19998 Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 

9 15 U.S.C. 78s(b)(3)(A)(i). 

10 17 CFR 240.19b–4(f)(1). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2CFR 240.19b–4. 

3The proposal would also expand the rule to 

address conduct by persons associated with a 

participant firm, in addition to the firm’s partners, 

directors, officers and registered employees. 

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 received nor 

solicited written comments on the 

proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

will take effect upon filing with the 

Commission pursuant to Section 

19(b)(3)(A)(i) of the Act 9 and Rule 19b–

4(f)(1) thereunder,10 because it 

constitutes a stated policy, practice, or 

interpretation with respect to the 

meaning, administration, or 

enforcement of an existing rule. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–2007–35 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–2007–35. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the 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–2007–35 and should 

be submitted on or before May 11, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–7554 Filed 4–19–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55625; File No. SR–CHX–

2007–08] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing of Proposed Rule Change To 

Expand Its Price Manipulation Rule To 

Address Additional Instances of 

Improper Behavior 

April 12, 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 March 21, 

2007, the Chicago Stock Exchange, Inc. 

(‘‘CHX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been 

substantially prepared by the CHX. 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 amend its 

rule relating to price manipulation to 

address two separate instances of 

improper activity: (1) Manipulative 

conduct consisting of a single event (in 

addition to a series of events, as the 

current rule contemplates) and (2) 

manipulation based upon the entry of 

orders as opposed to that based solely 

upon the entry of trades. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.chx.com/rules/ 

proposed_rules.htm. 

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 

CHX 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 CHX 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Through this proposal, the Exchange 

seeks to amend its rule relating to price 

manipulation to address two separate 

instances of improper activity: (1) 

Manipulative conduct consisting of a 

single event (in addition to a series of 

events, as the current rule contemplates) 

and (2) manipulation based upon the 

entry of orders as opposed to that based 

solely upon the entry of trades.3

As an initial matter, the Exchange 

believes that these changes to the rule 

would appropriately establish that 

improper price manipulation could 

occur, in certain circumstances, when 

orders are entered at successively higher 

or lower prices, not just upon the 

execution of a series of trades at 

successively higher or lower prices. 

Order-based manipulation, sometimes 

called spoofing, may be intended to take 

advantage of algorithms or electronic 

traders who focus on changes to the bid 

or offer in trading. In such situations, 


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Federal Register / Vol. 72, No. 76 / Friday, April 20, 2007 / Notices 19999 

4Other order-based manipulative activity might 

occur with the upcoming implementation of the 

new market data revenue allocation formula under 

Regulation NMS—which, in general, requires that 

market data revenue be allocated based upon both 

quoting and trading activity in each market. The 

entry of orders (which are designed not be 

executed) could be used to create a false, 

misleading, or artificial appearance of quoting 

activity in a particular security within a particular 

market. 

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

6 15 U.S.C. 78f(b)(5). 

7 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Amendment No. 1 replaces and supersedes the 

original filing in its entirety. 

4As set forth in ISE Rule 2127, a ‘‘Partnership 

Unit’’ means a security (a) that is issued by a 

partnership that invests in any combination of 

futures contracts, options on futures contracts, 

forward contracts, commodities and/or securities; 

and (b) that is issued and redeemed daily in 

specified aggregate amounts at net asset value. 

the bad actor may enter higher, nonmarketable bids (offers) in one market 

center in order to induce market 

participants to lift an offer (hit a bid) 

which he has posted in the same or 

different market center.4

Additionally, the Exchange believes 

that the proposed changes to the rule 

would appropriately establish that 

improper price manipulation could 

occur, in certain circumstances, when a 

single execution occurs (or a single 

order is entered) at a price higher than 

(or lower than) the current market. A 

single trade that is executed at a 

significantly higher or lower price at the 

end of the trading day, for example, 

could be used to establish a price which 

does not reflect the true state of the 

market in that security, to the benefit of 

a participant firm. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act,5 in general, and Section 

6(b)(5) of the Act,6 in particular, in that 

it is designed to promote just and 

equitable principles of trade, 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 by expanding the price 

manipulation rule to address additional 

instances of improper behavior. 

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange did not solicit or 

receive any written comments with 

respect to the proposed rule change. 

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 the self-regulatory 

organization consents, the Commission 

will: 

A. By order approve the 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 rulecomments@sec.gov. Please include File 

Number SR–CHX–2007–08 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CHX–2007–08. 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. 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 available publicly. All 

submissions should refer to File 

Number SR–CHX–2007–08 and should 

be submitted on or before May 11, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7492 Filed 4–19–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55635; File No. SR–ISE–

2007–16] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Order 

Granting Accelerated Approval of 

Proposed Rule Change, as Modified by 

Amendment No. 1, Relating to Options 

Based on Commodity Pool ETFs 

April 16, 2007. 

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

Securities Exchange Act of 1934 

(‘‘Act’’)1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on February 

21, 2007, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been substantially prepared by the 

Exchange. On March 26, 2007, ISE filed 

Amendment No. 1 to the proposed rule 

change.3 This order provides notice of 

the proposed rule change as modified by 

Amendment No. 1 and approves the 

proposed rule change on an accelerated 

basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

certain rules to permit the listing and 

trading of options on equity interests 

issued by trust issued receipts (‘‘TIRs’’), 

partnership units (‘‘Partnership 

Units’’),4 and other entities (referred 

collectively herein as ‘‘Commodity Pool 


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