Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval to Proposed Rule Change, as Modified by Amendment No. 2, Establishing a Voluntary Professional Designation, 47988-47990 [E8-18895]
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47988
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
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.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–18894 Filed 8–14–08; 8:45 am]
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:
BILLING CODE 8010–01–P
mstockstill on PROD1PC66 with NOTICES
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–2008–82 on the
subject line.
Paper Comments
• 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-CBOE–2008–82. 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 Exchange. 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 publicly available. All
submissions should refer to File
Number SR-CBOE–2008–82 and should
be submitted on or before September 5,
2008.
VerDate Aug<31>2005
19:03 Aug 14, 2008
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58327; File No. SR–CBOE–
2008–09]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Amendment No. 2 and Order Granting
Accelerated Approval to Proposed
Rule Change, as Modified by
Amendment No. 2, Establishing a
Voluntary Professional Designation
August 7, 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 January
18, 2008, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
a proposed rule change as described in
Items I and II below, which Items have
been prepared substantially by the
Exchange. The proposed rule change
was published for comment in the
Federal Register on February 1, 2008.3
On February 15, 2008, the Commission
received a comment letter on the
proposal.4 On July 8, 2008, the
Exchange filed Amendment No. 2 to the
proposal.5 The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as modified by Amendment No. 2, from
interested persons. For the reasons
discussed below, the Commission is
granting accelerated approval of the
proposed rule change as modified.
12 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. 57256
(February 1, 2008), 73 FR 7338 (February 7, 2008).
4 See letter from Andrea Schneider to Florence E.
Harmon, Acting Secretary, Commission, dated
February 15, 2008 (‘‘Schneider Letter’’).
5 According to the Exchange, the purpose of
Amendment No. 2 is to add a more complete list
of Exchange rules for which the Voluntary
Professional designation would apply, and to
provide that the Voluntary Professional designation
would not be available in Hybrid 3.0 classes. The
Commission received notice of the withdrawal of
Amendment No. 1 on July 2, 2008.
1 15
PO 00000
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
‘‘Voluntary Professional’’ designation.
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 these statements
may be examined at the places specified
in Item III 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to allow nonbroker-dealer customers to voluntarily
have their orders categorized as brokerdealer orders for order handling, order
execution, and cancel fee calculation
purposes. Specifically, these orders
would be treated as broker-dealer orders
for purposes of Rules 6.2A (Rapid
Opening System); 6.2B (Hybrid Opening
System); 6.9 (Solicited Transactions);
6.13A (Simple Auction Liaison); 6.45
(Priority of Bids and Offers—Allocation
of Trades); 6.13B (Penny Price
Improvement); 6.45A (Priority and
Allocation of Equity Option Trades on
the CBOE Hybrid System) (except that
Voluntary Professional orders may be
considered public customer orders, and
therefore not be subject to the exposure
requirements for solicited broker-dealer
orders, under Interpretation and
Policy.02); 6.45B (Priority and
Allocation of Trades in Index Options
and Options on ETFs on the CBOE
Hybrid System) (except that Voluntary
Professional orders may be considered
public customer orders, and therefore
not be subject to the exposure
requirements for solicited broker-dealer
orders, under Interpretation and
Policy.02); 6.53C(c)(ii) and (d)(v) and
6.53C.06(b)–(c) (Complex Orders on the
Hybrid System); 6.74 (Crossing Orders)
(except that Voluntary Professional
orders may be considered public
E:\FR\FM\15AUN1.SGM
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mstockstill on PROD1PC66 with NOTICES
customer orders subject to facilitation
under paragraphs (b) and (d)); 6.74A
(Automated Improvement Mechanism)
(except that Voluntary Professional
orders may be considered customer
Agency Orders or solicited orders
eligible for customer-to-customer
immediate crosses under Interpretation
and Policy.09); 6.74B (Solicitation
Auction Mechanism); 8.13 (Preferred
Market-Maker Program); 8.15B
(Participation Entitlement of LMMs);
8.87 (Participation Entitlement of DPMs
and e-DPMs); 24.19 (Multi-Class BroadBased Index Option Spread Orders);
43.1 (Matching Algorithm/Priority); 44.4
(Obligations of SBT Market-Makers);
and 44.14 (SBT DPM Obligations).
Lastly, the Voluntary Professional
designation would not be available in
Hybrid 3.0 classes.
Some Exchange users have requested
the flexibility to voluntarily designate
their orders as broker-dealer orders
because it is more suitable to their
trading strategies, which involve highvolume order submission and
cancellation. Except as noted above, the
orders of these Voluntary Professionals
would participate in trades on the same
terms as broker-dealer orders for
purposes of the rules set forth above.
Orders from Voluntary Professionals
would continue to be treated as public
customer orders for purposes of the
linkage-related rules.
With respect to linkage-related rules,
CBOE states that it would provide the
same away-market protection for orders
from Voluntary Professionals as for
orders from public customers. In
addition, orders from Voluntary
Professionals that are cancelled would
not be counted as public customer order
cancellations in connection with the
cancellation fee charged to clearing
members. It is expected that member
firms seeking to facilitate customer use
of this new designation would mark
these orders with a new origin code to
be provided by the Exchange. The
Exchange intends to establish, in a
separate rule filing under Section 19(b)
of the Act, a transaction fee applicable
to Voluntary Professionals and the
Exchange would not commence the
Voluntary Professional program until
such fee was in place.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act in general and
furthers the objectives of Section 6(b)(5)
of the Act 6 in particular in that it is
designed to promote just and equitable
principles of trade, serve to remove
6 15
U.S.C. 78f(b)(5).
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19:03 Aug 14, 2008
Jkt 214001
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will 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 did not solicit or
receive written comments with respect
to the proposed rule change.
47989
between the hours of 10 a.m. and 3 p.m.
Copies of the 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–2008–09 and should
be submitted on or before September 5,
2008.
IV. Commission Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
III. Solicitation of Comments
rules and regulations thereunder
Interested persons are invited to
applicable to a national securities
submit written data, views, and
exchange and, in particular, the
arguments concerning the foregoing,
requirements of Section 6(b)(5) of the
including whether the proposed rule
Act, which requires that the rules of a
change is consistent with the Act.
national securities exchange, among
other things, be designed to promote
Comments may be submitted by any of
just and equitable principles of trade, to
the following methods:
remove impediments to and perfect the
Electronic Comments
mechanism of a free and open market
• Use the Commission’s Internet
and a national market system, and, in
comment form (https://www.sec.gov/
general, to protect investors and the
rules/sro.shtml); or
public interest; and not be designed to
• Send an e-mail to rulepermit unfair discrimination between
comments@sec.gov. Please include File
customers, issuers, brokers, or dealers.7
Number SR–CBOE–2008–09 on the
The Commission notes that it recently
subject line.
approved a substantially similar
proposal by the International Securities
Paper Comments
Exchange, LLC (‘‘ISE’’) to create a
• Send paper comments in triplicate
Voluntary Professional category.8 The
to Secretary, Securities and Exchange
grounds upon which the Commission
Commission, 100 F Street, NE.,
based its approval of the ISE proposal
Washington, DC 20549–1090.
apply equally to the CBOE proposal.
All submissions should refer to File
Under the proposed rule change, a
Number SR–CBOE–2008–09. This file
public customer could elect to be
number should be included on the
designated as a Voluntary Professional.
subject line if e-mail is used. To help the One of the consequences of electing this
Commission process and review your
designation is that a customer’s orders
comments more efficiently, please use
no longer would be subject to CBOE’s
only one method. The Commission will cancellation fees. Thus, choosing to
post all comments on the Commission’s become a Voluntary Professional could
Internet Web site (https://www.sec.gov/
represent significant savings for a public
rules/sro.shtml). Copies of the
customer whose trading strategy
submission, all subsequent
involves placing, and then cancelling,
amendments, all written statements
orders frequently.
with respect to the proposed rule
By electing to become a Voluntary
change that are filed with the
Professional, a public customer would
Commission, and all written
also cede priority rights normally
communications relating to the
granted to public customer orders.
proposed rule change between the
Importantly, however, this result is
Commission and any person, other than determined solely by the choice of the
those that may be withheld from the
7 In approving this proposed rule change the
public in accordance with the
Commission has considered the proposed rule’s
provisions of 5 U.S.C. 552, will be
impact on efficiency, competition, and capital
available for inspection and copying in
formation. See 15 U.S.C. 78c(f).
the Commission’s Public Reference
8 See Securities Exchange Act Release No. 57553
Room, 100 F Street, NE., Washington,
(March 25, 2008), 73 FR 16916 (March 31, 2008)
(SR–ISE–2007–76).
DC 20549, on official business days
PO 00000
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47990
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
customer, and may be rescinded at a
customer’s election.
The commenter questioned how the
proposed rule change would benefit
public customers.9 The commenter
maintained that if CBOE is willing to
forgive its cancellation fees, ‘‘then
* * * there was never a problem with
cancels from public customers but only
[the Exchange] trying to concentrate
power and punish the public customer.’’
The Commission is not today
considering CBOE’s cancellation fee.10
Instead, the Commission is approving a
proposed rule change that would give
public customers more flexibility in
how they participate in CBOE’s
marketplace. In sum, the Commission
believes that the proposed rule change
would provide an additional choice to
public customers.
The Commission finds good cause for
approving the proposed rule change
prior to the thirtieth day after the date
of publication of notice of filing thereof
in the Federal Register. The
Commission believes that accelerated
approval of the Exchange’s proposal
relating to Voluntary Professionals is
appropriate because it is similar to an
ISE rule that recently was approved by
the Commission.11 The Commission
believes that CBOE’s proposal does not
raise any new issues that were not
considered by the Commission in
connection with the ISE proposal.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (SR–CBOE–2008–
09), as modified by Amendment No. 2,
be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–18895 Filed 8–14–08; 8:45 am]
mstockstill on PROD1PC66 with NOTICES
BILLING CODE 8010–01–P
Schneider Letter, supra note 4.
Securities Exchange Act Release No. 44607
(July 27, 2001), 66 FR 40757 (August 3, 2001) (SR–
CBOE–2001–40) (establishing the CBOE Order
Routing System cancellation fee).
11 See supra note 8.
12 17 CFR 200.30–3(a)(12).
10 See
19:03 Aug 14, 2008
[Release No. 34–58331; File No. SR–FINRA–
2008–016]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving a
Proposed Rule Change To Align the
Reporting Requirements and
Dissemination Protocols for OTC
Equity Transactions Involving Foreign
Securities With All Other OTC Equity
Securities
August 8, 2008.
I. Introduction
On April 25, 2008, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
of Securities Dealers, Inc. (‘‘NASD’’))
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposal: (1) To amend
NASD Rule 6620 to align the reporting
requirements for over-the-counter
(‘‘OTC’’) equity transactions involving
foreign securities with the reporting
requirements for other OTC equity
transactions; and (2) to align the
dissemination protocols for all last sale
reports of OTC equity transactions. On
June 12, 2008, FINRA submitted
Amendment No. 1 to the proposed rule
change. The proposal was published for
comment in the Federal Register on
June 26, 2008.3 The Commission
received five comments regarding the
proposal.4 This order approves the
proposed rule change, as modified by
Amendment No. 1.
II. Description of the Proposed Rule
Change
Currently, NASD rules require that
transactions in OTC Equity Securities
(which term encompasses domestic
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 57986
(June 18, 2008), 73 FR 36363 (‘‘Notice’’).
4 See letters from Verdun Edgtton, Vice President
and Corporate Governance Officer, The Bank of
New York Mellon, to Secretary, Commission, dated
July 17, 2008 (‘‘BNYMellon Letter’’); Sam Guidetti,
Director of Compliance, Hill, Thompson, Magid &
Co., to Florence E. Harmon, Acting Secretary,
Commission, dated July 15, 2008 (‘‘Hill Thompson
Letter’’); Peter Coolidge, Portfolio Manager, Deltec
Special Situations Partners, L.P., to Secretary,
Commission, dated July 9, 2008 (‘‘Deltec Letter’’);
R. Cromwell Coulson, Chief Executive Officer, Pink
OTC Markets, to Secretary, Commission, dated July
7, 2008 (‘‘Pink OTC Markets Letter’’); and Robert
Arancio, President, and Kimberly Unger, Executive
Director, The Security Traders Association of New
York, to Secretary, Commission, dated June 27,
2008 (‘‘STANY Letter’’).
2 17
9 See
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COMMISSION
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Frm 00115
Fmt 4703
Sfmt 4703
equity securities, American Depositary
Receipts (‘‘ADRs’’), and Canadian
issues) that are executed between 8 a.m.
and 8 p.m. Eastern Time be reported to
the OTC Reporting Facility within 90
seconds of execution.5 Thus,
transactions in all ADRs and Canadian
issues, including those that are not
registered with the Commission and
thus are not subject to the Commission’s
reporting requirements, are subject to
90-second reporting under NASD Rule
6620. Transactions in all other foreign
equity securities are excluded from the
90-second reporting requirement and
instead must be reported by 1:30 p.m.
Eastern Time the day after the
transaction is executed.6
Last sale information for transactions
in domestic OTC Equity Securities
reported pursuant to Rule 6620 is
disseminated on a real-time basis,
irrespective of whether the security is
registered with the Commission.
However, there is no uniformity
regarding the dissemination of last sale
information for transactions in ADRs
and foreign securities. Last sale reports
of ADRs and Canadian issues that are
quoted on the OTC Bulletin Board
(‘‘OTCBB’’), which has an eligibility
requirement that OTCBB issuers must
be reporting issuers,7 are disseminated
on a real-time basis. However, only
summary information is disseminated at
the end of each trading day for OTC
ADRs and Canadian issues that are not
quoted on the OTCBB, whether or not
they are registered with the
Commission. Transactions in foreign
securities, other than Canadian issues
and ADRs, that are quoted on the
OTCBB are disseminated on a real-time
basis if they are received on the day of
the trade. However, as noted above,
there is no current requirement to report
these trades to FINRA within 90
seconds of execution, or even on the
trade date. If an OTC transaction in a
foreign security is not reported on the
trade date, last sale information for that
transaction is not disseminated.
FINRA now proposes: (1) To require
all transactions in OTC Equity
Securities to be reported within 90
seconds of execution; and (2) to
5 See NASD Rule 6620(a). For purposes of the
NASD Rule 6600 Series, ‘‘OTC Equity Securities’’
means equity securities for which real-time trade
reporting is not otherwise required. See NASD Rule
6600. NASD Rule 6610(d) further defines ‘‘OTC
Equity Security’’ as ‘‘any non-exchange-listed
security and certain exchange-listed securities that
do not otherwise qualify for real-time trade
reporting.’’
6 See NASD Rule 6620(a)(3)(C)(iii). Although not
required, a member may choose to report
transactions in foreign securities within 90 seconds
of execution. See NASD Rule 6620 n.1.
7 See NASD Rule 6530(b)(1).
E:\FR\FM\15AUN1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 159 (Friday, August 15, 2008)]
[Notices]
[Pages 47988-47990]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18895]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58327; File No. SR-CBOE-2008-09]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Amendment No. 2 and Order Granting
Accelerated Approval to Proposed Rule Change, as Modified by Amendment
No. 2, Establishing a Voluntary Professional Designation
August 7, 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 January 18, 2008, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared substantially by
the Exchange. The proposed rule change was published for comment in the
Federal Register on February 1, 2008.\3\ On February 15, 2008, the
Commission received a comment letter on the proposal.\4\ On July 8,
2008, the Exchange filed Amendment No. 2 to the proposal.\5\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as modified by Amendment No. 2, from interested
persons. For the reasons discussed below, the Commission is granting
accelerated approval of the proposed rule change as modified.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 57256 (February 1,
2008), 73 FR 7338 (February 7, 2008).
\4\ See letter from Andrea Schneider to Florence E. Harmon,
Acting Secretary, Commission, dated February 15, 2008 (``Schneider
Letter'').
\5\ According to the Exchange, the purpose of Amendment No. 2 is
to add a more complete list of Exchange rules for which the
Voluntary Professional designation would apply, and to provide that
the Voluntary Professional designation would not be available in
Hybrid 3.0 classes. The Commission received notice of the withdrawal
of Amendment No. 1 on July 2, 2008.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt a ``Voluntary Professional''
designation. 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 these statements may be examined at the places specified in
Item III 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to allow non-broker-dealer customers to
voluntarily have their orders categorized as broker-dealer orders for
order handling, order execution, and cancel fee calculation purposes.
Specifically, these orders would be treated as broker-dealer orders for
purposes of Rules 6.2A (Rapid Opening System); 6.2B (Hybrid Opening
System); 6.9 (Solicited Transactions); 6.13A (Simple Auction Liaison);
6.45 (Priority of Bids and Offers--Allocation of Trades); 6.13B (Penny
Price Improvement); 6.45A (Priority and Allocation of Equity Option
Trades on the CBOE Hybrid System) (except that Voluntary Professional
orders may be considered public customer orders, and therefore not be
subject to the exposure requirements for solicited broker-dealer
orders, under Interpretation and Policy.02); 6.45B (Priority and
Allocation of Trades in Index Options and Options on ETFs on the CBOE
Hybrid System) (except that Voluntary Professional orders may be
considered public customer orders, and therefore not be subject to the
exposure requirements for solicited broker-dealer orders, under
Interpretation and Policy.02); 6.53C(c)(ii) and (d)(v) and 6.53C.06(b)-
(c) (Complex Orders on the Hybrid System); 6.74 (Crossing Orders)
(except that Voluntary Professional orders may be considered public
[[Page 47989]]
customer orders subject to facilitation under paragraphs (b) and (d));
6.74A (Automated Improvement Mechanism) (except that Voluntary
Professional orders may be considered customer Agency Orders or
solicited orders eligible for customer-to-customer immediate crosses
under Interpretation and Policy.09); 6.74B (Solicitation Auction
Mechanism); 8.13 (Preferred Market-Maker Program); 8.15B (Participation
Entitlement of LMMs); 8.87 (Participation Entitlement of DPMs and e-
DPMs); 24.19 (Multi-Class Broad-Based Index Option Spread Orders); 43.1
(Matching Algorithm/Priority); 44.4 (Obligations of SBT Market-Makers);
and 44.14 (SBT DPM Obligations). Lastly, the Voluntary Professional
designation would not be available in Hybrid 3.0 classes.
Some Exchange users have requested the flexibility to voluntarily
designate their orders as broker-dealer orders because it is more
suitable to their trading strategies, which involve high-volume order
submission and cancellation. Except as noted above, the orders of these
Voluntary Professionals would participate in trades on the same terms
as broker-dealer orders for purposes of the rules set forth above.
Orders from Voluntary Professionals would continue to be treated as
public customer orders for purposes of the linkage-related rules.
With respect to linkage-related rules, CBOE states that it would
provide the same away-market protection for orders from Voluntary
Professionals as for orders from public customers. In addition, orders
from Voluntary Professionals that are cancelled would not be counted as
public customer order cancellations in connection with the cancellation
fee charged to clearing members. It is expected that member firms
seeking to facilitate customer use of this new designation would mark
these orders with a new origin code to be provided by the Exchange. The
Exchange intends to establish, in a separate rule filing under Section
19(b) of the Act, a transaction fee applicable to Voluntary
Professionals and the Exchange would not commence the Voluntary
Professional program until such fee was in place.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act in general and furthers the objectives of
Section 6(b)(5) of the Act \6\ in particular in that it is designed to
promote just and equitable principles of trade, serve to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and protect investors and the public
interest.
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\6\ 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 did not solicit or receive written comments with
respect to the proposed rule change.
III. 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-2008-09 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-2008-09. 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 the 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-2008-09 and should be
submitted on or before September 5, 2008.
IV. Commission Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6(b)(5) of the Act, which
requires that the rules of a national securities exchange, among other
things, be designed to promote just and equitable principles of trade,
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; and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.\7\ The
Commission notes that it recently approved a substantially similar
proposal by the International Securities Exchange, LLC (``ISE'') to
create a Voluntary Professional category.\8\ The grounds upon which the
Commission based its approval of the ISE proposal apply equally to the
CBOE proposal.
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\7\ 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).
\8\ See Securities Exchange Act Release No. 57553 (March 25,
2008), 73 FR 16916 (March 31, 2008) (SR-ISE-2007-76).
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Under the proposed rule change, a public customer could elect to be
designated as a Voluntary Professional. One of the consequences of
electing this designation is that a customer's orders no longer would
be subject to CBOE's cancellation fees. Thus, choosing to become a
Voluntary Professional could represent significant savings for a public
customer whose trading strategy involves placing, and then cancelling,
orders frequently.
By electing to become a Voluntary Professional, a public customer
would also cede priority rights normally granted to public customer
orders. Importantly, however, this result is determined solely by the
choice of the
[[Page 47990]]
customer, and may be rescinded at a customer's election.
The commenter questioned how the proposed rule change would benefit
public customers.\9\ The commenter maintained that if CBOE is willing
to forgive its cancellation fees, ``then * * * there was never a
problem with cancels from public customers but only [the Exchange]
trying to concentrate power and punish the public customer.'' The
Commission is not today considering CBOE's cancellation fee.\10\
Instead, the Commission is approving a proposed rule change that would
give public customers more flexibility in how they participate in
CBOE's marketplace. In sum, the Commission believes that the proposed
rule change would provide an additional choice to public customers.
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\9\ See Schneider Letter, supra note 4.
\10\ See Securities Exchange Act Release No. 44607 (July 27,
2001), 66 FR 40757 (August 3, 2001) (SR-CBOE-2001-40) (establishing
the CBOE Order Routing System cancellation fee).
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The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof in the Federal Register. The Commission
believes that accelerated approval of the Exchange's proposal relating
to Voluntary Professionals is appropriate because it is similar to an
ISE rule that recently was approved by the Commission.\11\ The
Commission believes that CBOE's proposal does not raise any new issues
that were not considered by the Commission in connection with the ISE
proposal.
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\11\ See supra note 8.
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It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-CBOE-2008-09), as modified by
Amendment No. 2, be, and hereby is, approved on an accelerated basis.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18895 Filed 8-14-08; 8:45 am]
BILLING CODE 8010-01-P
