[Federal Register Volume 70, Number 245 (Thursday, December 22, 2005)]
[Notices]
[Pages 76085-76086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-7665]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52957; File No. SR-CBOE-2005-102]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Extend the Duration of CBOE Rule 6.45A(b) Pertaining to 
Orders Represented in Open Outcry

December 15, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 13, 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 filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it effective upon 
filing with the Commission.\5\ 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).
    \5\ The Exchange has asked the Commission to waive the 30-day 
operative delay required by Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii). See discussion infra Section III.
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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 the duration of CBOE Rule 6.45A(b) (the 
``Rule''), which relates to the allocation of orders represented in 
open outcry in equity option classes designated by the Exchange to be 
traded on the CBOE Hybrid Trading System (``Hybrid''), through March 
14, 2006. No other substantive changes are being made to the Rule. The 
text of the proposed rule change is available on the CBOE's Internet 
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 those 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 parts of such 
statements.

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

1. Purpose
    In March 2005, the Commission approved revisions to CBOE Rule 6.45A 
related to the introduction of Remote Market-Makers.\6\ Among other 
things, the Rule, pertaining to the allocation of orders represented in 
open outcry in equity options classes traded on Hybrid, was amended to 
clarify that only in-crowd market participants would be eligible to 
participate in open outcry trade allocations. In addition, the Rule was 
amended to limit its duration until September 14, 2005, unless 
otherwise extended. The duration of the Rule was thereafter extended 
until December 14, 2005.\7\ As the duration period expires on December 
14, 2005, the Exchange proposes to extend the effectiveness of the Rule 
through March 14, 2006.\8\
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    \6\ See Securities Exchange Act Release No. 51366 (March 14, 
2005), 70 FR 13217 (March 18, 2005) (SR-CBOE-2004-75).
    \7\ See Securities Exchange Act Release No. 52423 (September 14, 
2005), 70 FR 55194 (September 20, 2005) (SR-CBOE-2005-76).
    \8\ In order to effect proprietary transactions on the floor of 
the Exchange, in addition to complying with the requirements of the 
Rule, members are also required to comply with the requirements of 
Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), or qualify for an 
exemption. Section 11(a)(1) restricts securities transactions of a 
member of any national securities exchange effected on that exchange 
for (i) the member's own account, (ii) the account of a person 
associated with the member, or (iii) an account over which the 
member or a person associated with the member exercises discretion, 
unless a specific exemption is available. The Exchange issued a 
regulatory circular to members informing them of the applicability 
of these Section 11(a)(1) requirements when the duration of the Rule 
was extended until December 14, 2005. See CBOE Regulatory Circular 
RG05-103 (November 2, 2005). The Exchange has represented that it 
expects to issue a similar regulatory circular to members reminding 
them of the applicability of the Section 11(a)(1) requirements with 
respect to the proposed rule change. Telephone conversation between 
Jennifer Lamie, Managing Senior Attorney, CBOE, and Edward Cho, 
Attorney, Division of Market Regulation, Commission (December 15, 
2005).
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2. Statutory Basis
    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) of the Act.\9\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \10\ 
requirements 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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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 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

    The Exchange neither solicited nor received comments on the 
proposal.

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

[[Page 76086]]

significant burden on competition; and (3) does not become operative 
for thirty days from the date on which it was filed, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, it has become effective pursuant 
to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ 
thereunder.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ Pursuant to Rule 19b-4(f)(6)(iii), the Exchange has given 
the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change, at least five business days prior to the date on which 
the Exchange filed the proposed rule change. See 17 CFR 240.19b-
4(f)(6)(iii).
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    A proposed rule change filed under Commission Rule 19b-4(f)(6) \14\ 
normally does not become operative prior to thirty days after the date 
of filing. The CBOE requests that the Commission waive the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate 
the proposed rule change to become operative immediately to allow the 
Exchange to continue to operate under the existing allocation 
parameters for orders represented in open outcry in Hybrid on an 
uninterrupted basis. The Commission hereby grants the request. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver will allow the CBOE to continue to operate under 
the Rule without interruption. For these reasons, the Commission 
designates the proposed rule change as effective and operative 
immediately.\15\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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 proposed 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.

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-2005-102 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-2005-102. 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, 100 F Street, 
NE., 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-2005-102 and should be 
submitted on or before January 12, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7665 Filed 12-21-05; 8:45 am]
BILLING CODE 8010-01-P