Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to DPMs and LMMs, 25067-25068 [E8-9908]
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Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57742; File No. SR–CBOE–
2008–50]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to DPMs and
LMMs
April 30, 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 April 25,
2008, 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 and II below, which Items
have been substantially prepared by the
Exchange. 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 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
CBOE rules relating to Designated
Primary Market-Makers (‘‘DPMs’’) and
Lead Market-Makers (‘‘LMMs’’). The
text of the proposed rule change 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.
rwilkins on PROD1PC63 with NOTICES
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 parts of such
statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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17:11 May 05, 2008
Jkt 214001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBOE is proposing to amend Rules
8.3—Appointment of Market-Makers,
8.85—DPM Obligations, and 8.91—
Limitations on Dealings of DPMs and
Affiliated Persons of DPMs, to permit
Market-Maker(s) affiliated with a DPM
to hold an appointment and submit
electronic quotations in the same class
provided CBOE uses an allocation
algorithm in the class that does not
allocate electronic trades, in whole or in
part, in an equal percentage based on
the number of market participants
quoting at the best bid or offer.
Similarly, CBOE is proposing to amend
Rules 8.3 and 8.15A—Lead MarketMakers in Hybrid Classes, to make it
clear that it is permissible for MarketMaker(s) affiliated with an LMM to hold
an appointment and submit electronic
quotations in the same class provided
CBOE uses an allocation algorithm in
the class that does not allocate
electronic trades, in whole or in part, in
an equal percentage based on the
number of market participants quoting
at the best bid or offer.5 These changes
are the same as and consistent with
CBOE rules that already permit
affiliated Market-Makers as well as
Market-Maker(s) affiliated with an
Electronic DPM (‘‘e-DPM’’) to hold
appointments and submit electronic
quotes in the same class under the same
conditions.6 CBOE believes this rule
change will provide more flexibility for
DPMs and their Market-Maker affiliates,
as well as for LMMs and their MarketMaker affiliates, commensurate with
what is already available for other
Market-Maker participants.
Accordingly, CBOE believes that the
proposed rule change is designed to
promote just and equitable principles of
trade.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations under the
5 LMMs and their affiliated Market Makers will
remain subject to CBOE Rule 4.18 (and Rule
8.15A(b)(vii) in the case of LMMs) regarding the
prevention of the misuse of material non-public
information. DPMs and their affiliated MarketMakers will remain subject to ‘‘Guidelines for
Exemptive Relief Under Rule 8.91(e) for Members
Affiliated with DPMs,’’ set forth in CBOE Rule 8.91,
as well as CBOE Rule 4.18. Telephone conversation
between Sonia Trocchio, Special Counsel, Division
of Trading and Markets, Commission, and Patrick
Sexton, Associate General Counsel, CBOE, on April
28, 2008.
6 See CBOE Rule 8.3(c)(vii)(3).
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
25067
Act applicable to a national securities
exchange and, in particular, the
requirements of section 6(b) of the Act.7
Specifically, the Exchange believes the
proposed rule change is consistent with
the section 6(b)(5) Act 8 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. In particular, CBOE
believes this rule change will provide
more flexibility for DPMs and their
Market-Maker affiliates, as well as
LMMs and their Market-Maker affiliates,
commensurate with what is already
available for other Market-Maker
participants. It also places these various
types of market participants (DPM,
LMM, e-DPM) on equal footing as it
relates to allowing Market-Makers
affiliated with those market participants
to hold appointments and submit
electronic quotes in the same option
classes under the same conditions.
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 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 rule 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, provided that the selfregulatory organization has given the
Commission written notice of its intent
to file 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,9 the proposed rule change
has become effective pursuant to section
19(b)(3)(A) of the Act 10 and Rule 19b–
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
9 CBOE fulfilled this requirement.
10 15 U.S.C. 78s(b)(3)(A).
8 15
E:\FR\FM\06MYN1.SGM
06MYN1
25068
Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices
4(f)(6) thereunder.11 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.
Under Rule 19b–4(f)(6) of the Act,12
the proposal does not become operative
for 30 days after the date of its filing, or
such shorter time as the Commission
may designate if consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative date. The Exchange states that
the proposed rule change provides the
same flexibility to DPMs and LMMs that
e-DPMs have in terms of allowing
affiliated Market-Makers to hold an
appointment and to submit electronic
quotations in the same class. Moreover,
CBOE believes that it would be unfair to
DPMs and LMMs to have to wait 30
days for this rule change to take effect,
given that such restriction is not in
place for e-DPMs, and that DPMs have
expressed an interest in having this rule
change take effect immediately. Thus,
waiving the 30-day operative period
will allow the rule change to be
implemented immediately and place
these types of market participants on
equal footing with e-DPMs. Based on
these reasons, the Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest, and
thus designates the proposal effective
upon filing.13
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
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
Deputy Secretary.
[FR Doc. E8–9908 Filed 5–5–08; 8:45 am]
BILLING CODE 8010–01–P
rwilkins on PROD1PC63 with NOTICES
CFR 240.19b–4(f)(6).
12 Id.
13 For purposes only of waiving the operative date
of this proposal, the Commission has considered
the proposed rule’s impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
VerDate Aug<31>2005
17:11 May 05, 2008
Jkt 214001
[Release No. 34–57734; File No. SR–CHX–
2008–05]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
All submissions should refer to File
of a Proposed Rule Change to Change
Number SR–CBOE–2008–50. This file
the Composition of its Regulatory
number should be included on the
subject line if e-mail is used. To help the Oversight Committee
Commission process and review your
April 29, 2008.
comments more efficiently, please use
Pursuant to Section 19(b)(1) of the
only one method. The Commission will Securities Exchange Act of 1934
post all comments on the Commission’s (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Internet Web site (https://www.sec.gov/
notice is hereby given that on April 21,
rules/sro.shtml). Copies of the
2008, the Chicago Stock Exchange, Inc.
submission, all subsequent
(‘‘CHX’’ or ‘‘Exchange’’) filed with the
amendments, all written statements
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
with respect to the proposed rule
change as described in Items I and II
change that are filed with the
below, which Items have been
Commission, and all written
substantially prepared by the Exchange.
communications relating to the
The Exchange has designated this
proposed rule change between the
Commission and any person, other than proposal as non-controversial under
Section 19(b)(3)(A)(iii) of the Act 3 and
those that may be withheld from the
Rule 19b–4(f)(6) thereunder.4 The
public in accordance with the
Commission is publishing this notice to
provisions of 5 U.S.C. 552, will be
solicit comments on the proposed rule
available for inspection and copying in
change from interested persons.
the Commission’s Public Reference
Room, on official business days between I. Self-Regulatory Organization’s
the hours of 10 a.m. and 3 p.m. Copies
Statement of the Terms of Substance of
the Proposed Rule Change
of such filing also will be available for
inspection and copying at the principal
The Exchange proposes to amend its
office of the CBOE. All comments
rules to change the composition of the
received will be posted without change; Regulatory Oversight Committee
the Commission does not edit personal
(‘‘ROC’’ or ‘‘Committee’’) so that this
identifying information from
group consists of at least five Public
submissions. You should submit only
Directors and to allow the Exchange’s
information that you wish to make
Vice Chairman to appoint, and the
Public Directors on the Exchange’s
available publicly. All submissions
Board of Directors to approve, up to two
should refer to File Number SR–CBOE–
2008–50 and should be submitted on or Participant Directors to serve as nonvoting advisors to the Committee. The
before May 27, 2008.
text of this proposed rule change is
For the Commission, by the Division of
available at the CHX, on the Exchange’s
Trading and Markets, pursuant to delegated
Web site at https://www.chx.com/rules/
14
authority.
proposed_rules.html, and in the
Florence E. Harmon,
Commission’s Public Reference Room.
• 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–2008–50 on the
subject line.
11 17
SECURITIES AND EXCHANGE
COMMISSION
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
CHX included statements concerning
the purpose of, and basis for, 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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
14 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00131
Fmt 4703
Sfmt 4703
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]]>Agencies
[Federal Register Volume 73, Number 88 (Tuesday, May 6, 2008)]
[Notices]
[Pages 25067-25068]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-9908]
[[Page 25067]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57742; File No. SR-CBOE-2008-50]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to DPMs and LMMs
April 30, 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 April 25, 2008, 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 and II below, which Items have been substantially prepared by
the Exchange. 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\ 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
The Exchange proposes to amend CBOE rules relating to Designated
Primary Market-Makers (``DPMs'') and Lead Market-Makers (``LMMs''). The
text of the proposed rule change 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.
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 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
CBOE is proposing to amend Rules 8.3--Appointment of Market-Makers,
8.85--DPM Obligations, and 8.91--Limitations on Dealings of DPMs and
Affiliated Persons of DPMs, to permit Market-Maker(s) affiliated with a
DPM to hold an appointment and submit electronic quotations in the same
class provided CBOE uses an allocation algorithm in the class that does
not allocate electronic trades, in whole or in part, in an equal
percentage based on the number of market participants quoting at the
best bid or offer. Similarly, CBOE is proposing to amend Rules 8.3 and
8.15A--Lead Market-Makers in Hybrid Classes, to make it clear that it
is permissible for Market-Maker(s) affiliated with an LMM to hold an
appointment and submit electronic quotations in the same class provided
CBOE uses an allocation algorithm in the class that does not allocate
electronic trades, in whole or in part, in an equal percentage based on
the number of market participants quoting at the best bid or offer.\5\
These changes are the same as and consistent with CBOE rules that
already permit affiliated Market-Makers as well as Market-Maker(s)
affiliated with an Electronic DPM (``e-DPM'') to hold appointments and
submit electronic quotes in the same class under the same
conditions.\6\ CBOE believes this rule change will provide more
flexibility for DPMs and their Market-Maker affiliates, as well as for
LMMs and their Market-Maker affiliates, commensurate with what is
already available for other Market-Maker participants. Accordingly,
CBOE believes that the proposed rule change is designed to promote just
and equitable principles of trade.
---------------------------------------------------------------------------
\5\ LMMs and their affiliated Market Makers will remain subject
to CBOE Rule 4.18 (and Rule 8.15A(b)(vii) in the case of LMMs)
regarding the prevention of the misuse of material non-public
information. DPMs and their affiliated Market-Makers will remain
subject to ``Guidelines for Exemptive Relief Under Rule 8.91(e) for
Members Affiliated with DPMs,'' set forth in CBOE Rule 8.91, as well
as CBOE Rule 4.18. Telephone conversation between Sonia Trocchio,
Special Counsel, Division of Trading and Markets, Commission, and
Patrick Sexton, Associate General Counsel, CBOE, on April 28, 2008.
\6\ See CBOE Rule 8.3(c)(vii)(3).
---------------------------------------------------------------------------
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 a
national securities exchange and, in particular, the requirements of
section 6(b) of the Act.\7\ Specifically, the Exchange believes the
proposed rule change is consistent with the section 6(b)(5) Act \8\
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. In particular, CBOE believes this rule change will provide
more flexibility for DPMs and their Market-Maker affiliates, as well as
LMMs and their Market-Maker affiliates, commensurate with what is
already available for other Market-Maker participants. It also places
these various types of market participants (DPM, LMM, e-DPM) on equal
footing as it relates to allowing Market-Makers affiliated with those
market participants to hold appointments and submit electronic quotes
in the same option classes under the same conditions.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 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 rule 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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,\9\ the proposed rule change has become effective
pursuant to section 19(b)(3)(A) of the Act \10\ and Rule 19b-
[[Page 25068]]
4(f)(6) thereunder.\11\ 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.
---------------------------------------------------------------------------
\9\ CBOE fulfilled this requirement.
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
Under Rule 19b-4(f)(6) of the Act,\12\ the proposal does not become
operative for 30 days after the date of its filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest. The Exchange has requested that
the Commission waive the 30-day operative date. The Exchange states
that the proposed rule change provides the same flexibility to DPMs and
LMMs that e-DPMs have in terms of allowing affiliated Market-Makers to
hold an appointment and to submit electronic quotations in the same
class. Moreover, CBOE believes that it would be unfair to DPMs and LMMs
to have to wait 30 days for this rule change to take effect, given that
such restriction is not in place for e-DPMs, and that DPMs have
expressed an interest in having this rule change take effect
immediately. Thus, waiving the 30-day operative period will allow the
rule change to be implemented immediately and place these types of
market participants on equal footing with e-DPMs. Based on these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest, and thus designates the proposal effective upon filing.\13\
---------------------------------------------------------------------------
\12\ Id.
\13\ For purposes only of waiving the operative date of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
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-2008-50 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-2008-50. 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, on official business
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also
will be available for inspection and copying at the principal office of
the 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-2008-50 and should be submitted on or before May 27, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-9908 Filed 5-5-08; 8:45 am]
BILLING CODE 8010-01-P
