Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Allow the Exchange To Determine To Permit Electronic Exposure of SAL, HAL, and/or COA Orders to All CBOE Market-Makers, 33865-33867 [E8-13303]
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Federal Register / Vol. 73, No. 115 / Friday, June 13, 2008 / Notices
33865
rwilkins on PROD1PC63 with NOTICES
Investigation Identification Division,
Washington, DC 20537–9700 (as set
forth in 28 CFR 16.30 through 16.34). In
the latter case, the FBI forwards the
challenge to the agency that submitted
the data and requests that agency to
verify or correct the challenged entry.
Upon receipt of an official
communication directly from the agency
that contributed the original
information, the FBI Identification
Division makes any changes necessary
in accordance with the information
supplied by that agency. The Licensee
must provide at least ten (10) days for
an individual to initiate an action
challenging the results of an FBI
criminal history records check after the
record is made available for his/her
review. The Licensee may make a final
determination on access to SGI or
unescorted access to the panoramic or
underwater irradiator sealed sources
based upon the criminal history record
only upon receipt of the FBI’s ultimate
confirmation or correction of the record.
Upon a final adverse determination on
access to SGI or unescorted access to the
panoramic or underwater irradiator
sealed sources, the Licensee shall
provide the individual its documented
basis for denial. Access to SGI or
unescorted access to the panoramic or
underwater irradiator sealed sources
shall not be granted to an individual
during the review process.
security number, sex, and other
applicable physical characteristics for
identification purposes.
4. The Licensee shall make criminal
history records, obtained under this
section, available for examination by an
authorized representative of the NRC to
determine compliance with the
regulations and laws.
5. The Licensee shall retain all
fingerprint and criminal history records
received from the FBI, or a copy if the
individual’s file has been transferred,
for three (3) years after termination of
employment or denial to access SGI or
unescorted access to the panoramic or
underwater irradiator sealed sources.
After the required three (3) year period,
these documents shall be destroyed by
a method that will prevent
reconstruction of the information in
whole or in part.
• Cynthia G. Pierre, PhD,
Enforcement Director, U.S. Department
of Education, Office for Civil Rights; and
• Janice H. Brambilla, Director of
Management Planning, Broadcasting
Board of Governors.
FOR FURTHER INFORMATION CONTACT:
Debra A. Hall, Deputy Director of
Administration, U.S. Occupational
Safety and Health Review Commission,
1120–20th Street, NW., Washington, DC
20036, (202) 606–5397.
[FR Doc. E8–13326 Filed 6–12–08; 8:45 am]
[Release No. 34–57937; File No. SR–CBOE–
2008–58]
Protection of Information
1. Each Licensee who obtains a
criminal history record on an individual
pursuant to this Order shall establish
and maintain a system of files and
procedures for protecting the record and
the personal information from
unauthorized disclosure.
2. The Licensee may not disclose the
record or personal information collected
and maintained to persons other than
the subject individual, his/her
representative, or to those who have a
need to access the information in
performing assigned duties in the
process of determining access to SGI or
unescorted access to the panoramic or
underwater irradiator sealed sources. No
individual authorized to have access to
the information may re-disseminate the
information to any other individual who
does not have a need-to-know.
3. The personal information obtained
on an individual from a criminal history
record check may be transferred to
another Licensee if the Licensee holding
the criminal history record receives the
individual’s written request to redisseminate the information contained
in his/her file, and the gaining Licensee
verifies information such as the
individual’s name, date of birth, social
Notice is given under 5 U.S.C.
4314(c)(4) of the appointment of
members to the Performance Review
Board (PRB) of the Occupational Safety
and Health Review Commission.
DATE: Membership is effective on June
13, 2008.
SUPPLEMENTARY INFORMATION: The
Review Commission, as required by 5
U.S.C. 4314(c)(1) through (5), has
established a Senior Executive Service
PRB. The PRB reviews and evaluates the
initial appraisal of a senior executive’s
performance by the supervisor, and
makes recommendations to the
Chairman of the Review Commission
regarding performance ratings,
performance awards, and pay-forperformance adjustments. In the case of
an appraisal of a career appointee, more
than half of the members shall consist
of career appointees, pursuant to 5
U.S.C. 4314(c)(5). The names and titles
of the PRB members are as follows:
• Terry T. Shelton, Associate
Administrator, U.S. Department of
Transportation, Federal Motor Carrier
Safety Administration;
• Fran L. Leonard, Chief Financial
Officer, Federal Mediation and
Conciliation Service, Office of the
Director;
VerDate Aug<31>2005
16:18 Jun 12, 2008
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BILLING CODE 7590–01–P
OCCUPATIONAL SAFETY AND
HEALTH REVIEW COMMISSION
Senior Executive Service Performance
Review Board Membership
Occupational Safety and Health
Review Commission.
ACTION: Notice.
AGENCY:
SUMMARY:
PO 00000
Frm 00065
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Dated: June 9, 2008.
Horace A. Thompson, III,
Chairman.
[FR Doc. E8–13331 Filed 6–12–08; 8:45 am]
BILLING CODE 7600–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Allow the Exchange
To Determine To Permit Electronic
Exposure of SAL, HAL, and/or COA
Orders to All CBOE Market-Makers
June 6, 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 June 3,
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, II, and
III 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 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 modify
Rules 6.13A, Simple Auction Liaison
(‘‘SAL’’), 6.14, Hybrid Agency Liaison
(‘‘HAL’’), and 6.53C(d), Process for
Complex Order RFR Auction (‘‘COA’’),
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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33866
Federal Register / Vol. 73, No. 115 / Friday, June 13, 2008 / Notices
so that the Exchange may determine on
a class-by-class basis to permit
electronic exposure of SAL, HAL and/or
COA orders to all CBOE Market-Makers
to give additional opportunities to
provide the orders with the best price.
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’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 those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
rwilkins on PROD1PC63 with NOTICES
In classes where SAL, HAL and/or
COA are activated, orders are
electronically exposed to all MarketMakers appointed to the relevant option
class as well as all members acting as
agent for orders at the top of the
Exchange’s book (‘‘Qualifying
Members’’) in the relevant options
series. During the applicable exposure
period, the orders that are subject to
exposure are eligible to receive a better
price.5 At the conclusion of the SAL,
HAL or COA process, as applicable, the
order is then allocated pursuant to the
allocation algorithms described in the
5 SAL is a feature within CBOE’s Hybrid System
that auctions eligible marketable orders for price
improvement over the national best bid or offer
(‘‘NBBO’’). See Rule 6.13A. HAL is a feature within
CBOE’s Hybrid System that provides automated
order handling for eligible market and limit orders
if: (i) The market orders or limit orders are
marketable against the Exchange’s disseminated
quotation while that quotation is not at the NBBO;
(ii) the limit orders would improve the Exchange’s
disseminated quotation and are marketable against
quotations disseminated by other exchanges
participating in the Intermarket Options Linkage
(‘‘Linkage’’); and (iii) for Hybrid 3.0 classes, the
limit orders would improve the Exchange’s
disseminated quotation, except when the
disseminated quotation is represented by a manual
quote. See Rule 6.14. COA is a feature within
CBOE’s Hybrid System that auctions eligible
complex orders for price improvement. See Rule
6.53C.
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relevant rules. In addition, in the case
of HAL, if no responses are received or
if there remains an unexecuted portion
of a marketable order, then the
remaining balance of the order will be
routed through Linkage to a competing
exchange(s).6 When an order is sent
through Linkage, the other exchange
charges an execution fee. The cost of
sending the order through Linkage can
be substantial, particularly with respect
to other options exchanges that have
adopted a maker-taker fee schedule.7
In order to offer additional
opportunities for price improvement
and, in the case of HAL, to retain as
much order flow as possible on CBOE
and to help reduce costs associated with
the number of orders sent through
Linkage,8 CBOE proposes to allow the
6 If the remaining order balance is for the account
of a public customer and is marketable against
another exchange that is a participant in Linkage,
then HAL will route a Principal Acting as Agent
Linkage Order (‘‘P/A Order’’) on behalf of the
remaining order balance through the Linkage and
any resulting execution of the P/A Order will be
allocated to that order. If the remaining order
balance is marketable against another exchange that
is a participant in Linkage but is not for the account
of a public customer, then HAL will route a
Principal Linkage Order (‘‘P Order’’) on behalf of
the Remaining Order through the Linkage and any
resulting execution of the P Order will be allocated
to the remaining order. In either situation above, if
the Linkage order cannot be transmitted from the
Exchange because the price of the Linkage order (or
a better price) is no longer available on any market,
then HAL will, pursuant to normal order allocation
processing, execute the remaining order balance
against the Exchange’s existing quote (provided
such execution would not cause a trade-through) or,
if the Exchange’s quote is inferior to the Exchange’s
best bid or offer at the time the order was received
by HAL (‘‘Exchange Initial BBO’’), against the
Market-Makers that constituted the Exchange Initial
BBO at a price equal to the Exchange Initial BBO.
If the remaining order is not marketable (either on
CBOE or another exchange), it will be entered into
the Hybrid book for dissemination. See Rule
6.14(b)(i)—(iii).
7 Several options exchanges have adopted a fee
structure in which firms receive a rebate for the
execution of orders resting in the limit order book
(i.e., posting liquidity) and pay a fee for the
execution of orders that trade against liquidity
resting on the limit order book (i.e., taking
liquidity). Taker fees currently range up to $0.45
per contract and are charged without consideration
of the order origin category, including public
customer orders. In contrast, CBOE does not
generally charge a fee for the execution of public
customer orders that are routed directly to our
market. The effective price paid by a customer
purchasing an option can be considerably higher on
an exchange that charges a taker fee. For example,
a customer that enters a marketable limit order to
buy 10 contracts for $0.10 would pay $100 on CBOE
and $104.50 if executed on an exchange that
charges a $0.45 taker fee (an effective 4.5%
increase). Because orders cannot be executed at
prices inferior to the NBBO, members are effectively
forced to pay taker fees when an exchange with a
taker fee structure is at the NBBO and the members’
orders are directly routed to such an exchange or
indirectly routed to such an exchange through
Linkage (where the fees are passed through).
8 Outbound Linkage costs are incurred by CBOE
and its members. CBOE currently rebates DPM
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Exchange to determine on a class-byclass basis to permit responses to orders
exposed through SAL, HAL and/or COA
to be submitted by all CBOE MarketMakers (not just Market-Makers
appointed to the relevant option class)
and Qualifying Members. This would
provide for additional opportunities to
provide orders with price improvement
and, in the case of HAL, to provide
those orders with the best price on
CBOE instead of routing the order
through Linkage.
For such classes, each CBOE MarketMaker that submits a response to trade
with an order during the response
period would be entitled to receive an
allocation of the order in accordance
with the existing allocation algorithms
in effect for the option class, as
described in the SAL, HAL and COA
rules, as applicable. All other provisions
of the SAL, HAL and/or COA rules, as
applicable, would apply unchanged.
To the extent the Exchange
determines to permit all CBOE MarketMakers to respond to SAL, HAL and/or
COA, the Exchange may also determine
to apply a seat cost, if any, to MarketMakers not assigned to the class that
elect to receive the SAL, HAL and/or
COA messages. Any such seat cost so
determined by the Exchange would be
submitted to the Commission in a
separate rule filing.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act 9 in general and furthers
the objectives of Section 6(b)(5) of the
Act 10 in particular in that it is designed
to foster cooperation and coordination
with persons engaged in regulating,
clearing, settling, processing
information with respect to, and
facilitating 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
transaction fees generated from transactions against
customer orders that underlie outbound PA and P
Orders (‘‘CBOE Transactions’’). In addition, when
DPMs incur fees to execute PA or P Orders at other
exchanges (‘‘Away Transactions’’), those DPMs are
credited an additional amount per contract to offset
such fees. CBOE also credits DPMs an additional
amount per contract on both CBOE Transactions
and Away Transactions to offset the Sales Value Fee
(which offsets fees payable to the Commission
under Section 31 of the Act), the Options Clearing
Corporation (‘‘OCC’’) per contract fee applicable to
market-makers and specialists set forth on the OCC
Schedule of Fees, and an estimated average clearing
firm per contract fee. In the case of a P Order, the
Exchange also passes through the total amount of
the credits above to the member that originated the
order underlying the P Order. See Section 21 of the
CBOE Fees Schedule.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 73, No. 115 / Friday, June 13, 2008 / Notices
public interest. In particular, the
Exchange believes that the proposed
change would give additional
opportunities to provide orders
executions at improved prices and, in
the case of HAL, executions at the
NBBO on CBOE and reduce costs by
reducing the number of Linkage orders
sent to other exchanges.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
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 11 and Rule 19b–
4(f)(6) thereunder.12
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:
11 15
U.S.C. 78s(b)(3)(A).
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 the
Exchange has satisfied the five-day pre-filing notice
requirement.
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12 17
VerDate Aug<31>2005
16:18 Jun 12, 2008
Jkt 214001
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–2008–58 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
33867
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57938; File No. SR–CBOE–
2008–56]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the
Temporary Membership Status Access
Fee
June 9, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
All submissions should refer to File
notice is hereby given that on May 30,
Number SR–CBOE–2008–58. This file
2008, the Chicago Board Options
number should be included on the
subject line if e-mail is used. To help the Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
Commission process and review your
and Exchange Commission
comments more efficiently, please use
(‘‘Commission’’) the proposed rule
only one method. The Commission will change as described in Items I, II, and
post all comments on the Commission’s III below, which Items have been
Internet Web site (https://www.sec.gov/
prepared by CBOE. CBOE has
rules/sro.shtml). Copies of the
designated this proposal as one
submission, all subsequent
establishing or changing a due, fee, or
amendments, all written statements
other charge imposed by the Exchange
with respect to the proposed rule
under Section 19(b)(3)(A),3 and Rule
change that are filed with the
19b–4(f)(2) thereunder,4 which renders
Commission, and all written
the proposal effective upon filing with
communications relating to the
the Commission. The Commission is
proposed rule change between the
publishing this notice to solicit
Commission and any person, other than comments on the proposed rule change
from interested parties.
those that may be withheld from the
public in accordance with the
I. Self-Regulatory Organization’s
provisions of 5 U.S.C. 552, will be
Statement of the Terms of Substance of
available for inspection and copying in
the Proposed Rule Change
the Commission’s Public Reference
CBOE proposes to adjust the monthly
Room, 100 F Street, NE., Washington,
access fee for persons granted temporary
DC 20549, on official business days
CBOE membership status (‘‘Temporary
between the hours of 10 a.m. and 3 p.m.
Members’’) pursuant to Interpretation
Copies of such filing also will be
and Policy .02 under CBOE Rule 3.19
available for inspection and copying at
(‘‘Rule 3.19.02’’). The text of the
the principal office of the CBOE. All
proposed rule change is available on the
comments received will be posted
Exchange’s Web site (https://
without change; the Commission does
www.cboe.org/Legal/), at the Exchange’s
not edit personal identifying
Office of the Secretary, and at the
information from submissions. You
Commission’s Public Reference Room.
should submit only information that
you wish to make available publicly. All II. Self-Regulatory Organization’s
Statement of the Purpose of, and
submissions should refer to File
Number SR–CBOE–2008–58 and should Statutory Basis for, the Proposed Rule
Change
be submitted on or before July 7, 2008.
In its filing with the Commission,
For the Commission, by the Division of
CBOE included statements concerning
Trading and Markets, pursuant to delegated
the purpose of, and basis for, the
authority.13
proposed rule change and discussed any
Florence E. Harmon,
comments it received on the proposed
Acting Secretary.
rule change. The text of these statements
[FR Doc. E8–13303 Filed 6–12–08; 8:45 am]
may be examined at the places specified
in Item IV below. CBOE has prepared
BILLING CODE 8010–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2).
2 17
13 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00067
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]]>Agencies
[Federal Register Volume 73, Number 115 (Friday, June 13, 2008)]
[Notices]
[Pages 33865-33867]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-13303]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57937; File No. SR-CBOE-2008-58]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Allow the Exchange To Determine To Permit Electronic
Exposure of SAL, HAL, and/or COA Orders to All CBOE Market-Makers
June 6, 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 June 3, 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, II, and III 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\ 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 modify Rules 6.13A, Simple Auction Liaison
(``SAL''), 6.14, Hybrid Agency Liaison (``HAL''), and 6.53C(d), Process
for Complex Order RFR Auction (``COA''),
[[Page 33866]]
so that the Exchange may determine on a class-by-class basis to permit
electronic exposure of SAL, HAL and/or COA orders to all CBOE Market-
Makers to give additional opportunities to provide the orders with the
best price. 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'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 those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In classes where SAL, HAL and/or COA are activated, orders are
electronically exposed to all Market-Makers appointed to the relevant
option class as well as all members acting as agent for orders at the
top of the Exchange's book (``Qualifying Members'') in the relevant
options series. During the applicable exposure period, the orders that
are subject to exposure are eligible to receive a better price.\5\ At
the conclusion of the SAL, HAL or COA process, as applicable, the order
is then allocated pursuant to the allocation algorithms described in
the relevant rules. In addition, in the case of HAL, if no responses
are received or if there remains an unexecuted portion of a marketable
order, then the remaining balance of the order will be routed through
Linkage to a competing exchange(s).\6\ When an order is sent through
Linkage, the other exchange charges an execution fee. The cost of
sending the order through Linkage can be substantial, particularly with
respect to other options exchanges that have adopted a maker-taker fee
schedule.\7\
---------------------------------------------------------------------------
\5\ SAL is a feature within CBOE's Hybrid System that auctions
eligible marketable orders for price improvement over the national
best bid or offer (``NBBO''). See Rule 6.13A. HAL is a feature
within CBOE's Hybrid System that provides automated order handling
for eligible market and limit orders if: (i) The market orders or
limit orders are marketable against the Exchange's disseminated
quotation while that quotation is not at the NBBO; (ii) the limit
orders would improve the Exchange's disseminated quotation and are
marketable against quotations disseminated by other exchanges
participating in the Intermarket Options Linkage (``Linkage''); and
(iii) for Hybrid 3.0 classes, the limit orders would improve the
Exchange's disseminated quotation, except when the disseminated
quotation is represented by a manual quote. See Rule 6.14. COA is a
feature within CBOE's Hybrid System that auctions eligible complex
orders for price improvement. See Rule 6.53C.
\6\ If the remaining order balance is for the account of a
public customer and is marketable against another exchange that is a
participant in Linkage, then HAL will route a Principal Acting as
Agent Linkage Order (``P/A Order'') on behalf of the remaining order
balance through the Linkage and any resulting execution of the P/A
Order will be allocated to that order. If the remaining order
balance is marketable against another exchange that is a participant
in Linkage but is not for the account of a public customer, then HAL
will route a Principal Linkage Order (``P Order'') on behalf of the
Remaining Order through the Linkage and any resulting execution of
the P Order will be allocated to the remaining order. In either
situation above, if the Linkage order cannot be transmitted from the
Exchange because the price of the Linkage order (or a better price)
is no longer available on any market, then HAL will, pursuant to
normal order allocation processing, execute the remaining order
balance against the Exchange's existing quote (provided such
execution would not cause a trade-through) or, if the Exchange's
quote is inferior to the Exchange's best bid or offer at the time
the order was received by HAL (``Exchange Initial BBO''), against
the Market-Makers that constituted the Exchange Initial BBO at a
price equal to the Exchange Initial BBO. If the remaining order is
not marketable (either on CBOE or another exchange), it will be
entered into the Hybrid book for dissemination. See Rule
6.14(b)(i)--(iii).
\7\ Several options exchanges have adopted a fee structure in
which firms receive a rebate for the execution of orders resting in
the limit order book (i.e., posting liquidity) and pay a fee for the
execution of orders that trade against liquidity resting on the
limit order book (i.e., taking liquidity). Taker fees currently
range up to $0.45 per contract and are charged without consideration
of the order origin category, including public customer orders. In
contrast, CBOE does not generally charge a fee for the execution of
public customer orders that are routed directly to our market. The
effective price paid by a customer purchasing an option can be
considerably higher on an exchange that charges a taker fee. For
example, a customer that enters a marketable limit order to buy 10
contracts for $0.10 would pay $100 on CBOE and $104.50 if executed
on an exchange that charges a $0.45 taker fee (an effective 4.5%
increase). Because orders cannot be executed at prices inferior to
the NBBO, members are effectively forced to pay taker fees when an
exchange with a taker fee structure is at the NBBO and the members'
orders are directly routed to such an exchange or indirectly routed
to such an exchange through Linkage (where the fees are passed
through).
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In order to offer additional opportunities for price improvement
and, in the case of HAL, to retain as much order flow as possible on
CBOE and to help reduce costs associated with the number of orders sent
through Linkage,\8\ CBOE proposes to allow the Exchange to determine on
a class-by-class basis to permit responses to orders exposed through
SAL, HAL and/or COA to be submitted by all CBOE Market-Makers (not just
Market-Makers appointed to the relevant option class) and Qualifying
Members. This would provide for additional opportunities to provide
orders with price improvement and, in the case of HAL, to provide those
orders with the best price on CBOE instead of routing the order through
Linkage.
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\8\ Outbound Linkage costs are incurred by CBOE and its members.
CBOE currently rebates DPM transaction fees generated from
transactions against customer orders that underlie outbound PA and P
Orders (``CBOE Transactions''). In addition, when DPMs incur fees to
execute PA or P Orders at other exchanges (``Away Transactions''),
those DPMs are credited an additional amount per contract to offset
such fees. CBOE also credits DPMs an additional amount per contract
on both CBOE Transactions and Away Transactions to offset the Sales
Value Fee (which offsets fees payable to the Commission under
Section 31 of the Act), the Options Clearing Corporation (``OCC'')
per contract fee applicable to market-makers and specialists set
forth on the OCC Schedule of Fees, and an estimated average clearing
firm per contract fee. In the case of a P Order, the Exchange also
passes through the total amount of the credits above to the member
that originated the order underlying the P Order. See Section 21 of
the CBOE Fees Schedule.
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For such classes, each CBOE Market-Maker that submits a response to
trade with an order during the response period would be entitled to
receive an allocation of the order in accordance with the existing
allocation algorithms in effect for the option class, as described in
the SAL, HAL and COA rules, as applicable. All other provisions of the
SAL, HAL and/or COA rules, as applicable, would apply unchanged.
To the extent the Exchange determines to permit all CBOE Market-
Makers to respond to SAL, HAL and/or COA, the Exchange may also
determine to apply a seat cost, if any, to Market-Makers not assigned
to the class that elect to receive the SAL, HAL and/or COA messages.
Any such seat cost so determined by the Exchange would be submitted to
the Commission in a separate rule filing.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act \9\ in general and furthers the objectives of
Section 6(b)(5) of the Act \10\ in particular in that it is designed to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating 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
[[Page 33867]]
public interest. In particular, the Exchange believes that the proposed
change would give additional opportunities to provide orders executions
at improved prices and, in the case of HAL, executions at the NBBO on
CBOE and reduce costs by reducing the number of Linkage orders sent to
other exchanges.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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 the Exchange has satisfied the
five-day pre-filing notice requirement.
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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:
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-2008-58 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2008-58. 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 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-2008-58 and should be
submitted on or before July 7, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-13303 Filed 6-12-08; 8:45 am]
BILLING CODE 8010-01-P
