Federal Register / Vol. 73, No. 89 / Wednesday, May 7, 2008 / Notices 25811 

9 17 CFR 200.30–3(a)(12). 

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). 

5See Securities Exchange Act Release No. 55531 

(March 26, 2007), 72 FR 15736 (April 2, 2007) (SR–

CBOE–2006–94). See also Securities Exchange Act 

Release No. 57568 (March 26, 2008), 73 FR 18016 

(April 2, 2008) (SR–CBOE–2008–32) (immediately 

effective rule change expanding the Off-Floor DPM 

program, which had originally been limited to 

equity option classes to include all option classes 

traded on the Hybrid Trading System and Hybrid 

2.0 Platform (collectively ‘‘Hybrid’’)). 

6CBOE Rule 8.15A(a)(i) provides that the factors 

to be considered in selecting LMMs include: 

Adequacy of capital; experience in trading index 

options or options on ETFs; presence in the trading 

crowd; adherence to CBOE Rules; and ability to 

meet the obligations specified in the Rule. An 

individual may be appointed as an LMM for one 

expiration month at a time. When individual 

members are associated with one or more other 

members, only one member may receive an LMM 

appointment. 

7CBOE Rule 8.83(g) provides that the factors to 

be considered in determining whether to permit a 

DPM to operate as an Off-Floor DPM include, but 

are not limited to, any one or more of the following: 

(i) Adequacy of capital; (ii) operational capacity; 

(iii) trading experience of and observance of 

generally accepted standards of conduct by the 

applicant, its associated persons, and the DPM 

Designees who will represent the applicant in its 

capacity as a DPM; (iv) number and experience of 

support personnel of the applicant who will be 

performing functions related to the applicant’s DPM 

business; (v) regulatory history of and history of 

adherence to CBOE Rules by the applicant, its 

associated persons, and the DPM Designees who 

will represent the applicant in its capacity as a 

DPM; (vi) willingness and ability of the applicant 

to promote the Exchange as a marketplace; (vii) 

performance evaluations conducted pursuant to 

CBOE Rule 8.60, Evaluation of Trading Crowd 

Performance; and (viii) in the event that one or 

more shareholders, directors, officers, partners, 

managers, members, DPM Designees, or other 

principals of an applicant is or has previously been 

a shareholder, director, officer, partner, manager, 

member, DPM Designee, or other principal in 

another DPM, adherence by such DPM to the 

requirements set forth in Section C of Chapter VIII 

of the CBOE Rules respecting DPM responsibilities 

and obligations during the time period in which 

such person(s) held such position(s) with the DPM. 

8 In addition to the changes to CBOE Rule 8.15A, 

CBOE is proposing related updates to paragraph (b) 

of CBOE Rule 8.15B, Participation Entitlement of 

LMMs, and subparagraphs (d)(v) and (vii) of CBOE 

Rule 6.74, Crossing Orders. 

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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 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–BSE–2008–02 and should 

be submitted on or before May 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10072 Filed 5–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57747; File No. SR–CBOE–

2008–49] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Off-Floor 

LMMs 

April 30, 2008. 

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 April 24, 

2008, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) 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 

Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’

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 amend 

CBOE rules relating to Lead MarketMakers (‘‘LMMs’’). 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 

Last year, CBOE amended its rules to 

provide Designated Primary MarketMakers (‘‘DPMs’’) with the flexibility to 

operate remotely away from CBOE’s 

trading floor as a so-called ‘‘Off-Floor 

DPM.’’ 5 CBOE is now proposing to 

provide LMMs with the same flexibility 

to operate remotely away from CBOE’s 

trading floor. Specifically, CBOE 

proposes to amend Rule 8.15A, Lead 

Market-Makers in Hybrid Classes, to 

provide the following: 

• An LMM generally will operate on 

CBOE’s trading floor (‘‘On-Floor 

LMM’’). However, an LMM can request 

that the Exchange authorize the LMM to 

function remotely away from CBOE’s 

trading floor (‘‘Off-Floor LMM’’) on a 

class-by-class basis. 

• An LMM can request that the 

Exchange authorize it to operate as an 

Off-Floor LMM in one or more Hybrid 

classes. The Exchange will consider the 

factors specified in Rule 8.15A(a)(i)(A),6

as well as the factors applicable to OffFloor DPMs specified in paragraph (g) of 

Rule 8.83, Approval to Act as a DPM,7

in determining whether to permit an 

LMM to operate as an Off-Floor LMM. 

If an LMM is approved to operate as an 

Off-Floor LMM in one or more Hybrid 

classes, the Off-Floor LMM can have an 

LMM designee trade in open outcry in 

the option classes allocated to the OffFloor LMM, but the Off-Floor LMM 

shall not receive a participation 

entitlement under Rule 8.15B, 

Participation Entitlement of LMMs, with 

respect to orders represented in open 

outcry.8

• An LMM that is approved to 

operate as an Off-Floor LMM in one or 

more Hybrid classes can request that the 

Exchange authorize it to operate as an 

On-Floor LMM in those option classes. 

In making a determination pursuant to 

this paragraph, the Exchange should 

evaluate whether the change is in the 

best interests of the Exchange, and may 


sroberts on PROD1PC70 with NOTICES
25812 Federal Register / Vol. 73, No. 89 / Wednesday, May 7, 2008 / Notices 

9These proposed On-/Off-Floor LMM provisions 

are substantially similar to the corresponding 

provisions for On-/Off-Floor DPMs in paragraphs (g) 

and .01 to CBOE Rule 8.83. 

10This provision is substantially similar to an 

existing provision in CBOE’s rules respecting OffFloor DPM obligations. See paragraph (a)(v) of 

CBOE Rule 8.85, DPM Obligations. CBOE is 

proposing a related cross-reference update to 

paragraph (c)(vii)(1) of CBOE Rule 8.3. 

11This language is substantially similar to 

existing language in CBOE’s rules respecting e-DPM 

obligations. See paragraph (x) of CBOE Rule 8.93, 

e-DPM Obligations. In addition, the Exchange is 

proposing to modify CBOE Rule 8.15A to make 

clear that the rule applies to Hybrid Trading System 

and Hybrid 2.0 Platform option classes. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14CBOE fulfilled this requirement. 

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

16 17 CFR 240.19b–4(f)(6). 

consider any information that it believes 

will be of assistance to it. Factors to be 

considered may include, but are not 

limited to, performance, operational 

capacity of the Exchange or LMM, 

efficiency, number and experience of 

personnel of the LMM who will be 

performing functions related to the 

trading of the applicable securities, 

number of securities involved, number 

of Market-Makers affected, and trading 

volume of the securities.9

• In addition, CBOE is proposing to 

include a requirement that, as part of a 

pilot program until March 14, 2009, an 

Off-Floor LMM not allow more than one 

Market-Maker affiliated with the OffFloor LMM to trade on CBOE’s trading 

floor in any specific option class 

allocated to the Off-Floor LMM and 

provided such Market-Maker is trading 

on a separate membership (absent the 

pilot program, an Off-Floor LMM may 

not allow any Market-Makers affiliated 

with the Off-Floor LMM to trade on 

CBOE’s trading floor in any class 

allocated to the Off-Floor LMM) and 

provided the Off-Floor LMM does not 

have an LMM designee trading in open 

outcry in the option classes allocated to 

the Off-Floor LMM.10

Lastly, CBOE is proposing to update 

the LMM obligations listed in Rule 

8.15A to include a requirement that, 

subject to paragraph (d) of Rule 54.7, 

General Prohibitions (under the CBOE 

Stock Exchange Rules), LMMs in Hybrid 

classes (whether On-Floor or Off-Floor) 

maintain information barriers that are 

reasonably designed to prevent the 

misuse of material, non-public 

information with any affiliates that may 

conduct a brokerage business in option 

classes allocated to the LMM or act as 

specialist or Market-Maker in any 

security underlying options allocated to 

the LMM, and otherwise comply with 

the requirements of Rule 4.18, 

Prevention of the Misuse of Material, 

Non-Public Information.11

By permitting an LMM to function as 

an Off-Floor LMM, CBOE believes that 

the rule change provides more 

flexibility to a member organization that 

may wish to function remotely, and 

provides more flexibility to CBOE when 

allocating option classes to the best 

applicant. It also removes a potential 

operational dilemma for a Market-Maker 

that functions as a DPM in some classes 

and an LMM in others, but that would 

like to function remotely away from the 

trading floor as a DPM/LMM in all of its 

option classes. Accordingly, CBOE 

believes that the proposed rule change 

is designed to promote just and 

equitable principles of trade. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations under the 

Act applicable to a national securities 

exchange and, in particular, the 

requirements of Section 6(b) of the 

Act.12 Specifically, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) Act 13

requirements that the rules of an 

exchange be designed to promote just 

and equitable principles of trade, to 

prevent fraudulent and manipulative 

acts and, in general, to protect investors 

and the public interest. 

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 rule 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, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file 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,14 the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 15 and 

Rule 19b–4(f)(6) thereunder.16 At any 

time within 60 days of the filing of such 

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–2008–49 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–2008–49. 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, 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 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 73, No. 89 / Wednesday, May 7, 2008 / Notices 25813 

17 17 CFR 200.30–3(a)(12). 

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). 

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

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

7CBOE fulfilled this requirement. 

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

9 17 CFR 240.19b–4(f)(6). 

10 Id. 

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–

2008–49 and should be submitted on or 

before May 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10023 Filed 5–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57752; File No. SR–CBOE–

2008–51] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Lowering the 

Appointment Cost of SPX Options 

May 1, 2008. 

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 April 30, 

2008, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) 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. The Exchange filed the 

proposal as a ‘‘non-controversial’’

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 amend 

CBOE rules to lower the appointment 

cost for options on the Standard & 

Poor’s 500 (SPX). 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’s Public Reference Room. 

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 

The purpose of this rule change is to 

amend CBOE Rule 8.3 to lower the 

appointment cost for SPX options. 

Presently, SPX has an appointment cost 

of 1.0. CBOE proposes to reduce the 

appointment cost to .95 effective May 1, 

2008. Members then could utilize the 

excess membership capacity of .05 to 

hold an appointment and quote 

electronically in an appropriate number 

of Hybrid 2.0 option classes, which 

promotes competition and efficiency. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations under the 

Act applicable to a national securities 

exchange and, in particular, the 

requirements of Section 6(b) of the Act.5

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) Act 6 requirements 

that the rules of an exchange be 

designed to promote just and equitable 

principles of trade, to prevent 

fraudulent and manipulative acts and, 

in general, to protect investors and the 

public interest. 

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 rule 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, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file 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,7 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 At any time 

within 60 days of the filing of such 

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. 

Under Rule 19b–4(f)(6) of the Act,10

the proposal does not become operative 

for 30 days after the date of its filing, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative delay, so that the proposal 

may take effect on May 1, 2008. 

Lowering the appointment cost on SPX 

options will allow Market-Makers who 

have an appointment in SPX additional 

options classes in which they could act 

as Market-Makers. Thus, the Exchange 

believes that waiving the 30-day 

operative period will promote 

competition and efficiency without 

undue delay. The Commission agrees 

and, consistent with the protection of 

investors and the public interest, has 

determined to waive the 30-day 


sroberts on PROD1PC70 with NOTICES