Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Regarding the CBSX Floor Post, 38071-38072 [E9-18166]

Download as PDF Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change is designated by the Exchange as establishing or changing a due, fee, or other charge, thereby qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A)(ii) 6 of the Act and subparagraph (f)(2) of Rule 19b–4 7 thereunder. At any time within 60 days of the filing of the 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: erowe on DSK5CLS3C1PROD 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–2009–044 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–CBOE–2009–044. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the 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 Number SR–CBOE– 2009–044 and should be submitted on or before August 20, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–18167 Filed 7–29–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60375; File No. SR–CBOE– 2009–047] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Regarding the CBSX Floor Post July 23, 2009. 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 July 2, 2009, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. On July 23, 2009, the Exchange filed Amendment No. 1, which replaced the original filing in its entirety. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The filing proposes to modify the CBOE Stock Exchange (‘‘CBSX’’) Rules to allow all CBSX Market-Maker types to operate from the Floor Post. The text of the proposed rule change is available 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 6 15 U.S.C. 78s(b)(3)(A)(ii). 7 17 CFR 240.19b–4(f)(2). VerDate Nov<24>2008 15:34 Jul 29, 2009 1 15 Jkt 217001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 38071 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 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 CBSX is an all electronic stock marketplace. One of the reasons CBOE created CBSX was to try to capture some of the sizable stock trading done by CBOE options traders. CBOE members trade stock both as a hedging vehicle for option trades done on CBOE and in connection with trading complex orders that contain stock and option components (e.g. a buy-write). Thus, it was always envisioned that traders on CBOE’s trading floor would trade stock on CBSX. All CBOE members are eligible to trade on CBSX without incurring any extra costs or completing lengthy ‘‘membership’’ applications. CBOE also created a limited number of CBSX Trading Permits to allow potential non-CBOE member users that do not want to incur the significant costs associated with buying or leasing a CBOE membership to trade on CBSX.3 These Permit Holders are not allowed to trade options on CBOE. To help generate interest in CBSX with the CBOE trading floor community, the Exchange established the CBSX Floor Post. The Floor Post is a location on the CBOE trading floor where CBSX Designated Primary Market-Maker (‘‘DPM’’) personnel can be stationed to respond to stock price discovery requests from CBOE’s trading floor community. As part of CBSX’s approval, the Exchange was asked to physically separate the CBSX Floor Post from the options trading posts (i.e. eliminate sightlines between the Floor Post and 3 See Securities Exchange Act Rel. No. 34–54987 (December 20, 2006), 71 FR 78481 (December 29, 2006) (SR–CBOE–2006–107). E:\FR\FM\30JYN1.SGM 30JYN1 38072 Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices erowe on DSK5CLS3C1PROD with NOTICES any equity option trading posts). This request was made to avoid any potential issues related to ‘‘side-by-side trading’’ which involves a stock trading location situated in close and open physical proximity to a location where a derivative on that stock (e.g., an option) is traded.4 The Rule governing the CBSX Floor Post is Rule 51.12. The Exchange now proposes to modify Rule 51.12 to permit all CBSX Market-Makers types to utilize the Floor Post. Currently, the Rule provides that only CBSX DPMs may operate from the Floor Post (brokers are also permitted to enter the Floor Post area).5 Recently, however, CBSX has received requests from CBSX Market-Makers seeking to operate from the Floor Post. This filing would allow them to do so. The Floor Post continues to restrict any sightlines to the equity option trading posts. Also, the CBSX Fees Schedule has been amended to include a fee for CBSX Market-Makers using the CBSX Floor Post. The Exchange has also received inquiries from CBSX Trading Permit Holders that act in the capacity of CBSX Brokers to operate from CBOE’s trading floor. Many current CBOE members (including Floor Brokers) execute stock orders on CBSX from the trading floor. Trading Permit Holders on the CBOE trading floor would enter orders on CBSX just like any other user on the CBOE trading floor. The only difference is that CBSX Trading Permit holders are not allowed to trade options (and have not incurred the costs associated with CBOE membership). The Exchange has established a fee for Trading Permit Holders that operate on CBOE’s trading floor from a perimeter booth (these booths, which are typically occupied by CBOE Floor Brokers, are located around the perimeter of the trading floor).6 It is possible that no CBSX Trading Permit Holders (whether they are CBSX Market-Maker or CBSX Brokers) ultimately decide to establish a physical operation on the CBOE trading floor. However, to the extent that they do, any CBSX Market-Making would be limited to operating from the CBSX Floor Post, while CBSX Brokers would be allowed to establish operations at perimeter booths. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the 4 Side-by-side trading concerns originated in connection with open outcry trading on exchange trading floors (i.e., they pre-date the advent of allelectronic exchanges). 5 No CBSX DPMs are situating personnel at the Floor Post at this time. It is empty. 6 See SR–CBOE–2009–044. VerDate Nov<24>2008 15:34 Jul 29, 2009 Jkt 217001 Securities Exchange Act of 1934 (the ‘‘Act’’) 7 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.8 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 9 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. Permitting CBSX Market Makers to use the CBSX Floor Post along with Floor Brokers and CBSX DPM personnel promotes just and equitable principles of trade and removes impediments to and perfects the mechanism for a free and open market. 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which NYSE consents, the Commission will: (A) By order approve such proposed rule change; or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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: PO 00000 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–2009–047 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–CBOE–2009–047. 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 offices 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 Number SR–CBOE–2009–047 and should be submitted on or before August 20, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–18166 Filed 7–29–09; 8:45 am] BILLING CODE 8010–01–P 7 15 U.S.C. 78s(b)(1). 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). Frm 00094 Fmt 4703 10 17 Sfmt 4703 E:\FR\FM\30JYN1.SGM CFR 200.30–3(a)(12). 30JYN1

Agencies

[Federal Register Volume 74, Number 145 (Thursday, July 30, 2009)]
[Notices]
[Pages 38071-38072]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18166]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60375; File No. SR-CBOE-2009-047]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change, as Modified by 
Amendment No. 1, Regarding the CBSX Floor Post

July 23, 2009.
    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 July 2, 2009, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. On July 23, 2009, the Exchange filed Amendment No. 1, which 
replaced the original filing in its entirety. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The filing proposes to modify the CBOE Stock Exchange (``CBSX'') 
Rules to allow all CBSX Market-Maker types to operate from the Floor 
Post. 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 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
    CBSX is an all electronic stock marketplace. One of the reasons 
CBOE created CBSX was to try to capture some of the sizable stock 
trading done by CBOE options traders. CBOE members trade stock both as 
a hedging vehicle for option trades done on CBOE and in connection with 
trading complex orders that contain stock and option components (e.g. a 
buy-write). Thus, it was always envisioned that traders on CBOE's 
trading floor would trade stock on CBSX. All CBOE members are eligible 
to trade on CBSX without incurring any extra costs or completing 
lengthy ``membership'' applications. CBOE also created a limited number 
of CBSX Trading Permits to allow potential non-CBOE member users that 
do not want to incur the significant costs associated with buying or 
leasing a CBOE membership to trade on CBSX.\3\ These Permit Holders are 
not allowed to trade options on CBOE.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Rel. No. 34-54987 (December 20, 
2006), 71 FR 78481 (December 29, 2006) (SR-CBOE-2006-107).
---------------------------------------------------------------------------

    To help generate interest in CBSX with the CBOE trading floor 
community, the Exchange established the CBSX Floor Post. The Floor Post 
is a location on the CBOE trading floor where CBSX Designated Primary 
Market-Maker (``DPM'') personnel can be stationed to respond to stock 
price discovery requests from CBOE's trading floor community. As part 
of CBSX's approval, the Exchange was asked to physically separate the 
CBSX Floor Post from the options trading posts (i.e. eliminate 
sightlines between the Floor Post and

[[Page 38072]]

any equity option trading posts). This request was made to avoid any 
potential issues related to ``side-by-side trading'' which involves a 
stock trading location situated in close and open physical proximity to 
a location where a derivative on that stock (e.g., an option) is 
traded.\4\ The Rule governing the CBSX Floor Post is Rule 51.12.
---------------------------------------------------------------------------

    \4\ Side-by-side trading concerns originated in connection with 
open outcry trading on exchange trading floors (i.e., they pre-date 
the advent of all-electronic exchanges).
---------------------------------------------------------------------------

    The Exchange now proposes to modify Rule 51.12 to permit all CBSX 
Market-Makers types to utilize the Floor Post. Currently, the Rule 
provides that only CBSX DPMs may operate from the Floor Post (brokers 
are also permitted to enter the Floor Post area).\5\ Recently, however, 
CBSX has received requests from CBSX Market-Makers seeking to operate 
from the Floor Post. This filing would allow them to do so. The Floor 
Post continues to restrict any sightlines to the equity option trading 
posts. Also, the CBSX Fees Schedule has been amended to include a fee 
for CBSX Market-Makers using the CBSX Floor Post.
---------------------------------------------------------------------------

    \5\ No CBSX DPMs are situating personnel at the Floor Post at 
this time. It is empty.
---------------------------------------------------------------------------

    The Exchange has also received inquiries from CBSX Trading Permit 
Holders that act in the capacity of CBSX Brokers to operate from CBOE's 
trading floor. Many current CBOE members (including Floor Brokers) 
execute stock orders on CBSX from the trading floor. Trading Permit 
Holders on the CBOE trading floor would enter orders on CBSX just like 
any other user on the CBOE trading floor. The only difference is that 
CBSX Trading Permit holders are not allowed to trade options (and have 
not incurred the costs associated with CBOE membership). The Exchange 
has established a fee for Trading Permit Holders that operate on CBOE's 
trading floor from a perimeter booth (these booths, which are typically 
occupied by CBOE Floor Brokers, are located around the perimeter of the 
trading floor).\6\
---------------------------------------------------------------------------

    \6\ See SR-CBOE-2009-044.
---------------------------------------------------------------------------

    It is possible that no CBSX Trading Permit Holders (whether they 
are CBSX Market-Maker or CBSX Brokers) ultimately decide to establish a 
physical operation on the CBOE trading floor. However, to the extent 
that they do, any CBSX Market-Making would be limited to operating from 
the CBSX Floor Post, while CBSX Brokers would be allowed to establish 
operations at perimeter booths.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') \7\ and the rules and 
regulations thereunder and, in particular, the requirements of Section 
6(b) of the Act.\8\ Specifically, the Exchange believes the proposed 
rule change is consistent with the Section 6(b)(5) \9\ 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. Permitting CBSX Market Makers to use 
the CBSX Floor Post along with Floor Brokers and CBSX DPM personnel 
promotes just and equitable principles of trade and removes impediments 
to and perfects the mechanism for a free and open market.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(1).
    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition 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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which NYSE consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2009-047 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2009-047. 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 offices 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 Number SR-CBOE-2009-047 and should be 
submitted on or before August 20, 2009.
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18166 Filed 7-29-09; 8:45 am]
BILLING CODE 8010-01-P
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