Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Clarify Its Description of an Existing Program Under Which It Makes Subsidy Payments to CBOE Members That Provide Certain Order Routing Functionalities to Other CBOE Members and/or Use Such Functionalities Themselves, 15018-15019 [E8-5590]
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Federal Register / Vol. 73, No. 55 / Thursday, March 20, 2008 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57498; File No. SR–CBOE–
2008–27]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Clarify Its Description
of an Existing Program Under Which It
Makes Subsidy Payments to CBOE
Members That Provide Certain Order
Routing Functionalities to Other CBOE
Members and/or Use Such
Functionalities Themselves
March 14, 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 March 6,
2008, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by CBOE. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A)(i) of the
Act,3 and Rule 19b–4(f)(1) thereunder,4
as constituting a stated policy, practice,
or interpretation with respect to the
meaning, administration, or
enforcement of an existing rule, which
renders the proposed rule change
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested parties.
mstockstill on PROD1PC66 with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to clarify subsidy
arrangements with CBOE members that
provide certain order routing
functionalities to other CBOE members
and/or use such functionalities
themselves. This rule change does not
provide for any modifications to the text
of CBOE’s rules. The proposed rule
change is available on the Exchange’s
Web site (https://www.cboe.com), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
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).
VerDate Aug<31>2005
16:44 Mar 19, 2008
Jkt 214001
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, Proposed Rule
Change
1. Purpose
CBOE proposes to clarify the
description in SR–CBOE–2007–34 of a
program under which CBOE enters into
subsidy arrangements with CBOE
members that provide certain order
routing functionalities to other CBOE
members and/or use such
functionalities themselves.5 Under the
program, CBOE makes payments to
participating CBOE members to
subsidize their costs of providing
routing services to route orders to
CBOE. CBOE believes that clarifying its
description of the program is desirable
in view of questions that it has received
about the program since SR–CBOE–
2007–34 became effective. This rule
change does not make any substantive
modification to the program.6
SR–CBOE–2007–34 includes a
description of the features that an order
routing functionality must have to
qualify for the program. One required
feature is a preferencing feature such
that CBOE is the default destination
exchange for individually executed
marketable orders if CBOE is at the
national best bid or offer (‘‘NBBO’’),
regardless of size or time, subject to the
ability of any user to manually override
CBOE as the default destination on an
order-by-order basis.
SR–CBOE–2007–34 stated that
CBOE’s payment to participating CBOE
members to subsidize their costs of
providing routing services ‘‘would be
$0.05 per contract for orders routed to
CBOE through a participating member’s
system.’’ Questions that CBOE has
received have shown that this statement
should be clarified in two respects.
5 See Securities Exchange Act Release No. 55629
(April 13, 2007), 72 FR 19992 (April 20, 2007) (SR–
CBOE–2007–34).
6 CBOE has administered the program consistent
with the description of the program as clarified in
this rule change since the inception of the program.
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
First, CBOE makes payments under the
program only with respect to executed
contracts routed to CBOE through a
participating member’s system; no
payment is made with respect to orders
that are routed to CBOE but not
executed. Second, CBOE does not make
payments under the program with
respect to executed contracts in singlelisted options classes traded on CBOE,
or with respect to complex orders or
spread orders. Single-listed options
classes and complex orders or spread
orders are not subject to preferencing to
a default destination exchange, and
CBOE therefore does not take them into
account in calculating subsidy
payments.7
SR–CBOE–2007–34 also stated that a
‘‘participating member would have to
agree that it would not be entitled to
receive any other revenue for the use of
its system specifically with respect to
orders routed to CBOE.’’ Questions that
CBOE has received have shown that this
statement also should be clarified.
CBOE never intended that members
participating in the program would be
precluded from receiving payment for
order flow if they choose to do so.
CBOE stated in SR–CBOE–2007–34:
That nothing about the subsidy program
would relieve any CBOE member that is
using an order routing functionality
provided by another member or its own
functionality from complying with its
best execution obligations; that, just as
with any customer order and any other
routing functionality, a member has an
obligation to consider the availability of
price improvement at various markets
and whether routing a customer order
through a functionality that qualifies for
the program would allow for access to
such opportunities if readily available;
and that a member needs to conduct
best execution evaluations on a regular
basis, at a minimum quarterly, that
include its use of any router qualifying
for the program. These statements all
remain true with respect to the program.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to national
securities exchanges and, in particular,
the requirements of Section 6(b) of the
Act 8 because it will assist members in
understanding the terms of CBOE’s
order router subsidy program.
Specifically, the Exchange believes the
proposed rule change is consistent with
7 Quotations are not disseminated through the
Options Price Reporting Authority for complex
orders or spread orders, and there is no NBBO for
such orders.
8 15 U.S.C. 78f(b).
E:\FR\FM\20MRN1.SGM
20MRN1
Federal Register / Vol. 73, No. 55 / Thursday, March 20, 2008 / Notices
the objectives of Section 6(b)(4) of the
Act 9 in that it is designed to provide for
the equitable allocation of reasonable
dues, fees, and other charges among
CBOE members and other persons using
its facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed 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 10 and Rule
19b 4(f)(1) thereunder.11 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:
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2008–27. 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–2008–27 and should
be submitted on or before April 10,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–5590 Filed 3–19–08; 8:45 am]
BILLING CODE 8011–01–P
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–2008–27 on the
subject line.
mstockstill on PROD1PC66 with NOTICES
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
U.S.C. 78f(b)(4).
U.S.C. 78s(b)(3)(A)(i).
11 17 CFR 240.19b–4(f)(1).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57497; File No. SR–FINRA–
2007–021]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change and
Amendment No. 1 Relating to
Amendments to the Code of
Arbitration Procedure for Customer
Disputes and the Code of Arbitration
Procedure for Industry Disputes To
Address Motions To Dismiss and To
Amend the Eligibility Rule Related to
Dismissals
March 14, 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 Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
of Securities Dealers, Inc. (‘‘NASD’’))
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
on November 2, 2007, and amended on
February 13, 2008 (Amendment No. 1),
the proposed rule change as described
in Items I, II, and III below, which Items
have been substantially prepared by
FINRA Dispute Resolution. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA Dispute Resolution is
proposing to amend NASD Rules 12206
and 12504 of the Code of Arbitration
Procedure for Customer Disputes
(‘‘Customer Code’’) and NASD Rules
13206 and 13504 of the Code of
Arbitration Procedure for Industry
Disputes (‘‘Industry Code’’) by
providing specific procedures that will
govern motions to dismiss, and
amending the provision of the eligibility
rule related to dismissals. Below is the
text of the proposed rule change.
Proposed new language is in italics;
proposed deletions are in brackets.
*
*
*
*
*
12206. Time Limits
(a) No change.
(b) Dismissal under Rule
Dismissal of a claim under this rule
does not prohibit a party from pursuing
the claim in court. By filing a motion to
9 15
10 15
VerDate Aug<31>2005
16:44 Mar 19, 2008
1 15
12 17
Jkt 214001
PO 00000
CFR 200.30–3(a)(12).
Frm 00064
Fmt 4703
Sfmt 4703
15019
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\20MRN1.SGM
20MRN1
]]>Agencies
[Federal Register Volume 73, Number 55 (Thursday, March 20, 2008)]
[Notices]
[Pages 15018-15019]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5590]
[[Page 15018]]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57498; File No. SR-CBOE-2008-27]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Clarify Its Description of an Existing Program Under
Which It Makes Subsidy Payments to CBOE Members That Provide Certain
Order Routing Functionalities to Other CBOE Members and/or Use Such
Functionalities Themselves
March 14, 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 March 6, 2008, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been substantially prepared by
CBOE. The Exchange filed the proposed rule change pursuant to Section
19(b)(3)(A)(i) of the Act,\3\ and Rule 19b-4(f)(1) thereunder,\4\ as
constituting a stated policy, practice, or interpretation with respect
to the meaning, administration, or enforcement of an existing rule,
which renders the proposed rule change effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested parties.
---------------------------------------------------------------------------
\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
CBOE proposes to clarify subsidy arrangements with CBOE members
that provide certain order routing functionalities to other CBOE
members and/or use such functionalities themselves. This rule change
does not provide for any modifications to the text of CBOE's rules. The
proposed rule change is available on the Exchange's Web site (https://
www.cboe.com), 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, Proposed Rule Change
1. Purpose
CBOE proposes to clarify the description in SR-CBOE-2007-34 of a
program under which CBOE enters into subsidy arrangements with CBOE
members that provide certain order routing functionalities to other
CBOE members and/or use such functionalities themselves.\5\ Under the
program, CBOE makes payments to participating CBOE members to subsidize
their costs of providing routing services to route orders to CBOE. CBOE
believes that clarifying its description of the program is desirable in
view of questions that it has received about the program since SR-CBOE-
2007-34 became effective. This rule change does not make any
substantive modification to the program.\6\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 55629 (April 13,
2007), 72 FR 19992 (April 20, 2007) (SR-CBOE-2007-34).
\6\ CBOE has administered the program consistent with the
description of the program as clarified in this rule change since
the inception of the program.
---------------------------------------------------------------------------
SR-CBOE-2007-34 includes a description of the features that an
order routing functionality must have to qualify for the program. One
required feature is a preferencing feature such that CBOE is the
default destination exchange for individually executed marketable
orders if CBOE is at the national best bid or offer (``NBBO''),
regardless of size or time, subject to the ability of any user to
manually override CBOE as the default destination on an order-by-order
basis.
SR-CBOE-2007-34 stated that CBOE's payment to participating CBOE
members to subsidize their costs of providing routing services ``would
be $0.05 per contract for orders routed to CBOE through a participating
member's system.'' Questions that CBOE has received have shown that
this statement should be clarified in two respects. First, CBOE makes
payments under the program only with respect to executed contracts
routed to CBOE through a participating member's system; no payment is
made with respect to orders that are routed to CBOE but not executed.
Second, CBOE does not make payments under the program with respect to
executed contracts in single-listed options classes traded on CBOE, or
with respect to complex orders or spread orders. Single-listed options
classes and complex orders or spread orders are not subject to
preferencing to a default destination exchange, and CBOE therefore does
not take them into account in calculating subsidy payments.\7\
---------------------------------------------------------------------------
\7\ Quotations are not disseminated through the Options Price
Reporting Authority for complex orders or spread orders, and there
is no NBBO for such orders.
---------------------------------------------------------------------------
SR-CBOE-2007-34 also stated that a ``participating member would
have to agree that it would not be entitled to receive any other
revenue for the use of its system specifically with respect to orders
routed to CBOE.'' Questions that CBOE has received have shown that this
statement also should be clarified. CBOE never intended that members
participating in the program would be precluded from receiving payment
for order flow if they choose to do so.
CBOE stated in SR-CBOE-2007-34: That nothing about the subsidy
program would relieve any CBOE member that is using an order routing
functionality provided by another member or its own functionality from
complying with its best execution obligations; that, just as with any
customer order and any other routing functionality, a member has an
obligation to consider the availability of price improvement at various
markets and whether routing a customer order through a functionality
that qualifies for the program would allow for access to such
opportunities if readily available; and that a member needs to conduct
best execution evaluations on a regular basis, at a minimum quarterly,
that include its use of any router qualifying for the program. These
statements all remain true with respect to the program.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to national
securities exchanges and, in particular, the requirements of Section
6(b) of the Act \8\ because it will assist members in understanding the
terms of CBOE's order router subsidy program. Specifically, the
Exchange believes the proposed rule change is consistent with
[[Page 15019]]
the objectives of Section 6(b)(4) of the Act \9\ in that it is designed
to provide for the equitable allocation of reasonable dues, fees, and
other charges among CBOE members and other persons using its
facilities.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed 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 \10\ and Rule
19b 4(f)(1) thereunder.\11\ 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(i).
\11\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
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-2008-27 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-2008-27. 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-2008-27 and should be
submitted on or before April 10, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-5590 Filed 3-19-08; 8:45 am]
BILLING CODE 8011-01-P
