Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change To Reduce Certain Order Exposure Times From Three Seconds to One Second, 39747-39748 [E8-15628]

Download as PDF Federal Register / Vol. 73, No. 133 / Thursday, July 10, 2008 / Notices Act,6 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. The proposed rule change will preserve the status quo of the pilot program without interruption as the Commission further reviews the area of Linkage fees. IV. Solicitation of Comments B. Self-Regulatory Organization’s Statement on Burden on Competition Electronic 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: The Exchange 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 • 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 No. SR–BSE–2008–35 on the subject line. Paper Comments The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action jlentini on PROD1PC65 with NOTICES This proposed rule change is filed pursuant to paragraph (A) of section 19(b)(3) of the Exchange Act 7 and Rule 19b–4(f)(6) thereunder.8 This proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days after the date of the filing, 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, 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.9 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Exchange Act. 6 15 U.S.C. 78f(b)(4). U.S.C. 78s(b)(3)(A). 8 17 CFR 240.19b–4(f)(6). 9 The Exchange has satisfied this pre-filing requirement. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BSE–2008–35. 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 BSE. 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–BSE– 2008–35 and should be submitted on or before July 31, 2008. 7 15 VerDate Aug<31>2005 16:58 Jul 09, 2008 Jkt 214001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Acting Secretary. [FR Doc. E8–15625 Filed 7–9–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58088; File No. SR–CBOE– 2008–16] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change To Reduce Certain Order Exposure Times From Three Seconds to One Second July 2, 2008. I. Introduction On May 16, 2008, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’), filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to reduce certain order exposure times from three seconds to one second. The proposed rule change was published for comment in the Federal Register on May 30, 2008.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposes to reduce the order handling and exposure periods contained in Rules 6.45A, Priority and Allocation of Equity Option Trades on the CBOE Hybrid System, 6.45B, Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System, 6.74A, Automated Improvement Mechanism (‘‘AIM’’), and 6.74B, Solicitation Auction Mechanism, from three seconds to one second. Rules 6.45A and 6.45B provide that an order entry firm may not execute an order it represents as agent with a facilitation or solicited order (referred to herein as ‘‘crossing orders’’) using the Hybrid Trading System (‘‘Hybrid’’) unless it first complies with the threesecond exposure requirement. Specifically, order entry firms may not execute a facilitation cross unless: (i) 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 57849 (May 22, 2008), 73 FR 31167 (May 30, 2008). 1 15 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 39747 E:\FR\FM\10JYN1.SGM 10JYN1 39748 Federal Register / Vol. 73, No. 133 / Thursday, July 10, 2008 / Notices jlentini on PROD1PC65 with NOTICES The agency order is first exposed on Hybrid for at least three seconds; (ii) the order entry firm has been bidding or offering for at least three seconds prior to receiving the agency order that is executable against such bid or offer; or (iii) the order entry firm proceeds in accordance with the floor-based open outcry crossing rules contained in CBOE Rule 6.74, Crossing Orders. Similarly, order entry firms may not execute an order they represent as agent against orders solicited from members and nonmember broker-dealers unless the agency order is first exposed on Hybrid for at least three seconds. During this three-second exposure period for crossing orders, other members may enter orders to trade against the exposed order. CBOE proposes to reduce these exposure periods to one second. Rule 6.74A provides that orders entered into AIM must be exposed for a random time period that is not less than three seconds and not more than five seconds, to provide an opportunity for additional trading interest to be entered before the orders are automatically executed. Rule 6.74B provides that orders entered into the Solicitation Auction Mechanism (the ‘‘SAM Auction’’) must be exposed for a three second period, also to provide an opportunity for additional trading interest to be entered before the orders are automatically executed. CBOE proposes to reduce the exposure period for AIM and the exposure period for the SAM Auction to one second. III. Discussion and Commission Findings The Commission has carefully reviewed the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.4 In particular, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act,5 which, among other things, requires that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Commission also finds that the proposed rule change is consistent with section 6(b)(8) of the Act,6 which requires that the rules of an exchange not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Commission believes that, in the electronic environment of Hybrid, reducing each of the exposure periods from three seconds to one second could facilitate the prompt execution of orders, while continuing to provide participants in Hybrid with an opportunity to compete for exposed bids and offers. According to the Exchange, numerous CBOE market participants have the capability to and do opt to respond within a one-second exposure period on its Hybrid trading platform. Specifically, the Exchange noted that the exposure and allocation timers for the Exchange’s Hybrid Agency Liaison (‘‘HAL’’) mechanism, which employs the same type of mechanical messaging as the AIM and SAM Auction mechanisms, are currently both set at 0.300 seconds and numerous market participants can and do opt to respond to HAL exposure messages within this time frame. The Exchange also noted that market participants receive mechanically messaged information about book updates, and are able to and do opt to automatically submit orders and quotes in response to those book updates on the Hybrid trading system, in substantially the same manner as they would respond to a HAL message. Accordingly, the Commission believes that it is consistent with the Act for these order exposure times to be reduced from three seconds to one second. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,7 that the proposed rule change (SR–CBOE–2008– 16) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Acting Secretary. [FR Doc. E8–15628 Filed 7–9–08; 8:45 am] BILLING CODE 8010–01–P 4 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:58 Jul 09, 2008 Jkt 214001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58076; File No. SR–CBOE– 2008–66] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to the Appointment Cost of RVX and VXN Options July 1, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 26, 2008, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III 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 the appointment cost for options on the CBOE Russell 2000 Volatility Index (RVX) and options on the CBOE Nasdaq 100 Volatility Index (VXN). 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, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, 1 15 6 15 U.S.C. 78f(b)(8). 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(12). PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 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 E:\FR\FM\10JYN1.SGM 10JYN1

Agencies

[Federal Register Volume 73, Number 133 (Thursday, July 10, 2008)]
[Notices]
[Pages 39747-39748]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15628]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58088; File No. SR-CBOE-2008-16]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval of Proposed Rule Change To Reduce 
Certain Order Exposure Times From Three Seconds to One Second

July 2, 2008.

I. Introduction

    On May 16, 2008, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange''), filed with the Securities and Exchange 
Commission (``Commission'') pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to reduce certain order exposure 
times from three seconds to one second. The proposed rule change was 
published for comment in the Federal Register on May 30, 2008.\3\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57849 (May 22, 
2008), 73 FR 31167 (May 30, 2008).
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II. Description of the Proposal

    The Exchange proposes to reduce the order handling and exposure 
periods contained in Rules 6.45A, Priority and Allocation of Equity 
Option Trades on the CBOE Hybrid System, 6.45B, Priority and Allocation 
of Trades in Index Options and Options on ETFs on the CBOE Hybrid 
System, 6.74A, Automated Improvement Mechanism (``AIM''), and 6.74B, 
Solicitation Auction Mechanism, from three seconds to one second.
    Rules 6.45A and 6.45B provide that an order entry firm may not 
execute an order it represents as agent with a facilitation or 
solicited order (referred to herein as ``crossing orders'') using the 
Hybrid Trading System (``Hybrid'') unless it first complies with the 
three-second exposure requirement. Specifically, order entry firms may 
not execute a facilitation cross unless: (i)

[[Page 39748]]

The agency order is first exposed on Hybrid for at least three seconds; 
(ii) the order entry firm has been bidding or offering for at least 
three seconds prior to receiving the agency order that is executable 
against such bid or offer; or (iii) the order entry firm proceeds in 
accordance with the floor-based open outcry crossing rules contained in 
CBOE Rule 6.74, Crossing Orders. Similarly, order entry firms may not 
execute an order they represent as agent against orders solicited from 
members and non-member broker-dealers unless the agency order is first 
exposed on Hybrid for at least three seconds. During this three-second 
exposure period for crossing orders, other members may enter orders to 
trade against the exposed order. CBOE proposes to reduce these exposure 
periods to one second.
    Rule 6.74A provides that orders entered into AIM must be exposed 
for a random time period that is not less than three seconds and not 
more than five seconds, to provide an opportunity for additional 
trading interest to be entered before the orders are automatically 
executed. Rule 6.74B provides that orders entered into the Solicitation 
Auction Mechanism (the ``SAM Auction'') must be exposed for a three 
second period, also to provide an opportunity for additional trading 
interest to be entered before the orders are automatically executed. 
CBOE proposes to reduce the exposure period for AIM and the exposure 
period for the SAM Auction to one second.

III. Discussion and Commission Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\4\ In particular, the Commission finds that the proposed rule 
change is consistent with section 6(b)(5) of the Act,\5\ which, among 
other things, requires that the rules of a national securities exchange 
be designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest. The 
Commission also finds that the proposed rule change is consistent with 
section 6(b)(8) of the Act,\6\ which requires that the rules of an 
exchange not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that, in the electronic environment of 
Hybrid, reducing each of the exposure periods from three seconds to one 
second could facilitate the prompt execution of orders, while 
continuing to provide participants in Hybrid with an opportunity to 
compete for exposed bids and offers. According to the Exchange, 
numerous CBOE market participants have the capability to and do opt to 
respond within a one-second exposure period on its Hybrid trading 
platform. Specifically, the Exchange noted that the exposure and 
allocation timers for the Exchange's Hybrid Agency Liaison (``HAL'') 
mechanism, which employs the same type of mechanical messaging as the 
AIM and SAM Auction mechanisms, are currently both set at 0.300 seconds 
and numerous market participants can and do opt to respond to HAL 
exposure messages within this time frame. The Exchange also noted that 
market participants receive mechanically messaged information about 
book updates, and are able to and do opt to automatically submit orders 
and quotes in response to those book updates on the Hybrid trading 
system, in substantially the same manner as they would respond to a HAL 
message. Accordingly, the Commission believes that it is consistent 
with the Act for these order exposure times to be reduced from three 
seconds to one second.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-CBOE-2008-16) be, and hereby 
is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-15628 Filed 7-9-08; 8:45 am]
BILLING CODE 8010-01-P
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