81704 Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). 

13 Id. 

14For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

15See supra note 7. 

16 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release Nos. 63256 

(November 5, 2010), 75 FR 69503 (November 12, 

2010). 

6 15 U.S.C. 78s(b)(2). 

7 17 CFR 200.30–3(a)(31). 

A proposed rule change filed under 

Rule 19b–4(f)(6) 11 normally may not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b– 

4(f)(6)(iii) 12 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange requests that the Commission 

waive the 30-day operative delay, as 

specified in Rule 19b–4(f)(6)(iii),13

which would make the proposed rule 

change effective and operative upon 

filing. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.14 The 

Commission notes that the proposal is 

based on the rules of another SRO that 

similarly excludes market on open 

orders from its market collar 

functionality.15 Accordingly, the 

Commission designates the proposed 

rule change operative upon filing with 

the Commission. 

At any time within 60 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. 

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 rulecomments@sec.gov. Please include File 

Number SR–EDGA–2010–25 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–EDGA–2010–25. 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 

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 on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such 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 publicly available. All 

submissions should refer to File 

Number SR–EDGA–2010–25 and should 

be submitted on or before January 18, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32614 Filed 12–27–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63582; File No. SR–FINRA– 

2010–055] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Designation 

of a Longer Period for Commission 

Action on Proposed Rule Change To 

Amend FINRA Rule 6140 (Other 

Trading Practices) 

December 21, 2010. 

On October 29, 2010, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’),2 and Rule 19b–4 thereunder,3 a 

proposed rule change to amend FINRA 

Rule 6140 to eliminate the provisions 

regarding the handling of stop orders, 

delete definitions relating to stop stock 

transactions, and to relocate the 

definition of ‘‘initial public offering.’’ 

Section 19(b)(2) of the Act– 4 provides 

that within forty-five days of the 

publication of notice of the filing of a 

proposed rule change, or within such 

longer period as the Commission may 

designate up to ninety days of such date 

if it finds such longer period to be 

appropriate and publishes its reasons 

for so finding, the Commission shall 

either approve or disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day for the filing 

submitted by FINRA will be December 

27, 2010.5

The Commission finds it appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change so that it has sufficient time 

to consider the proposed rule change, 

relating to the elimination of the FINRA 

provisions regarding the handling of 

stop orders and the deletion of 

definitions relating to stop stock 

transactions, and the comment letters 

that have been submitted in connection 

with the filing. 

Accordingly, the Commission, 

pursuant to Section 19(b)(2) of the Act,6

designates February 10, 2011, as the 

date by which the Commission should 

either approve or disapprove, or 

institute proceedings to determine 

whether to disapprove the proposed 

rule change. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32516 Filed 12–27–10; 8:45 am] 

BILLING CODE 8011–01–P 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 81705 

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). 

5The allocation algorithms include price-time, 

pro-rata, and the ultimate matching algorithm 

(‘‘UMA’’) base priorities and a combination of 

various optional priority overlays pertaining to 

public customer priority, Market-Maker 

participation entitlements, small order preference, 

and market turner. See Rules 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. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63580; File No. SR–CBOE– 

2010–114] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to the Hybrid 

Opening System 

December 20, 2010. 

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 December 

8, 2010, 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 and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Rule 6.2B, Hybrid Opening System 

(‘‘HOSS’’). The text of the proposed rule 

change is available on the Exchange’s 

Web site (http://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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

HOSS is a feature within CBOE’s 

Hybrid System that is used for 

conducting trading rotations. The 

Exchange is proposing to amend the 

HOSS rule in various respects. 

First, to have more flexibility in a 

manner that is consistent with other 

CBOE rules with order eligibility 

provisions, the Exchange is proposing to 

amend the HOSS rule to include an 

order eligibility provision. In particular, 

Rule 6.2B will be amended to provide 

that the Exchange shall designate the 

eligible order size, eligible order type, 

eligible order origin code (i.e., public 

customer orders, non-Market Maker 

broker-dealer orders, and Market Maker 

broker-dealer orders) that HOSS will 

accept for rotations on a class-by-class 

basis. The proposal would not, however, 

permit the Exchange to discriminate 

among individual market participants of 

the same type (e.g., permit certain 

market-maker orders but not others to be 

eligible). The Rule will also be amended 

to delete a reference to spread orders 

and contingency order [sic] not being 

eligible to participate in HOSS opening 

trades or in the determination of the 

opening price, expected opening price 

or expected opening size. (As revised, 

the Exchange would determine whether 

to designate these orders types as 

eligible for HOSS on a class-by-class 

basis, just as it would for any other 

order type.) Any changes to the HOSS 

order eligibility parameters determined 

by the Exchange would be announced to 

CBOE Trading Permit Holders via 

Regulatory Circular. 

This proposed change to include 

order eligibility requirements within the 

HOSS rule is consistent with the order 

eligibility requirements contained in 

other rules that pertain to features 

within CBOE’s Hybrid System, such as 

the order eligibility requirements for 

Rule 6.13A, Simple Auction Liaison 

(SAL) (SAL is a feature within the 

Hybrid System that auctions marketable 

orders for price improvement over the 

national best bid and offer), and Rule 

6.14, Hybrid Agency Liaison (HAL) 

(HAL is a feature within the Hybrid 

System that provides automated order 

handling in designated classes trading 

on Hybrid for qualifying electronic 

orders that are not automatically 

executed by the Hybrid System). The 

proposed rule change is also consistent 

with the provisions of Rule 6.53, Certain 

Types of Orders Defined, which 

provides that the classes and/or systems 

(e.g., the HOSS, SAL and HAL systems) 

for which the orders types described in 

Rule 6.53 shall be available will be as 

provided in the Exchange Rules, as the 

context may indicate, or as otherwise 

specified via Regulatory Circular. 

Second, the Exchange is proposing to 

adopt new Interpretation and Policy .04 

regarding the applicable allocation 

algorithm 5 for HOSS and to make 

related changes to Interpretation and 

Policy .03. Currently, there are various 

rotations procedures set forth in Rule 

6.2B, such as the regular HOSS rotation 

procedure described in Rule 6.2B(a)–(g), 

the modified HOSS rotation procedure 

for Hybrid 3.0 classes described in Rule 

6.2B.01, and the HOSS Hybrid Agency 

Liaison (‘‘HAL’’) for openings (referred 

to herein as the ‘‘HOSS HAL–O’’ 

procedure) described in Rule 6.2B.03. 

Right now the Rule does not specifically 

identify the applicable allocation 

algorithm for the HOSS and modified 

HOSS rotation procedures. Paragraph 

(c)(iv) of the Rule simply states that in 

determining the priority of orders and 

quotes to be traded, the System gives 

priority to market orders first, then to 

limit orders and quotes whose price is 

better than the opening price, and then 

to resting orders and quotes at the 

opening price. For the HOSS HAL–O 

rotation procedure, Rule 6.2B.03 

provides that the system gives priority 

to public customer market orders first 

(with multiple orders ranked based on 

time priority), then to non-public 

customer market orders second (with 

multiple orders being ranked based on 

time priority), then to multiple quotes 

and orders whose price is better than 

the opening price (with multiple quotes 

and orders being ranked in accordance 

with the allocation algorithm in effect 

for the option class pursuant to Rule 

6.45A or 6.45B), then to limit orders and 

quotes at the opening price (with 

multiple orders and quotes ranked in 

accordance with the allocation 

algorithm in effect for the class pursuant 

to Rule 6.45A or 6.45B). 

The Exchange is proposing to remove 

the specific allocation algorithm 

description for HOSS HAL–O rotations 

in Interpretation and Policy .03(c)(i) of 

Rule 6.2B. Instead, the provision will be 

amended provide [sic] that, in 

determining the priority of orders and 


emcdonald on DSK2BSOYB1PROD with NOTICES
81706 Federal Register / Vol. 75, No. 248 / Tuesday, December 28, 2010 / Notices 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). 

quotes to be traded, the System will give 

priority to market orders first, then to 

limit orders and quotes whose price is 

better than the opening price, and then 

to resting orders and quotes at the 

opening price (this description is the 

same as is currently provided in Rule 

6.2B(c)(iv) and noted above). The 

Exchange is also proposing to adopt 

new Interpretation and Policy .04 to 

Rule 6.2B. Proposed Interpretation and 

Policy .04 to Rule 6.2B will provide that 

the Exchange may determine on a classby-class basis which electronic 

allocation algorithm would apply for 

rotations (whether using the HOSS, 

modified HOSS or HOSS HAL–O 

rotation procedure). This change will 

also provide the Exchange with 

additional flexibility to permit the 

allocation algorithm in effect for a 

rotation to be different from the 

allocation algorithm in effect for the 

option class. All pronouncements 

regarding allocation algorithm 

determinations by the Exchange will be 

announced to CBOE Trading Permit 

Holders via Regulatory Circular. 

In conjunction with this change, the 

Exchange is also proposing to modify 

Rule 6.2B to codify and describe the 

manner in which HOSS handles 

opening imbalances in series that open 

at a minimum price increment (e.g., a 

series that opens at a price of $0.05 

when the series is quoted in $0.05 

increments and a series that opens at a 

price of $0.01 when the series is quoted 

in $0.01 increments). In those scenarios, 

HOSS opens even if a sell market order 

imbalance exists. In addition, the 

Exchange may determine to apply a 

separate electronic allocation algorithm 

for series that open at a minimum price 

increment due to a sell market order 

imbalance. As indicated above, 

pronouncements regarding allocation 

algorithm determinations will be 

announced via Regulatory Circular. 

The matching algorithm applied for 

rotations for each option class will be 

pursuant to Rule 6.45A or 6.45B, as 

applicable. Thus, the Exchange is not 

creating any new algorithms, but is 

amending Rule 6.2B to make clear that 

the Exchange may determine the 

applicable allocation algorithm for 

rotations as described above and to 

provide the flexibility for the Exchange 

to choose an algorithm from among the 

existing algorithms to be applied to 

rotations, rather than simply defaulting 

to the algorithm in effect for intra-day 

trading in the option class. 

Finally, the Exchange is proposing 

non-substantive amendments to Rule 

6.2B, so that the rule text can generally 

be more consistently organized, 

numbered and worded. For example, 

the Exchange is proposing to add 

descriptive headings to each section of 

the rule, and to replace multiple 

references to Exchange determinations 

being announced via Regulatory 

Circular with a single reference in 

proposed Interpretation and Policy .05, 

which will provide 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. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change 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 foster cooperation and coordination 

with persons engaged in regulating, 

clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. In particular, the 

Exchange believes that the proposed 

change would provide more flexibility 

and clarity in its HOSS rule. The 

Exchange also believes that the 

proposed HOSS order eligibility 

provision is consistent with order 

eligibility provisions in other existing 

rules, such as the SAL, HAL and order 

type rules. 

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 

Because the foregoing proposed rule 

change: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms does not become 

operative for 30 days after the date of 

this filing, 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 8 and Rule 

19b–4(f)(6) thereunder.9 A proposed 

rule change filed under Rule 19b– 

4(f)(6) 10 normally may not become 

operative prior to 30 days after the date 

of filing. However, Rule 19b– 

4(f)(6)(iii) 11 permits the Commission to 

designate such shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

At any time within 60 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. 

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 rulecomments@sec.gov. Please include File 

Number SR–CBOE–2010–114 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–2010–114. 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 


emcdonald on DSK2BSOYB1PROD with NOTICES