[Federal Register Volume 70, Number 58 (Monday, March 28, 2005)]
[Notices]
[Pages 15669-15671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1365]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51407; File No. SR-CBOE-2005-16]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated To Extend a Pilot Program Relating to Margin 
Requirements for Certain Complex Options Spreads

March 22, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 7, 2005, the Chicago Board Options Exchange, Incorporated 
(``CBOE'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared primarily by the CBOE. 
Pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ CBOE has designated this proposal as non-
controversial, which renders the proposed rule change effective 
immediately upon filing. 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)(iii).
    \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

    CBOE proposes to extend, until February 7, 2006, a pilot program 
permitting an interpretation to CBOE Rule 12.3, Margin Requirements, 
relating to margin requirements for certain complex option spreads. The 
text of the proposed rule change is available at the Office of the 
Secretary, CBOE 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, CBOE 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. CBOE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.\5\
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    \5\ The Commission has modified parts of these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On August 8, 2003, the Commission approved on a one-year pilot 
basis (``Pilot'') a CBOE Regulatory Circular setting forth an 
interpretation of CBOE's current margin requirements for certain 
complex option spreads.\6\ CBOE subsequently submitted two additional 
filings relating to the Pilot--one to extend the Pilot for an 
additional six months,\7\ which was effective upon

[[Page 15670]]

filing with the Commission,\8\ and another proposing permanent 
implementation of the margin requirements covered by the Pilot.\9\ In 
this filing, CBOE has requested an additional extension of the Pilot, 
until February 7, 2006, or until such time as the Commission has 
approved CBOE's request for permanent implementation of the margin 
requirements on certain complex option spreads, whichever occurs 
sooner.
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    \6\ See Securities Exchange Act Release No. 48306 (August 8, 
2003), 68 FR 48974 (approving SR-CBOE-2003-24). Regulatory Circular 
RG03-66 was issued by CBOE following the Commission's approval of 
SR-CBOE-2003-24.
    \7\ See SR-CBOE-2004-56.
    \8\ See Securities Exchange Act Release No. 50164 (August 6, 
2004), 69 FR 50405 (August 16, 2004) (approving SR-CBOE-2004-56). 
Regulatory Circular RG03-66 was reissued as Regulatory Circular 
RG04-90.
    \9\ See SR-CBOE-2004-53.
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    CBOE is proposing an extension of the Pilot so that it may continue 
in effect while the Commission considers CBOE's proposal for permanent 
implementation. As such, CBOE proposes to reissue the Regulatory 
Circular with the new Pilot expiration date. CBOE has received no 
negative comments concerning Regulatory Circulars RG03-66 or RG04-90 
since they were issued, nor is CBOE aware of any negative consequences 
resulting from the application of the margin requirements permitted by 
the Regulatory Circulars.
2. Statutory Basis
    CBOE represented that the proposed Regulatory Circular clarifies 
that CBOE's current margin rules extend to complex option spreads, 
thereby allowing investors to more efficiently implement these 
strategies. As such, CBOE believes that the proposed Regulatory 
Circular interpretation of CBOE Rule 12.3 is consistent with and 
furthers the objectives of Section 6(b)(5) of the Act, in that it is 
designed to perfect the mechanisms of a free and open market and to 
protect investors and the public interest.

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    CBOE neither solicited nor received written comments with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has become effective upon filing 
on February 7, 2005, pursuant to Section 19(b)(3)(A) \10\ of the Act 
and Rule 19b-4(f)(6) \11\ thereunder because the proposal: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) does not become operative for 30 days from the date of filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the 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 filing date of the proposed rule change.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ As required under Rule 19b-4(f)(6)(iii), the CBOE provided 
the Commission with written notice of its intent to file the 
proposed rule change at least five business days prior to the filing 
date.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. CBOE has requested 
that the Commission waive the 30-day operative waiting period to permit 
CBOE to continue the Pilot without interruption while the Commission 
determines whether to approve permanent implementation of the subject 
margin requirements.
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission, consistent with the protection of investors and the 
public interest, has waived the 30-day requirement that the proposed 
rule change not become operative for 30 days after the date it was 
filed.\14\ The Commission believes that granting immediate 
effectiveness to the proposed rule change is appropriate because it 
will allow the Pilot to continue without interruption after it would 
otherwise have expired on February 7, 2005. At any time within 60 days 
of the filing of the 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 the furtherance of the 
purposes of the Act.\15\
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    \14\ For the purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rules 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \15\ 15 U.S.C. 78s(b)(3)(C).
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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 Number SR-CBOE-2005-16 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-2005-16. 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 
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-2005-16 and should be submitted on or before April 18, 2005.


[[Page 15671]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
Margaret H. McFarland,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E5-1365 Filed 3-25-05; 8:45 am]
BILLING CODE 8010-01-P