[Federal Register Volume 74, Number 27 (Wednesday, February 11, 2009)]
[Notices]
[Pages 6927-6928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2774]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59359; File No. SR-CBOE-2008-123]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change To Adopt a Trade, 
Flash and Cancel Order Type for CBSX

February 4, 2009.
    On December 3, 2008, Chicago Board Options Exchange, Incorporated 
(``CBOE'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt a Trade, Flash and Cancel order type for 
the CBOE Stock Exchange (``CBSX''). The proposed rule change was 
published for comment in the Federal Register on January 2, 2009.\3\ 
The Commission received no comments regarding the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59147 (December 22, 
2008), 74 FR 150.
---------------------------------------------------------------------------

    The Commission has carefully reviewed the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to a 
national securities exchange \4\ and, in particular, Section 6(b)(5) of 
the Act,\5\ which requires that an exchange have rules designed to 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and to protect investors and the public interest. The 
Commission also believes that the proposed rule change furthers the 
objectives of Section 11A of the Act,\6\ as it helps to assure the 
economically efficient execution of securities transactions, fair 
competition among

[[Page 6928]]

brokers and dealers and among exchange markets, and the practicability 
of brokers executing investors' orders in the best market.
---------------------------------------------------------------------------

    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78k-1.
---------------------------------------------------------------------------

    If CBSX is at quoting at the national best bid or offer (``NBBO'') 
when a Trade, Flash and Cancel order is submitted to CBSX, CBSX will 
execute the incoming order automatically against the published 
quotation. However, if CBSX is not quoting at the NBBO, the Trade, 
Flash and Cancel designation initiates a process whereby the order 
would be electronically exposed to CBSX traders for a period of up to 
three seconds, rather than routed away to other markets, in accordance 
with Exchange Rule 52.6(a). CBSX traders will not know the identity or 
the account type of the party that submitted the Trade, Flash and 
Cancel order.\7\ CBSX traders can respond with orders that match or 
better the NBBO to trade with the Trade, Flash and Cancel order. If no 
CBSX trader matches or improves on the NBBO by the end of the exposure 
period, the CBSX system will cancel the Trade, Flash and Cancel order. 
In no event will an execution result that is inferior to the NBBO.\8\ 
Use of the Trade, Flash and Cancel order is strictly voluntary. The 
Commission believes that the Trade, Flash and Cancel order type is a 
potentially useful means for order senders to control where their 
orders are routed and to seek price improvement. Therefore, the 
Commission believes that the proposal is consistent with the Act.
---------------------------------------------------------------------------

    \7\ See e-mail from Angelo Evangelou, Assistant General Counsel, 
CBOE, to Michael Gaw, Assistant Director, and Andrew Madar, Special 
Counsel, Division of Trading and Markets, Commission, dated February 
3, 2009.
    \8\ The Exchange stated that, ``If a flash responder attempts to 
trade against the order by matching the flash price (the NBBO price 
at the time the order was received by the CBSX System), the order 
will be executed unless the system determines at the point of 
execution that the flash price is worse than a revised NBBO in which 
case the order will be cancelled.'' See e-mail from Angelo 
Evangelou, Assistant General Counsel, CBOE, to Michael Gaw, 
Assistant Director, and Andrew Madar, Special Counsel, Division of 
Trading and Markets, Commission, dated December 19, 2008.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-CBOE-2008-123) be, and it hereby is, 
approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-2774 Filed 2-10-09; 8:45 am]
BILLING CODE 8011-01-P