[Federal Register Volume 72, Number 149 (Friday, August 3, 2007)]
[Notices]
[Pages 43303-43305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15066]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56154; File No. SR-CBOE-2007-85]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to CBOE's Delisting Policy

July 27, 2007.
    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 23, 2007, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been substantially prepared by 
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to

[[Page 43304]]

section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder.\4\ 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its delisting policy. The text of 
the proposed rule change is available on the Exchange's Web site 
(http://www.cboe.com), at the Exchange's Office of the Secretary and at 
the Commission.

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 Exchange 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
    On January 23, 2007, the Commission approved CBOE's rule filing 
(SR-CBOE-2006-92) to permit thirteen option classes to trade in penny 
increments in connection with the Penny Pilot Program.\5\ In its rule 
filing, CBOE discussed the various quote mitigation strategies that it 
had already implemented and intended to implement. One of the quote 
mitigation strategies was to adopt a delisting policy. CBOE's delisting 
policy currently provides that CBOE will delist any equity option class 
with national average daily volume (``ADV'') of less than 20 contracts.
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    \5\ See Securities Exchange Act Release No. 55154 (January 23, 
2007), 72 FR 4743 (February 1, 2007).
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    Because CBOE's rule filing relating to the Penny Pilot Program was 
only approved on a six-month pilot basis, including apparently the 
delisting policy, CBOE requests that its delisting policy be approved 
on a permanent basis.\6\
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    \6\ CBOE believes it is unclear from the approval order whether 
the delisting policy was intended to be approved only on a six-month 
pilot basis, as opposed to the changes to the minimum increments for 
the thirteen option classes participating in the Penny Pilot 
Program.
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    CBOE also proposes to amend its delisting policy to provide that 
CBOE may make exceptions to its delisting policy in appropriate 
circumstances. For example, if an option class that otherwise would 
qualify to be delisted (due to having a national ADV of less than 20 
contracts) experiences a significant increase in trading volume, CBOE 
could choose not to delist the option class. To qualify, the option 
class would need to have a national ADV of 20 or more contracts in the 
month immediately preceding its scheduled delisting, or in the twenty 
trading days prior to its scheduled delisting.
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.\7\ Specifically, the Exchange believes the 
proposed rule change is consistent with the section 6(b)(5) Act \8\ 
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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder,\10\ because 
the foregoing proposed rule does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30-days after the date of filing.\11\ 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest.\12\ The Exchange has requested that 
the Commission waive the 30-day operative delay. The Commission 
believes that waiving the 30-day operative delay to allow the 
Exchange's delisting policy as it currently exists to continue on a 
permanent basis is consistent with the protection of investors and the 
public interest because such waiver will ensure continuity of the 
Exchange's policy and will allow the Exchange's quote mitigation 
strategy to remain in effect without interruption. However, with regard 
to CBOE's proposal to amend its policy, the Commission does not believe 
that waiver of the operative delay is warranted. Therefore, the 
Commission designates the proposal seeking to make the delisting policy 
effective on a permanent basis to be operative upon filing with the 
Commission.\13 \The proposed amendments to the policy will become 
operative after the 30-day operative delay.
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    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission 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 of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. CBOE has satisfied the five-day pre-filing requirement.
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay, 
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 purposes of the Act.\14 \
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    \14\ See 15 U.S.C. 78s(b)(3)(C).
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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 43305]]

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-2007-85 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2007-85. 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, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the 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-2007-85 and should be 
submitted on or before August 24, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-15066 Filed 8-2-07; 8:45 am]
BILLING CODE 8010-01-P