Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Clarify the Definition of “Narrow-Based Index”, 43739-43741 [E9-20656]

Download as PDF Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices mstockstill on DSKH9S0YB1PROD with NOTICES perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. As discussed above, all NYSE Amex market participants will be able to view Electronic Complex Orders in the Consolidated Book and submit Electronic Complex Orders to the CME to trade against orders in the Consolidated Book. Accordingly, the Commission believes that the proposal could increase the transparency of Electronic Complex Orders and facilitate their execution. The proposal provides customer Electronic Complex Orders with priority over non-customer Electronic Complex Orders at the same price,22 and also preserves the priority of customer orders in the individual leg markets. In this regard, if individual customer orders in the Consolidated Book can execute an incoming Electronic Complex Order in full, or in a permissible ratio, at the same total net debit or credit as an Electronic Complex Order in the Consolidated Book, the individual customer orders will have priority.23 Further, when an Electronic Complex Order is executed, the price of at least one leg of the order must trade at a price that is better than the corresponding price of all customer bids or offers in the Consolidated Book for that series by at least one standard trading increment.24 The Commission believes that it is reasonable and consistent with the Act for NYSE Amex not to provide a guaranteed allocation to Specialists, as described above, because Specialists do not have quoting obligations for complex strategies. Finally, the Commission believes that the proposal could facilitate the execution of stock-option orders on the Amex by providing for the electronic handling and execution of these orders, which currently must be handled manually. The Commission notes that proposal provides for the execution of stock-option orders submitted to the CME in a manner that is consistent with the Amex’s existing priority rules for stock-option orders, which provide the options leg of a stock-option order with priority over bids (offers) in the trading crowd at the same price, but not over public customer orders in the Consolidated Book.25 Accordingly, the 22 See NYSE Amex Rule 980NY(b). NYSE Amex Rule 980NY(c)(i). 24 See NYSE Amex Rule 980NY, Commentary .02. 25 See NYSE Amex Rule 963NY(d). The Commission notes that the proposed rules governing the handling of Stock/option Orders are substantially similar to rules adopted by the Chicago Board Options Exchange, Incorporated, which the Commission reviewed previously. See 23 See VerDate Nov<24>2008 17:19 Aug 26, 2009 Jkt 217001 Commission finds that the NYSE Amex rules concerning the execution of Stock/ option Orders submitted to the CME are consistent with the Act. IV. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after publication for comment in the Federal Register. Amendment No. 1, which inserts a reference to ‘‘quotes’’ that was omitted erroneously and replaces an incorrect cross-reference in the proposed rule text, help to clarify the proposed rule change and do not differ materially from the proposal as published in the Federal Register on July 19, 2009. Accordingly, the Commission finds good cause, consistent with Section 19(b)(2) of the Act,26 to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. V. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 1, including whether Amendment No. 1 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 rulecomments@sec.gov. Please include File Number SR–NYSEAmex–2009–42 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–NYSEAmex–2009–42. 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 CBOE Rule 6.53C, Commentary .06. See also Securities Exchange Act Release Nos. 56903 (December 5, 2007), 72 FR 70356 (December 11, 2007) (File No. SR–CBOE–2007–68) (order approving rules relating to the electronic handling and execution of stock-option orders); and 59585 (March 17, 2009), 74 FR 12416 (March 24, 2009) (File No. SR–CBOE–2009–017) (notice of filing and immediate effectiveness of rules allowing conversions and reversals to be routed to the electronic complex order book). 26 15 U.S.C. 78s(b)(2). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 43739 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 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–NYSEAmex–2009–42 and should be submitted on or before September 17, 2009. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,27 that the proposed rule change (SR–NYSEAmex– 2009–42), as modified by Amendment No. 1, is approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–20654 Filed 8–26–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60556; File No. SR–CBOE– 2009–061] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Clarify the Definition of ‘‘Narrow-Based Index’’ August 21, 2009. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the 27 15 28 17 E:\FR\FM\27AUN1.SGM U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 27AUN1 43740 Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices ‘‘Act’’) 1 and Rule 19b–4 2 thereunder, notice is hereby given that on August 18, 2009, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend Rule 24.1(i)(2) by clarifying the definition of ‘‘industry index’’ and ‘‘narrow-basedindex’’ to include indices having component securities that are all headquartered within a single country. The text of the rule proposal 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 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 mstockstill on DSKH9S0YB1PROD with NOTICES 1. Purpose This proposed rule change is based on a filing previously submitted by NASDAQ OMX PHLX, Inc (‘‘PHLX’’) that was effective on filing.5 CBOE proposes to amend Rule 24.1(i)(2), which defines the terms 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 5 See Exchange Act Release No. 60150 (June 19, 2009), 74 FR 30658 (June 26, 2009) (SR–Phlx–2009– 35). 2 17 VerDate Nov<24>2008 17:19 Aug 26, 2009 Jkt 217001 ‘‘industry index’’ and ‘‘narrow-based index’’ to mean ‘‘an index designed to be representative of a particular industry or a group of related industries,’’ to also accommodate an index having component securities that are all headquartered within a single country to be listed as a narrow-based index pursuant to Exchange rules. This would enable options based on an index, including companies all headquartered within a single country, to be rightfully considered as a generic narrow-based index for purposes of listing on the Exchange and trading. The listing and trading of index options on the Exchange is generally conditioned on the ability to meet the rule requirements for narrow-based, micro-narrow based and broad based indices.6 More particularly regarding narrow-based indices, Rule 24.2(b) states that the Exchange may trade options on an underlying index pursuant to Rule 19b–4(e) of the Act 7 where all of the conditions noted are satisfied.8 Indeed, the Exchange has, and continues to, list and trade options on narrow-based indices based on industries or a group of related industries that are located within various countries. These options are traded pursuant to the Exchange’s index option trading rules.9 With the Exchange’s interpretation of Rule 24.1(i)(2) as discussed herein, the Exchange proposes to list and trade options, pursuant to Rule 24.2(b), on an index(es) that has component securities, which are all headquartered within a single country. The Exchange represents that, in all other material aspects, the underlying narrow-based index would be required to satisfy all other requirements for generic listing and trading pursuant to Rule 24.2(b) and 6 Broad-based (or market) and micro narrowbased indices, which are not at issue in this filing, are defined in Rule 24.1(i)(1) and 24.1(i)(3). 7 The International Securities Exchange and PHLX have the same ability pursuant to their own rules. 8 These include the index is capitalizationweighted, price-weighted, modified capitalizationweighted or equal dollar-weighted, and consists of ten or more component securities; each component security has a market capitalization of at least $75 million, except that for each of the lowest weighted component securities in the index that in the aggregate account for no more than 10% of the weight of the index; the market capitalization is at least $50 million; and trading volume of each component security has been at least one million shares for each of the last six months, except that for each of the lowest weighted component securities in the index that in the aggregate account for no more than 10% of the weight of the index, trading volume has been at least 500,000 shares for each of the last six months. See Rule 24.2(b)(1)–(12) or all of the conditions [sic]. 9 See Chapter XXIV (index options trading rules). See also Chapters I through XIX (general options trading rules). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 options on such indices would be traded pursuant to the Exchange’s trading rules.10 The proposed rule change simply seeks to clarify that the generic listing and trading standards would cover an index that otherwise qualifies as a ‘‘narrow-based index,’’ with the exception that the component securities of the index are all headquartered within a single country. The Exchange represents that its existing surveillance procedures applicable to trading in options will be adequate to properly monitor the trading in options on these narrowbased indices. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act 11 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.12 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 13 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 by clarifying the term ‘‘narrow-based index’’ also accommodates an index having component securities that are all headquartered within a single country. 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. 10 See id. The trading rules include, among other things, position limits, exercise limits and terms of options contracts (Rules 24.4A, 24.5 and 24.9). See also Securities Exchange Act Release No. 4052 (July 18, 2000), 65 FR 45805 (July 25, 2000) (SR–CBOE– 00–16) (order approving narrow-based index options position limit increase to 18,000, 24,000 and 31,500 contracts). 11 15 U.S.C. 78f(b)(1). [sic] 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). E:\FR\FM\27AUN1.SGM 27AUN1 Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, 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 14 and Rule 19b–4(f)(6) thereunder.15 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: mstockstill on DSKH9S0YB1PROD 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–2009–061 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–2009–061. 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–2009–061 and should be submitted on or before September 17, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Deputy Secretary. [FR Doc. E9–20656 Filed 8–26–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60555; File No. SR–CBOE– 2009–039] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, To Extend the Delta Hedging Exemption From Equity Options Position Limits to Customers August 21, 2009. On June 19, 2009, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) 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 extend the delta hedging exemption 14 15 16 17 15 17 1 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). CBOE has satisfied the five business-day prefiling requirement. VerDate Nov<24>2008 17:19 Aug 26, 2009 Jkt 217001 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 43741 from equity option position limits to positions of customers who hedge those positions in accordance with a pricing model maintained and operated by The Options Clearing Corporation (‘‘OCC’’). On July 8, 2009, CBOE filed Amendment No. 1 to the proposed rule change. The proposed rule change was published for comment in the Federal Register on July 17, 2009.3 The Commission received no comment letters on the proposal. This order approves the proposed rule change, as modified by Amendment No. 1. In December 2007, the Commission approved a CBOE proposal to create an exemption from position and exercise limits 4 applicable to equity options (stock options and options on exchangetraded funds) for positions held by CBOE members and certain nonmember affiliates that are ‘‘delta neutral’’ 5 under a ‘‘permitted pricing model’’ 6 (‘‘Exemption’’).7 When a position is not delta neutral, only the option contract equivalent of the net delta 8 of the position remains subject to the position limits in Rule 4.11.9 3 See Securities Exchange Act Release No. 60271 (July 9, 2009), 74 FR 34842. 4 Rule 4.12 establishes exercise limits for an option at the same level as the option’s position limit under Rule 4.11. 5 The term ‘‘delta neutral’’ is defined in Rule 4.11.04(c)(A) as referring to an equity option position that is hedged, in accordance with a permitted pricing model, by a position in the underlying security or one or more instruments relating to the underlying security, for the purpose of offsetting the risk that the value of the option position will change with incremental changes in the price of the security underlying the option position. 6 Under Rule 4.11.04(c)(C), ‘‘permitted pricing model’’ for purposes of the Exemption is a pricing model: (1) Maintained and operated by the OCC (‘‘OCC Model’’); (2) maintained and used by a member or its non-member affiliate subject to consolidated supervision by the Commission pursuant to Appendix E of Rule 15c3–1, 17 CFR 240.15c3–1, under the Act; (3) maintained and used by a financial holding company (‘‘FHC’’) or a company treated as an FHC under the Bank Holding Company Act of 1956, or its affiliate subject to consolidated holding company group supervision; (4) maintained and used by a Commissionregistered OTC derivatives dealer; or (5) used by a national bank under the National Bank Act. See Rule 4.11.04(c)(C). 7 See Securities Exchange Act Release No. 56970 (December 14, 2007), 72 FR 72428 (December 20, 2007) (SR–CBOE–2007–99) (‘‘Exemption Approval Order’’). 8 ‘‘Net delta’’ means, at any time, the number of shares (either long or short) required to offset the risk that the value of an equity option position will change with incremental changes in the price of the security underlying the option position. ‘‘Options contract equivalent of the net delta’’ means the net delta divided by the number of shares underlying the options contract. See Rule 4.11.04(c)(B). 9 The Commission notes that CBOE Rule 4.11.04 provides for multiple, independent hedge exemptions. Of course, to the extent that a position is used to hedge for the purpose of one exemption from position limit requirements, such as the delta Continued E:\FR\FM\27AUN1.SGM 27AUN1

Agencies

[Federal Register Volume 74, Number 165 (Thursday, August 27, 2009)]
[Notices]
[Pages 43739-43741]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-20656]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60556; File No. SR-CBOE-2009-061]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Clarify the Definition of ``Narrow-Based Index''

August 21, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 43740]]

``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given that 
on August 18, 2009, 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

    CBOE proposes to amend Rule 24.1(i)(2) by clarifying the definition 
of ``industry index'' and ``narrow-based-index'' to include indices 
having component securities that are all headquartered within a single 
country. The text of the rule proposal 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 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
    This proposed rule change is based on a filing previously submitted 
by NASDAQ OMX PHLX, Inc (``PHLX'') that was effective on filing.\5\
---------------------------------------------------------------------------

    \5\ See Exchange Act Release No. 60150 (June 19, 2009), 74 FR 
30658 (June 26, 2009) (SR-Phlx-2009-35).
---------------------------------------------------------------------------

    CBOE proposes to amend Rule 24.1(i)(2), which defines the terms 
``industry index'' and ``narrow-based index'' to mean ``an index 
designed to be representative of a particular industry or a group of 
related industries,'' to also accommodate an index having component 
securities that are all headquartered within a single country to be 
listed as a narrow-based index pursuant to Exchange rules. This would 
enable options based on an index, including companies all headquartered 
within a single country, to be rightfully considered as a generic 
narrow-based index for purposes of listing on the Exchange and trading.
    The listing and trading of index options on the Exchange is 
generally conditioned on the ability to meet the rule requirements for 
narrow-based, micro-narrow based and broad based indices.\6\ More 
particularly regarding narrow-based indices, Rule 24.2(b) states that 
the Exchange may trade options on an underlying index pursuant to Rule 
19b-4(e) of the Act \7\ where all of the conditions noted are 
satisfied.\8\ Indeed, the Exchange has, and continues to, list and 
trade options on narrow-based indices based on industries or a group of 
related industries that are located within various countries. These 
options are traded pursuant to the Exchange's index option trading 
rules.\9\
---------------------------------------------------------------------------

    \6\ Broad-based (or market) and micro narrow-based indices, 
which are not at issue in this filing, are defined in Rule 
24.1(i)(1) and 24.1(i)(3).
    \7\ The International Securities Exchange and PHLX have the same 
ability pursuant to their own rules.
    \8\ These include the index is capitalization-weighted, price-
weighted, modified capitalization-weighted or equal dollar-weighted, 
and consists of ten or more component securities; each component 
security has a market capitalization of at least $75 million, except 
that for each of the lowest weighted component securities in the 
index that in the aggregate account for no more than 10% of the 
weight of the index; the market capitalization is at least $50 
million; and trading volume of each component security has been at 
least one million shares for each of the last six months, except 
that for each of the lowest weighted component securities in the 
index that in the aggregate account for no more than 10% of the 
weight of the index, trading volume has been at least 500,000 shares 
for each of the last six months. See Rule 24.2(b)(1)-(12) or all of 
the conditions [sic].
    \9\ See Chapter XXIV (index options trading rules). See also 
Chapters I through XIX (general options trading rules).
---------------------------------------------------------------------------

    With the Exchange's interpretation of Rule 24.1(i)(2) as discussed 
herein, the Exchange proposes to list and trade options, pursuant to 
Rule 24.2(b), on an index(es) that has component securities, which are 
all headquartered within a single country. The Exchange represents 
that, in all other material aspects, the underlying narrow-based index 
would be required to satisfy all other requirements for generic listing 
and trading pursuant to Rule 24.2(b) and options on such indices would 
be traded pursuant to the Exchange's trading rules.\10\ The proposed 
rule change simply seeks to clarify that the generic listing and 
trading standards would cover an index that otherwise qualifies as a 
``narrow-based index,'' with the exception that the component 
securities of the index are all headquartered within a single country.
---------------------------------------------------------------------------

    \10\ See id. The trading rules include, among other things, 
position limits, exercise limits and terms of options contracts 
(Rules 24.4A, 24.5 and 24.9). See also Securities Exchange Act 
Release No. 4052 (July 18, 2000), 65 FR 45805 (July 25, 2000) (SR-
CBOE-00-16) (order approving narrow-based index options position 
limit increase to 18,000, 24,000 and 31,500 contracts).
---------------------------------------------------------------------------

    The Exchange represents that its existing surveillance procedures 
applicable to trading in options will be adequate to properly monitor 
the trading in options on these narrow-based indices.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act \11\ and the rules and regulations thereunder and, in 
particular, the requirements of Section 6(b) of the Act.\12\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \13\ 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 by clarifying the term ``narrow-based index'' also 
accommodates an index having component securities that are all 
headquartered within a single country.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(1). [sic]
    \12\ 15 U.S.C. 78f(b).
    \13\ 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.

[[Page 43741]]

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

    Because the foregoing proposed rule does not (i) significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate if consistent with the protection of 
investors and the public interest, 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 \14\ and Rule 19b-
4(f)(6) thereunder.\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). CBOE has satisfied the five 
business-day prefiling requirement.
---------------------------------------------------------------------------

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-2009-061 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-2009-061. 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-2009-061 and should be 
submitted on or before September 17, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20656 Filed 8-26-09; 8:45 am]
BILLING CODE 8010-01-P
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