[Federal Register Volume 69, Number 81 (Tuesday, April 27, 2004)]
[Notices]
[Pages 22893-22895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9522]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49584; File No. SR-CBOE-2004-22]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. To Extend the Exchange's Automated Limit Order Display 
Facility Pilot Program Until October 19, 2004

April 20, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on April 15, 2003, the Chicago Board Options 
Exchange, Inc. (``CBOE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the Exchange's automated limit 
order display facility (``Autobook'') pilot until October 19, 2004 or 
such earlier time as the Commission may approve Autobook on a permanent 
basis. The text of the proposed rule change appears below. Additions 
are in italics. Deletions are in [brackets].
* * * * *
Rule 8.85 DPM Obligations
    (a) No change.
    (b)(i)-(vi) No Change.
    (vii) Autobook Pilot. Maintain and keep active on the DPM's PAR 
workstation at all times the automated limit order display facility 
(``Autobook'') provided by the Exchange. The appropriate Exchange Floor 
Procedure Committee will determine the Autobook timer in all classes 
under that Committee's jurisdiction. A DPM may deactivate Autobook as 
to a class or classes provided that Floor Official approval is 
obtained. The DPM must obtain such approval no later than three minutes 
after deactivation. The Autobook Pilot expires on [April 21, 2004] 
October 19, 2004, or such earlier time as the Commission has approved 
Autobook on a permanent basis.

[[Page 22894]]

    To the extent that there is any inconsistency between the specific 
obligations of a DPM set forth in subparagraph (b)(i) through (b)(vii) 
of this Rule and the general obligations of a Floor Broker or of an 
Order Book Official under the Rules, subparagraph (b)(i) through 
(b)(vii) of this Rule shall govern.
    (c)-(e) No change.
    * * * Interpretations and Policies:
    .01-.04 No change.
* * * * *

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
    On April 18, 2003, the Commission approved, on a pilot basis, the 
implementation of Autobook.\3\ Autobook is an enhancement to the 
Designated Primary Market Maker's (``DPM'') PAR workstation that 
automatically facilitates the entry of eligible customer limit orders 
into the limit order book at the end of a configurable period of time 
provided such limit orders have not previously been addressed manually 
by the DPM. Specifically, Autobook assists and facilitates DPMs' 
compliance with their regulatory obligation and the display of eligible 
customer limit orders in the disseminated quotations as required by 
CBOE rules and Regulatory Circulars.\4\
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    \3\ See Securities Exchange Act Release No. 47701 (April 18, 
2003), 68 FR 22426 (April 28, 2003) (Order approving SR-CBOE-2003-16 
on a pilot program basis until April 21, 2004) (``Autobook Pilot 
Release''). Autobook is governed by CBOE Rule 8.85(b)(vii). The 
Commission notes that the representations made by CBOE in the 
Autobook Pilot Release regarding a DPM's ability to turn off 
Autobook, impermissibly rely on Autobook and CBOE's surveillance for 
impermissible reliance on Autobook continue to apply.
    \4\ Currently, CBOE's DPMs are required to execute or book 95% 
of all eligible customer limit orders ``immediately'' but not later 
than 30-seconds after receipt under normal market conditions.
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    The Autobook pilot is due to expire on April 21, 2004. The Exchange 
proposes to extend the Autobook pilot until October 19, 2004 or such 
earlier time as the Commission has approved Autobook on a permanent 
basis.
    The Exchange intends to submit a rule filing to the Commission 
proposing permanent approval of Autobook in the next several weeks. 
Therefore, the Exchange proposes to extend the Autobook pilot program 
until October 19, 2004 so that the pilot may continue in effect while 
the Commission considers the Exchange's upcoming permanent approval 
proposal.
2. Statutory Basis
    The Exchange believes that because Autobook assists and facilitates 
DPMs' compliance with their regulatory obligations and the display of 
eligible customer limit orders in the disseminated quotations as 
required by CBOE rules and Regulatory Circulars, the proposed rule 
change is consistent with section 6(b) of the Act,\5\ in general, and 
furthers the objectives of section 6(b)(5),\6\ in particular, in that 
it is designed to promote just and equitable principles of trade and to 
protect investors and the public interest. Furthermore, the Exchange 
believes that the proposed changes are consistent with the Act's 
requirement that an exchange's rules not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.\7\
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
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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

    The foregoing rule change, as amended, has become effective 
pursuant to section 19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) 
of Rule 19b-4 \9\ thereunder because it does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate; and the Exchange has given the Commission 
written notice of its intention to file the proposed rule change at 
least five business days prior to filing. At any time within 60 days of 
the filing of such proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6)(iii) of the Act,\10\ the proposal does not 
become operative for 30 days after the date of its filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest and the Exchange is 
required to give the Commission written notice of its intention to file 
the proposed rule change at least five business days prior to filing. 
The Exchange has requested that the Commission waive the five-day pre-
filing notice requirement and accelerate the operative date of the 
proposal to April 21, 2004, so that the Autobook pilot program may 
continue without interruption after it would have otherwise expired on 
April 21, 2004. For this reason, the Commission, consistent with the 
protection of investors and the public interest, has determined to 
waive the five-day pre-filing notice requirement and accelerate the 
operative date of the proposal to April 21, 2004,\11\ and, therefore, 
the proposal is effective and operative on that date.
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the five-day pre-filing notice 
requirement and accelerating the 30-day operative period for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form 
(http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please 
include File

[[Page 22895]]

Number SR-CBOE-2004-22 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609.
    All submissions should refer to File Number SR-CBOE-2004-22. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Section, 450 Fifth 
Street, NW., Washington, DC 20549. 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 Number SR-
CBOE-2004-22 and should be submitted on or before May 18, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-9522 Filed 4-26-04; 8:45 am]
BILLING CODE 8010-01-P