Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Option Expiration Months Open for Trading on the Exchange, 34278-34279 [2011-14516]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 113 (Monday, June 13, 2011)]
[Notices]
[Pages 34278-34279]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14516]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64614; File No. SR-CBOE-2011-053]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Option Expiration Months Open for Trading on 
the Exchange

June 7, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on June 3, 2011, the Chicago Board Options Exchange, Incorporated 
(the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) under the Act,\3\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to permit the Exchange to 
list additional expiration months if such expiration months are listed 
on another exchange. 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'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
    The purpose of the proposed rule change is to amend CBOE's Rules to 
permit the Exchange to list additional expiration months if such 
expiration months are listed on another exchange. This filing is based 
on a filing previously submitted by NASDAQ OMX PHLX, Inc. (``PHLX'') 
\4\ and by International Securities Exchange, LLC (``ISE'').\5\
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    \4\ See Securities Exchange Act Release No. 63700 (January 11, 
2011) 76 FR 2931 (January 18, 2011) (SR-PHLX-2011-04).
    \5\ See Securities Exchange Act Release No. 64343 (April 26, 
2011), 76 FR 24546 (May 2, 2011) (SR-ISE-2011-26).
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    Pursuant to Interpretation and Policy .03 to Rule 5.5, the Exchange 
typically opens four (4) expiration months for each class of options 
open for trading on the Exchange: The first two being the two nearest 
months, regardless of the quarterly cycle on which that class trades; 
the third and fourth being the next two months of the quarterly cycle 
previously designated by the Exchange for that specific class. For 
example, if the Exchange listed, in late April, a new stock option on a 
January-April-July-October quarterly cycle, the Exchange would list the 
two nearest term months (May and June) and the next two expiration 
months of the cycle (July and October). When the May series expires, 
the Exchange would add January series. When the June series expires, 
the Exchange would add August series as the next month, and would not 
add April.
    In 2010, for competitive reasons, the Exchange established a pilot 
program pursuant to which CBOE would list up to an additional two 
expiration months, for a total of six expiration months for each class 
of options open for trading on the Exchange (the ``Additional 
Expiration Months Pilot'').\6\
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    \6\ See Securities Exchange Act Release No. 63185 (October 27, 
2010), 75 FR 67419 (November 2, 2010) (SR-CBOE-2010-97). As stated 
in footnote 5 at page 67419, CBOE does not believe that Rule 5.5.03 
limits the maximum number of expiration months that may be listed. 
Rule 5.5(a) and 5.5(c) provide CBOE with the flexibility to add 
additional expiration months, which the Exchange has previously 
done. By establishing the Additional Series Pilot Program, CBOE did 
not limit its existing ability.
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    PHLX submitted a proposal to adopt rules that permit it to list an 
unlimited number of expiration months and series for each class of 
standard options opened for trading on that exchange. Specifically, 
PHLX amended its rules so that it can open ``at least one expiration 
month'' for each class of standard options open for trading on that 
exchange. CBOE does not believe that its Additional Expiration Months 
Pilot restricts the total number expirations that CBOE may list under 
its Rules. However, at least one other exchange (ISE), which has 
adopted a similar Additional Expiration Months Pilot has filed to 
expressly permit the listing of additional series if such series are 
listed on at least one other registered national securities exchange.
    For competitive reasons, CBOE proposes to add new Interpretation 
and Policy .19 to Rule 5.5 and new Interpretation and Policy .12 to 
Rule 24.9 to permit the Exchange to list additional expiration months 
on options classes opened for trading on the Exchange if such 
expiration months are opened for trading on at least one other national 
securities exchange. This proposed rule change will allow CBOE to match 
the listing of expiration months that other exchanges list.
    The Exchange notes that the proposed rule change affords additional 
flexibility in that it will permit the exchange to list those 
additional expiration months that have an actual demand from market 
participants thereby potentially reducing the proliferation of classes 
and series. The Exchange believes the proposed rule change is proper, 
and indeed necessary, in light of the need to have rules that permit 
the listing of identical expiration months across exchanges for 
products that multiply-listed and fungible with one another. The 
Exchange believes that the proposed rule change should encourage

[[Page 34279]]

competition and be beneficial to traders and market participants by 
providing them with a means to trade on the Exchange securities that 
are listed and traded on other exchanges.
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 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 proposed rule change will 
permit the Exchange to accommodate requests made by its Trading 
Privilege Holders and other market participants to list the additional 
expiration months and thus encourage competition without harming 
investors or the public interest.
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    \7\ 15 U.S.C. 78s(b)(1).
    \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

    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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Commission has waived the five-day prefiling requirement in this 
case.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the proposal should promote competition by allowing 
the Exchange, without undue delay, to list and trade option series that 
are trading on other options exchanges. Therefore, the Commission 
designates the proposal operative upon filing.\12\
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    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-053 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-2011-053. 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 website viewing and 
printing 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-CBOE-2011-053 and should be 
submitted on or before July 5, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14516 Filed 6-10-11; 8:45 am]
BILLING CODE 8011-01-P