[Federal Register Volume 70, Number 30 (Tuesday, February 15, 2005)]
[Notices]
[Page 7783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-600]



[[Page 7783]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51148; File No. SR-CBOE-2004-67]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change and Amendment No. 1 
Thereto Relating to Split Price Priority

February 8, 2005.
    On October 21, 2004, the Chicago Board Options Exchange, 
Incorporated (``CBOE'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend its split price priority 
rule. On December 17, 2004, the Exchange filed Amendment No. 1 to the 
proposed rule change. The proposed rule change, as amended, was 
published for notice and comment in the Federal Register on January 3, 
2005.\3\ The Commission received no comment letters on the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50924 (December 23, 
2004), 70 FR 128.
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    The proposed rule change would amend the Exchange's rule regarding 
split price transactions in open outcry generally to permit a member 
with an order for at least 100 contracts who buys (sells) at least 50 
contracts at a particular price to have priority over all others in 
purchasing (selling) up to an equivalent number of contracts of the 
same order at the next lower (higher) price without being required to 
yield to existing customer interest in the limit order book.
    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
In particular, the Commission believes that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\5\ which requires, among 
other things, that the rules of an exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade and, in general, to protect investors and 
the public interest. The Commission believes that the proposed rule 
change should encourage more aggressive quoting by market makers in 
competition for large-sized orders, and, in turn, lead to better-priced 
executions. The Commission notes that the proposed rule change includes 
interpretive language that clarifies that floor brokers who avail 
themselves of the split priority rule are obligated to ensure 
compliance with Section 11(a) of the Act.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-CBOE-2004-67), as amended, be 
hereby approved.
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    \6\ 15 U.S.C. 78f(b)(5).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-600 Filed 2-14-05; 8:45 am]
BILLING CODE 8010-01-P