the execution remained, zero; and (ii) at least one strike price below (for calls) or above (for puts) in the same options class was quoted no bid at the time of execution. For purposes of subparagraphs (a)(2)(i) and (a)(2)(ii), bids and offers of the parties to the subject trade that are in any of the series in the same options class shall not be considered. In addition, each group of series in an options class with a non-standard deliverable will be treated as a separate options class. (3)–(5) No change. (b)–(e) No change. * * * Interpretations and Policies: .01–.03 No change. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change mstockstill on PROD1PC66 with NOTICES 1. Purpose The Exchange is proposing to amend Rule 6.25, which is its obvious error rule pertaining to equity options, in order to modify the nullification provisions for no bid series. Currently, the Rule simply provides that electronic transactions in series that are quoted no bid on the Exchange are subject to nullification provided that at least one strike price below (for calls) or above VerDate Aug<31>2005 18:25 Aug 08, 2007 Jkt 211001 (for puts) in the same options class was quoted no bid at the time of execution. Under the revised Rule, additional criteria and clarifying language would be added. Specifically, an electronic transaction in a series quoted no bid on the Exchange would be subject to nullification provided: (i) The bid in that series immediately preceding the execution was, and for five (5) seconds prior to the execution remained, zero; and (ii) at least one strike price below (for calls) or above (for puts) in the same options class was quoted no bid at the time of execution. Thus, for example, if a trade occurs in the ABC 45 call option series when the series was quoted $0.00–$0.10, the trade may be nullified if: (i) The bid was at $0.00 for at least five (5) seconds prior to the execution; and (ii) at least one call option series in ABC with a strike below 45 (e.g., the ABC 30, 35 or 40 call option series) had a bid of $0.00 at the time of execution. The revised no bid provision would also provide that, when determining the Exchange’s quotes in the relevant series for purposes of (i) and (ii) above, bids and offers of the parties to the subject trade that are in any of the series in the same options class shall not be considered. The revised rule would also provide that each group of series in an options class with a non-standard deliverable will be treated as a separate options class. Thus, for example, if due to a reorganization, certain of the series in the ABC option class have a deliverable of 150 shares per options contract (as compared to the standard 100 shares per option contract), all ABC option series that are subject to the 150 contract delivery requirements would be considered separately from the ABC option series that are subject to the 100 contract delivery requirements for purposes of applying the no bid provision. Finally, the revised Rule would clarify that the no bid provision is intended to apply to series quoted no bid on the Exchange (as opposed to series for which the national best bid is quoted no bid).4 The Exchange states that the proposed changes to the no bid provision are intended to address the Exchange’s experience in applying the provision to particular trading scenarios that have occurred. The Exchange believes that the additional criteria and clarifications are reasonable and objective, and would serve to better identify instances where 4 Consistent with the existing provisions, for a nullification to be granted, any member or person associated with a member that believes it participated in a transaction that falls within the no bid series parameters must also satisfy the notification procedures set forth in paragraph (b) of Rule 6.25. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 44893 the no bid provision is intended to apply. The Exchange is also proposing to make a revision to the introductory language in Rule 6.25 in order to cross reference paragraph (a)(5), which pertains to erroneous trades resulting from an erroneous quote in the underlying, as one of the three obvious error provisions that have no applicability to trades executed in open outcry.5 The Exchange is proposing to include the cross-reference in the introductory language in Rule 6.25 for consistency and completeness. The Exchange asserts that this proposed change is non-substantive because the text of paragraph (a)(5) already explicitly provides that the provision is not applicable to trades executed in open outcry. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with section 6(b) of the Act,6 in general, and furthers the objectives of section 6(b)(5) of the Act,7 in particular, in that it is designed to promote just and equitable principles of trade, prevent fraudulent and manipulative acts, 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. 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 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 No written comments were solicited or received by the Exchange 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 5 The other two obvious error provisions that have no applicability to trades executed in open outcry pertain to obvious price errors and no bid series. See introductory language to Rule 6.25 and paragraphs (a)(1) and (2) thereunder. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). E:\FR\FM\09AUN1.SGM 09AUN1 44894 Federal Register / Vol. 72, No. 153 / Thursday, August 9, 2007 / Notices (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: mstockstill on PROD1PC66 with NOTICES 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–2007–04 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–2007–04. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. 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–CBOE–2007–04 and should VerDate Aug<31>2005 18:34 Aug 08, 2007 Jkt 211001 be submitted on or before August 30, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–15543 Filed 8–8–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56191; File No. SR–CBOE– 2007–79] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Eliminate Position and Exercise Limits for Options on the Russell 2000 Index, and To Specify That Reduced-Value Options on Broad-Based Security Indexes for Which Full-Value Options Have No Position and Exercise Limits Similarly Have No Position and Exercise Limits August 2, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 11and Rule 19b–4 thereunder,2 notice is hereby given that on July 17, 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 CBOE. On August 2, 2007, the Exchange filed Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to eliminate position and exercise limits for options on the Russell 2000 Index (‘‘RUT’’), a broad-based securities index that is multiply-listed and heavily traded. The Exchange also proposes to amend CBOE Rules 24.4(a) and 24.5 to specify that reduced-value options on broad-based security indexes for which full-value 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 In Amendment No. 1, the Exchange made minor corrections to the rule text and purpose section of the proposed rule change. 1 15 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 options have no position and exercise limits similarly have no position and exercise limits. In addition, the Exchange proposes to make technical changes to Rules 24.4, 24.5, and 24A.7. The text of the proposed rule change is available on CBOE’s Web site (http:// www.cboe.org/legal), at CBOE, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate position and exercise limits for options on RUT, a broad-based securities index that is multiply-listed and heavily traded.4 The Exchange also proposes to amend Rules 24.4(a) and 24.5 to specify that reduced-value options on broadbased security indexes for which fullvalue options have no position and exercise limits similarly have no position and exercise limits. In addition, the Exchange proposes to make technical changes to Rules 24.4, 24.5, and 24A.7 to specify that there are no position and exercise limits for European-Style Exercise S&P 100 Index options (‘‘XEO’’) and to add ‘‘XEO’’ to the position reporting and margin rules. Eliminate Position and Exercise Limits for RUT Options The Exchange believes that the circumstances and considerations relied 4 The current position and exercise limits for RUT options are 50,000 contracts, with no more than 30,000 of such contracts in a series in the nearest expiration month, were established almost 15 years ago when the Commission approved the rule change that provided for the listing and trading of RUT options and have since remained unchanged. See Securities Exchange Act Release No. 31382 (October 30, 1992), 57 FR 52802 (November 5, 1992) (SR–CBOE–1992–02). See also Rule 24.4, Position Limits for Broad-Based Index Options, and Rule 24.5, Exercise Limits, (providing that exercise limits for index option contracts are equivalent to prescribed position limits). E:\FR\FM\09AUN1.SGM 09AUN1

Agencies

[Federal Register Volume 72, Number 153 (Thursday, August 9, 2007)]
[Notices]
[Pages 44892-44894]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15543]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56190; File No. SR-CBOE-2007-04]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change and Amendment 
No. 1 Thereto Amending Its Obvious Error Rule for Equity Options

August 2, 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 February 21, 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 Exchange. On July 2, 2007, the CBOE submitted Amendment 
No. 1 to the proposed rule change.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 supersedes and replaces the original filing 
in its entirety. The substance of Amendment No. 1 is incorporated 
into this notice.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend CBOE Rule 6.25, which is the 
Exchange's rule applicable to the nullification and adjustment of 
transactions in equity options, to revise its obvious error provision 
related to ``no bid'' series. The Exchange is also proposing to make a 
non-substantive change by adding a cross-reference within the text of 
Rule 6.25.
    Below is the text of the proposed rule change. Proposed new 
language is in italics and proposed deletions are in [brackets].

Chicago Board Options Exchange, Incorporated Rules

Rule 6.25--Nullification and Adjustment of Equity Options Transactions

    RULE 6.25. This Rule governs the nullification and adjustment of 
transactions involving equity options. Rule 24.16 governs the 
nullification and adjustment of transactions involving index options 
and options on ETFs and HOLDRs. Paragraphs (a)(1), [and] (2)

[[Page 44893]]

and (5) of this Rule have no applicability to trades executed in open 
outcry.
    (a) Trades Subject to Review
    A member or person associated with a member may have a trade 
adjusted or nullified if, in addition to satisfying the procedural 
requirements of paragraph (b) below, one of the following conditions is 
satisfied:
    (1) No change.
    (2) No Bid Series. Electronic transactions in series quoted no bid 
on the Exchange will be nullified provided:
    (i) The bid in that series immediately preceding the execution was, 
and for five seconds prior to the execution remained, zero; and
    (ii) at least one strike price below (for calls) or above (for 
puts) in the same options class was quoted no bid at the time of 
execution.
    For purposes of subparagraphs (a)(2)(i) and (a)(2)(ii), bids and 
offers of the parties to the subject trade that are in any of the 
series in the same options class shall not be considered. In addition, 
each group of series in an options class with a non-standard 
deliverable will be treated as a separate options class.
    (3)-(5) No change.
    (b)-(e) No change.
    * * * Interpretations and Policies:
    .01-.03 No change.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange is proposing to amend Rule 6.25, which is its obvious 
error rule pertaining to equity options, in order to modify the 
nullification provisions for no bid series. Currently, the Rule simply 
provides that electronic transactions in series that are quoted no bid 
on the Exchange are subject to nullification provided that at least one 
strike price below (for calls) or above (for puts) in the same options 
class was quoted no bid at the time of execution. Under the revised 
Rule, additional criteria and clarifying language would be added. 
Specifically, an electronic transaction in a series quoted no bid on 
the Exchange would be subject to nullification provided: (i) The bid in 
that series immediately preceding the execution was, and for five (5) 
seconds prior to the execution remained, zero; and (ii) at least one 
strike price below (for calls) or above (for puts) in the same options 
class was quoted no bid at the time of execution. Thus, for example, if 
a trade occurs in the ABC 45 call option series when the series was 
quoted $0.00-$0.10, the trade may be nullified if: (i) The bid was at 
$0.00 for at least five (5) seconds prior to the execution; and (ii) at 
least one call option series in ABC with a strike below 45 (e.g., the 
ABC 30, 35 or 40 call option series) had a bid of $0.00 at the time of 
execution.
    The revised no bid provision would also provide that, when 
determining the Exchange's quotes in the relevant series for purposes 
of (i) and (ii) above, bids and offers of the parties to the subject 
trade that are in any of the series in the same options class shall not 
be considered. The revised rule would also provide that each group of 
series in an options class with a non-standard deliverable will be 
treated as a separate options class. Thus, for example, if due to a 
reorganization, certain of the series in the ABC option class have a 
deliverable of 150 shares per options contract (as compared to the 
standard 100 shares per option contract), all ABC option series that 
are subject to the 150 contract delivery requirements would be 
considered separately from the ABC option series that are subject to 
the 100 contract delivery requirements for purposes of applying the no 
bid provision. Finally, the revised Rule would clarify that the no bid 
provision is intended to apply to series quoted no bid on the Exchange 
(as opposed to series for which the national best bid is quoted no 
bid).\4\
---------------------------------------------------------------------------

    \4\ Consistent with the existing provisions, for a nullification 
to be granted, any member or person associated with a member that 
believes it participated in a transaction that falls within the no 
bid series parameters must also satisfy the notification procedures 
set forth in paragraph (b) of Rule 6.25.
---------------------------------------------------------------------------

    The Exchange states that the proposed changes to the no bid 
provision are intended to address the Exchange's experience in applying 
the provision to particular trading scenarios that have occurred. The 
Exchange believes that the additional criteria and clarifications are 
reasonable and objective, and would serve to better identify instances 
where the no bid provision is intended to apply.
    The Exchange is also proposing to make a revision to the 
introductory language in Rule 6.25 in order to cross reference 
paragraph (a)(5), which pertains to erroneous trades resulting from an 
erroneous quote in the underlying, as one of the three obvious error 
provisions that have no applicability to trades executed in open 
outcry.\5\ The Exchange is proposing to include the cross-reference in 
the introductory language in Rule 6.25 for consistency and 
completeness. The Exchange asserts that this proposed change is non-
substantive because the text of paragraph (a)(5) already explicitly 
provides that the provision is not applicable to trades executed in 
open outcry.
---------------------------------------------------------------------------

    \5\ The other two obvious error provisions that have no 
applicability to trades executed in open outcry pertain to obvious 
price errors and no bid series. See introductory language to Rule 
6.25 and paragraphs (a)(1) and (2) thereunder.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act,\6\ in general, and furthers the objectives of 
section 6(b)(5) of the Act,\7\ in particular, in that it is designed to 
promote just and equitable principles of trade, prevent fraudulent and 
manipulative acts, remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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

    No written comments were solicited or received by the Exchange 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

[[Page 44894]]

(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-2007-04 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-2007-04. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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-CBOE-2007-04 and should be 
submitted on or before August 30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-15543 Filed 8-8-07; 8:45 am]
BILLING CODE 8010-01-P