[Federal Register Volume 70, Number 161 (Monday, August 22, 2005)]
[Notices]
[Pages 48995-48996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4558]



[[Page 48995]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52262; File No. SR-CBOE-2005-61]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the Extension of a Pilot Program That Increases 
the Standard Position and Exercise Limits for Certain Options Traded on 
the Exchange

August 15, 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 August 11, 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 
Exchange has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. 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).
    \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

    The CBOE proposes to extend an existing pilot program that 
increases the standard position and exercise limits for certain options 
traded on the Exchange (``Pilot Program''). The text of the proposed 
rule change is available on the CBOE's Web site (http://www.cboe.com), 
at the CBOE's principal office, and at the Commission's Public 
Reference Room.

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 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
    The Pilot Program, as previously approved by the Commission, 
provides for an increase to the standard position and exercise limits 
for equity option contracts and for options on QQQQs for a six month 
period.\5\ Specifically, the Pilot Program increased the applicable 
position and exercise limits for equity options and options on the QQQQ 
in accordance with the following levels:\6\
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    \5\ The Pilot Program, which the Commission approved on February 
23, 2005, is set to expire on August 23, 2005. See Securities 
Exchange Act Release No. 51244 (February 23, 2005), 70 FR 10010 
(March 1, 2005) (order approving SR-CBOE-2003-30, as amended) 
(``Pilot Program Order'').
    \6\ Except when the Pilot Program is in effect.

------------------------------------------------------------------------
                                             Pilot Program equity option
   Current equity option contract limit            contract limit
------------------------------------------------------------------------
13,500 contracts..........................  25,000 contracts.
22,500 contracts..........................  50,000 contracts.
31,500 contracts..........................  75,000 contracts.
60,000 contracts..........................  200,000 contracts.
75,000 contracts..........................  250,000 contracts.
-------------------------------------------
Current QQQQ Option Contract Limit........  Pilot Program QQQQ Option
                                             Contract Limit
-------------------------------------------
300,000 contracts.........................  900,000 contracts.
------------------------------------------------------------------------

    The purpose of the proposed rule change is to extend the Pilot 
Program for an additional six-month period. The Exchange believes that 
extending the Pilot Program for six months is warranted due to the 
positive feedback from members and for the reasons cited in the 
original rule filing that proposed the adoption of the Pilot 
Program.\7\ Also, the Exchange has not encountered any problems or 
difficulties relating to the Pilot Program since its inception. For 
these reasons, the Exchange requests that the Commission extend the 
Pilot Program for an additional six months.
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    \7\ See Pilot Program Order, supra note 5.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements provided under Section 6(b)(5) of the Act 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The 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

    Because the forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing, or such shorter time as the Commission 
may designate, it has become effective pursuant to Section 19(b)(3)(A) 
of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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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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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\10\ 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange provided the Commission 
with written notice of its intent to file this proposed rule change at 
least five business days prior to the date of filing the proposed rule 
change. In addition, the Exchange has requested that the Commission 
waive the 30-day pre-operative delay. The Commission believes that 
waiving the 30-day pre-operative delay is consistent with the 
protection of investors and in the public interest because it will 
allow the Pilot Program to continue uninterrupted.\12\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ Id.
    \12\ For the purposes only of waiving the operative date of 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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    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 furtherance of the Act.

[[Page 48996]]

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 No. SR-CBOE-2005-61 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File No. SR-CBOE-2005-61. 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, 100 F Street, NE., 
Washington, DC 20549. Copies of such filing will also 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 No. SR-CBOE-2005-61 and should be 
submitted on or before September 12, 2005.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4558 Filed 8-19-05; 8:45 am]
BILLING CODE 8010-01-P