[Federal Register Volume 77, Number 237 (Monday, December 10, 2012)]
[Notices]
[Pages 73498-73500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29701]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68350; File No. SR-CBOE-2012-117]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Its Rule Related to Multi-Class Broad-
Based Index Option Spread Orders

December 4, 2012.
    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 November 29, 2012, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
Exchange. 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its rule related to multi-class 
broad-based index option spread orders. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 these 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 aspects of such 
statements.

[[Page 73499]]

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

1. Purpose
    The purpose of this rule filing is to (i) clarify that the term 
``Multi-Class Broad-Based Index Option Spread Order (Multi-Class Spread 
Order)'' may refer to either an order or a quote; (ii) clarify who 
Trading Permit Holders (``TPHs'') initiating a Multi-Class Spread Order 
in the primary trading station must notify in the secondary trading 
station; (iii) provide that the recipient Order Book Official 
(``OBO''), Designated Primary Market-Maker (``DPM'') or Exchange staff 
in the secondary trading station must verbalize the terms of a Multi-
Class Spread Order to the secondary trading crowd; and (iv) require 
that the recipient OBO, DPM or Exchange staff in the secondary trading 
station document the terms of the order.
    Exchange Rule 24.19 describes a Multi-Class Spread Order as ``an 
order'' to buy a stated number of contracts of a Broad-Based Index 
Option and sell an equal number, or an equivalent number, of contracts 
of a different Broad-Based Index Option. Market-Makers however, may 
also enter a ``Multi-Class Spread Order'' quote. Accordingly, the 
Exchange is seeking to clarify in its rules that the term ``Multi-Class 
Spread Order'' may refer to either an order or a quote, thereby 
maintaining clarity in the rules and reducing potential confusion.
    The Exchange is also seeking to clarify the procedure for which 
notice regarding a Multi-Class Spread Order is given to the trading 
crowd at a secondary trading station. Rule 24.19 provides that a Multi-
Class Spread Order may be represented at the trading station of either 
Broad-Based Index, subject to certain conditions. First, Rule 
24.19(b)(i) currently requires that upon an announcement of a Multi-
Class Spread Order at the primary trading station, the TPH initiating 
the order must contact either an OBO or the DPM at the secondary 
trading station, who then must disseminate notice of the order to the 
secondary trading crowd. In some classes however, it is possible that 
neither an OBO nor DPM is assigned. Therefore, the Exchange is 
proposing to clarify that, in addition to an OBO or DPM, a TPH may 
contact otherwise appropriate Exchange staff (e.g. PAR official or 
trading official). Trading stations which do not have an OBO or DPM 
assigned must ensure that an appropriate Exchange staff is present for 
purposes of disseminating a notice of a Multi-Class Spread Order. The 
proposed rule change would reduce confusion, as well as provide 
guidance in situations where neither an OBO nor DPM exists.
    Next, the Exchange proposes to specify the manner in which the 
recipient OBO, DPM, or Exchange staff in the secondary trading station 
must disseminate a notice of a Multi-Class-Spread Order. The proposed 
rule change requires the recipient OBO, DPM, or Exchange staff in the 
secondary trading station to verbalize the terms of the order to the 
secondary trading crowd. This proposed change ensures adequate 
dissemination of a notice of an order and its terms and promotes 
transparency. Finally, the Exchange seeks to require that the recipient 
OBO, DPM, or Exchange staff document the terms of the order for 
purposes of record retention and aiding surveillance.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act, in general. Specifically, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5) requirements that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest. Clarifying that a ``Multi-Class 
Spread Order'' may refer to an order or a quote should clear up any 
potential confusion and therefore inform investors. Clarifying and 
specifying the procedures in which a notice of a Multi-Class Spread 
Order is disseminated and documented also reduces potential confusion 
and maintains clarity in the rules. Further, it promotes transparency 
and aids in surveillance, thereby protecting investors.

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 
proposed rule change.

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

    Because the foregoing proposed rule change 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, it has 
become effective pursuant to Section 19(b)(3)(A) \3\ of the Act and 
Rule 19b-4(f)(6) \4\ thereunder.
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    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of this proposed rule 
change, the Commission summarily may temporarily suspend 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.

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 email to [email protected]. Please include 
File Number SR-CBOE-2012-117 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2012-117. This file 
number should be included on the subject line if email 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

[[Page 73500]]

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 Web site viewing and printing in the Commission's Public 
Reference Room on official business days between the hours of 10:00 
a.m. and 3:00 p.m. Copies of such filing also will be available for 
inspection and copying at the principal offices of the Exchange. 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-2012-117, and should be 
submitted on or before December 31, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29701 Filed 12-7-12; 8:45 am]
BILLING CODE 8011-01-P