[Federal Register Volume 70, Number 137 (Tuesday, July 19, 2005)]
[Notices]
[Pages 41464-41466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3831]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52019; File No. SR-CBOE-2005-53]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Permit a Limited Suspension of Exchange Membership 
Transactions to Allow for the Dissemination of Information Deemed 
Material to the Value of Exchange Memberships

July 12, 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 July 8, 2005, the Chicago Board Options Exchange, Incorporated 
(``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 CBOE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange Rule 3.14--Sale and 
Transfer of Membership, to permit the Exchange to suspend membership 
purchase and sale transactions for a limited period of time to allow 
for the dissemination of information deemed to be material to the value 
of Exchange memberships. Below is the text of the proposed rule change. 
Proposed new language is italicized.
* * * * *

[[Page 41465]]

RULE 3.14--Sale and Transfer of Membership
    (a)-(d) Unchanged.
    * * * Interpretations and Policies:
    .01 In circumstances in which the Board of Directors deems it 
necessary in the interest of maintaining a fair and orderly market in 
transferable Exchange memberships, the Board may declare a suspension 
of membership purchase and sale transactions to allow for the 
dissemination of information deemed to be material to the value of 
Exchange memberships. Any such suspension shall be limited in duration 
to no longer than one business day. During any such suspension, any bid 
or offer previously submitted to the Membership Department in 
accordance with Rule 3.13(b) or Rule 3.14(a) may be withdrawn by the 
submission to the Membership Department of a written revocation of the 
bid or offer. No new bids or offers may be submitted during any such 
suspension.
* * * * *

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 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. The CBOE 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
    The purpose of the proposed rule change is to allow for the 
temporary suspension of Exchange membership purchase and sale 
transactions in the interest of maintaining a fair and orderly market 
in transferable Exchange memberships. Specifically, the proposal would 
permit the Board of Directors to suspend membership transactions for a 
limited period of time to allow for the dissemination of information 
deemed to be material to the value of Exchange memberships. During a 
temporary suspension, any bid or offer to purchase or sell a membership 
previously submitted to the Exchange's Membership Department would be 
permitted to be withdrawn through the submission of a written 
revocation of the bid or offer. No new bids or offers would be 
permitted to be submitted during a suspension. In addition, the 
proposed rule provides that no suspension would be permitted to last 
more than one business day.
    Currently, the Exchange has no rule in place specifically 
authorizing the Exchange to temporarily suspend membership 
transactions. The Exchange believes that having such a rule would 
provide CBOE with the ability to allow for material information 
relating to the value of Exchange memberships to be disseminated and 
absorbed by members before additional seat transactions may be 
consummated. This would permit the Exchange to ensure that members 
engaging in seat transactions have an adequate opportunity to learn of 
the information so that they are not at an informational disadvantage 
and have time to reassess their current bids and offers in light of the 
new material information. Having such a rule would assist the Exchange 
in maintaining a fair and orderly market in CBOE memberships. The 
Exchange believes one business day is a sufficient amount of time to 
allow the seat market to absorb any disseminated material information.
2. Statutory Basis
    The Exchange believes that having the ability to declare a 
temporary suspension of membership transactions would serve to promote 
a fair and orderly market for its memberships. For this reason, the 
Exchange believes the proposed rule change is consistent with the Act 
and the rules and regulations under the Act applicable to a national 
securities exchange and, in particular, the requirements of Section 
6(b) \3\ of the Act. Specifically, the Exchange believes the proposed 
rule change is consistent with the requirements of Section 6(b)(5) \4\ 
that the rules of an exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

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 has become effective pursuant to Section 
19(b)(3)(A) of the Act \5\ and subparagraph (f)(6) of Rule 19b-4 \6\ 
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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    Under Rule 19b-4(f)(6)(iii) of the Act,\7\ 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. The Exchange has 
requested the Commission to waive to 30-day operative delay. The 
Commission, consistent with the protection of investors and the public 
interest, has determined to waive the 30-day operative date because 
such waiver will permit the Exchange to implement the rule without 
undue delay.\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.19b-4(f)(6)(iii).
    \8\ For purposes only of waiving 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).
---------------------------------------------------------------------------

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:

[[Page 41466]]

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-2005-53 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-CBOE-2005-53. 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 Room. 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-2005-53 and should be submitted on or before August 
9, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3831 Filed 7-18-05; 8:45 am]
BILLING CODE 8010-01-P