Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Short Term Option Series, 65430-65432 [E8-26105]
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Federal Register / Vol. 73, No. 213 / Monday, November 3, 2008 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58864; File No. SR–BSE–
2008–45]
Self-Regulatory Organizations; Boston
Stock Exchange, Inc.; Order Granting
Approval of a Proposed Rule Change
To Amend the By-Laws of the Boston
Stock Exchange, Inc.
October 27, 2008.
On September 5, 2008, the Boston
Stock Exchange, Inc. (‘‘BSE’’ 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
amend the by-laws of BSE in accordance
with SR–BSE–2008–23.3 The proposed
rule change was published for comment
in the Federal Register on September
22, 2008.4 The Commission received no
comments on the proposal.
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 5 and, in particular, the
requirements of Section 6 of the Act 6
and the rules and regulations
thereunder. Specifically, as discussed
more fully in the Acquisition Approval
Order,7 the Commission finds that the
proposal is consistent with Section
6(b)(1) of the Act,8 which requires
among other things, that a national
securities exchange be so organized to
carry out the purposes of the Act and
comply with the requirements of the
Act; and Section 6(b)(3) of the Act,9
which requires, among other things, that
a national securities exchange assure the
fair representation of its members in the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58324
(August 7, 2008), 73 FR 46936 (August 12, 2008)
(order approving proposed rule changes by BSE and
the Boston Stock Clearing Corporation relating to,
among other things, the acquisition of BSE by The
NASDAQ OMX Group, Inc. (‘‘Acquisition’’))
(‘‘Acquisition Approval Order’’). In connection with
SR–BSE–2008–23, BSE committed to propose to its
Board of Directors immediately following the
closing of the Acquisition certain amendments to
the bylaws of BSE. See id. at notes 73, 75, 214, and
accompanying text.
4 See Securities Exchange Act Release No. 58547
(September 15, 2008), 73 FR 54648.
5 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
6 15 U.S.C. 78f.
7 See Acquisition Approval Order, supra note 3,
at notes 78–84, 216, and accompanying text.
8 15 U.S.C. 78f(b)(1).
9 15 U.S.C. 78f(b)(3).
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selection of its directors and
administration of its affairs. The
proposal is designed to clarify the
procedures for the selection of directors
to the BSE board of directors that are
representative of members; limit the
influence that a single member, or group
of members, may exercise over the
Exchange; and clarify the procedures for
ensuring that participants in BSE’s
options exchange facility have fair
representation on the BSE board of
directors.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,10 that the
proposed rule change (File No. SR–
BSE–2008–45) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–26109 Filed 10–31–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58870; File No. SR–CBOE–
2008–110]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to Short Term
Option Series
October 28, 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 October
27, 2008, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been 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.
10 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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).
11 17
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Short Term Option Series pilot program
(‘‘Pilot Program’’) to increase the
number of series that may be listed for
a class selected to participate in the
Pilot Program from seven series to
twenty series. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.cboe.org/Legal), at the Exchange’s
Office of the Secretary and at the
Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On July 12, 2005, the Commission
approved the Pilot Program.5 The Pilot
Program allows CBOE to list and trade
Short Term Option Series, which would
expire one week after the date on which
a series is opened. Under the Pilot
Program, CBOE can select up to five
approved option classes on which Short
Term Option Series could be opened.
5 See Securities Exchange Act Release No. 52011
(July 12, 2005), 70 FR 41451 (July 19, 2005) (SR–
CBOE–2004–63) (‘‘Pilot Program Approval Order’’).
The Pilot Program has since been extended and is
currently scheduled to expire on July 12, 2009. See
Securities Exchange Act Release No. 53984 (June
14, 2006), 71 FR 35718 (June 21, 2006) (SR–CBOE–
2006–48) (immediately effective rule change
extending the Pilot Program, which would have
otherwise expired on July 12, 2006, through July 12,
2007), 56050 (July 11, 2007), 72 FR 39472 (July 18,
2007) (SR–CBOE–2007–76) (immediately effective
rule change extending the Pilot Program through
July 12, 2008); and 58094 (July 3, 2008), 73 FR
40000 (July 11, 2008) (SR–CBOE–2008–70)
(immediately effective rule change extending the
Pilot Program through July 12, 2009); see also
Securities Exchange Act Release No. 54338 (August
21, 2006), 71 FR 50952 (August 28, 2006) (SR–
CBOE–2006–49) (order approving an amendment to
the Pilot Program that increased the number of
series that may be listed for a class selected to
participate in the Pilot Program from five series to
seven series).
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If selected for the Pilot Program, the
Exchange may open up to seven Short
Term Option Series for each expiration
date in that class. The strike price of
each Short Term Option Series are fixed
at a price per share, with approximately
the same number of strike prices above
and below the value of the underlying
security or calculated index value at
about the time that the Short Term
Option Series is opened.6 If the
Exchange opens less than seven Short
Term Option Series for a given
expiration date, additional series may be
opened for trading on the Exchange
when the Exchange deems it necessary
to maintain an orderly market, to meet
customer demand or when the current
value of the underlying security or
index moves substantially from the
exercise price or prices of the series
already opened. In any event, the total
number of series for a given expiration
date will not exceed seven series.
The Exchange has selected the
following four options classes to
participate in the Pilot Program: S&P
500 Index options (SPX), S&P 100 Index
American-style options (OEX), MiniS&P 500 Index options (XSP), and S&P
100 Index European-style options
(XEO). CBOE believes the Pilot Program
has been successful and well received
by its members and the investing public.
CBOE is now proposing to modify the
terms of the Pilot Program to provide
that up to twenty (as opposed to seven)
Short Term Option Series may be
opened for each expiration date. The
Exchange believes this increase in the
number of series would provide
investors with greater flexibility in the
trading of Short Term Option Series by
allowing investors to establish options
positions that are better tailored to meet
their investment objectives. CBOE also
believes that allowing for the increased
number of series would allow us to
better maintain an orderly market, meet
customer demand and respond in
scenarios when the market price of the
underlying moves substantially from the
exercise price or prices of the series
already opened, which has been our
experience recently with the recent
volatility in the market. Indeed, member
firms representing customers have
repeatedly requested that CBOE seek to
increase the number of available series.
Consistent with the existing Pilot
Program provisions: (i) Approximately
the same number of strike prices would
be opened above and below the value of
the underlying security or calculated
6 For example, if seven series are initially opened,
there will be at least three strike prices above and
three strike prices below the value of the underlying
security or calculated index value.
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index value at about the time the Short
Term Option Series are initially opened
for trading; (ii) if the Exchange has
opened less than twenty Short Term
Option Series for a given expiration
date, additional series may be opened
for trading on the Exchange when the
Exchange deems it necessary to
maintain an orderly market, to meet
customer demand or when the current
value of the underlying security or
index moves substantially from the
exercise price or prices of the series
already opened; and (iii) in any event,
the total number of series for a given
expiration date will not exceed twenty
series.
The Exchange is also changing the
Pilot Program rules to include a
condition that any strike prices initially
listed by the Exchange shall be within
thirty percent (30%) above or below the
closing price of the underlying security
on the preceding day or the current
value of the underlying index, as
applicable. Any additional strike prices
listed by the Exchange shall be within
thirty percent (30%) above or below the
current price of the underlying security
or current value of the underlying
index, as applicable. Under the rule
change, the Exchange may also open
additional strike prices of Short Term
Option Series that are more than 30%
above or below the current price of the
underlying security or current value of
the underlying index, as applicable,
provided that demonstrated customer
interest exists for such series, as
expressed by institutional, corporate or
individual customers or their brokers.
Market-Makers trading for their own
account shall not be considered when
determining customer interest under
this provision. The opening of the new
Short Term Option Series shall not
affect the series of options of the same
class previously opened.7
In support of the rule change, and as
required by the Pilot Program Approval
Order, the Exchange has submitted to
the Commission a Pilot Program report
(the ‘‘Report’’) detailing the Exchange’s
experience with the Pilot Program.
Specifically, the Report contains data
and written analysis regarding the four
options classes included in the Pilot
Program. The Report was submitted
under separate cover and seeks
7 These new parameters are similar to parameters
that are already in place for the Exchange’s
Quarterly Options Series pilot program. See CBOE
Rule 5.5(e)(4). The Exchange is also making a nonsubstantive change to delete an errant phrase, ‘‘or
calculated index value,’’ in two locations in the text
of CBOE Rule 5.5.03. Weekly options overlying
indexes are addressed in CBOE Rule 24.9(a)(2), so
the reference to a calculated index value in CBOE
Rule 5.5.03 is unnecessary.
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65431
confidential treatment under the
Freedom of Information Act.
The Exchange believes there is
sufficient investor interest and demand
to increase the number of series. The
Exchange believes that the Pilot
Program has provided investors with
additional means of managing their risk
exposures and carrying out their
investment objectives. Furthermore, the
Exchange has not experienced any
capacity-related problems with respect
to Short Term Option Series. The
Exchange also represents that it has the
necessary system capacity to support
the option series listed under the Pilot
Program and the proposed increase in
number of series.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act 8
and the rules and regulations
thereunder and, in particular, the
requirements of Section 6(b) of the Act.9
Specifically, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 10 requirements that
the rules of an exchange be designed to
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts, to remove
impediments to and to perfect the
mechanism for a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Exchange believes
that increasing the number of series will
result in a continuing benefit to
investors, by allowing them additional
means to manage their risk exposures
and carry out their investment
objectives.
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 rule does not (i)
significantly affect the protection of
investors or the public interest; (ii)
8 15
U.S.C. 78s(b)(1).
U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
9 15
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Federal Register / Vol. 73, No. 213 / Monday, November 3, 2008 / Notices
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, provided that the selfregulatory organization has given the
Commission written notice of its intent
to file the proposed rule change at least
five business days prior to the date of
filing of the proposed rule change or
such shorter time as designated by the
Commission, the proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 11 and
Rule 19b–4(f)(6) thereunder.12
The Exchange has asked the
Commission to waive the operative
delay to permit the proposed rule
change to become operative prior to the
30th day after filing. The Commission
has determined that waiving the 30-day
operative delay of the Exchange’s
proposal is consistent with the
protection of investors and the public
interest because such waiver will enable
CBOE to better meet customer demand
in light of recent increased volatility in
the marketplace.13 Therefore, the
Commission designates the proposal
operative upon filing.
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.
No. SR–CBOE–2008–110 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.
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:
All submissions should refer to File
Number SR–CBOE–2008–110. 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 available publicly. All
submissions should refer to File No.
SR–CBOE–2008–110 and should be
submitted on or before November 24,
2008.
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
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–26105 Filed 10–31–08; 8:45 am]
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
provide the Commission with 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
Exchange has fulfilled this requirement.
13 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58778; File No. SR–CBOE–
2008–90]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting Approval
of a Proposed Rule Change Related to
Trades in Restricted Classes
October 14, 2008.
Correction
In notice document E8–24971
beginning on page 62577 in the issue of
Tuesday, October 21, 2008, the date is
corrected to read as set forth above.
[FR Doc. Z8–24971 Filed 10–31–08; 8:45 am]
BILLING CODE 1505–01–D
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58861; File No. SR–ISE–
2008–78]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing of Proposed Rule
Change Relating to Quoting
Obligations for Competitive Market
Makers
October 27, 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 October
21, 2008, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
organization. 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 ISE proposes to amend ISE Rules
713, 804 and 805 to establish a new
quoting obligation for the Exchange’s
Competitive Market Makers (‘‘CMMs’’).
The text of the proposed rule change is
as follows, with deletions in [brackets]
and additions italicized:
Rule 713. Priority of Quotes and Orders
(a) through (f) no change.
1 15
14 17
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CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
03NON1
]]>Agencies
[Federal Register Volume 73, Number 213 (Monday, November 3, 2008)]
[Notices]
[Pages 65430-65432]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26105]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58870; File No. SR-CBOE-2008-110]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to Short Term Option Series
October 28, 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 October 27, 2008, the Chicago Board Options Exchange,
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Short Term Option Series pilot
program (``Pilot Program'') to increase the number of series that may
be listed for a class selected to participate in the Pilot Program from
seven series to twenty series. The text of the proposed rule change is
available on the Exchange's Web site (https://www.cboe.org/Legal), at
the Exchange's Office of the Secretary and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 12, 2005, the Commission approved the Pilot Program.\5\ The
Pilot Program allows CBOE to list and trade Short Term Option Series,
which would expire one week after the date on which a series is opened.
Under the Pilot Program, CBOE can select up to five approved option
classes on which Short Term Option Series could be opened.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 52011 (July 12,
2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-63) (``Pilot
Program Approval Order''). The Pilot Program has since been extended
and is currently scheduled to expire on July 12, 2009. See
Securities Exchange Act Release No. 53984 (June 14, 2006), 71 FR
35718 (June 21, 2006) (SR-CBOE-2006-48) (immediately effective rule
change extending the Pilot Program, which would have otherwise
expired on July 12, 2006, through July 12, 2007), 56050 (July 11,
2007), 72 FR 39472 (July 18, 2007) (SR-CBOE-2007-76) (immediately
effective rule change extending the Pilot Program through July 12,
2008); and 58094 (July 3, 2008), 73 FR 40000 (July 11, 2008) (SR-
CBOE-2008-70) (immediately effective rule change extending the Pilot
Program through July 12, 2009); see also Securities Exchange Act
Release No. 54338 (August 21, 2006), 71 FR 50952 (August 28, 2006)
(SR-CBOE-2006-49) (order approving an amendment to the Pilot Program
that increased the number of series that may be listed for a class
selected to participate in the Pilot Program from five series to
seven series).
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[[Page 65431]]
If selected for the Pilot Program, the Exchange may open up to
seven Short Term Option Series for each expiration date in that class.
The strike price of each Short Term Option Series are fixed at a price
per share, with approximately the same number of strike prices above
and below the value of the underlying security or calculated index
value at about the time that the Short Term Option Series is opened.\6\
If the Exchange opens less than seven Short Term Option Series for a
given expiration date, additional series may be opened for trading on
the Exchange when the Exchange deems it necessary to maintain an
orderly market, to meet customer demand or when the current value of
the underlying security or index moves substantially from the exercise
price or prices of the series already opened. In any event, the total
number of series for a given expiration date will not exceed seven
series.
---------------------------------------------------------------------------
\6\ For example, if seven series are initially opened, there
will be at least three strike prices above and three strike prices
below the value of the underlying security or calculated index
value.
---------------------------------------------------------------------------
The Exchange has selected the following four options classes to
participate in the Pilot Program: S&P 500 Index options (SPX), S&P 100
Index American-style options (OEX), Mini-S&P 500 Index options (XSP),
and S&P 100 Index European-style options (XEO). CBOE believes the Pilot
Program has been successful and well received by its members and the
investing public.
CBOE is now proposing to modify the terms of the Pilot Program to
provide that up to twenty (as opposed to seven) Short Term Option
Series may be opened for each expiration date. The Exchange believes
this increase in the number of series would provide investors with
greater flexibility in the trading of Short Term Option Series by
allowing investors to establish options positions that are better
tailored to meet their investment objectives. CBOE also believes that
allowing for the increased number of series would allow us to better
maintain an orderly market, meet customer demand and respond in
scenarios when the market price of the underlying moves substantially
from the exercise price or prices of the series already opened, which
has been our experience recently with the recent volatility in the
market. Indeed, member firms representing customers have repeatedly
requested that CBOE seek to increase the number of available series.
Consistent with the existing Pilot Program provisions: (i)
Approximately the same number of strike prices would be opened above
and below the value of the underlying security or calculated index
value at about the time the Short Term Option Series are initially
opened for trading; (ii) if the Exchange has opened less than twenty
Short Term Option Series for a given expiration date, additional series
may be opened for trading on the Exchange when the Exchange deems it
necessary to maintain an orderly market, to meet customer demand or
when the current value of the underlying security or index moves
substantially from the exercise price or prices of the series already
opened; and (iii) in any event, the total number of series for a given
expiration date will not exceed twenty series.
The Exchange is also changing the Pilot Program rules to include a
condition that any strike prices initially listed by the Exchange shall
be within thirty percent (30%) above or below the closing price of the
underlying security on the preceding day or the current value of the
underlying index, as applicable. Any additional strike prices listed by
the Exchange shall be within thirty percent (30%) above or below the
current price of the underlying security or current value of the
underlying index, as applicable. Under the rule change, the Exchange
may also open additional strike prices of Short Term Option Series that
are more than 30% above or below the current price of the underlying
security or current value of the underlying index, as applicable,
provided that demonstrated customer interest exists for such series, as
expressed by institutional, corporate or individual customers or their
brokers. Market-Makers trading for their own account shall not be
considered when determining customer interest under this provision. The
opening of the new Short Term Option Series shall not affect the series
of options of the same class previously opened.\7\
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\7\ These new parameters are similar to parameters that are
already in place for the Exchange's Quarterly Options Series pilot
program. See CBOE Rule 5.5(e)(4). The Exchange is also making a non-
substantive change to delete an errant phrase, ``or calculated index
value,'' in two locations in the text of CBOE Rule 5.5.03. Weekly
options overlying indexes are addressed in CBOE Rule 24.9(a)(2), so
the reference to a calculated index value in CBOE Rule 5.5.03 is
unnecessary.
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In support of the rule change, and as required by the Pilot Program
Approval Order, the Exchange has submitted to the Commission a Pilot
Program report (the ``Report'') detailing the Exchange's experience
with the Pilot Program. Specifically, the Report contains data and
written analysis regarding the four options classes included in the
Pilot Program. The Report was submitted under separate cover and seeks
confidential treatment under the Freedom of Information Act.
The Exchange believes there is sufficient investor interest and
demand to increase the number of series. The Exchange believes that the
Pilot Program has provided investors with additional means of managing
their risk exposures and carrying out their investment objectives.
Furthermore, the Exchange has not experienced any capacity-related
problems with respect to Short Term Option Series. The Exchange also
represents that it has the necessary system capacity to support the
option series listed under the Pilot Program and the proposed increase
in number of series.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act \8\ and the rules and regulations thereunder and, in
particular, the requirements of Section 6(b) of the Act.\9\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirements that the rules of
an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest. The Exchange believes that increasing the number
of series will result in a continuing benefit to investors, by allowing
them additional means to manage their risk exposures and carry out
their investment objectives.
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\8\ 15 U.S.C. 78s(b)(1).
\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 rule does not (i) significantly affect the
protection of investors or the public interest; (ii)
[[Page 65432]]
impose any significant burden on competition; and (iii) become
operative for 30 days from the date on which it was filed, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, provided that the
self-regulatory organization has given the Commission written notice of
its intent to file the proposed rule change at least five business days
prior to the date of filing of the proposed rule change or such shorter
time as designated by the Commission, the proposed rule change 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 a self-regulatory organization to provide the Commission
with 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 Exchange has fulfilled this requirement.
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The Exchange has asked the Commission to waive the operative delay
to permit the proposed rule change to become operative prior to the
30th day after filing. The Commission has determined that waiving the
30-day operative delay of the Exchange's proposal is consistent with
the protection of investors and the public interest because such waiver
will enable CBOE to better meet customer demand in light of recent
increased volatility in the marketplace.\13\ Therefore, the Commission
designates the proposal operative upon filing.
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 No. SR-CBOE-2008-110 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-2008-110. 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 available publicly. All
submissions should refer to File No. SR-CBOE-2008-110 and should be
submitted on or before November 24, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26105 Filed 10-31-08; 8:45 am]
BILLING CODE 8011-01-P
