Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Trades for Less Than $1, 40539-40541 [2013-16091]
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Federal Register / Vol. 78, No. 129 / Friday, July 5, 2013 / Notices
Further, NSCC does not expect the
rule changes to impact trade volumes
significantly. According to NSCC, the
majority of trades are currently being
submitted to NSCC in real-time on a
trade-by-trade basis, and NSCC is
operationally capable of managing trade
volumes that are multiple times larger
than the historical peak volumes.
In the wake of recent industry
disruptions, industry participants have
been focused on developing controls to
address the risks that arise from
technology issues. A comment letter
submitted to the Commission in
advance of its Technology and Trading
Roundtable, held in October 2012, and
signed by a number of industry
participants including SROs, brokerdealers, and buy-side firms, supported
this rule change as a crucial component
of the industry controls that could
increase market transparency and
ultimately mitigate risks associated with
high-frequency trading and related
technology.13
Implementation Timeframe
NSCC will advise Members of the
implementation date of the rule change
through issuance of an NSCC Important
Notice. The rule change will not be
implemented earlier than seven (7)
months from the date of Commission
approval.
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III. Discussion
Section 19(b)(2)(C) of the Act 14
directs the Commission to approve a
proposed rule change of a selfregulatory organization if it finds that
such proposed rule change is consistent
with the requirements of the Act and
rules and regulations thereunder
applicable to such organization. Section
17A(b)(3)(F) of the Act 15 requires,
among other things, that the rules of a
clearing agency be designed to promote
the prompt and accurate clearance and
settlement of securities transactions.
The Commission finds that the rule
change is consistent with these
requirements because the receipt of
original terms of the trades unaltered. A Member or
any of its Affiliates may not engage in the PreNetting of Trades prior to their submission to the
Corporation in contravention of this section. In
addition, a Member or any of its Affiliates may not
engage in any practice designed to contravene the
prohibition against the Pre-Netting of Trades.’’),
https://dtcc.com/legal/rules_proc/FICCGovernment_Security_Division_Rulebook.pdf. See
also Order Granting Approval of a Proposed Rule
Change Relating to Trade Submission Requirements
and Pre-Netting, Release No. 34–51908 (June 22,
2005), 70 FR 37450 (June 29, 2005).
13 See Market Technology Roundtable Comment
Letter dated Sept. 28, 2012, available at https://
www.sec.gov/comments/4-652/4652-17.pdf.
14 15 U.S.C. 78s(b)(2)(C).
15 15 U.S.C. 78q–1(b)(3)(F).
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locked-in trade data on a real-time basis
should permit NSCC’s risk management
processes to monitor trades closer to
trade execution on an intra-day basis
and identify and manage any issues
relating to excessive risk exposure
earlier on a closer to real-time basis,
thereby potentially minimizing a source
of operational risk and facilitating the
prompt and accurate clearance and
settlement of securities transactions.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the
Act 16 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,17 that the
proposed rule change (File No. SR–
NSCC–2013–05) be, and hereby is,
approved.18
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.19
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–16088 Filed 7–3–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69893; File No. SR–CBOE–
2013–067]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to Trades for
Less Than $1
June 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 June 28,
2013, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated the proposal as a ‘‘nonU.S.C. 78q–1.
U.S.C. 78s(b)(2).
18 In approving the proposed rule change, the
Commission considered the proposed rule’s impact
on efficiency, competition, and capital formation.
See 15 U.S.C. 78c(f).
19 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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16 15
17 15
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40539
controversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder.4
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to extend
its program that allows transactions to
take place at a price that is below $1 per
option contract through January 5, 2014.
The text of the proposed rule change is
available on the Exchange’s Web site
(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
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 those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
An ‘‘accommodation’’ or ‘‘cabinet’’
trade refers to trades in listed options on
the Exchange that are worthless or not
actively traded. Cabinet trading is
generally conducted in accordance with
the Exchange Rules, except as provided
in Exchange Rule 6.54, Accommodation
Liquidations (Cabinet Trades), which
sets forth specific procedures for
engaging in cabinet trades. Rule 6.54
currently provides for cabinet
transactions to occur via open outcry at
a cabinet price of $1 per option contract
in any options series open for trading in
the Exchange, except that the Rule is not
applicable to trading in option classes
participating in the Penny Pilot
Program. Under the procedures, bids
and offers (whether opening or closing
a position) at a price of $1 per option
contract may be represented in the
trading crowd by a Floor Broker or by
a Market-Maker or provided in response
3 15
4 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
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tkelley on DSK3SPTVN1PROD with NOTICES
to a request by a PAR Official/OBO, a
Floor Broker or a Market-Maker, but
must yield priority to all resting orders
in the PAR Official/OBO cabinet book
(which resting cabinet book orders may
be closing only). So long as both the
buyer and the seller yield to orders
resting in the cabinet book, opening
cabinet bids can trade with opening
cabinet offers at $1 per option contract.
The Exchange has temporarily
amended the procedures through June
28, 2013 to allow transactions to take
place in open outcry at a price of at least
$0 but less than $1 per option contract.5
These lower priced transactions are
traded pursuant to the same procedures
applicable to $1 cabinet trades, except
that (i) bids and offers for opening
transactions are only permitted to
accommodate closing transactions in
order to limit use of the procedure to
liquidations of existing positions, and
(ii) the procedures are also available for
trading in option classes participating in
the Penny Pilot Program.6 The Exchange
believes that allowing a price of at least
$0 but less than $1 better accommodates
the closing of options positions in series
that are worthless or not actively traded,
particularly due to market conditions
which may result in a significant
number of series being out-of-themoney. For example, a market
participant might have a long position
in a call series with a strike price of
$100 and the underlying stock might
now be trading at $30. In such an
5 See Securities Exchange Act Release Nos. 59188
(December 30, 2008), 74 FR 480 (January 6, 2009)
(SR–CBOE–2008–133) (adopting the amended
procedures on a temporary basis through January
30, 2009), 59331 (January 30, 2009), 74 FR 6333
(February 6, 2009) (extending the amended
procedures on a temporary basis through May 29,
2009), 60020 (June 1, 2009), 74 FR 27220 (June 8,
2009) (SR–CBOE–2009–034) (extending the
amended procedures on a temporary basis through
June 1, 2010), 62192 (May 28, 2010), 75 FR 31828
(June 4, 2010) (SR–CBOE–2010–052) (extending the
amended procedures on a temporary basis through
June 1, 2011); 64403 (May 4, 2011), 76 FR 27110
(May 10, 2011) (SR–CBOE–2011–048) (extending
the amended procedures on a temporary basis
through December 30, 2011); 65872 (December 2,
2011), 76 FR 76788 (December 8, 2011) (SR–CBOE–
2011–113) (extending the amended procedures on
a temporary basis through June 29, 2012) and 67144
(June 6, 2012), 77 FR 35095 (June 12, 2012) (SR–
CBOE–2012–053) (extending the amended
procedures on a temporary basis through June 28,
2013).
6 Currently the $1 cabinet trading procedures are
limited to options classes traded in $0.05 or $0.10
standard increment. The $1 cabinet trading
procedures are not available in Penny Pilot Program
classes because in those classes an option series can
trade in a standard increment as low as $0.01 per
share (or $1.00 per option contract with a 100 share
multiplier). Because the temporary procedures
allow trading below $0.01 per share (or $1.00 per
option contract with a 100 share multiplier), the
procedures are available for all classes, including
those classes participating in the Penny Pilot
Program.
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instance, there might not otherwise be a
market for that person to close-out the
position even at the $1 cabinet price
(e.g., the series might be quoted no
bid).7
The purpose of the instant rule
change is to extend the operation of
these temporary procedures through
January 5, 2014, so that the procedures
can continue without interruption while
CBOE considers whether to seek
permanent approval of the temporary
procedures.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Act 8 and
the rules and regulations thereunder
and, in particular, the requirements of
Section 6(b) of the Act.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 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. The
Exchange believes that allowing for
liquidations at a price less than $1 per
option contract better facilitates the
closing of options positions that are
worthless or not actively trading.
Further, the Exchange believes the
proposal is consistent with the Act
because the proposed extension is of
appropriate length to allow the
Exchange and the Commission to
continue to assess the impact of the
Exchange’s authority to allow
transactions to take place in open outcry
7 As with other accommodation liquidations
under Rule 6.54, transactions that occur for less
than $1 are not be disseminated to the public on
the consolidated tape. In addition, as with other
accommodation liquidations under Rule 6.54, the
transactions are exempt from the Consolidated
Options Audit Trail (‘‘COATS’’) requirements of
Exchange Rule 6.24, Required Order Information.
However, the Exchange maintains quotation, order
and transaction information for the transactions in
the same format as the COATS data is maintained.
In this regard, all transactions for less than $1 must
be reported to the Exchange following the close of
each business day. The rule also provides that
transactions for less than $1 will be reported for
clearing utilizing forms, formats and procedures
established by the Exchange from time to time. In
this regard, the Exchange initially intends to have
clearing firms directly report the transactions to The
Options Clearing Corporation (‘‘OCC’’) using OCC’s
position adjustment/transfer procedures. This
manner of reporting transactions for clearing is
similar to the procedure that CBOE currently
employs for on-floor position transfer packages
executed pursuant to Exchange Rule 6.49A,
Transfer of Positions.
8 15 U.S.C. 78s(b)(1).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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at a price of at least $0 but less than $1
per option in accordance with its
attendant obligations and conditions,
including the process for submitting
such transactions to OCC for clearing.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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.
The Exchange believes that allowing
for liquidations at a price less than $1
per option contract better facilitates the
closing of options positions that are
worthless or not actively trading. The
Exchange believes this promotes fair
and orderly markets, as well as assists
the Exchange in its ability to effectively
attract order flow and liquidity to its
market, and ultimately benefits all
CBOE TPHs and all investors.
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed rule change does
not make any changes to Exchange
rules, but simply extends an existing
temporary program. Further, the
program is available to all market
participants through CBOE TPHs. The
Exchange does not believe that the
proposed rule change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because, again, the proposed rule
change does not make any changes to
Exchange rules, but simply extends an
existing temporary program. Moreover,
to the extent that the program makes
CBOE a more attractive marketplace, as
noted above, the program is available to
all market participants through CBOE
TPHs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
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Federal Register / Vol. 78, No. 129 / Friday, July 5, 2013 / Notices
public interest, provided that the selfregulatory organization has given the
Commission written notice of its intent
to file the proposed rule change at least
five business days prior to the date of
filing of the proposed rule change or
such shorter time as designated by the
Commission,11 the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 12 and
Rule 19b–4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the pilot program
can continue without interruption. The
Commission notes that the proposed
rule change does not present any new,
unique or substantive issues, but rather
is merely extending an existing pilot
program and that waiver of the 30-day
operative delay will prevent confusion
about whether the pilot program
continues to be available. Therefore, the
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest and designates the
proposed rule change as operative
effective June 28, 2013.16
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
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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:
11 The
Exchange has satisfied this requirement.
U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
16 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).
12 15
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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–2013–067 on the
subject line.
• 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–2013–067. 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 CBOE. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2013–067 and should be submitted on
or before July 26, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–16091 Filed 7–3–13; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
GDT Tek, Inc., Gemini Explorations,
Inc., Genetic Vectors, Inc., and Global
Gate Property Corp.; Order of
Suspension of Trading
July 2, 2013.
Paper Comments
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of GDT Tek,
Inc. because it has not filed any periodic
reports since the period ended June 30,
2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Gemini
Explorations, Inc. because it has not
filed any periodic reports since the
period ended July 31, 2009.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Genetic
Vectors, Inc. because it has not filed any
periodic reports since the period ended
September 30, 2000.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Global Gate
Property Corp. because it has not filed
any periodic reports since the period
ended March 31, 2011.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of the above-listed companies
is suspended for the period from 9:30
a.m. EDT on July 2, 2013, through 11:59
p.m. EDT on July 16, 2013.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2013–16272 Filed 7–2–13; 4:15 pm]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA 2013–0019]
Privacy Act of 1974, as Amended;
Computer Matching Program (SSA)—
Match Number 1014
AGENCY:
17 17
CFR 200.30–3(a)(12).
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Social Security Administration
(SSA).
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Agencies
[Federal Register Volume 78, Number 129 (Friday, July 5, 2013)]
[Notices]
[Pages 40539-40541]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16091]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69893; File No. SR-CBOE-2013-067]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to Trades for Less Than $1
June 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 June 28, 2013, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Exchange has designated the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 is proposing to extend its program that allows
transactions to take place at a price that is below $1 per option
contract through January 5, 2014. The text of the proposed rule change
is available on the Exchange's Web site (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 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 those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
An ``accommodation'' or ``cabinet'' trade refers to trades in
listed options on the Exchange that are worthless or not actively
traded. Cabinet trading is generally conducted in accordance with the
Exchange Rules, except as provided in Exchange Rule 6.54, Accommodation
Liquidations (Cabinet Trades), which sets forth specific procedures for
engaging in cabinet trades. Rule 6.54 currently provides for cabinet
transactions to occur via open outcry at a cabinet price of $1 per
option contract in any options series open for trading in the Exchange,
except that the Rule is not applicable to trading in option classes
participating in the Penny Pilot Program. Under the procedures, bids
and offers (whether opening or closing a position) at a price of $1 per
option contract may be represented in the trading crowd by a Floor
Broker or by a Market-Maker or provided in response
[[Page 40540]]
to a request by a PAR Official/OBO, a Floor Broker or a Market-Maker,
but must yield priority to all resting orders in the PAR Official/OBO
cabinet book (which resting cabinet book orders may be closing only).
So long as both the buyer and the seller yield to orders resting in the
cabinet book, opening cabinet bids can trade with opening cabinet
offers at $1 per option contract.
The Exchange has temporarily amended the procedures through June
28, 2013 to allow transactions to take place in open outcry at a price
of at least $0 but less than $1 per option contract.\5\ These lower
priced transactions are traded pursuant to the same procedures
applicable to $1 cabinet trades, except that (i) bids and offers for
opening transactions are only permitted to accommodate closing
transactions in order to limit use of the procedure to liquidations of
existing positions, and (ii) the procedures are also available for
trading in option classes participating in the Penny Pilot Program.\6\
The Exchange believes that allowing a price of at least $0 but less
than $1 better accommodates the closing of options positions in series
that are worthless or not actively traded, particularly due to market
conditions which may result in a significant number of series being
out-of-the-money. For example, a market participant might have a long
position in a call series with a strike price of $100 and the
underlying stock might now be trading at $30. In such an instance,
there might not otherwise be a market for that person to close-out the
position even at the $1 cabinet price (e.g., the series might be quoted
no bid).\7\
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\5\ See Securities Exchange Act Release Nos. 59188 (December 30,
2008), 74 FR 480 (January 6, 2009) (SR-CBOE-2008-133) (adopting the
amended procedures on a temporary basis through January 30, 2009),
59331 (January 30, 2009), 74 FR 6333 (February 6, 2009) (extending
the amended procedures on a temporary basis through May 29, 2009),
60020 (June 1, 2009), 74 FR 27220 (June 8, 2009) (SR-CBOE-2009-034)
(extending the amended procedures on a temporary basis through June
1, 2010), 62192 (May 28, 2010), 75 FR 31828 (June 4, 2010) (SR-CBOE-
2010-052) (extending the amended procedures on a temporary basis
through June 1, 2011); 64403 (May 4, 2011), 76 FR 27110 (May 10,
2011) (SR-CBOE-2011-048) (extending the amended procedures on a
temporary basis through December 30, 2011); 65872 (December 2,
2011), 76 FR 76788 (December 8, 2011) (SR-CBOE-2011-113) (extending
the amended procedures on a temporary basis through June 29, 2012)
and 67144 (June 6, 2012), 77 FR 35095 (June 12, 2012) (SR-CBOE-2012-
053) (extending the amended procedures on a temporary basis through
June 28, 2013).
\6\ Currently the $1 cabinet trading procedures are limited to
options classes traded in $0.05 or $0.10 standard increment. The $1
cabinet trading procedures are not available in Penny Pilot Program
classes because in those classes an option series can trade in a
standard increment as low as $0.01 per share (or $1.00 per option
contract with a 100 share multiplier). Because the temporary
procedures allow trading below $0.01 per share (or $1.00 per option
contract with a 100 share multiplier), the procedures are available
for all classes, including those classes participating in the Penny
Pilot Program.
\7\ As with other accommodation liquidations under Rule 6.54,
transactions that occur for less than $1 are not be disseminated to
the public on the consolidated tape. In addition, as with other
accommodation liquidations under Rule 6.54, the transactions are
exempt from the Consolidated Options Audit Trail (``COATS'')
requirements of Exchange Rule 6.24, Required Order Information.
However, the Exchange maintains quotation, order and transaction
information for the transactions in the same format as the COATS
data is maintained. In this regard, all transactions for less than
$1 must be reported to the Exchange following the close of each
business day. The rule also provides that transactions for less than
$1 will be reported for clearing utilizing forms, formats and
procedures established by the Exchange from time to time. In this
regard, the Exchange initially intends to have clearing firms
directly report the transactions to The Options Clearing Corporation
(``OCC'') using OCC's position adjustment/transfer procedures. This
manner of reporting transactions for clearing is similar to the
procedure that CBOE currently employs for on-floor position transfer
packages executed pursuant to Exchange Rule 6.49A, Transfer of
Positions.
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The purpose of the instant rule change is to extend the operation
of these temporary procedures through January 5, 2014, so that the
procedures can continue without interruption while CBOE considers
whether to seek permanent approval of the temporary procedures.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Act \8\ and the rules and regulations thereunder and, in particular,
the requirements of Section 6(b) of the Act.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ 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.
The Exchange believes that allowing for liquidations at a price less
than $1 per option contract better facilitates the closing of options
positions that are worthless or not actively trading. Further, the
Exchange believes the proposal is consistent with the Act because the
proposed extension is of appropriate length to allow the Exchange and
the Commission to continue to assess the impact of the Exchange's
authority to allow transactions to take place in open outcry at a price
of at least $0 but less than $1 per option in accordance with its
attendant obligations and conditions, including the process for
submitting such transactions to OCC for clearing.
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\8\ 15 U.S.C. 78s(b)(1).
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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.
The Exchange believes that allowing for liquidations at a price
less than $1 per option contract better facilitates the closing of
options positions that are worthless or not actively trading. The
Exchange believes this promotes fair and orderly markets, as well as
assists the Exchange in its ability to effectively attract order flow
and liquidity to its market, and ultimately benefits all CBOE TPHs and
all investors.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule change does not make any changes to Exchange rules, but
simply extends an existing temporary program. Further, the program is
available to all market participants through CBOE TPHs. The Exchange
does not believe that the proposed rule change will impose any burden
on intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because, again, the proposed
rule change does not make any changes to Exchange rules, but simply
extends an existing temporary program. Moreover, to the extent that the
program makes CBOE a more attractive marketplace, as noted above, the
program is available to all market participants through CBOE TPHs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the
[[Page 40541]]
public interest, provided that the self-regulatory organization has
given the Commission written notice of its intent to file the proposed
rule change at least five business days prior to the date of filing of
the proposed rule change or such shorter time as designated by the
Commission,\11\ the proposed rule change has become effective pursuant
to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6)
thereunder.\13\
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\11\ The Exchange has satisfied this requirement.
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the pilot program can continue without interruption. The Commission
notes that the proposed rule change does not present any new, unique or
substantive issues, but rather is merely extending an existing pilot
program and that waiver of the 30-day operative delay will prevent
confusion about whether the pilot program continues to be available.
Therefore, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest and designates the proposed rule change as operative effective
June 28, 2013.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or 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-2013-067 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-2013-067. 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 CBOE. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2013-067 and should be
submitted on or before July 26, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16091 Filed 7-3-13; 8:45 am]
BILLING CODE 8011-01-P