Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE's Rules Related to Credit Default Basket Options, 50131-50133 [E7-17163]
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Federal Register / Vol. 72, No. 168 / Thursday, August 30, 2007 / Notices
electronically, to FR0705@ustr.eop.gov,
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[FR Doc. E7–17233 Filed 8–29–07; 8:45 am]
50131
The Office of the Secretary at (202)
551–5400.
Dated: August 27, 2007.
Nancy M. Morris,
Secretary.
[FR Doc. E7–17167 Filed 8–29–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56317; File No. SR–CBOE–
2007–93]
BILLING CODE 3190–W7–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold the following meeting during
the week of August 27, 2007:
A Closed Meeting will be held on
Thursday, August 30, 2007 at 2 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), (9)(B), and
(10) and 17 CFR 200.402(a)(3), (5), (7),
9(ii) and (10), permit consideration of
the scheduled matters at the Closed
Meeting.
Commissioner Nazareth, as duty
officer, voted to consider the items
listed for the closed meeting in closed
session, and determined that no earlier
notice thereof was possible.
The subject matter of the Closed
Meeting scheduled for Thursday,
August 30, 2007 will be:
Formal orders of investigations;
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings of an
enforcement nature;
Resolution of litigation claims;
Other matters related to enforcement
proceedings; and
An adjudicatory matter.
At times, changes in Commission
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scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
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contact:
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Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend CBOE’s Rules
Related to Credit Default Basket
Options
August 24, 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 August
21, 2007, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) 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 prepared substantially by the
Exchange. The Exchange has designated
the proposed rule change 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules pertaining to Credit Default Basket
Options (‘‘CDBOs’’) in order to conform
the Exchange’s Succession Event
confirmation process for CDBOs with
that currently codified for single-name
Credit Default Options (‘‘CDOs’’).5 The
text of the proposed rule change is
available on the Exchange’s Web site
(https://www.cboe.org/legal), at the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(i).
4 17 CFR 240.19b–4(f)(1).
5 See Securities Exchange Act Release No. 56114
(July 20, 2007), 72 FR 41367 (July 27, 2007) (SR–
CBOE–2007–81).
2 17
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Federal Register / Vol. 72, No. 168 / Thursday, August 30, 2007 / Notices
Exchange’s principal office, 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 those
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 the
Statutory Basis for, the Proposed Rule
Change
rfrederick on PROD1PC67 with NOTICES
1. Purpose
The Exchange has received approval
from the Commission to list and trade
CDOs and CDBOs, which are different
types of binary options, based on debt
securities, that pay a fixed amount in
the event a Credit Event is confirmed
during the life of the option.6 Recently
the Exchange amended CBOE Rule 29.4,
Adjustments, in order to set out certain
parameters that the Exchange intends to
use for determining the applicable share
to be allocated to a Successor Reference
Entity if there is a CDO contract
adjustment due to a Succession Event.7
The Exchange currently seeks to
establish the same parameters for
CDBOs.
CBOE Rule 29.4(b)(1) provides that, if
the Exchange confirms a Succession
Event in a Basket Component, that
component may be replaced by one or
more Basket Components (‘‘Successor
Basket Components’’) consisting of
Successor Reference Entity(ies).8
Currently, the rule does not provide a
framework for determining the
allocation among Successor Basket
Component(s). As it applies to CDOs,
CBOE Rule 29.4(a)(1) makes clear that,
if the Exchange confirms a Succession
Event, the allocation among Successor
6 See Securities Exchange Act Release No. 55871
(June 6, 2007), 72 FR 32372 (June 12, 2007) (order
approving SR–CBOE–2006–84 to list and trade
CDOs); Securities Exchange Act Release No. 56275
(August 17, 2007) (order approving SR–CBOE–
2007–26 to list and trade CDBOs).
7 See supra note 5. As to CDOs, a ‘‘Successor
Reference Entity’’ and a ‘‘Succession Event’’ are
defined in accordance with the terms of the
Relevant Obligation(s). See CBOE Rule 29.4(a)(1)(i).
8 As to CDBOs, a ‘‘Successor Basket Component’’
and a ‘‘Succession Event’’ are defined in accordance
with the terms of the Relevant Obligation(s). See
CBOE Rule 29.4(b)(1)(i).
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Reference Entities will be based on the
applicable share of each Successor
Reference Entity. In order to conform
the Exchange’s Succession Event
confirmation process for CDBOs with
the process used for CDOs, the
Exchange first proposes to amend CBOE
Rule 29.4(b)(1) to clarify that, if the
Exchange confirms a Succession Event
in a Basket Component, that component
will be replaced by one or more Basket
Components (‘‘Successor Basket
Component(s)’’) that have succeeded the
original Basket Component based on the
applicable share of each Successor
Basket Component.9
Second, the Exchange proposes to
specify how the ‘‘applicable share’’
would be calculated. Consistent with
CDOs, the term ‘‘applicable share’’
would be a percentage amount used to
determine the adjusted cash settlement
amount applicable to each Successor
Basket Component.10 As set out in the
proposed revisions to CBOE Rule
29.4(b)(1)(i), in determining the
applicable share, the Exchange as a
general rule would allocate an equal
share to each Successor Basket
Component that has succeeded the
original Basket Component as issuer and
guarantor of (i) at least one Relevant
Obligation and (ii) at least 25% of the
principal amount of the original Basket
Component’s outstanding debt
obligations other than non-recourse
indebtedness. If no Successor Basket
Component satisfies the ‘‘at least 25%’’
requirement and the original Basket
Component does not survive following
the Succession Event, an equal share
will be allocated to the Successor Basket
Component(s) that succeeded to the
largest percentage of the original Basket
Component’s outstanding debt
obligations other than non-recourse
indebtedness.’’ 11 These proposed
‘‘applicable share’’ parameters would
9 The Exchange also proposes to change the word
‘‘may’’ to ‘‘will’’ in CBOE Rule 29(b)(1) to provide
additional clarity and certainty with respect to the
Exchange’s Succession Event confirmation process.
10 Every determination by the Exchange pursuant
to CBOE Rule 29.4 is within the Exchange’s sole
discretion, is conclusive and binding on all holders
and sellers, and is not subject to review. See CBOE
Rule 29.4(e).
11 If no Successor Basket Component satisfies the
‘‘at least 25%’’ requirement and the original Basket
Component survives, then no Succession Event will
be deemed to have occurred and the CDBO contract
will not be adjusted.
As provided in CBOE Rule 29.4(b)(1)(ii), in the
event of an adjustment for succession, the Exchange
would specify the Reference Obligation, the
recovery rate, and the basket weight of each
Successor Basket Component, and the newly
specified weight(s) would equal the weight of the
predecessor Basket Component replaced by the
Successor Basket Component(s).
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override any contradictory provision in
the terms of the Relevant Obligation(s).
As with CDOs, the Exchange believes
that setting forth these same conforming
parameters would clarify how the
Exchange intends to administer the
Succession Event confirmation process,
thereby affording investors with
additional clarity and certainty
regarding the impact of a Succession
Event on an outstanding CDBO contract.
The Exchange also understands that
these parameters would be substantially
similar to and generally consistent with
the practice in the over-the-counter
market.
Finally, the Exchange is also
proposing two technical changes to
CBOE Rule 29.4. Specifically, the
Exchange proposes to substitute the
term ‘‘Reference Entity’’ with the term
‘‘Basket Component’’ in two places in
the rule text. With respect to CDBOs, the
term ‘‘Reference Entity’’ and ‘‘Basket
Component’’ have identical meanings
and are defined as the issuer or
guarantor of one of the Reference
Obligations that underlies a CDBO.12
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations under the
Act applicable to national securities
exchanges. Specifically, the Exchange
believes the proposed rule change is
consistent with the Section 6(b)(5) 13
which requires that the rules of an
exchange be designed to promote just
and equitable principles of trade, to
prevent fraudulent and manipulative
acts, to remove impediments to and to
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. As
indicated above, the Exchange believes
conforming the Succession Event
confirmation process for CDBOs with
the existing process for CDOs would
afford investors additional clarity and
certainty regarding the impact of a
Succession Event on an outstanding
CDBO contract.
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 not necessary or
appropriate in furtherance of the
purposes of the Act.
12 See
13 15
E:\FR\FM\30AUN1.SGM
CBOE Rules 29.1(f) and (h).
U.S.C. 78f(b)(5).
30AUN1
Federal Register / Vol. 72, No. 168 / Thursday, August 30, 2007 / Notices
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
III. Date of Effectiveness of the
the Commission’s Public Reference
Proposed Rule Change and Timing for
Room, 100 F Street, NE., Washington,
Commission Action
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Because the foregoing rule change
Copies of such filing also will be
constitutes a stated policy, practice, or
available for inspection and copying at
interpretation with respect to the
the principal office of CBOE. All
meaning, administration, or
comments received will be posted
enforcement of an existing rule, it has
without change; the Commission does
become effective pursuant to Section
19(b)(3)(A)(i) of the Act 14 and Rule 19b– not edit personal identifying
4(f)(1) thereunder.15 At any time within information from submissions. You
60 days of the filing of the proposed rule should submit only information that
change, the Commission may summarily you wish to make available publicly. All
submissions should refer to File
abrogate such rule change if it appears
Number SR–CBOE–2007–93 andshould
to the Commission that such action is
be submitted on or before September 20,
necessary or appropriate in the public
2007.
interest, for the protection of investors,
or otherwise in furtherance of the
For the Commission, by the Division of
purposes of the Act.
Market Regulation, pursuant to delegated
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.
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:
rfrederick on PROD1PC67 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–2007–93 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2007–93. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (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
14 15
15 17
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
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14:38 Aug 29, 2007
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authority.16
Nancy M. Morris,
Secretary.
[FR Doc. E7–17163 Filed 8–29–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56311; File No. SR–CBOE–
2006–99]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change and
Amendment No. 1 Thereto Related to
FLEX Options Trading
August 23, 2007.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
27, 2006, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) 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 August 17, 2007, CBOE
filed Amendment No. 1 to the proposed
rule change.3 The Commission is
publishing this notice to solicit
16 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 replaced the
proposed rule change in its entirety.
1 15
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50133
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 adopt rules
to provide for the trading of Flexible
Exchange Options (‘‘FLEX Options’’) 4
on the Exchange’s new FLEX Hybrid
Trading System platform and to make
certain corresponding revisions to its
existing open-outcry based FLEX RFQ
System platform. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at CBOE, and at
the Commission’s Public Reference
Room.5
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 those
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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
i. Description of the FLEX Hybrid
Trading System
Currently, FLEX Options are traded
on the Exchange through an openoutcry-based, Request for Quotes
(‘‘RFQ’’) process (referred to herein as
the ‘‘FLEX RFQ System’’ platform). The
purpose of the proposed rule change is
to amend Exchange rules to provide for
an alternate framework to trade FLEX
4 FLEX Options provide investors with the ability
to customize basic option features including size,
expiration date, exercise style, and certain exercise
prices.
5 The Exchange notes that unrelated changes are
being proposed to the text of Rule 24A.7 in a
separate rule filing. See Securities Exchange Act
Release No. 56191 (August 2, 2007), 72 FR 44894
(August 9, 2007) (SR–CBOE–2007–79). If that rule
filing becomes effective before this instant rule
filing, the Exchange intends to submit an
amendment to reflect conforming changes to the
text to Rules 24A.7 and 24A.8, as well as proposed
Rules 24B.7 and 24B.8. Telephone conversation
between Jennifer Lamie, Assistant General Counsel,
CBOE, and Terri Evans, Special Counsel, Division
of Market Regulation (‘‘Division’’), Commission on
August 20, 2007.
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]]>Agencies
[Federal Register Volume 72, Number 168 (Thursday, August 30, 2007)]
[Notices]
[Pages 50131-50133]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-17163]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56317; File No. SR-CBOE-2007-93]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Amend CBOE's Rules Related to Credit Default Basket
Options
August 24, 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 August 21, 2007, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') 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 prepared
substantially by the Exchange. The Exchange has designated the proposed
rule change 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules pertaining to Credit
Default Basket Options (``CDBOs'') in order to conform the Exchange's
Succession Event confirmation process for CDBOs with that currently
codified for single-name Credit Default Options (``CDOs'').\5\ The text
of the proposed rule change is available on the Exchange's Web site
(https://www.cboe.org/legal), at the
[[Page 50132]]
Exchange's principal office, and at the Commission's Public Reference
Room.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 56114 (July 20,
2007), 72 FR 41367 (July 27, 2007) (SR-CBOE-2007-81).
---------------------------------------------------------------------------
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 those 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange has received approval from the Commission to list and
trade CDOs and CDBOs, which are different types of binary options,
based on debt securities, that pay a fixed amount in the event a Credit
Event is confirmed during the life of the option.\6\ Recently the
Exchange amended CBOE Rule 29.4, Adjustments, in order to set out
certain parameters that the Exchange intends to use for determining the
applicable share to be allocated to a Successor Reference Entity if
there is a CDO contract adjustment due to a Succession Event.\7\ The
Exchange currently seeks to establish the same parameters for CDBOs.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 55871 (June 6,
2007), 72 FR 32372 (June 12, 2007) (order approving SR-CBOE-2006-84
to list and trade CDOs); Securities Exchange Act Release No. 56275
(August 17, 2007) (order approving SR-CBOE-2007-26 to list and trade
CDBOs).
\7\ See supra note 5. As to CDOs, a ``Successor Reference
Entity'' and a ``Succession Event'' are defined in accordance with
the terms of the Relevant Obligation(s). See CBOE Rule
29.4(a)(1)(i).
---------------------------------------------------------------------------
CBOE Rule 29.4(b)(1) provides that, if the Exchange confirms a
Succession Event in a Basket Component, that component may be replaced
by one or more Basket Components (``Successor Basket Components'')
consisting of Successor Reference Entity(ies).\8\ Currently, the rule
does not provide a framework for determining the allocation among
Successor Basket Component(s). As it applies to CDOs, CBOE Rule
29.4(a)(1) makes clear that, if the Exchange confirms a Succession
Event, the allocation among Successor Reference Entities will be based
on the applicable share of each Successor Reference Entity. In order to
conform the Exchange's Succession Event confirmation process for CDBOs
with the process used for CDOs, the Exchange first proposes to amend
CBOE Rule 29.4(b)(1) to clarify that, if the Exchange confirms a
Succession Event in a Basket Component, that component will be replaced
by one or more Basket Components (``Successor Basket Component(s)'')
that have succeeded the original Basket Component based on the
applicable share of each Successor Basket Component.\9\
---------------------------------------------------------------------------
\8\ As to CDBOs, a ``Successor Basket Component'' and a
``Succession Event'' are defined in accordance with the terms of the
Relevant Obligation(s). See CBOE Rule 29.4(b)(1)(i).
\9\ The Exchange also proposes to change the word ``may'' to
``will'' in CBOE Rule 29(b)(1) to provide additional clarity and
certainty with respect to the Exchange's Succession Event
confirmation process.
---------------------------------------------------------------------------
Second, the Exchange proposes to specify how the ``applicable
share'' would be calculated. Consistent with CDOs, the term
``applicable share'' would be a percentage amount used to determine the
adjusted cash settlement amount applicable to each Successor Basket
Component.\10\ As set out in the proposed revisions to CBOE Rule
29.4(b)(1)(i), in determining the applicable share, the Exchange as a
general rule would allocate an equal share to each Successor Basket
Component that has succeeded the original Basket Component as issuer
and guarantor of (i) at least one Relevant Obligation and (ii) at least
25% of the principal amount of the original Basket Component's
outstanding debt obligations other than non-recourse indebtedness. If
no Successor Basket Component satisfies the ``at least 25%''
requirement and the original Basket Component does not survive
following the Succession Event, an equal share will be allocated to the
Successor Basket Component(s) that succeeded to the largest percentage
of the original Basket Component's outstanding debt obligations other
than non-recourse indebtedness.'' \11\ These proposed ``applicable
share'' parameters would override any contradictory provision in the
terms of the Relevant Obligation(s).
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\10\ Every determination by the Exchange pursuant to CBOE Rule
29.4 is within the Exchange's sole discretion, is conclusive and
binding on all holders and sellers, and is not subject to review.
See CBOE Rule 29.4(e).
\11\ If no Successor Basket Component satisfies the ``at least
25%'' requirement and the original Basket Component survives, then
no Succession Event will be deemed to have occurred and the CDBO
contract will not be adjusted.
As provided in CBOE Rule 29.4(b)(1)(ii), in the event of an
adjustment for succession, the Exchange would specify the Reference
Obligation, the recovery rate, and the basket weight of each
Successor Basket Component, and the newly specified weight(s) would
equal the weight of the predecessor Basket Component replaced by the
Successor Basket Component(s).
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As with CDOs, the Exchange believes that setting forth these same
conforming parameters would clarify how the Exchange intends to
administer the Succession Event confirmation process, thereby affording
investors with additional clarity and certainty regarding the impact of
a Succession Event on an outstanding CDBO contract. The Exchange also
understands that these parameters would be substantially similar to and
generally consistent with the practice in the over-the-counter market.
Finally, the Exchange is also proposing two technical changes to
CBOE Rule 29.4. Specifically, the Exchange proposes to substitute the
term ``Reference Entity'' with the term ``Basket Component'' in two
places in the rule text. With respect to CDBOs, the term ``Reference
Entity'' and ``Basket Component'' have identical meanings and are
defined as the issuer or guarantor of one of the Reference Obligations
that underlies a CDBO.\12\
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\12\ See CBOE Rules 29.1(f) and (h).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to
national securities exchanges. Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \13\ which
requires that the rules of an exchange be designed to promote just and
equitable principles of trade, to prevent fraudulent and manipulative
acts, to remove impediments to and to perfect the mechanism of a free
and open market and a national market system, and, in general, to
protect investors and the public interest. As indicated above, the
Exchange believes conforming the Succession Event confirmation process
for CDBOs with the existing process for CDOs would afford investors
additional clarity and certainty regarding the impact of a Succession
Event on an outstanding CDBO contract.
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\13\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in furtherance of
the purposes of the Act.
[[Page 50133]]
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 constitutes a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule, it has become
effective pursuant to Section 19(b)(3)(A)(i) of the Act \14\ and Rule
19b-4(f)(1) thereunder.\15\ 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.
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\14\ 15 U.S.C. 78s(b)(3)(A)(i).
\15\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2007-93 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2007-93. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (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, 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 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-2007-93 and should be
submitted on or before September 20, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-17163 Filed 8-29-07; 8:45 am]
BILLING CODE 8010-01-P
