Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change To Increase Position and Exercise Limits for EEM Options, 43897-43899 [2012-18219]
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Federal Register / Vol. 77, No. 144 / Thursday, July 26, 2012 / Notices
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 proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
TKELLEY on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
No. SR–BATS–2012–028 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 No.
SR–BATS–2012–028. This file number
should be included on the subject line
if email 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 Web site 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
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BATS–
2012–028 and should be submitted on
or before August 16, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.67
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–18218 Filed 7–25–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Release No. 34–67478; File No. SR–
CBOE–2012–066]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of
Proposed Rule Change To Increase
Position and Exercise Limits for EEM
Options
July 20, 2012.
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 July 9,
2012, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) 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 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
Interpretation and Policy .07 to Rule
4.11 (Position Limits) to increase the
position and exercise limits for options
on the iShares MSCI Emerging Markets
Index Fund (‘‘EEM’’) to 500,000
contracts. 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.
67 17
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
VerDate Mar<15>2010
16:42 Jul 25, 2012
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PO 00000
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
Frm 00093
Fmt 4703
Sfmt 4703
43897
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 Exchange began trading options
on the iShares MSCI Emerging Markets
Index Fund (‘‘EEM’’) on March 9, 2006.
Position limits for exchange-traded fund
(‘‘ETFs’’) options, such as EEM options,
are determined pursuant to Rule 4.11
and vary according to the number of
outstanding share [sic] and past sixmonth trading volume of the underlying
stock or ETF. The largest in
capitalization and most frequently
traded stocks and ETFs have an option
position limit of 250,000 contracts (with
adjustments for splits, re-capitalizations,
etc.) on the same side of the market;
smaller capitalization stocks and ETFs
have position limits of 200,000, 75,000,
50,000 or 25,000 contracts (with
adjustments for splits, re-capitalizations,
etc.) on the same side of the market. The
current position limit for EEM options
is 250,000 contracts. The purpose of the
proposed rule change is to amend CBOE
Rule 4.11, Interpretation and Policy .07
to increase the position and exercise
limits for EEM options to 500,000
contracts.3
There is precedent for establishing
position limits for options on activelytraded ETFs and these position limit
levels are set forth in Interpretation and
Policy .07 to Rule 4.11.
Security underlying option
The DIAMONDS Trust (DIA) ..
The Standard and Poor’s Depositary Receipts Trust
(SPY) ...................................
The iShares Russell 2000
Index Fund (IWM) ...............
Position limit
(contracts)
300,000
900,000
500,000
3 By virtue of CBOE Rule 4.12, Interpretation and
Policy .02, which is not being amended by this
filing, the exercise limit for EEM options would be
similarly increased.
E:\FR\FM\26JYN1.SGM
26JYN1
43898
Federal Register / Vol. 77, No. 144 / Thursday, July 26, 2012 / Notices
Security underlying option
The PowerShares QQQ Trust
(QQQQ) ...............................
Position limit
(contracts)
900,000
In support of this proposed rule
change, the Exchange has collected
trading statistics comparing EEM to
IWM and SPY. As shown in the
following table, the average daily
volume in 2011 for EEM was 65 million
shares compared to 64.1 million shares
for IWM and 213 million shares for SPY.
The total shares outstanding for EEM are
2011 ADV
(mil. shares)
ETF
TKELLEY on DSK3SPTVN1PROD with NOTICES
EEM .............................................................
IWM ..............................................................
SPY ..............................................................
The Exchange believes that increasing
position limits for EEM options will
lead to a more liquid and competitive
market environment for EEM options
that will benefit customers interested in
this product.
Under the Exchange’s proposal, the
options reporting requirement for EEM
options would continue unabated. Thus,
the Exchange would still require that
each Trading Permit Holder (‘‘TPH’’) or
TPH organization that maintains a
position in EEM options on the same
side of the market, for its own account
or for the account of a customer, report
certain information to the Exchange.
This information would include, but
would not be limited to, the option
position, whether such position is
hedged and, if so, a description of the
hedge, and the collateral used to carry
the position, if applicable. Exchange
market-makers (including Designated
Primary Market-Makers) would
continue to be exempt from this
reporting requirement, as market-maker
information can be accessed through the
Exchange’s market surveillance systems.
In addition, the general reporting
requirement for customer accounts that
maintain an aggregate position of 200 or
more option contracts would remain at
this level for EEM options.4
As the anniversary of listed options
trading approaches its fortieth year, the
Exchange believes that the existing
surveillance procedures and reporting
requirements at CBOE, other options
exchanges, and at the several clearing
firms are capable of properly identifying
unusual and/or illegal trading activity.
In addition, routine oversight
inspections of the Exchange’s regulatory
programs by the Commission have not
uncovered any material inconsistencies
or shortcomings in the manner in which
the Exchange’s market surveillance is
conducted. These procedures utilize
daily monitoring of market movements
via automated surveillance techniques
4 For
reporting requirements, see CBOE Rule 4.13.
VerDate Mar<15>2010
16:42 Jul 25, 2012
Jkt 226001
2011 ADV
(option contracts)
65
64.1
213
922.9 million compared to 192.6 million
shares for IWM and 716.1 million shares
for SPY. Further, the fund market cap
for EEM is $41.1 billion compared to
$15.5 billion for IWM and $98.3 billion
for SPY.
Shares outstanding
(mil.)
280,000
662,500
2,892,000
922.9
192.6
716.1
Fund market cap
($bil)
41.1
15.5
98.3
to identify unusual activity in both
options and underlying stocks.5
Furthermore, large stock holdings
must be disclosed to the Commission by
way of Schedules 13D or 13G.6 Options
positions are part of any reportable
positions and, thus, cannot be legally
hidden. Moreover, the Exchange’s
requirement that TPHs file reports with
the Exchange for any customer who
held aggregate large long or short
positions of any single class for the
previous day will continue to serve as
an important part of the Exchange’s
surveillance efforts.
The Exchange believes that the
current financial requirements imposed
by the Exchange and by the Commission
adequately address concerns that a TPH
or its customer may try to maintain an
inordinately large un-hedged position in
an option, particularly on EEM. Current
margin and risk-based haircut
methodologies serve to limit the size of
positions maintained by any one
account by increasing the margin and/
or capital that a TPH must maintain for
a large position held by itself or by its
customer.7 In addition, the
Commission’s net capital rule, Rule
15c3–1 8 under the Act,9 imposes a
capital charge on TPHs to the extent of
any margin deficiency resulting from
the higher margin requirement.
the Section 6(b)(5) 11 requirements that
the rules of an exchange be designed to
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
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. Specifically, the
proposed rule change will benefit large
market makers (which generally have
the greatest potential and actual ability
to provide liquidity and depth in the
product), as well as retail traders,
investors, and public customers, by
providing them with a more effective
trading and hedging vehicle. In
addition, the Exchange believes that the
structure of EEM options and the
considerable liquidity of the market for
EEM options diminish the opportunity
to manipulate this product and disrupt
the underlying market that a lower
position limit may protect against.
2. Statutory Basis
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.
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder, including the requirements
of Section 6(b) of the Act.10 In
particular, the Exchange believes the
proposed rule change is consistent with
procedures have been effective for the
surveillance of EEM options trading and will
continue to be employed.
6 17 CFR 240.13d–1.
7 See CBOE Rule 12.3 for a description of margin
requirements.
8 17 CFR 240.15c3–1.
9 15 U.S.C. 78s(b)(1) [sic].
10 15 U.S.C. 78f(b).
PO 00000
5 These
Frm 00094
Fmt 4703
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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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 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
11 15
E:\FR\FM\26JYN1.SGM
U.S.C. 78f(b)(5).
26JYN1
Federal Register / Vol. 77, No. 144 / Thursday, July 26, 2012 / Notices
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 the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
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:
TKELLEY on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–CBOE–2012–066 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–2012–066. This file
number should be included on the
subject line if email 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 Web site 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
10:00 a.m. and 3:00 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
VerDate Mar<15>2010
16:42 Jul 25, 2012
Jkt 226001
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2012–066 and should be submitted on
or before August 16, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–18219 Filed 7–25–12; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 7964]
60-Day Notice of Proposed Information
Collection: Humphrey Evaluation
Survey
Notice of request for public
comments.
ACTION:
The Department of State is
seeking Office of Management and
Budget (OMB) approval for the
information collection described below.
The purpose of this notice is to allow 60
days for public comment in the Federal
Register preceding submission to OMB.
We are conducting this process in
accordance with the Paperwork
Reduction Act of 1995.
• Title of Information Collection:
Humphrey Evaluation Survey.
• OMB Control Number: None (OMB
Control Number 1405–xxxx).
• Type of Request: New Collection.
• Originating Office: Bureau of
Educational and Cultural Affairs, Office
of Policy and Evaluation, Evaluation
Division (ECA/P/V).
• Form Number: SV2012–0003.
• Respondents: Foreign Humphrey
participants between 1979 and 2009.
• Estimated Number of Respondents:
1,200 annually.
• Estimated Number of Responses:
1,200 annually.
• Average Hours per Response: 30
minutes.
• Total Estimated Burden: 600 hours
annually.
• Frequency: One time.
• Obligation to Respond: Voluntary.
DATES: The Department will accept
comments from the public up to 60 days
from July 26, 2012.
ADDRESSES:
You may submit comments by any of
the following methods:
• Web: Persons with access to the
Internet may view and comment on this
notice by going to the Federal
SUMMARY:
PO 00000
12 17
CFR 200.30–3(a)(12).
Frm 00095
Fmt 4703
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43899
regulations Web site at
www.regulations.gov. You can search for
the document by: Selecting ‘‘Notice’’
under Document Type, entering the
Public Notice number as the ‘‘Keyword
or ID’’, checking the ‘‘Open for
Comment’’ box, and then click
‘‘Search’’. If necessary, use the ‘‘Narrow
by Agency’’ option on the Results page.
Email: HaleMJ2@state.gov.
• Email: HaleMJ2@state.gov.
• Mail (paper, disk, or CD–ROM
submissions): ECA/P/V, SA–5, C2 Floor,
Department of State, Washington, DC
20522–0505.
• Fax: 202–632–6320.
• Hand Delivery or Courier: ECA/P/V,
SA–5, C2 Floor, Department of State,
2200 C Street NW., Washington, DC
20037.
You must include the DS form
number (if applicable), information
collection title, and OMB control
number in any correspondence.
FOR FURTHER INFORMATION CONTACT:
Direct requests for additional
information regarding the collection
listed in this notice, including requests
for copies of the proposed information
collection and supporting documents, to
Michelle Hale, ECA/P/V, SA–5, C2
Floor, Department of State, Washington,
DC 20522–0582, who may be reached on
202–632–6312 or at HaleMJ2@state.gov.
SUPPLEMENTARY INFORMATION:
We are soliciting public comments to
permit the Department to:
• Evaluate whether the proposed
information collection is necessary for
the proper performance of our
functions.
• Evaluate the accuracy of our
estimate of the burden of the proposed
collection, including the validity of the
methodology and assumptions used.
• Enhance the quality, utility, and
clarity of the information to be
collected.
• Minimize the reporting burden on
those who are to respond, including the
use of automated collection techniques
or other forms of technology.
Abstract of Proposed Collection
This request for a new information
collection will allow ECA/P/V to
conduct a descriptive survey of the
exchange participants who went on the
Hubert H. Humphrey Fellowship
Program between 1979 and 2009.
Collecting this data will help ECA/P/V
examine what Fellows have been doing
post-program, and their roles in critical
areas of change at work, and in their
fields of study, and how the program
affected their work. Data collections
efforts will be conducted via electronic
survey.
E:\FR\FM\26JYN1.SGM
26JYN1
]]>Agencies
- SECURITIES AND EXCHANGE COMMISSION
- Release No. 34-67478; File No. SR-CBOE-2012-066]
[Federal Register Volume 77, Number 144 (Thursday, July 26, 2012)]
[Notices]
[Pages 43897-43899]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18219]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-67478; File No. SR-CBOE-2012-066]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change To Increase
Position and Exercise Limits for EEM Options
July 20, 2012.
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 July 9, 2012, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') 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 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend Interpretation and Policy .07 to Rule 4.11
(Position Limits) to increase the position and exercise limits for
options on the iShares MSCI Emerging Markets Index Fund (``EEM'') to
500,000 contracts. 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
The Exchange began trading options on the iShares MSCI Emerging
Markets Index Fund (``EEM'') on March 9, 2006. Position limits for
exchange-traded fund (``ETFs'') options, such as EEM options, are
determined pursuant to Rule 4.11 and vary according to the number of
outstanding share [sic] and past six-month trading volume of the
underlying stock or ETF. The largest in capitalization and most
frequently traded stocks and ETFs have an option position limit of
250,000 contracts (with adjustments for splits, re-capitalizations,
etc.) on the same side of the market; smaller capitalization stocks and
ETFs have position limits of 200,000, 75,000, 50,000 or 25,000
contracts (with adjustments for splits, re-capitalizations, etc.) on
the same side of the market. The current position limit for EEM options
is 250,000 contracts. The purpose of the proposed rule change is to
amend CBOE Rule 4.11, Interpretation and Policy .07 to increase the
position and exercise limits for EEM options to 500,000 contracts.\3\
---------------------------------------------------------------------------
\3\ By virtue of CBOE Rule 4.12, Interpretation and Policy .02,
which is not being amended by this filing, the exercise limit for
EEM options would be similarly increased.
---------------------------------------------------------------------------
There is precedent for establishing position limits for options on
actively-traded ETFs and these position limit levels are set forth in
Interpretation and Policy .07 to Rule 4.11.
------------------------------------------------------------------------
Position
Security underlying option limit
(contracts)
------------------------------------------------------------------------
The DIAMONDS Trust (DIA).................................. 300,000
The Standard and Poor's Depositary Receipts Trust (SPY)... 900,000
The iShares Russell 2000 Index Fund (IWM)................. 500,000
[[Page 43898]]
The PowerShares QQQ Trust (QQQQ).......................... 900,000
------------------------------------------------------------------------
In support of this proposed rule change, the Exchange has collected
trading statistics comparing EEM to IWM and SPY. As shown in the
following table, the average daily volume in 2011 for EEM was 65
million shares compared to 64.1 million shares for IWM and 213 million
shares for SPY. The total shares outstanding for EEM are 922.9 million
compared to 192.6 million shares for IWM and 716.1 million shares for
SPY. Further, the fund market cap for EEM is $41.1 billion compared to
$15.5 billion for IWM and $98.3 billion for SPY.
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011 ADV (mil. 2011 ADV (option Shares outstanding Fund market cap
ETF shares) contracts) (mil.) ($bil)
--------------------------------------------------------------------------------------------------------------------------------------------------------
EEM........................................................... 65 280,000 922.9 41.1
IWM........................................................... 64.1 662,500 192.6 15.5
SPY........................................................... 213 2,892,000 716.1 98.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange believes that increasing position limits for EEM
options will lead to a more liquid and competitive market environment
for EEM options that will benefit customers interested in this product.
Under the Exchange's proposal, the options reporting requirement
for EEM options would continue unabated. Thus, the Exchange would still
require that each Trading Permit Holder (``TPH'') or TPH organization
that maintains a position in EEM options on the same side of the
market, for its own account or for the account of a customer, report
certain information to the Exchange. This information would include,
but would not be limited to, the option position, whether such position
is hedged and, if so, a description of the hedge, and the collateral
used to carry the position, if applicable. Exchange market-makers
(including Designated Primary Market-Makers) would continue to be
exempt from this reporting requirement, as market-maker information can
be accessed through the Exchange's market surveillance systems. In
addition, the general reporting requirement for customer accounts that
maintain an aggregate position of 200 or more option contracts would
remain at this level for EEM options.\4\
---------------------------------------------------------------------------
\4\ For reporting requirements, see CBOE Rule 4.13.
---------------------------------------------------------------------------
As the anniversary of listed options trading approaches its
fortieth year, the Exchange believes that the existing surveillance
procedures and reporting requirements at CBOE, other options exchanges,
and at the several clearing firms are capable of properly identifying
unusual and/or illegal trading activity. In addition, routine oversight
inspections of the Exchange's regulatory programs by the Commission
have not uncovered any material inconsistencies or shortcomings in the
manner in which the Exchange's market surveillance is conducted. These
procedures utilize daily monitoring of market movements via automated
surveillance techniques to identify unusual activity in both options
and underlying stocks.\5\
---------------------------------------------------------------------------
\5\ These procedures have been effective for the surveillance of
EEM options trading and will continue to be employed.
---------------------------------------------------------------------------
Furthermore, large stock holdings must be disclosed to the
Commission by way of Schedules 13D or 13G.\6\ Options positions are
part of any reportable positions and, thus, cannot be legally hidden.
Moreover, the Exchange's requirement that TPHs file reports with the
Exchange for any customer who held aggregate large long or short
positions of any single class for the previous day will continue to
serve as an important part of the Exchange's surveillance efforts.
---------------------------------------------------------------------------
\6\ 17 CFR 240.13d-1.
---------------------------------------------------------------------------
The Exchange believes that the current financial requirements
imposed by the Exchange and by the Commission adequately address
concerns that a TPH or its customer may try to maintain an inordinately
large un-hedged position in an option, particularly on EEM. Current
margin and risk-based haircut methodologies serve to limit the size of
positions maintained by any one account by increasing the margin and/or
capital that a TPH must maintain for a large position held by itself or
by its customer.\7\ In addition, the Commission's net capital rule,
Rule 15c3-1 \8\ under the Act,\9\ imposes a capital charge on TPHs to
the extent of any margin deficiency resulting from the higher margin
requirement.
---------------------------------------------------------------------------
\7\ See CBOE Rule 12.3 for a description of margin requirements.
\8\ 17 CFR 240.15c3-1.
\9\ 15 U.S.C. 78s(b)(1) [sic].
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, including the
requirements of Section 6(b) of the Act.\10\ In particular, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirements that the rules of an exchange be
designed to promote just and equitable principles of trade, to prevent
fraudulent and manipulative acts, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, 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. Specifically, the proposed
rule change will benefit large market makers (which generally have the
greatest potential and actual ability to provide liquidity and depth in
the product), as well as retail traders, investors, and public
customers, by providing them with a more effective trading and hedging
vehicle. In addition, the Exchange believes that the structure of EEM
options and the considerable liquidity of the market for EEM options
diminish the opportunity to manipulate this product and disrupt the
underlying market that a lower position limit may protect against.
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\10\ 15 U.S.C. 78f(b).
\11\ 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
Within 45 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
[[Page 43899]]
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 the self-
regulatory organization consents, the Commission will:
(A) By order approve or disapprove 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 email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2012-066 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-2012-066. This file
number should be included on the subject line if email 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 Web site 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
10:00 a.m. and 3:00 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-2012-066 and should be
submitted on or before August 16, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-18219 Filed 7-25-12; 8:45 am]
BILLING CODE 8011-01-P
