Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Hybrid Quote Locks, 45498-45500 [E9-21135]
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45498
Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices
jlentini on DSKJ8SOYB1PROD with NOTICES
Applicants state that multiple classes of
shares of the Funds may violate section
18(i) of the Act because each class
would be entitled to exclusive voting
rights with respect to matters solely
related to that class.
3. Section 6(c) of the Act provides that
the Commission may exempt any
person, security or transaction or any
class or classes of persons, securities or
transactions from any provision of the
Act, or from any rule thereunder, if and
to the extent such exemption is
necessary or appropriate in the public
interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants
request an exemption under section 6(c)
from sections 18(c) and 18(i) to permit
the Funds to issue multiple classes of
shares.
4. Applicants submit that the
proposed allocation of expenses and
voting rights among multiple classes is
equitable and will not discriminate
against any group or class of
shareholders. Applicants submit that
the proposed arrangements would
permit a Fund to facilitate the
distribution of its shares and provide
investors with a broader choice of
shareholder services. Applicants assert
that the proposed closed-end
investment company multiple class
structure does not raise the concerns
underlying section 18 of the Act to any
greater degree than open-end
investment companies’ multiple class
structures that are permitted by rule
18f–3 under the Act. Applicants state
that each Fund will comply with the
provisions of rule 18f–3 as if it were an
open-end investment company.
Early Withdrawal Charges
1. Section 23(c) of the Act provides,
in relevant part, that no registered
closed-end investment company will
purchase securities of which it is the
issuer, except: (a) On a securities
exchange or other open market; (b)
pursuant to tenders, after reasonable
opportunity to submit tenders given to
all holders of securities of the class to
be purchased; or (c) under other
circumstances as the Commission may
permit by rules and regulations or
orders for the protection of investors.
2. Rule 23c–3 under the Act permits
a registered closed-end investment
company (an ‘‘interval fund’’) to make
repurchase offers of between five and
twenty-five percent of its outstanding
shares at net asset value at periodic
intervals pursuant to a fundamental
policy of the interval fund. Rule 23c–
3(b)(1) under the Act provides that an
interval fund may deduct from
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16:56 Sep 01, 2009
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repurchase proceeds only a repurchase
fee, not to exceed two percent of the
proceeds, that is reasonably intended to
compensate the fund for expenses
directly related to the repurchase.
3. Section 23(c)(3) provides that the
Commission may issue an order that
would permit a closed-end investment
company to repurchase its shares in
circumstances in which the repurchase
is made in a manner or on a basis that
does not unfairly discriminate against
any holders of the class or classes of
securities to be purchased. As noted
above, section 6(c) provides that the
Commission may exempt any person,
security or transaction from any
provision of the Act, if and to the extent
that the exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Applicants request relief under
sections 6(c) and 23(c) from rule 23c–3
to the extent necessary for the Funds to
impose EWCs on shares of the Funds
submitted for repurchase that have been
held for less than a specified period.
4. Applicants believe that the
requested relief meets the standards of
sections 6(c) and 23(c)(3). Rule 6c–10
under the Act permits open-end
investment companies to impose
contingent deferred sales loads
(‘‘CDSLs’’), subject to certain conditions.
Applicants state that EWCs are
functionally similar to CDSLs imposed
by open-end investment companies
under rule 6c–10. Applicants state that
EWCs may be necessary for the
distributor to recover distribution costs.
Applicants state that any EWC imposed
by the Funds will comply with rule 6c–
10 under the Act as if the rule were
applicable to closed-end investment
companies. The Funds also will disclose
EWCs in accordance with the
requirements of Form N–1A concerning
CDSLs. Applicants further state that the
Funds will apply the EWC (and any
waivers or scheduled variations of the
EWC) uniformly to all shareholders in a
given class and consistently with the
requirements of rule 22d–1 under the
Act.
Asset-based Distribution Fees
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit an
affiliated person of a registered
investment company or an affiliated
person of such person, acting as
principal, from participating in or
effecting any transaction in connection
with any joint enterprise or joint
arrangement in which the investment
company participates unless the
Commission issues an order permitting
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the transaction. In reviewing
applications submitted under section
17(d) and rule 17d–1, the Commission
considers whether the participation of
the investment company in a joint
enterprise or joint arrangement is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants.
2. Rule 17d–3 under the Act provides
an exemption from section 17(d) and
rule 17d–1 to permit open-end
investment companies to enter into
distribution arrangements pursuant to
rule 12b–1 under the Act. Applicants
request an order under section 17(d) and
rule 17d–1 under the Act to permit the
Fund to impose asset-based distribution
fees. Applicants have agreed to comply
with rules 12b–1 and 17d–3 as if those
rules applied to closed-end investment
companies.
Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Each Fund relying on the order will
comply with the provisions of rules 6c–
10, 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, as if
those rules applied to closed-end
management investment companies,
and will comply with the NASD Sales
Charge Rule, as amended from time to
time, as if that rule applied to all closedend management investment
companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21138 Filed 9–1–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60572; File No. SR–CBOE–
2009–060]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to Hybrid Quote
Locks
August 26, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
1 15
2 17
E:\FR\FM\02SEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
02SEN1
Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices
notice is hereby given that on August
19, 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, II, and
III below, which Items have been
prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
Rules 6.45A, Priority and Allocation of
Equity Option Trades on the CBOE
Hybrid System, and 6.45B, Priority and
Allocation of Trades in Index Options
and Options on ETFs on the CBOE
Hybrid System, to eliminate provisions
in each respective rule that provide that
Market-Makers whose quotes are locked
(or inverted) will receive a quote update
notification. CBOE is also proposing to
amend Rule 6.45A to provide that the
length of the quote lock counting period
will be established by the Exchange,
may vary by product, and will not
exceed one second. 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.
jlentini on DSKJ8SOYB1PROD with NOTICES
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.
3 15
4 17
16:56 Sep 01, 2009
1. Purpose
Rules 6.45A(d) and 6.45B(d) describe
how the Hybrid System operates in the
event that a Market-Maker’s
disseminated quotes interact with the
disseminated quote(s) of other MarketMakers, resulting in a ‘‘locked’’ quote
(e.g., $1.00 bid—$1.00 offer). In the
event of a quote lock, the following
currently occurs:
(i) The Exchange will disseminate the
locked market and both quotes will be
deemed ‘‘firm’’ disseminated market
quotes.
(ii) The Market-Makers whose quotes
are locked will receive a quote update
notification advising that their quotes
are locked.
(iii) When the market locks, a
‘‘counting period’’ will begin during
which Market-Makers whose quotes are
locked may eliminate the locked market.
Provided, however, in accordance with
paragraph (i) above a Market-Maker will
be obligated to execute customer and
broker-dealer orders eligible for
automatic execution pursuant to Rule
6.13, CBOE Hybrid System’s Automatic
Execution Feature, at his disseminated
quote in accordance with Rule 8.51,
Firm Disseminated Market Quotes. If at
the end of the counting period the
quotes remain locked, the locked quotes
will automatically execute against each
other in accordance with the applicable
allocation algorithm. Under Rule 6.45A
(applicable to equity options), the
counting period is one second. Under
Rule 6.45B (applicable to index and ETF
options), the length of the counting
period is established by the Exchange,
may vary by product, and will not
exceed one second.5
(iv) The Hybrid System will not
disseminate an internally crossed
market (i.e., the CBOE best bid is higher
than the CBOE best offer). If a MarketMaker submits a quote (‘‘incoming
quote’’) that would invert an existing
quote (‘‘existing quote’’), the Hybrid
System will change the incoming quote
such that it locks the first quote and
send a notice to the second MarketMaker indicating that its quote was
changed. Locked markets are handled in
accordance with paragraphs (i) through
(iii) above. During the lock period, if the
existing quote is cancelled subsequent
5 Under Rule 6.45B, an exception applies when
the market locks in a Hybrid 3.0 class. In such
cases, there is no counting period. Locked quotes
will not automatically execute against each other
and will remain locked until a quote is cancelled
or changed. See Rule 6.45A(d)(i)(C).
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b-4(f)(6).
VerDate Nov<24>2008
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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45499
to the time the incoming quote is
changed, the incoming quote will
automatically be restored to its original
terms.
Through this rule change, the
Exchange is seeking to amend the
locked quote process in two respects.
First, the Exchange is proposing to
eliminate the provisions that provide
that Market-Makers whose quotes are
locked (or inverted) will receive a quote
update notification message (as
described in paragraphs (ii) and (iv)
above). The Exchange will continue to
disseminate the locked market and have
a counting period during which MarketMakers whose quotes are locked may
eliminate the locked market in the same
manner as described above. The
Exchange believes that elimination of
the notification messages will permit its
systems to operate more efficiently. In
addition, the Exchange believes that it is
no longer necessary for Market-Makers
to have a separate notification to react
to a quote lock. For example, they can
instead react based on a disseminated
locked market.
Second, the Exchange is amending
Rule 6.45A (applicable to equity
options) to provide that the length of the
counting period, which is currently
fixed at one-second, will instead be
established by the Exchange, may vary
by product, and will not exceed one
second. This change will provide more
flexibility in the administration of the
rule and is consistent with the counting
period language that already exists in
Rule 6.45B (applicable to index and ETF
options). The Exchange had previously
indicated that the ability to vary the
timer by product is more important in
an index setting where there are larger
trading crowds than there are in an
equity setting.6 However, the Exchange
believes we no longer need to have that
distinction and we should have the
same flexibility to reduce the timer in
an equity setting.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with 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
6 See Securities Exchange Act Release No. 51680
(May 10, 2005), 70 FR 28326 (May 17, 2005) (SR–
CBOE–2004–87) (notice of proposed rule change
relating to trading rules on the Hybrid System for
index options and options on ETFs); see also
Securities Exchange Act Release No. 51822 (June
10, 2005), 70 FR 35321 (June 17, 2005) (order
approving SR–CBOE–2004–87).
7 15 U.S.C. 78s(b)(1). [sic]
8 15 U.S.C. 78f(b).
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45500
Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices
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. In particular, the
Exchange believes that the elimination
of the notification messages will permit
its systems to operate more efficiently
and the change to the counting period
for equity options classes will provide
more flexibility in the administration of
the rule in a manner consistent with the
existing rule for index and ETF options
classes.
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.
jlentini on DSKJ8SOYB1PROD with NOTICES
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 change (i)
does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) by its terms, does not 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 10 and
Rule 19b–4(f)(6) thereunder.11 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
9 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6).
10 15
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16:56 Sep 01, 2009
Jkt 217001
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2009–060 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.
should be submitted on or before
September 23, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–21135 Filed 9–1–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60573; File No. SR–NYSE–
2009–86]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Extending the
Length of Time That Exchange
Systems Transmit Odd-Lot Order-byOrder Information to the DMM Unit
Algorithm Prior to the Opening
Transaction From August 31, 2009 to
October 31, 2009
August 26, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
All submissions should refer to File
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Number SR–CBOE–2009–060. This file
notice is hereby given that, on August
number should be included on the
21, 2009, New York Stock Exchange
subject line if e-mail is used. To help the LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with
Commission process and review your
the Securities and Exchange
comments more efficiently, please use
Commission (‘‘Commission’’) the
only one method. The Commission will proposed rule change as described in
post all comments on the Commission’s Items I and II below, which Items have
Internet Web site https://www.sec.gov/
been prepared by the Exchange. The
rules/sro.shtml). Copies of the
Exchange designated the proposal
submission, all subsequent
eligible for immediate effectiveness
amendments, all written statements
pursuant to Section 19(b)(3)(A) of the
with respect to the proposed rule
Act 3 and Rule 19b–4(f)(6) thereunder.4
change that are filed with the
The Commission is publishing this
Commission, and all written
notice to solicit comments on the
communications relating to the
proposed rule change from interested
proposed rule change between the
persons.
Commission and any person, other than
I. Self-Regulatory Organization’s
those that may be withheld from the
Statement of the Terms of Substance of
public in accordance with the
the Proposed Rule Change
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
The Exchange proposes to extend the
the Commission’s Public Reference
length of time that Exchange systems
Room, 100 F Street, NE., Washington,
transmit odd-lot order-by-order
DC 20549, on official business days
information to the DMM unit algorithm
between the hours of 10 a.m. and 3 p.m.
prior to the opening transaction from
Copies of such filing also will be
August 31, 2009 to October 31, 2009.
available for inspection and copying at
The text of the proposed rule change is
the principal office of the CBOE. All
available at the Exchange, the
comments received will be posted
Commission’s Public Reference Room,
without change; the Commission does
and https://www.nyse.com.
not edit personal identifying
information from submissions. You
12 17 CFR 200.30–3(a)(12).
should submit only information that
1 15 U.S.C. 78s(b)(1).
you wish to make available publicly. All
2 17 CFR 240.19b–4.
submissions should refer to File
3 15 U.S.C. 78s(b)(3)(A).
Number SR–CBOE–2009–060 and
4 17 CFR 240.19b–4(f)(6).
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]]>Agencies
[Federal Register Volume 74, Number 169 (Wednesday, September 2, 2009)]
[Notices]
[Pages 45498-45500]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21135]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60572; File No. SR-CBOE-2009-060]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to Hybrid Quote Locks
August 26, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 45499]]
notice is hereby given that on August 19, 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, II, and III 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 is proposing to amend Rules 6.45A, Priority and
Allocation of Equity Option Trades on the CBOE Hybrid System, and
6.45B, Priority and Allocation of Trades in Index Options and Options
on ETFs on the CBOE Hybrid System, to eliminate provisions in each
respective rule that provide that Market-Makers whose quotes are locked
(or inverted) will receive a quote update notification. CBOE is also
proposing to amend Rule 6.45A to provide that the length of the quote
lock counting period will be established by the Exchange, may vary by
product, and will not exceed one second. 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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Rules 6.45A(d) and 6.45B(d) describe how the Hybrid System operates
in the event that a Market-Maker's disseminated quotes interact with
the disseminated quote(s) of other Market-Makers, resulting in a
``locked'' quote (e.g., $1.00 bid--$1.00 offer). In the event of a
quote lock, the following currently occurs:
(i) The Exchange will disseminate the locked market and both quotes
will be deemed ``firm'' disseminated market quotes.
(ii) The Market-Makers whose quotes are locked will receive a quote
update notification advising that their quotes are locked.
(iii) When the market locks, a ``counting period'' will begin
during which Market-Makers whose quotes are locked may eliminate the
locked market. Provided, however, in accordance with paragraph (i)
above a Market-Maker will be obligated to execute customer and broker-
dealer orders eligible for automatic execution pursuant to Rule 6.13,
CBOE Hybrid System's Automatic Execution Feature, at his disseminated
quote in accordance with Rule 8.51, Firm Disseminated Market Quotes. If
at the end of the counting period the quotes remain locked, the locked
quotes will automatically execute against each other in accordance with
the applicable allocation algorithm. Under Rule 6.45A (applicable to
equity options), the counting period is one second. Under Rule 6.45B
(applicable to index and ETF options), the length of the counting
period is established by the Exchange, may vary by product, and will
not exceed one second.\5\
---------------------------------------------------------------------------
\5\ Under Rule 6.45B, an exception applies when the market locks
in a Hybrid 3.0 class. In such cases, there is no counting period.
Locked quotes will not automatically execute against each other and
will remain locked until a quote is cancelled or changed. See Rule
6.45A(d)(i)(C).
---------------------------------------------------------------------------
(iv) The Hybrid System will not disseminate an internally crossed
market (i.e., the CBOE best bid is higher than the CBOE best offer). If
a Market-Maker submits a quote (``incoming quote'') that would invert
an existing quote (``existing quote''), the Hybrid System will change
the incoming quote such that it locks the first quote and send a notice
to the second Market-Maker indicating that its quote was changed.
Locked markets are handled in accordance with paragraphs (i) through
(iii) above. During the lock period, if the existing quote is cancelled
subsequent to the time the incoming quote is changed, the incoming
quote will automatically be restored to its original terms.
Through this rule change, the Exchange is seeking to amend the
locked quote process in two respects. First, the Exchange is proposing
to eliminate the provisions that provide that Market-Makers whose
quotes are locked (or inverted) will receive a quote update
notification message (as described in paragraphs (ii) and (iv) above).
The Exchange will continue to disseminate the locked market and have a
counting period during which Market-Makers whose quotes are locked may
eliminate the locked market in the same manner as described above. The
Exchange believes that elimination of the notification messages will
permit its systems to operate more efficiently. In addition, the
Exchange believes that it is no longer necessary for Market-Makers to
have a separate notification to react to a quote lock. For example,
they can instead react based on a disseminated locked market.
Second, the Exchange is amending Rule 6.45A (applicable to equity
options) to provide that the length of the counting period, which is
currently fixed at one-second, will instead be established by the
Exchange, may vary by product, and will not exceed one second. This
change will provide more flexibility in the administration of the rule
and is consistent with the counting period language that already exists
in Rule 6.45B (applicable to index and ETF options). The Exchange had
previously indicated that the ability to vary the timer by product is
more important in an index setting where there are larger trading
crowds than there are in an equity setting.\6\ However, the Exchange
believes we no longer need to have that distinction and we should have
the same flexibility to reduce the timer in an equity setting.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 51680 (May 10,
2005), 70 FR 28326 (May 17, 2005) (SR-CBOE-2004-87) (notice of
proposed rule change relating to trading rules on the Hybrid System
for index options and options on ETFs); see also Securities Exchange
Act Release No. 51822 (June 10, 2005), 70 FR 35321 (June 17, 2005)
(order approving SR-CBOE-2004-87).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
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
[[Page 45500]]
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.
In particular, the Exchange believes that the elimination of the
notification messages will permit its systems to operate more
efficiently and the change to the counting period for equity options
classes will provide more flexibility in the administration of the rule
in a manner consistent with the existing rule for index and ETF options
classes.
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\7\ 15 U.S.C. 78s(b)(1). [sic]
\8\ 15 U.S.C. 78f(b).
\9\ 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 change (i) does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) by its terms,
does not 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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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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-2009-060 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-2009-060. 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 CBOE. All comments received will
be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2009-060 and should be submitted on
or before September 23, 2009.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21135 Filed 9-1-09; 8:45 am]
BILLING CODE 8010-01-P
