Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend the Quoting Requirements Applicable to the Hybrid Opening System, 1247-1248 [E7-25651]
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Federal Register / Vol. 73, No. 4 / Monday, January 7, 2008 / Notices
with the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.6 In particular, the
Commission finds that the proposal is
consistent with Section 6(b)(4) of the
Act,7 which requires, among other
things, that the rules of the Exchange
provide for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using the Exchange’s facilities.
The Commission notes that no
comments were received on the
proposed fee increase, which is based
on existing annual fees for other
comparable products listed on the
Exchange.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (SR–Amex–2007–
116), as modified by Amendment Nos.
1 and 2, be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Nancy M. Morris,
Secretary.
[FR Doc. E7–25598 Filed 1–4–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57067; File No. SR–CBOE–
2007–87]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting Approval
of a Proposed Rule Change, as
Modified by Amendment No. 1 Thereto,
To Amend the Quoting Requirements
Applicable to the Hybrid Opening
System
December 31, 2007.
pwalker on PROD1PC71 with NOTICES
On July 25, 2007, the Chicago Board
Options Exchange, Incorporated
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend its rule pertaining to the Hybrid
Opening System (‘‘HOSS’’) as well as
related rules pertaining to the
obligations of designated primary
market-makers (‘‘DPMs’’), electronic
6 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(4).
8 15 U.S.C. 78s(b)(2).
9 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
VerDate Aug<31>2005
19:05 Jan 04, 2008
Jkt 214001
designated primary market-makers
(‘‘e-DPMs’’) and lead market-makers
(‘‘LMMs’’) during opening rotations. On
November 19, 2007, CBOE filed
Amendment No. 1 to the proposed rule
change. The proposed rule change, as
amended, was published for comment
in the Federal Register on November 26,
2007.3 The Commission received no
comments on the proposal. This order
approves the proposed rule change, as
modified by Amendment No. 1 thereto.
I. Description of the Proposal
HOSS is the Exchange’s automated
system for initiating trading at the
beginning of each trading day. The
Exchange proposes to amend its HOSS
procedures contained in CBOE Rule
6.2B. Previously, for each option class
approved for trading, HOSS had been
programmed to open an option series
only if the DPM or LMM, as applicable,
for the particular option class submitted
a quote that complies with the legal
quote width requirements of paragraph
(b)(iv) to CBOE Rule 8.7, Obligations of
Market-Makers. In 2005, the HOSS
procedures were revised; currently,
HOSS is programmed to open an option
series as long as any market maker,4 not
just the DPM or LMM, has submitted an
opening quote that complies with the
legal width quote requirements of CBOE
Rule 8.7(b)(iv).5 However, even though
the procedures were changed to permit
HOSS to automatically open a series
without a DPM’s or LMM’s quote, DPMs
(as well as e-DPMs) and LMMs are still
obligated under CBOE’s rules to submit
timely opening quotes.6
The proposed rule change modifies
the HOSS procedures to allow the
parameters to be configured so that an
option series will open: (1) If at least
one market maker has submitted an
opening quote, which is how HOSS
3 See Securities Exchange Act Release No. 56814
(November 19, 2007), 72 FR 66008 (‘‘Notice’’).
4 This could include a quote from a DPM, e-DPM,
LMM, Market-Maker or Remote Market-Maker.
5 See Securities Exchange Act Release No. 52234
(August 10, 2005), 70 FR 48214 (August 16, 2005)
(SR–CBOE–2005–40). Other factors must also be
satisfied for HOSS to open an options series. For
example, the opening price for the series must be
within an acceptable range and the opening trade
cannot create a market order imbalance. See, e.g.,
CBOE Rule 6.2B(e)(ii)–(iii).
6 Currently, DPMs, e-DPMs, and LMMs are
required to enter opening quotes in accordance with
CBOE Rule 6.2B in 100% of the series of each
appointed class; whereas, other Market-Makers and
Remote Market-Makers are permitted, but not
obligated, to enter opening quotes in accordance
with CBOE Rule 6.2B. See current CBOE Rules
6.2B, 8.15A, Lead Market-Makers in Hybrid Classes
(subparagraph (b)(iv) of this rule has been
interpreted by the Exchange to require an LMM to
enter opening quotes in 100% of the series of each
appointed class), 8.85, DPM Obligations, and 8.93,
e-DPM Obligations.
PO 00000
Frm 00050
Fmt 4703
Sfmt 4703
1247
currently operates; or (2) only if a DPM
or LMM, as applicable, has submitted an
opening quote, which is how HOSS
operated previously. Determinations on
the particular configuration would be
made on a class-by-class basis by the
appropriate Exchange Procedure
Committee and announced to the
membership via Regulatory Circular.7
In addition, the proposed rule change
amends the opening quote obligations of
DPMs, e-DPMs, and LMMs to require
them to ensure a timely initiation of an
opening trading rotation of each
allocated class by entering opening
quotes as necessary (i.e., when no other
market maker has entered an opening
quote). This change would absolve
DPMs, e-DPMs, and LMMs of their
responsibility (under CBOE’s current
rules) to enter opening quotes when
another market maker has already
entered an opening quote in a particular
series.8
II. Discussion and Commission
Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.9 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,10 which
requires, among other things, that the
rules of a national securities exchange
be designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating
transactions in securities, 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.
The proposed rule change will afford
the Exchange more flexibility in the
manner in which HOSS conducts
opening rotations. The Commission
believes that allowing the appropriate
Exchange Procedure Committee to
determine on a class-by-class basis how
7 See Notice, supra note 3, 72 FR at 66008 (noting
that the Exchange Procedure Committee might
consider such things as ‘‘trading in the underlying
or related products, trading in the option on
competing exchanges, how effectively opens have
occurred in the past, liquidity and/or other
factors.’’).
8 Under CBOE’s proposed rules, DPMs, e-DPMs,
and LMMs would still be permitted to enter
opening quotes even if another market maker has
already entered an opening quote.
9 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
10 15 U.S.C. 78f(b)(5).
E:\FR\FM\07JAN1.SGM
07JAN1
1248
Federal Register / Vol. 73, No. 4 / Monday, January 7, 2008 / Notices
a particular series should open may
allow CBOE to achieve more
competitive, efficient, and orderly
openings, while allowing the Exchange
to provide sufficient liquidity at the
open in particular classes.
While the Commission continues to
believe that the quoting obligations of
LMMs, DPMs, and e-DPMs are
appropriate, given the benefits (such as
favorable margin treatment) that are
provided to market makers, the
Commission also believes that it is
reasonable for CBOE to excuse them
from submitting opening quotes in their
assigned series when at least one other
market maker has already entered an
opening quote in that series. The
Commission notes that if no other
market maker has entered an opening
quote, the DPM and e-DPM or LMM
would be responsible for ensuring that
an opening quote is promptly entered so
that HOSS can automatically open the
series. This proposal, in conjunction
with another recently approved
proposed rule change,11 also should
encourage LMMs, DPMs, and e-DPMs to
quote more competitively during HOSS
opening rotations.12
III. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (SR–CBOE–2007–
87), as modified by Amendment No. 1,
be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Nancy M. Morris,
Secretary.
[FR Doc. E7–25651 Filed 1–4–08; 8:45 am]
pwalker on PROD1PC71 with NOTICES
BILLING CODE 8011–01–P
11 See Securities Exchange Act Release No. 56860
(November 29, 2007), 72 FR 68919 (December 6,
2007) (SR–CBOE–2007–59) (allowing market
makers to enter an opening quote for as low as one
contract if the underlying primary market
disseminates less than a 1,000-share best bid or
offer quote immediately prior to an option series
opening).
12 Nothing in this proposal would affect a MarketMaker’s obligation to honor its firm quote
obligations imposed by CBOE Rule 8.51.
13 15 U.S.C. 78s(b)(2).
14 17 CFR 200.30–3(a)(12).
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19:05 Jan 04, 2008
Jkt 214001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57065; File No. SR–NYSE–
2007–119]
Self-Regulatory Organizations; New
York Stock Exchange, LLC; Notice of
Filing of Proposed Rule Change
Relating to the Adoption of New
Exchange Rule 309 (Failure To Pay
Fees)
December 28, 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 December
21, 2007, the New York Stock Exchange,
LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been substantially prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NYSE proposes to adopt new
Exchange Rule 309, which delineates
procedures for the collection of fee
arrearages due the Exchange. The text of
the proposed rule change is set forth
below. New text is in italics.
Admission of Members (Rules 300–324)
*
*
*
*
*
Rule 309. Failure to Pay Exchange Fees
Any member, member organization or
allied member who shall not pay a fee
or any other sums due to the Exchange,
within forty-five days after the same
shall become payable, shall be reported
to the Chief Financial Officer of the
Exchange or designee who, after notice
has been given to such member, member
organization or allied member of such
arrearages, may suspend access to some
or all of the facilities of the Exchange
until payment is made. Except that
failure to pay any fine levied in
connection with a disciplinary action
shall be governed by Exchange Rule
476(k) (Disciplinary Proceedings
Involving Charges Against Members,
Member Organizations, Allied Members,
Approved Persons, Employees, or
Others).
Denial of access to some or all of the
facilities of the Exchange through
suspension under the provisions of this
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00051
Fmt 4703
Sfmt 4703
Rule shall not prevent the member,
member organization or allied member
from being proceeded against for any
offense other than that for which such
member, member organization, or allied
member was suspended.
*
*
*
*
*
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 seeks to adopt new
procedures that relate to the collection
of fees due the Exchange. Currently,
Exchange Rule 476(k) delineates the
procedures to address the failure of
members, member organizations or
allied members to pay a fine (i.e., a fine
levied in connection with a disciplinary
proceeding and related fees also
associated with a disciplinary
proceeding), or any other sum due the
Exchange. Specifically, Exchange Rule
476(k) provides that upon written notice
to such members, member organizations
or allied members and notification of
the Chairman of the Board of Directors
of the Exchange of the arrearage, the
Board of Directors may suspend the
member, member organization or allied
member for failure to pay the arrearages
due the Exchange until payment is
made.
The Exchange now proposes to adopt
new Exchange Rule 309 to provide
procedures to address members,
member organizations and allied
members who fail to pay fees and any
other sums due the Exchange. Types of
payments that would be considered a
‘‘fee’’ under proposed Rule 309 include,
but are not limited to, regulatory fees
(i.e., Gross Financial and Operational
Combined Uniform Single Report
(FOCUS) revenue fees and trading floor
regulatory fees), trading license fees,
and transaction charges. Additionally,
examples of payments that would
constitute ‘‘any other sums’’ include,
E:\FR\FM\07JAN1.SGM
07JAN1
]]>Agencies
[Federal Register Volume 73, Number 4 (Monday, January 7, 2008)]
[Notices]
[Pages 1247-1248]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-25651]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57067; File No. SR-CBOE-2007-87]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Granting Approval of a Proposed Rule Change, as
Modified by Amendment No. 1 Thereto, To Amend the Quoting Requirements
Applicable to the Hybrid Opening System
December 31, 2007.
On July 25, 2007, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend its rule pertaining to
the Hybrid Opening System (``HOSS'') as well as related rules
pertaining to the obligations of designated primary market-makers
(``DPMs''), electronic designated primary market-makers (``e-DPMs'')
and lead market-makers (``LMMs'') during opening rotations. On November
19, 2007, CBOE filed Amendment No. 1 to the proposed rule change. The
proposed rule change, as amended, was published for comment in the
Federal Register on November 26, 2007.\3\ The Commission received no
comments on the proposal. This order approves the proposed rule change,
as modified by Amendment No. 1 thereto.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 56814 (November 19,
2007), 72 FR 66008 (``Notice'').
---------------------------------------------------------------------------
I. Description of the Proposal
HOSS is the Exchange's automated system for initiating trading at
the beginning of each trading day. The Exchange proposes to amend its
HOSS procedures contained in CBOE Rule 6.2B. Previously, for each
option class approved for trading, HOSS had been programmed to open an
option series only if the DPM or LMM, as applicable, for the particular
option class submitted a quote that complies with the legal quote width
requirements of paragraph (b)(iv) to CBOE Rule 8.7, Obligations of
Market-Makers. In 2005, the HOSS procedures were revised; currently,
HOSS is programmed to open an option series as long as any market
maker,\4\ not just the DPM or LMM, has submitted an opening quote that
complies with the legal width quote requirements of CBOE Rule
8.7(b)(iv).\5\ However, even though the procedures were changed to
permit HOSS to automatically open a series without a DPM's or LMM's
quote, DPMs (as well as e-DPMs) and LMMs are still obligated under
CBOE's rules to submit timely opening quotes.\6\
---------------------------------------------------------------------------
\4\ This could include a quote from a DPM, e-DPM, LMM, Market-
Maker or Remote Market-Maker.
\5\ See Securities Exchange Act Release No. 52234 (August 10,
2005), 70 FR 48214 (August 16, 2005) (SR-CBOE-2005-40). Other
factors must also be satisfied for HOSS to open an options series.
For example, the opening price for the series must be within an
acceptable range and the opening trade cannot create a market order
imbalance. See, e.g., CBOE Rule 6.2B(e)(ii)-(iii).
\6\ Currently, DPMs, e-DPMs, and LMMs are required to enter
opening quotes in accordance with CBOE Rule 6.2B in 100% of the
series of each appointed class; whereas, other Market-Makers and
Remote Market-Makers are permitted, but not obligated, to enter
opening quotes in accordance with CBOE Rule 6.2B. See current CBOE
Rules 6.2B, 8.15A, Lead Market-Makers in Hybrid Classes
(subparagraph (b)(iv) of this rule has been interpreted by the
Exchange to require an LMM to enter opening quotes in 100% of the
series of each appointed class), 8.85, DPM Obligations, and 8.93, e-
DPM Obligations.
---------------------------------------------------------------------------
The proposed rule change modifies the HOSS procedures to allow the
parameters to be configured so that an option series will open: (1) If
at least one market maker has submitted an opening quote, which is how
HOSS currently operates; or (2) only if a DPM or LMM, as applicable,
has submitted an opening quote, which is how HOSS operated previously.
Determinations on the particular configuration would be made on a
class-by-class basis by the appropriate Exchange Procedure Committee
and announced to the membership via Regulatory Circular.\7\
---------------------------------------------------------------------------
\7\ See Notice, supra note 3, 72 FR at 66008 (noting that the
Exchange Procedure Committee might consider such things as ``trading
in the underlying or related products, trading in the option on
competing exchanges, how effectively opens have occurred in the
past, liquidity and/or other factors.'').
---------------------------------------------------------------------------
In addition, the proposed rule change amends the opening quote
obligations of DPMs, e-DPMs, and LMMs to require them to ensure a
timely initiation of an opening trading rotation of each allocated
class by entering opening quotes as necessary (i.e., when no other
market maker has entered an opening quote). This change would absolve
DPMs, e-DPMs, and LMMs of their responsibility (under CBOE's current
rules) to enter opening quotes when another market maker has already
entered an opening quote in a particular series.\8\
---------------------------------------------------------------------------
\8\ Under CBOE's proposed rules, DPMs, e-DPMs, and LMMs would
still be permitted to enter opening quotes even if another market
maker has already entered an opening quote.
---------------------------------------------------------------------------
II. Discussion and Commission Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\9\ In particular, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\10\ which
requires, among other things, that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating transactions in securities, 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.
---------------------------------------------------------------------------
\9\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed rule change will afford the Exchange more flexibility
in the manner in which HOSS conducts opening rotations. The Commission
believes that allowing the appropriate Exchange Procedure Committee to
determine on a class-by-class basis how
[[Page 1248]]
a particular series should open may allow CBOE to achieve more
competitive, efficient, and orderly openings, while allowing the
Exchange to provide sufficient liquidity at the open in particular
classes.
While the Commission continues to believe that the quoting
obligations of LMMs, DPMs, and e-DPMs are appropriate, given the
benefits (such as favorable margin treatment) that are provided to
market makers, the Commission also believes that it is reasonable for
CBOE to excuse them from submitting opening quotes in their assigned
series when at least one other market maker has already entered an
opening quote in that series. The Commission notes that if no other
market maker has entered an opening quote, the DPM and e-DPM or LMM
would be responsible for ensuring that an opening quote is promptly
entered so that HOSS can automatically open the series. This proposal,
in conjunction with another recently approved proposed rule change,\11\
also should encourage LMMs, DPMs, and e-DPMs to quote more
competitively during HOSS opening rotations.\12\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 56860 (November 29,
2007), 72 FR 68919 (December 6, 2007) (SR-CBOE-2007-59) (allowing
market makers to enter an opening quote for as low as one contract
if the underlying primary market disseminates less than a 1,000-
share best bid or offer quote immediately prior to an option series
opening).
\12\ Nothing in this proposal would affect a Market-Maker's
obligation to honor its firm quote obligations imposed by CBOE Rule
8.51.
---------------------------------------------------------------------------
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change (SR-CBOE-2007-87), as modified
by Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E7-25651 Filed 1-4-08; 8:45 am]
BILLING CODE 8011-01-P
