[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Notices]
[Pages 7472-7474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02148]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68742; File No. SR-CBOE-2013-006]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Pre-Opening Information

January 28, 2013.
    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 January 17, 2013, the Chicago Board Options Exchange, 
Incorporated (``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 Exchange has designated the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) 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).
    \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 Rule 6.2B, Hybrid Opening System 
(``HOSS''), regarding the dissemination of certain pre-opening 
information. The text of the proposed rule change is available on the 
Exchange's Web site (www.cboe.org/Legal), 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to update the provisions of Rule 6.2B 
regarding the dissemination of certain pre-opening information. In 
relevant part, the current provisions of Rule 6.2B(a)(ii) provide that, 
during the pre-opening period, at specified intervals of time that will 
be announced to Trading Permit Holders,\5\

[[Page 7473]]

CBOE's Hybrid Trading System (the ``System'') will disseminate to 
market participants (as defined in Rule 6.45A, Priority and Allocation 
of Equity Option Trades on the CBOE Hybrid System, and 6.45B, Priority 
and Allocation of Trades in Index Options and Options on ETFs on the 
CBOE Hybrid System \6\) information about resting orders in the Book 
that remain from the prior business day and any orders and quotes 
submitted before the opening, including the expected opening price 
(``EOP'') and expected opening size (``EOS'') given the current resting 
orders and quotes. The purpose of the proposed rule change is to update 
the text to provide that such pre-opening information will be 
disseminated to all users that have elected to receive such information 
(and to remove the existing reference to such pre-opening information 
being disseminated to market participants). As revised, the rule text 
will reflect that any user--whether or not a ``market participant''--
may receive pre-opening information.\7\ This revision will update the 
rule text to accurately reflect the Exchange's current practice of 
making such pre-opening information available to any user--whether or 
not a ``market participant.'' \8\
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    \5\ Pursuant to Rule 6.5B.05 [sic], all pronouncements regarding 
determinations by the Exchange pursuant to Rule 6.2B and the 
Interpretations and Policies thereunder will be announced to Trading 
Permit Holders via Regulatory Circular.
    \6\ See introductory text to Rule 6.45A (which provides that the 
term ``market participant'' refers to a Market-Maker, a Designated 
Primary Market-Maker (``DPM''), an Electronic DPM (``e-DPM''), and a 
floor broker or a PAR Official representing orders in the trading 
crowd) and Rule 6.45B (which provides that the term ``market 
participant'' refers to a Market-Maker, a DPM or LMM, an e-DPM with 
an appointment in the subject class, and a floor broker or PAR 
Official representing orders in the trading crowd).
    \7\ The Exchange is also proposing to replace a reference from 
the specified intervals of time being ``announced to Trading Permit 
Holders'' to being ``determined by the Exchange.'' The Exchange 
notes that all pronouncements regarding determinations by the 
Exchange pursuant to Rule 6.2B and the Interpretations and Policies 
thereunder will be announced to Trading Permit Holders via 
Regulatory Circular. See Rule 6.2B.05; see also note 5, supra. The 
Exchange also notes that Regulatory Circulars are publically 
available on the Exchange's Web site (www.cboe.com).
    \8\ Users may elect to receive the pre-opening data via Market 
Data Express, LLC (``MDX,'' an affiliate of CBOE). MDX currently 
makes the data available as part of the BBO Data Feed for CBOE 
listed options at no additional charge. See SR-CBOE-2013-005. In 
addition, for certain series, the Exchange may make certain pre-
opening data available on its publically accessible Web site and/or 
display the information on monitors on the trading floor and through 
an application programming interface (``API''), each currently at no 
additional charge.
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    The Exchange believes that the dissemination of this pre-opening 
information to all users that elect to receive such information 
increases opportunities for all types of participants (e.g., public 
customers, broker-dealers and market-makers) to participate in opening 
rotations. This broader participation could lead to more robust 
competition because more users may participate in opening rotations, 
which may result in better prices for customers.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section [sic] the Act and the rules and regulations under the Act, 
in general, and furthers the objectives of Section 6(b)(5),\9\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
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    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is consistent 
with the Act and the rules and regulations under the Act, in general, 
and furthers the objectives of Section 6(b)(5),\10\ in particular, in 
that it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system, 
and, in general, to protect investors and the public interest. [sic]
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    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change will update the rule text to accurately 
reflect the Exchange's current practice of making pre-opening 
information available to any user--whether or not a ``market 
participant.'' The Exchange believes that the dissemination of the pre-
opening information to all users that elect to receive such information 
increases opportunities for all types of participants (e.g., public 
customers, broker-dealers and market-makers) to participate in opening 
rotations. This broader participation could lead to more robust 
competition because more users may participate in opening rotations, 
which may result in better prices for customers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. As noted above, the Exchange 
believes that the dissemination of the pre-opening information to all 
users that elect to receive such information increases opportunities 
for all types of participants (e.g., public customers, broker-dealers 
and market-makers) to participate in opening rotations. This broader 
participation could lead to more robust competition because more users 
may participate in opening rotations, which may result in better prices 
for customers. The Exchange also believes that the data will help 
attract new users and new order flow to the Exchange, thereby improving 
the Exchange's ability to compete in the market for options order flow 
and executions. Finally, the Exchange notes that at least one other 
exchange, the NASDAQ Options Market (``NOM''), makes similar 
information about pre-opening information available to non-members.\11\
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    \11\ NOM disseminates certain pre-opening order imbalance 
information every five seconds for a period of time prior to the 
open and this information is made available via subscription. See 
NOM Chapter VI, Section 8(b)(1) and Chapter XV, Section 4(e); see 
also http://www.nasdaqtrader.com/trader.aspx?id=openclose.
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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 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 if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6)(iii) thereunder.\13\ At any time within 60

[[Page 7474]]

days of the filing of such 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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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:

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-2013-006 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-2013-006. 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 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, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office 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-2013-006 and should be 
submitted on or before February 22, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02148 Filed 1-31-13; 8:45 am]
BILLING CODE 8011-01-P