[Federal Register Volume 70, Number 236 (Friday, December 9, 2005)]
[Notices]
[Pages 73317-73319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-7103]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52855; File No. SR-CBOE-2005-96]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Extend a Pilot Program Relating to the Retail Automatic 
Execution System

November 30, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 73318]]

``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 15, 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 CBOE. The 
Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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

    CBOE proposes to extend a pilot program relating to the operation 
of CBOE's Retail Automatic Execution System (``RAES'') until November 
30, 2006 to allow broker-dealer orders that are eligible for execution 
on RAES pursuant to CBOE Rule 6.8, Interpretation and Policy .01 to 
automatically execute against customer limit orders on CBOE's book in 
classes designated by the appropriate Floor Procedure Committee 
(``Pilot''). The text of the proposed rule change is available on 
CBOE's Web site (http://www.cboe.com), at CBOE's Office of the 
Secretary, 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, 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to extend the Pilot until November 
30, 2006. The Pilot was originally approved on May 13, 2004, with an 
expiration date of November 30, 2004,\5\ and is currently extended for 
one year to November 30, 2005.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 49699 (May 13, 
2004), 69 FR 28958 (May 19, 2004) (SR-CBOE-2003-42).
    \6\ See Securities Exchange Act Release No. 50779 (December 1, 
2004), 69 FR 71087 (December 8, 2004) (SR-CBOE-2004-78).
---------------------------------------------------------------------------

    The Exchange's RAES system was created to allow for the automatic 
execution of retail customer options orders against CBOE market makers 
at their disseminated prices. In 1999, the Exchange expanded the RAES 
system to allow incoming RAES orders to execute against customer limit 
orders on the CBOE book when such booked orders constitute CBOE's best 
bid/offer.\7\ The Exchange has allowed broker-dealer orders to be 
executed on RAES in classes designated by the appropriate Floor 
Procedure Committee.\8\ The Pilot would allow these broker-dealer 
orders to automatically execute against the book.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 41995 (October 8, 
1999), 64 FR 56547 (October 20, 1999) (SR-CBOE-99-29).
    \8\ See Securities Exchange Act Release Nos. 45967 (May 20, 
2002), 67 FR 37888 (May 30, 2002) (SR-CBOE-2002-22); 46113 (June 25, 
2002), 67 FR 44486 (July 2, 2002) (SR-CBOE-2002-35); and 46598 
(October 3, 2002), 67 FR 63478 (October 11, 2002) (SR-CBOE-2002-56).
---------------------------------------------------------------------------

2. Statutory Basis
    Because the proposed rule change will expand the number of orders 
eligible to trade automatically with booked customer limit orders, the 
Exchange believes the proposed rule change is consistent with Section 
6(b) of the Act in general,\9\ and furthers the objectives of Section 
6(b)(5) of the Act in particular,\10\ in that it is designed to promote 
just and equitable principles of trade, to 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange believes that the proposed rule change will not 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

    No written comments were solicited or received with respect to the 
proposed rule changes.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative prior to 30 days after 
the date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, and because the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change at least five 
days prior to the filing date, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Exchange requests that the Commission waive the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii).\13\ The 
Exchange believes that the waiver of this period is appropriate because 
the filing merely extends the Pilot that has been in effect since May 
13, 2004 and because the Pilot affords automatic executions to a 
greater number of market participants.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that it is consistent with the protection 
of investors and the public interest to waive the 30-day operative 
delay and make this proposed rule change immediately effective.\14\ The 
Commission believes that the waiver of the 30-day operative delay will 
allow the Exchange to continue, without interruption, the existing 
operation of its Pilot for an additional year, expiring on November 30, 
2006. 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 purposes of the Act.
---------------------------------------------------------------------------

    \14\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 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.

[[Page 73319]]

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-2005-96 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 Number SR-CBOE-2005-96. 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 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-2005-96 
and should be submitted on or before December 30, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7103 Filed 12-8-05; 8:45 am]
BILLING CODE 8010-01-P