[Federal Register Volume 72, Number 229 (Thursday, November 29, 2007)]
[Notices]
[Pages 67615-67616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23168]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56824; File No. CBOE-2007-134]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Relating to the 
Continuous Quoting Obligations of DPMs

November 20, 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 November 9, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change as described in 
Items I, II, and III below, which Items have been prepared 
substantially by CBOE. 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.
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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 CBOE Rule 8.85 relating to the 
continuous quoting obligations of Designated Primary Market-Makers 
(``DPMs''). The text of the proposed rule change is available at CBOE, 
the Commission's Public Reference Room, and http://www.cboe.com/legal.

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
    CBOE proposes to modify the continuous electronic quoting 
obligation of DPMs in multiply-listed option classes, and make them 
consistent with the continuous quoting obligation of e-DPMs \3\ and 
Lead Market-Makers (``LMMs'') in Hybrid option classes.\4\ CBOE is not 
proposing to change the continuous electronic quoting obligation of 
DPMs in classes listed solely on CBOE.
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    \3\ See CBOE Rule 8.93.
    \4\ See CBOE Rule 8.15A.
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    Currently, DPMs are required to provide continuous electronic 
quotations in 100% of the series of each option class allocated to the 
DPM. E-DPMs and LMMs, on the other hand, are required to provide 
continuous electronic quotes in 90% of the series of each appointed 
option class. CBOE believes that it would be appropriate and reasonable 
to reduce the continuous electronic quoting obligation of DPMs in 
multiply-listed option classes from 100% of the series to 90% of the 
series. The participation entitlement for DPMs has been reduced over 
the past several years, and presently the participation entitlement is 
allocated between DPMs and e-DPMs under Rule 8.87. Specifically, if the 
DPM and one or more e-DPMs are quoting at the best bid/offer on CBOE, 
one-half of the entitlement is allocated to the DPM, and the other half 
is divided equally among the e-DPMs quoting at the best bid/offer on 
CBOE. In addition, in 2005 CBOE implemented a Preferred Market-Maker 
Program which provides that in instances where a Preferred Market-Maker 
receives a participation entitlement, then the DPM and e-DPM 
participation entitlement shall not apply to any order.\5\
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    \5\ See CBOE Rule 8.13.
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    CBOE believes that reducing the continuous electronic quoting 
obligations of DPMs in multiply-listed option classes may also mitigate 
quotations. In the event that an order is received in a series of a 
multiply-listed option class in which CBOE is not disseminating a 
quotation, CBOE would process the order in accordance with the 
provisions of Rule 6.14--the Hybrid Agency Liaison. As a result, CBOE 
does not believe there would be any negative effect on the handling of 
orders.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ in particular, in that it is designed to promote 
just and equitable principles of trade, serve to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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 either solicited or received with respect 
to the proposed rule change.

[[Page 67616]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which CBOE consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-134 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-2007-134. 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 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-2007-134 and should be 
submitted on or before December 20, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-23168 Filed 11-28-07; 8:45 am]
BILLING CODE 8011-01-P