Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Rule 6.14 (Hybrid Agency Liaison), 1378-1380 [E8-95]
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1378
Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Notices
more than 50% of the weight of the
securities in the Fund are now subject
to a CSSA.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (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.17 Specifically, the Exchange
believes the proposed rule change is
consistent with the section 6(b)(5) Act 18
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
The proposed rule change does not
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
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change
does not: (1) Significantly affect the
protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to section
19(b)(3)(A) of the Act 19 and Rule 19b–
4(f)(6) thereunder. 20
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing. 21 However, Rule 19b–
17 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4(f)(6).
21 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires that a self-regulatory
organization submit to the Commission written
notice of its intent to file the proposed rule change,
along with a brief description and text of the
proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has requested and the
Commission has determined to waive this five-day
pre-filing notice requirement.
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18 15
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17:32 Jan 07, 2008
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4(f)(6)(iii) 22 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay, to permit the Exchange to list
options on the Fund immediately. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. The proposal is
substantially similar to a proposal
recently submitted by CBOE and
approved by the Commission, 23 and it
raises no new regulatory issues. The
Commission notes that the Pilot, which
would otherwise expire December 31,
2007, is no longer needed now that the
Fund complies with Commentary
.06(b)(i) to Amex Rule 915. For these
reasons, the Commission designates the
proposed rule change to be operative
upon filing with the Commission. 24
At any time within 60 days of the
filing of such 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
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
• 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–Amex–2007–139 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–Amex–2007–139. This file
number should be included on the
22 Id.
23 See Securities Exchange Act Release No. 56448
(September 17, 2007), 72 FR 54304 (September 24,
2007) (SR–CBOE–2007–111).
24 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
Frm 00065
Fmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority. 25
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–86 Filed 1–7–08; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
PO 00000
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 Amex.
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–Amex–2007–139 and
should be submitted on or before
January 29, 2008.
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57082; File No. SR–CBOE–
2007–153]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Rule 6.14
(Hybrid Agency Liaison)
January 2, 2008.
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
28, 2007, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\08JAN1.SGM
08JAN1
Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Notices
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by CBOE. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the
Act 3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposal effective
upon receipt of this filing by 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
CBOE proposes to modify the
application of its Hybrid Agency Liaison
(‘‘HAL’’) system. The text of the rule
proposal is available on the Exchange’s
Web site (https://www.cboe.org/legal), at
the Exchange’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. 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
pwalker on PROD1PC71 with NOTICES
1. Purpose
CBOE Rule 6.14 governs the operation
of the Exchange’s HAL system. HAL
provides automated order handling in
designated classes trading on Hybrid for
qualifying electronic orders that are not
automatically executed. The purpose of
this filing is to modify the HAL
eligibility and order handling process
for non-marketable limit orders that
improve the Exchange’s disseminated
quote.
Description of HAL
CBOE Rule 6.14 provides that the
Exchange, with input from the
appropriate Floor Procedure Committee,
shall designate the classes in which
HAL shall be activated.5 For these
designated classes, HAL currently (i)
processes market and limit orders that
are marketable against the Exchange’s
disseminated quotation while that
quotation is not the National Best Bid or
Offer (‘‘NBBO’’), (ii) processes limit
orders that are marketable against the
NBBO when CBOE is not the NBBO,
and (iii) processes limit orders that
improve CBOE’s disseminated
quotation.6
The HAL order handling process
operates as follows.7 HAL flashes an
eligible order to gauge if there is any
interest from any Market-Maker or
member acting as agent for orders at the
top of the Exchange’s book (‘‘Qualifying
Member’’) to trade the order at the flash
price. For orders that are marketable
against the Exchange’s disseminated
quote or the NBBO, the flash price is the
NBBO price. For limit orders that
‘‘middle’’ the Exchange’s disseminated
quote and that are not marketable
against the NBBO, the flash price is the
limit price of the order(s). This flash/
exposure period is configurable but
cannot exceed 1.5 seconds. If, during
the exposure period, a Market-Maker or
Qualifying Member commits to trade
with any portion of the order, then the
exposure period ends and an allocation
period begins. The allocation period,
when combined with the flash period,
cannot exceed three seconds.
Exposed orders are filled at the
conclusion of the allocation period in
accordance with the allocation
algorithm in effect for the option class
pursuant to Rule 6.45A or Rule 6.45B.
There is no participation entitlement
applicable to exposed orders, and the
response size is limited to the size of the
exposed order for allocation purposes. If
no responses are received during the
exposure period, then a linkage order is
routed to the NBBO market on behalf of
the exposed order in cases where the
exposed order is marketable against the
NBBO, or if there remains an
unexecuted portion of a limit order that
is not marketable at the conclusion of
the allocation period, then the limit
order or remaining balance is entered
into the electronic book.
Proposed Changes
This filing makes two HAL changes.
First, for all non-Hybrid 3.0 Classes,
limit orders that better the Exchange’s
quote but that are not-marketable
(orders that fall under 6.14(a)(iii)) will
no longer be flashed through HAL.
Instead, these orders will route directly
5 See
CBOE Rule 6.14(a).
CBOE Rule 6.14(a).
7 See CBOE Rule 6.14(b).
3 15
U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
VerDate Aug<31>2005
17:32 Jan 07, 2008
and automatically to the electronic
book. Second, non-marketable limit
orders that would improve the
Exchange’s disseminated quote in
Hybrid 3.0 Classes will be flashed and
handled under normal HAL processing,
except when the eligible order is
entered on the same side of the market
as a manual quote. In that case, the
eligible limit order will automatically
route into the electronic book instead of
being processed by HAL, and the
manual quote will automatically cancel,
so that the Exchange’s disseminated
quote will be represented by the limit
order’s bid/offer. This is consistent with
how the limit order would currently be
processed in Hybrid 3.0 Classes when a
manual quote is present.
The Exchange proposes the first
change in connection with a recent fee
change it submitted (SR–CBOE–2007–
152) which provides a rebate, under
certain circumstances, to Market-Makers
that ‘‘step-up’’ to trade orders flashed in
HAL. The rebate program is meant to
reduce the number of orders that route
to away exchanges. Thus, the rebate is
geared more toward encouraging
matching better priced quotes on other
markets than it is toward trading middle
market limit orders. Therefore, the
Exchange proposes to directly book
those middle market limit orders and
not submit them for HAL processing.
This way, rebates are not provided for
stepping-up to trade orders that will
otherwise book. Additionally, direct
booking allows a wider range of users to
trade against the order sooner.
The second change allows the
Exchange to introduce the HAL process
in Hybrid 3.0 Classes. By initiating HAL
in Hybrid 3.0 Classes, the Exchange will
provide further automation to the order
handling process by allowing MarketMakers appointed to the relevant option
class to electronically participate on
such orders.
In all other respects, HAL shall
operate as it currently operates today.
2. Statutory Basis
The Exchange believes the proposed
rule change to amend CBOE Rule 6.14
to modify the eligibility and order
handling process for limit orders that
improve the Exchange’s disseminated
quote when HAL is activated is
consistent with the Act and the rules
and regulations under the Act
applicable to national securities
exchanges and, in particular, the
requirements of section 6(b) of the Act.8
Specifically, the Exchange believes the
proposed rule change is consistent with
6 See
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8 15
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1379
E:\FR\FM\08JAN1.SGM
U.S.C. 78f(b).
08JAN1
1380
Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Notices
the section 6(b)(5) 9 requirements 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 perfect the
mechanism for 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
CBOE does not believe that the
proposed rule change will result in 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 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 proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, if
consistent with the protection of
investors and the public interest, it has
become effective pursuant to section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11
Normally, a proposed rule change
filed under 19b–4(f)(6) may not become
operative prior to 30 days after the date
of filing. However, Rule 19b–
4(f)(6)(iii) 12 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay. In its filing, the Exchange noted
that waiver of the 30-day operative
delay, and immediate implementation
of the described rule change, would
allow the Exchange to (i) implement
pwalker on PROD1PC71 with NOTICES
9 15
U.S.C. 78f(b)(5).
10 15 U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires that a self-regulatory
organization submit to the Commission written
notice of its intent to file the proposed rule change,
along with a brief description and text of the
proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission notes that CBOE has
satisfied the five-day pre-filing notice requirement.
12 17 CFR 240.19b–4(f)(6)(iii).
VerDate Aug<31>2005
17:32 Jan 07, 2008
Jkt 214001
direct-booking of non-marketable nonHybrid 3.0 Classes concurrent with
related fee changes, which were filed
with the Commission for immediate
effectiveness on December 21, 2007 and
which take effect on January 1, 2008;
and (ii) immediately utilize HAL in
Hybrid 3.0 Classes, which will allow
Market-Makers appointed to the
relevant Hybrid 3.0 option class to
electronically participate on qualifying
flashed orders.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
proposed rule change will allow a
greater number of users to trade against
certain orders sooner. In addition,
initiating HAL for Hybrid 3.0 Classes
provides further automation to order
handling by allowing Market-Makers to
electronically participate on such
orders. Accordingly, consistent with the
protection of investors and the public
interest, the Commission designates the
proposed rule change to be operative
upon filing with the Commission.13
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
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2007–153 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–2007–153. This file
13 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
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–2007–153 and
should be submitted on or before
January 29, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–95 Filed 1–7–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57078; File No. SR–CHX–
2007–28]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Regarding
Trade Processing Fees
December 31, 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 Chicago Stock Exchange,
Inc. (‘‘Exchange’’ or ‘‘CHX’’) filed with
the Securities and Exchange
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\08JAN1.SGM
08JAN1
]]>Agencies
[Federal Register Volume 73, Number 5 (Tuesday, January 8, 2008)]
[Notices]
[Pages 1378-1380]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-95]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57082; File No. SR-CBOE-2007-153]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Rule 6.14 (Hybrid Agency Liaison)
January 2, 2008.
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 28, 2007, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities
[[Page 1379]]
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been substantially
prepared by CBOE. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposal effective upon receipt of this filing by 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to modify the application of its Hybrid Agency
Liaison (``HAL'') system. The text of the rule proposal is available on
the Exchange's Web site (https://www.cboe.org/legal), at the Exchange'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. 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 6.14 governs the operation of the Exchange's HAL system.
HAL provides automated order handling in designated classes trading on
Hybrid for qualifying electronic orders that are not automatically
executed. The purpose of this filing is to modify the HAL eligibility
and order handling process for non-marketable limit orders that improve
the Exchange's disseminated quote.
Description of HAL
CBOE Rule 6.14 provides that the Exchange, with input from the
appropriate Floor Procedure Committee, shall designate the classes in
which HAL shall be activated.\5\ For these designated classes, HAL
currently (i) processes market and limit orders that are marketable
against the Exchange's disseminated quotation while that quotation is
not the National Best Bid or Offer (``NBBO''), (ii) processes limit
orders that are marketable against the NBBO when CBOE is not the NBBO,
and (iii) processes limit orders that improve CBOE's disseminated
quotation.\6\
---------------------------------------------------------------------------
\5\ See CBOE Rule 6.14(a).
\6\ See CBOE Rule 6.14(a).
---------------------------------------------------------------------------
The HAL order handling process operates as follows.\7\ HAL flashes
an eligible order to gauge if there is any interest from any Market-
Maker or member acting as agent for orders at the top of the Exchange's
book (``Qualifying Member'') to trade the order at the flash price. For
orders that are marketable against the Exchange's disseminated quote or
the NBBO, the flash price is the NBBO price. For limit orders that
``middle'' the Exchange's disseminated quote and that are not
marketable against the NBBO, the flash price is the limit price of the
order(s). This flash/exposure period is configurable but cannot exceed
1.5 seconds. If, during the exposure period, a Market-Maker or
Qualifying Member commits to trade with any portion of the order, then
the exposure period ends and an allocation period begins. The
allocation period, when combined with the flash period, cannot exceed
three seconds.
---------------------------------------------------------------------------
\7\ See CBOE Rule 6.14(b).
---------------------------------------------------------------------------
Exposed orders are filled at the conclusion of the allocation
period in accordance with the allocation algorithm in effect for the
option class pursuant to Rule 6.45A or Rule 6.45B. There is no
participation entitlement applicable to exposed orders, and the
response size is limited to the size of the exposed order for
allocation purposes. If no responses are received during the exposure
period, then a linkage order is routed to the NBBO market on behalf of
the exposed order in cases where the exposed order is marketable
against the NBBO, or if there remains an unexecuted portion of a limit
order that is not marketable at the conclusion of the allocation
period, then the limit order or remaining balance is entered into the
electronic book.
Proposed Changes
This filing makes two HAL changes. First, for all non-Hybrid 3.0
Classes, limit orders that better the Exchange's quote but that are
not-marketable (orders that fall under 6.14(a)(iii)) will no longer be
flashed through HAL. Instead, these orders will route directly and
automatically to the electronic book. Second, non-marketable limit
orders that would improve the Exchange's disseminated quote in Hybrid
3.0 Classes will be flashed and handled under normal HAL processing,
except when the eligible order is entered on the same side of the
market as a manual quote. In that case, the eligible limit order will
automatically route into the electronic book instead of being processed
by HAL, and the manual quote will automatically cancel, so that the
Exchange's disseminated quote will be represented by the limit order's
bid/offer. This is consistent with how the limit order would currently
be processed in Hybrid 3.0 Classes when a manual quote is present.
The Exchange proposes the first change in connection with a recent
fee change it submitted (SR-CBOE-2007-152) which provides a rebate,
under certain circumstances, to Market-Makers that ``step-up'' to trade
orders flashed in HAL. The rebate program is meant to reduce the number
of orders that route to away exchanges. Thus, the rebate is geared more
toward encouraging matching better priced quotes on other markets than
it is toward trading middle market limit orders. Therefore, the
Exchange proposes to directly book those middle market limit orders and
not submit them for HAL processing. This way, rebates are not provided
for stepping-up to trade orders that will otherwise book. Additionally,
direct booking allows a wider range of users to trade against the order
sooner.
The second change allows the Exchange to introduce the HAL process
in Hybrid 3.0 Classes. By initiating HAL in Hybrid 3.0 Classes, the
Exchange will provide further automation to the order handling process
by allowing Market-Makers appointed to the relevant option class to
electronically participate on such orders.
In all other respects, HAL shall operate as it currently operates
today.
2. Statutory Basis
The Exchange believes the proposed rule change to amend CBOE Rule
6.14 to modify the eligibility and order handling process for limit
orders that improve the Exchange's disseminated quote when HAL is
activated is consistent with the Act and the rules and regulations
under the Act applicable to national securities exchanges and, in
particular, the requirements of section 6(b) of the Act.\8\
Specifically, the Exchange believes the proposed rule change is
consistent with
[[Page 1380]]
the section 6(b)(5) \9\ requirements 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 perfect
the mechanism for a free and open market and a national market system,
and, in general, to protect investors and the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 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 result in
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 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 proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, if consistent with
the protection of investors and the public interest, it has become
effective pursuant to section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires that a self-regulatory organization submit to the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as designated by the
Commission. The Commission notes that CBOE has satisfied the five-
day pre-filing notice requirement.
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Normally, a proposed rule change filed under 19b-4(f)(6) may not
become operative prior to 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) \12\ permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay. In its filing, the
Exchange noted that waiver of the 30-day operative delay, and immediate
implementation of the described rule change, would allow the Exchange
to (i) implement direct-booking of non-marketable non-Hybrid 3.0
Classes concurrent with related fee changes, which were filed with the
Commission for immediate effectiveness on December 21, 2007 and which
take effect on January 1, 2008; and (ii) immediately utilize HAL in
Hybrid 3.0 Classes, which will allow Market-Makers appointed to the
relevant Hybrid 3.0 option class to electronically participate on
qualifying flashed orders.
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The proposed rule change will allow a greater number of users to trade
against certain orders sooner. In addition, initiating HAL for Hybrid
3.0 Classes provides further automation to order handling by allowing
Market-Makers to electronically participate on such orders.
Accordingly, consistent with the protection of investors and the public
interest, the Commission designates the proposed rule change to be
operative upon filing with the Commission.\13\
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\13\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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
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-2007-153 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-2007-153. 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-2007-153 and should be
submitted on or before January 29, 2008.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-95 Filed 1-7-08; 8:45 am]
BILLING CODE 8011-01-P
