Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Minimum Volume Orders, 7467-7470 [2013-02187]
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7467
Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Notices
Filing Dates: The application was
filed on October 4, 2012, and amended
on January 16, 2013.
Applicant’s Address: 58 Riverwalk
Blvd., Building 2, Suite A, Ridgeland,
SC 29936.
Fifth Third Funds [File No. 811–5669]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. Applicant has
transferred the assets of four of its series
to series of Money Market Obligations
Trust and, on September 7, 2012, made
final distributions to shareholders of
those series based on net asset value.
Applicant has transferred the assets of
its remaining series to series of
Touchstone Investment Trust,
Touchstone Funds Group Trust and
Touchstone Strategic Trust and, on
September 10, 2012, made final
distributions to shareholders of those
series based on net asset value.
Expenses of $1,499,259 incurred in
connection with the reorganization were
paid by Fifth Third Asset Management,
Inc., applicant’s investment adviser, and
by Touchstone Advisors, Inc. and
Federated Investors, Inc., each an
investment adviser to certain acquiring
funds.
Filing Dates: The application was
filed on November 9, 2012, and
amended on January 17, 2013.
Applicant’s Address: 38 Fountain
Square Plaza, Cincinnati, OH 45263.
srobinson on DSK4SPTVN1PROD with NOTICES
Integrity Fund of Funds Inc. [File No.
811–8824]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On December 21,
2012, applicant made a liquidating
distribution to its shareholders, based
on net asset value. Applicant incurred
no expenses in connection with the
liquidation.
Filing Date: The application was filed
on January 4, 2013.
Applicant’s Address: 1 Main St.
North, Minot, ND 58703.
Legg Mason Capital Management Value
Trust Inc. [File No. 811–3380]; Legg
Mason Capital Management Special
Investment Trust Inc. [File No. 811–
4451]; Legg Mason Capital Management
Growth Trust Inc. [File No. 811–8966]
Summary: Each applicant seeks an
order declaring that it has ceased to be
an investment company. Applicants
have transferred their assets to
corresponding series of Legg Mason
Global Asset Management Trust, and on
February 29, 2012, made final
distributions to their shareholders based
on net asset value. Expenses of
approximately $60,852, $21,282 and
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$7,359, respectively, incurred in
connection with the reorganizations
were paid by each applicant.
Filing Dates: The application was
filed on September 25, 2012, and
amended on January 23, 2013.
Applicants’ Address: 100
International Dr., 7th Floor, Baltimore,
MD 21202.
Delaware Group Equity Funds III [File
No. 811–1485]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. Applicant has
transferred its asset to a series of
Voyager Mutual Funds III, and on
October 22, 2010, made a final
distribution to its shareholders based on
net asset value. Expenses of
approximately $208,564 incurred in
connection with the reorganization were
paid by applicant, the acquiring fund
and Delaware Management Company,
applicant’s investment adviser.
Filing Dates: The application was
filed on November 20, 2012, and
amended on January 24, 2013.
Applicant’s Address: 2005 Market St.,
Philadelphia, PA 19103–7094.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–02149 Filed 1–31–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68743; File No. SR–CBOE–
2013–009]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to Minimum
Volume Orders
January 28, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
16, 2013, Chicago Board Options
Exchange, Incorporated (the ‘‘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
Commission is publishing this notice to
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend its
rules to codify the ‘‘Minimum Volume
Order.’’ The text of the proposed rule
change is provided below. (additions are
italicized; deletions are [bracketed])
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 6.44. Bids and Offers in Relation
to Units of Trading
*
*
*
*
*
* * * Interpretations and Policies:
*
*
*
*
*
.05 A minimum volume order bid or
offer shall be deemed to have been
made for the full size of the order or any
lesser number of option contracts that is
at least equal to the minimum volume
specified. Minimum volume orders and
bids and offers made on a minimum
volume basis shall be deemed to be allor-none for purposes of Interpretations
and Polices .01 and .03 above. To the
extent available pursuant to Rule 6.53,
minimum volume orders may only be
made available by the Exchange for
open outcry trading.
*
*
*
*
*
Rule 6.53. Certain Types of Orders
Defined
One or more of the following order
types may be made available on a classby-class basis. Certain order types may
not be made available for all Exchange
systems. The classes and/or systems for
which the order types shall be available
will be as provided in the Rules, as the
context may indicate, or as otherwise
specified via Regulatory Circular.
(a)–(v) No changes.
(w) Minimum Volume Order. A
minimum volume order is an order
represented in open outcry for which an
execution must at least equal the
minimum volume specified. To the
extent there is any remaining balance of
a minimum volume order after the
minimum volume is executed, the
remainder will no longer have a
minimum fill contingency and will be
represented, in open outcry or
electronically, unless cancelled by the
customer. A minimum volume order
that has a minimum volume size equal
to the full size of the original order will
be considered an all-or-none order as
described in Rule 6.53(i).
*
*
*
*
*
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Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Notices
The text of the proposed rule change
is also available on the Exchange’s Web
site (https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), 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
Exchange 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange is proposing to add
new paragraph (w) to Exchange Rule
6.53, Certain Types of Orders Defined,
to codify an open outcry order type, the
‘‘Minimum Volume Order.’’ Because of
the complexity of programming to make
this order available electronically, this
order type is currently only supported
for routing to, and utilized on, the
Exchange’s trading floor for open outcry
trading,3 and, thus, the Exchange is
proposing to harmonize its Rules with
the current functionality and practice.
The proposed definition of a
Minimum Volume Order is similar to an
existing definition in the Exchange’s
Screen-Based Trading rules.4 In the
proposed language, a Minimum Volume
Order is an order represented in open
outcry for which an execution must at
least equal the minimum volume
specified. To the extent there is a
remaining balance of the original order
after the minimum volume amount has
been executed, the remainder of the
3 Please note the Exchange may decide to
introduce this order type electronically but such
action would be subject to a separate rule change
filing. The Exchange notes that it currently supports
various order types that by their nature or terms
may only be available for open outcry trading (e.g.,
Not Held Orders) or may only be available for
electronic trading (e.g., Reserve Orders). See, e.g.,
Exchange Rule 6.53(g) and (t).
4 See Exchange Rule 43.2(a)(9)(E), which defines
a ‘‘Minimum Volume Order’’ as ‘‘* * * an order
where the fill should be at least equal to the
minimum volume specified, which is an amount
less than the total volume of the order.’’ The
Exchange does not currently trade options pursuant
to its Screen-Based Trading Rules (Chapters XL–
XLIX).
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order will no longer have any minimum
volume contingency and will be
represented in open outcry or
electronically unless cancelled by the
customer. The proposed language also
notes that a Minimum Volume Order
that has a minimum volume size
equivalent to the full size of the original
order would be considered an All-orNone Order as described in Rule
6.53(i).5
For example, assume a Trading Permit
Holder (‘‘TPH’’) represents an order to
buy 50 contracts at $10.00 that is a
Minimum Volume Order with a
minimum fill size of 30. This order can
only execute if at least 30 contracts of
the order would trade against other
trading interest. In this scenario, if a
Floor Broker represents the Minimum
Volume Order to buy in open outcry
and another order or quote for 30
contracts were offered to sell against it,
as the minimum value was met, 30
contracts of the Minimum Volume
Order to buy would execute against the
sell order/quote and the remaining 20
contracts of the Minimum Volume
Order to buy would be represented on
the Exchange’s trading floor or
electronically unless cancelled by the
customer. In the same example, if orders
and/or quotes for only 10 contracts were
offered to sell against the Minimum
Volume Order, there would be no trade
because the minimum size of 30
contracts would not be satisfied.
In the case where the minimum
volume size specified is equivalent to
the total volume of the order, then the
order will be considered the same as an
All-or-None Order as specified in
Exchange Rule 6.53(i). In the above
example, if the order entered to buy was
a Minimum Value [sic] Order for 50
contracts with a minimum quantity of
50 contracts then the order would be
considered an All-or-None Order as
described in Rule 6.53(i), and, as such,
the entered order would only execute if
the 50 contracts could be executed in its
entirety.
The Exchange is also proposing to
amend Exchange Rule 6.44, Bids and
Offers in Relation to Units of Trading,
to address Minimum Volume Orders.
Rule 6.44, in relevant part, provides that
subject to certain provisions in the
Exchange rules, bids and offers made on
the floor are deemed to be for one
option contract unless a specific number
is expressed in the bid or offer. A bid
or offer for more than one option
contract which is not made on an Allor-None [sic] are deemed to be for that
5 Under Rule 6.53(i), an All-or-None Order is
currently defined as ‘‘* * * a market or limit order
which is to be executed in its entirety or not at all.’’
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amount or any lesser number of option
contracts. An All-or-None bid or offer is
deemed to be made only for the amount
stated. Proposed new Interpretation and
Policy .05 to Rule 6.44 will provide that,
to the extent that the Exchange
determines to make the Minimum
Volume Order type available,6 a
Minimum Volume Order bid or offer
would be deemed to have been made for
the full size of the order or any lesser
number of option contracts that is at
least equal to the minimum volume
specified.7
In addition, a Minimum Volume
Order would be deemed to be an All-orNone Order for purposes of certain other
provisions of Rule 6.44. The particular
provisions are Interpretations and
Policies .01 and .03 of Rule 6.44.8
Interpretation and Policy .01 of Rule
6.44 provides the following: (i) A bid or
offer may be made and transacted on an
All-or-None basis if the All-or-None bid
or offer represents the only bid or offer
available at the best price in the market
at the time the All-or-None bid or offer
is executed; 9 (ii) an All-or-None order
may not be crossed with another All-orNone order unless all bids or offers at
the same price at which the cross is to
be effected have been filled; and (iii) if
two or more All-or-None bids or offers
represent the only bids or offers at the
best price in the market, priority shall
be afforded to such All-or-None bids or
offers in the sequence in which they are
made. Interpretation and Policy .03
provides that the Exchange may restrict
the entry of All-or-None Orders in one
or more classes or series of options
whenever, in its judgment, the interests
of maintaining a fair and orderly market
are best served. Proposed new
Interpretation and Policy .05 to Rule
6.44 will reflect the applicability of
6 The introductory paragraph to Rule 6.53
currently provides that one or more of the identified
order types may be made available on a class-byclass basis, and certain order types may not be
made available for all Exchange Systems. The
introductory paragraph to Rule 6.53 also provides
that the classes and/or systems for which the order
types shall be available will be as provided in the
Rules, as the context may indicate, or as otherwise
specified via Regulatory Circular.
7 By comparison, for example, as noted above an
all-or-none bid or offer is deemed to be made only
for the amount stated. See Rule 6.44.
8 The Exchange notes that Interpretation and
Policy .02 relates to All-or-None orders in the
Exchange’s electronic book, and because Minimum
Volume Orders are only available in open outcry
trading, this provision is not applicable to
Minimum Volume Orders.
9 In other words, a Minimum Volume Order
would, like an All-or-None Order, yield priority to
all other interest at the same price on the trading
floor.
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Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Notices
these two provisions to Minimum
Volume Orders.10
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitation [sic] transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 13 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the addition of Rules 6.44.05 and
6.53(w) promotes just and equitable
principles of trading by aligning the text
of the rules with the actual
functionality, which is currently
available in open outcry. By updating
the text of the Exchange’s rules to
describe the orders already supported
by the Exchange, the proposed rule
change is attempting to harmonize the
functionality with the text of the
Exchange Rules and is thereby
promoting clarity and eliminating
confusion. In addition, the proposed
language alerts TPHs of the
functionality of the order, and, thus,
allows investors to use the order type,
to the extent made available by the
Exchange, with full knowledge of how
the order type will function.
The Exchange notes that the proposed
Minimum Volume Order type definition
is similar to an existing order type in the
Exchange’s Screen-Based Trading
Rules.14 Additionally, the Exchange
notes that the proposed order type is
similar to order types available on other
markets, including on the NASDAQ
OMX PHLX LLC (‘‘PHLX’’) 15 and on the
International Securities Exchange
(‘‘ISE’’).16
thereunder. 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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:
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes the proposed rule
change will not impose any burden
because the Exchange is merely
harmonizing its Rules with current
functionality and practice. Further,
CBOE believes that the proposed rule
change will relieve any burden on, or
otherwise promote, competition because
this order type is currently offered by
other Exchanges. Thus, clarifying the
Exchange rules would give further
authority to compete with other
exchanges currently offering the order
type.
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 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:
A. Significantly affect the protection
of investors or the public interest;
B. Impose any significant burden on
competition; and
C. 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 17 and Rule 19b–4(f)(6) 18
14 See
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10 Specifically,
proposed new Interpretation and
Policy .05 would also provide that Minimum
Volume Orders and bids and offers made on a
Minimum Volume basis shall be deemed to be Allor-None for purposes of Interpretations and Policies
.01 and .03 of Rule 6.44. This proposed
Interpretation and Policy .05 is similar to existing
Interpretation and Policy .04 to Rule 6.44, which
provides that Fill-or-Kill orders and bids or offers
made on a Fill-or-Kill basis shall be deemed to be
All-or-None for purposes of Rule 6.44.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
13 Id.
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Exchange Rule 43.2(a)(9)(E).
PHLX Rule 3301(f)(5), which provides that
‘‘Minimum Quantity Orders’’ are orders that require
‘‘a specified minimum quantity of shares be
obtained, or the order is cancelled. Minimum
Quantity Orders may only be entered with a timein-force designation of System Hours Immediate or
Cancel.’’
16 See ISE Rule 715(l) which defines a ‘‘Minimum
Quantity Order’’ as one that ‘‘is available for partial
execution, but each partial execution must be for a
specified number of contracts or greater.’’
17 15 U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
15 See
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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–2013–009 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–2013–009. 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
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
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Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–02187 Filed 1–31–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68740; File No. SR–ISE–
2013–07]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing of Proposed Rule
Change To Amend the International
Securities Exchange, LLC Amended
and Restated Constitution
January 28, 2013.
srobinson on DSK4SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on January 18, 2013, the International
Securities Exchange, LLC (‘‘Exchange’’
or ‘‘ISE’’) 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 the Substance
of the Proposed Rule Change
The Exchange proposes to amend its
Amended and Restated Constitution 3
(the ‘‘Constitution’’) to: (i) Declassify the
Non-Industry Directors (including the
Public Directors) of the Board; (ii)
change the term of the Non-Industry
Directors (including the Public
Directors) and the Former Employee
Director to a one (1) year term, subject
to re-election; and (iii) eliminate the
three-term limit for the Former
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amended and Restated Constitution of
International Securities Exchange, LLC (last
amended December 28, 2007).
1 15
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Employee Director. Currently, Section
3.2(c) of the Constitution requires, in
part, that Non-Industry Directors
(including the Public Directors) 4 and
Exchange Directors 5 be classified into
two classes designated as Class I and
Class II directors, and that all Directors
(including the Former Employee
Director) 6 serve two (2) year terms,
subject to re-election. The text of the
proposed rule change is available on the
Exchange’s Web site www.ise.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
Directors) 7 and Exchange Directors 8 be
classified into two classes designated as
Class I and Class II directors, and that
all Directors (including the Former
Employee Director) 9 serve two (2) year
terms, subject to re-election.
The Exchange proposes that Section
3.2(c) of the Constitution be amended to
remove any references to Class I
directors or Class II directors as such
terms relate to Non-Industry Directors
(including the Public Directors), and
state that the Non-Industry Directors
(including the Public Directors) would
hold office for a one (1) year term,
subject to re-election, as follows:
II. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
offices of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2013–009, and should be submitted on
or before February 22, 2013.
‘‘[t]he Non-Industry Directors and the
Public Directors shall hold office for a term
expiring at the annual meeting of the Sole
LLC Member and holders of Exchange Rights
held in the first year following the year of
their election, and until their successors are
elected and qualified.’’
In its filing with the Commission, the
Exchange 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 these
statements may be examined at the
places specified in Item IV below. The
self-regulatory organization has
prepared summaries, set forth in
Sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend the Constitution: (i)
To declassify the Non-Industry Directors
(including the Public Directors) of the
Board; (ii) to change the term of the
Non-Industry Directors (including the
Public Directors) and the Former
Employee Director to a one (1) year
term, subject to re-election; and (iii)
eliminate the three-term limit for the
Former Employee Director. Currently,
Section 3.2(c) of the Constitution
requires, in part, that Non-Industry
Directors (including the Public
4 Section 3.2(b)(iv) of the Constitution requires
that the Board be composed of eight (8) NonIndustry Directors (at least two (2) of which are
Public Directors) elected by the Sole LLC Member.
5 Section 3.2(b)(i)–(iii) of the Constitution
requires that the Board be composed of six (6)
Exchange Directors elected by the holders of
Exchange Rights.
6 Section 3.2(b)(vi) of the Constitution allows the
Sole LLC Member, in its sole and absolute
discretion, [sic] elect one (1) additional director
who shall meet the requirements of ‘‘Non-Industry
Directors,’’ except that such person was employed
by the Exchange at any time during the three (3)
year period prior to his or her initial election.
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For the avoidance of doubt, NonIndustry Directors (including the Public
Directors) would continue to be elected
by the Sole LLC Member at each annual
meeting of the Sole LLC Member and
holders of Exchange Rights in
accordance with Section 3.2 of the
Constitution.
The Exchange further proposes to
modify the term of the Former
Employee Director so that any such
director shall hold office for a one (1)
year term, subject to re-election, and to
make such corresponding technical
changes to the applicable parts of
Section 3.2(c). Furthermore, the
Exchange proposes to eliminate the
three-term limit for the Former
Employee Director.10 Upon
modification of the two (2) year term to
a one (1) year term, the Former
Employee Director would qualify to
become a Non-Industry Director after
serving on the Board of Directors for
three (3) years as he/she would no
longer have been employed by the
7 Section 3.2(b)(iv) of the Constitution requires
that the Board be composed of eight (8) NonIndustry Directors (at least two (2) of which are
Public Directors) elected by the Sole LLC Member.
8 Section 3.2(b)(i)–(iii) of the Constitution
requires that the Board be composed of six (6)
Exchange Directors elected by the holders of
Exchange Rights.
9 Section 3.2(b)(vi) of the Constitution allows the
Sole LLC Member, in its sole and absolute
discretion, elect one (1) additional director who
shall meet the requirements of ‘‘Non- Industry
Directors,’’ except that such person was employed
by the Exchange at any time during the three (3)
year period prior to his or her initial election.
10 Section 3.2(e)(iv) of the Constitution provides
that a Former Employee Director may not serve on
the Board of Directors for more than three (3)
consecutive terms. Any such director may be
eligible for election as a director following a twoyear hiatus from service on the Board of Directors,
provided, that he or she meets the director
qualifications pursuant to Section 3.2(b).
E:\FR\FM\01FEN1.SGM
01FEN1
]]>Agencies
[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Notices]
[Pages 7467-7470]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02187]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68743; File No. SR-CBOE-2013-009]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Minimum Volume Orders
January 28, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 16, 2013, Chicago Board Options Exchange, Incorporated
(the ``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 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.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend its rules to codify the ``Minimum
Volume Order.'' The text of the proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 6.44. Bids and Offers in Relation to Units of Trading
* * * * *
* * * Interpretations and Policies:
* * * * *
.05 A minimum volume order bid or offer shall be deemed to have
been made for the full size of the order or any lesser number of option
contracts that is at least equal to the minimum volume specified.
Minimum volume orders and bids and offers made on a minimum volume
basis shall be deemed to be all-or-none for purposes of Interpretations
and Polices .01 and .03 above. To the extent available pursuant to Rule
6.53, minimum volume orders may only be made available by the Exchange
for open outcry trading.
* * * * *
Rule 6.53. Certain Types of Orders Defined
One or more of the following order types may be made available on a
class-by-class basis. Certain order types may not be made available for
all Exchange systems. The classes and/or systems for which the order
types shall be available will be as provided in the Rules, as the
context may indicate, or as otherwise specified via Regulatory
Circular.
(a)-(v) No changes.
(w) Minimum Volume Order. A minimum volume order is an order
represented in open outcry for which an execution must at least equal
the minimum volume specified. To the extent there is any remaining
balance of a minimum volume order after the minimum volume is executed,
the remainder will no longer have a minimum fill contingency and will
be represented, in open outcry or electronically, unless cancelled by
the customer. A minimum volume order that has a minimum volume size
equal to the full size of the original order will be considered an all-
or-none order as described in Rule 6.53(i).
* * * * *
[[Page 7468]]
The text of the proposed rule change is also available on the
Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 Exchange 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 these 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 aspects 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 is proposing to add new paragraph (w) to Exchange Rule
6.53, Certain Types of Orders Defined, to codify an open outcry order
type, the ``Minimum Volume Order.'' Because of the complexity of
programming to make this order available electronically, this order
type is currently only supported for routing to, and utilized on, the
Exchange's trading floor for open outcry trading,\3\ and, thus, the
Exchange is proposing to harmonize its Rules with the current
functionality and practice.
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\3\ Please note the Exchange may decide to introduce this order
type electronically but such action would be subject to a separate
rule change filing. The Exchange notes that it currently supports
various order types that by their nature or terms may only be
available for open outcry trading (e.g., Not Held Orders) or may
only be available for electronic trading (e.g., Reserve Orders).
See, e.g., Exchange Rule 6.53(g) and (t).
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The proposed definition of a Minimum Volume Order is similar to an
existing definition in the Exchange's Screen-Based Trading rules.\4\ In
the proposed language, a Minimum Volume Order is an order represented
in open outcry for which an execution must at least equal the minimum
volume specified. To the extent there is a remaining balance of the
original order after the minimum volume amount has been executed, the
remainder of the order will no longer have any minimum volume
contingency and will be represented in open outcry or electronically
unless cancelled by the customer. The proposed language also notes that
a Minimum Volume Order that has a minimum volume size equivalent to the
full size of the original order would be considered an All-or-None
Order as described in Rule 6.53(i).\5\
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\4\ See Exchange Rule 43.2(a)(9)(E), which defines a ``Minimum
Volume Order'' as ``* * * an order where the fill should be at least
equal to the minimum volume specified, which is an amount less than
the total volume of the order.'' The Exchange does not currently
trade options pursuant to its Screen-Based Trading Rules (Chapters
XL-XLIX).
\5\ Under Rule 6.53(i), an All-or-None Order is currently
defined as ``* * * a market or limit order which is to be executed
in its entirety or not at all.''
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For example, assume a Trading Permit Holder (``TPH'') represents an
order to buy 50 contracts at $10.00 that is a Minimum Volume Order with
a minimum fill size of 30. This order can only execute if at least 30
contracts of the order would trade against other trading interest. In
this scenario, if a Floor Broker represents the Minimum Volume Order to
buy in open outcry and another order or quote for 30 contracts were
offered to sell against it, as the minimum value was met, 30 contracts
of the Minimum Volume Order to buy would execute against the sell
order/quote and the remaining 20 contracts of the Minimum Volume Order
to buy would be represented on the Exchange's trading floor or
electronically unless cancelled by the customer. In the same example,
if orders and/or quotes for only 10 contracts were offered to sell
against the Minimum Volume Order, there would be no trade because the
minimum size of 30 contracts would not be satisfied.
In the case where the minimum volume size specified is equivalent
to the total volume of the order, then the order will be considered the
same as an All-or-None Order as specified in Exchange Rule 6.53(i). In
the above example, if the order entered to buy was a Minimum Value
[sic] Order for 50 contracts with a minimum quantity of 50 contracts
then the order would be considered an All-or-None Order as described in
Rule 6.53(i), and, as such, the entered order would only execute if the
50 contracts could be executed in its entirety.
The Exchange is also proposing to amend Exchange Rule 6.44, Bids
and Offers in Relation to Units of Trading, to address Minimum Volume
Orders. Rule 6.44, in relevant part, provides that subject to certain
provisions in the Exchange rules, bids and offers made on the floor are
deemed to be for one option contract unless a specific number is
expressed in the bid or offer. A bid or offer for more than one option
contract which is not made on an All-or-None [sic] are deemed to be for
that amount or any lesser number of option contracts. An All-or-None
bid or offer is deemed to be made only for the amount stated. Proposed
new Interpretation and Policy .05 to Rule 6.44 will provide that, to
the extent that the Exchange determines to make the Minimum Volume
Order type available,\6\ a Minimum Volume Order bid or offer would be
deemed to have been made for the full size of the order or any lesser
number of option contracts that is at least equal to the minimum volume
specified.\7\
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\6\ The introductory paragraph to Rule 6.53 currently provides
that one or more of the identified order types may be made available
on a class-by-class basis, and certain order types may not be made
available for all Exchange Systems. The introductory paragraph to
Rule 6.53 also provides that the classes and/or systems for which
the order types shall be available will be as provided in the Rules,
as the context may indicate, or as otherwise specified via
Regulatory Circular.
\7\ By comparison, for example, as noted above an all-or-none
bid or offer is deemed to be made only for the amount stated. See
Rule 6.44.
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In addition, a Minimum Volume Order would be deemed to be an All-
or-None Order for purposes of certain other provisions of Rule 6.44.
The particular provisions are Interpretations and Policies .01 and .03
of Rule 6.44.\8\ Interpretation and Policy .01 of Rule 6.44 provides
the following: (i) A bid or offer may be made and transacted on an All-
or-None basis if the All-or-None bid or offer represents the only bid
or offer available at the best price in the market at the time the All-
or-None bid or offer is executed; \9\ (ii) an All-or-None order may not
be crossed with another All-or-None order unless all bids or offers at
the same price at which the cross is to be effected have been filled;
and (iii) if two or more All-or-None bids or offers represent the only
bids or offers at the best price in the market, priority shall be
afforded to such All-or-None bids or offers in the sequence in which
they are made. Interpretation and Policy .03 provides that the Exchange
may restrict the entry of All-or-None Orders in one or more classes or
series of options whenever, in its judgment, the interests of
maintaining a fair and orderly market are best served. Proposed new
Interpretation and Policy .05 to Rule 6.44 will reflect the
applicability of
[[Page 7469]]
these two provisions to Minimum Volume Orders.\10\
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\8\ The Exchange notes that Interpretation and Policy .02
relates to All-or-None orders in the Exchange's electronic book, and
because Minimum Volume Orders are only available in open outcry
trading, this provision is not applicable to Minimum Volume Orders.
\9\ In other words, a Minimum Volume Order would, like an All-
or-None Order, yield priority to all other interest at the same
price on the trading floor.
\10\ Specifically, proposed new Interpretation and Policy .05
would also provide that Minimum Volume Orders and bids and offers
made on a Minimum Volume basis shall be deemed to be All-or-None for
purposes of Interpretations and Policies .01 and .03 of Rule 6.44.
This proposed Interpretation and Policy .05 is similar to existing
Interpretation and Policy .04 to Rule 6.44, which provides that
Fill-or-Kill orders and bids or offers made on a Fill-or-Kill basis
shall be deemed to be All-or-None for purposes of Rule 6.44.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitation
[sic] transactions in securities, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \13\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
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In particular, the Exchange believes the addition of Rules 6.44.05
and 6.53(w) promotes just and equitable principles of trading by
aligning the text of the rules with the actual functionality, which is
currently available in open outcry. By updating the text of the
Exchange's rules to describe the orders already supported by the
Exchange, the proposed rule change is attempting to harmonize the
functionality with the text of the Exchange Rules and is thereby
promoting clarity and eliminating confusion. In addition, the proposed
language alerts TPHs of the functionality of the order, and, thus,
allows investors to use the order type, to the extent made available by
the Exchange, with full knowledge of how the order type will function.
The Exchange notes that the proposed Minimum Volume Order type
definition is similar to an existing order type in the Exchange's
Screen-Based Trading Rules.\14\ Additionally, the Exchange notes that
the proposed order type is similar to order types available on other
markets, including on the NASDAQ OMX PHLX LLC (``PHLX'') \15\ and on
the International Securities Exchange (``ISE'').\16\
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\14\ See Exchange Rule 43.2(a)(9)(E).
\15\ See PHLX Rule 3301(f)(5), which provides that ``Minimum
Quantity Orders'' are orders that require ``a specified minimum
quantity of shares be obtained, or the order is cancelled. Minimum
Quantity Orders may only be entered with a time-in-force designation
of System Hours Immediate or Cancel.''
\16\ See ISE Rule 715(l) which defines a ``Minimum Quantity
Order'' as one that ``is available for partial execution, but each
partial execution must be for a specified number of contracts or
greater.''
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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 that is not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, the Exchange
believes the proposed rule change will not impose any burden because
the Exchange is merely harmonizing its Rules with current functionality
and practice. Further, CBOE believes that the proposed rule change will
relieve any burden on, or otherwise promote, competition because this
order type is currently offered by other Exchanges. Thus, clarifying
the Exchange rules would give further authority to compete with other
exchanges currently offering the order type.
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
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:
A. Significantly affect the protection of investors or the public
interest;
B. Impose any significant burden on competition; and
C. 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 \17\ and
Rule 19b-4(f)(6) \18\ thereunder. 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.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
---------------------------------------------------------------------------
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-2013-009 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-2013-009. 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
[[Page 7470]]
offices of the Exchange. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-CBOE-2013-009, and should be submitted on or before February 22,
2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02187 Filed 1-31-13; 8:45 am]
BILLING CODE 8011-01-P
