[Federal Register Volume 70, Number 105 (Thursday, June 2, 2005)]
[Notices]
[Page 32386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2808]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51743; File No. SR-CBOE-2005-21]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval of Proposed Rule Change Relating 
to the Exchange's Calculation of the National Best Bid or Offer When 
Another Exchange Is Disconnected From the Intermarket Option Linkage

May 25, 2005.
    On March 17, 2005, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange''), filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ to amend its rule regarding the calculation of the 
National Best Bid or Offer (``NBBO'') when another participant exchange 
in the Plan for the Purpose of Creating and Operating an Intermarket 
Option Linkage (``Linkage Plan'') is disconnected from the Linkage.\3\ 
The proposed rule change was published for comment in the Federal 
Register on April 21, 2005.\4\ The Commission received no comments on 
the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The term ``Linkage'' means the systems and data 
communications network that link electronically the options 
exchanges to one another for the purpose of sending and receiving 
Linkage Orders, related confirmations, order statuses and 
Administrative Messages. See Section 2(14) of the Linkage Plan.
    \4\ See Securities Exchange Act Release No. 51540 (April 13, 
2005), 70 FR 20780.
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    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6 of the Act 
\5\ and the rules and regulations thereunder applicable to a national 
securities exchange.\6\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\7\ 
which requires, among other things, that the rules of CBOE be designed 
to promote just and equitable principles of trade, 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. The Commission believes that it is appropriate for CBOE to 
remove an exchange's disseminated quote from CBOE's determination of 
the NBBO when an exchange is disconnected from Linkage because access 
to that exchange's quote is limited during such times. The Commission 
further believes that CBOE's existing rules establish appropriate 
procedures to notify promptly the affected exchange and CBOE members of 
such removal and establish an appropriate standard for when to resume 
inclusion of the affected exchange's quote in CBOE's NBBO 
calculation.\8\
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    \5\ 15 U.S.C. 78f.
    \6\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ See CBOE Rule 6.13(e)(ii).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CBOE-2005-21) is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2808 Filed 6-1-05; 8:45 am]
BILLING CODE 8010-01-P