22012 Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 

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). 

5FLEX Options provide investors with the ability 

to customize basic option features including size, 

expiration date, exercise style, and certain exercise 

prices. FLEX Options can be FLEX Index Options 

or FLEX Equity Options. In addition, other products 

are permitted to be traded pursuant to the FLEX 

trading procedures. For example, credit options are 

eligible for trading as FLEX Options pursuant to the 

FLEX rules in Chapters XXIVA and XXIVB. See 

CBOE Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), 

24B.1(f) and (g), 24B.4(b)(1) and (c)(1), and 28.17. 

The rules governing the trading of FLEX Options on 

the FLEX Request for Quote (‘‘RFQ’’) System 

platform (which is limited to open outcry trading 

only) are contained in Chapter XXIVA. The rules 

governing the trading of FLEX Options on the FLEX 

Hybrid Trading System platform (which combines 

both open outcry and electronic trading) are 

contained in Chapter XXIVB. The Exchange notes 

that, currently, all FLEX Options are traded on the 

FLEX Hybrid Trading System platform. 

6Securities Exchange Act No. 66348 (February 7, 

2012), 77 FR 8304 (February 14, 2012) (SR–CBOE– 

2011–122). 

7Specifically, the Exchange eliminated references 

to European-capped style settlement and foreign 

currency provisions (and related index multiplier 

provisions) that were formerly contained in Rules 

24A.1(c) and (i), 24A.4(a)(2)(iii) and (b)(4), 24A.5(f), 

24B.1(c) and (m), 24B.4(a)(2)(iii) and (b)(4), and 

24B.5(e). 

8The Exchange notes that there is currently no 

open interest in any FLEX Option series with a 

European-Capped style exercise and currently no 

open interest in any FLEX Index Option series that 

is designated for settlement in a foreign currency. 

9 In the future, the Exchange may determine to reenable the capability for settlement of FLEX Index 

Options in a foreign currency, and such foreign 

currency settlement provisions would be the subject 

of a separate rule filing. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66769; File No. SR–CBOE– 

2012–033] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to FLEX Options 

April 6, 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 March 30, 

2012, Chicago Board Options Exchange, 

Incorporated (the ‘‘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 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to provide 

for additional time to implement new 

system enhancements for trading 

Flexible Exchange Options (‘‘FLEX 

Options’’) 5 that were the subject of 

another rule change filing that was 

recently approved. No changes to the 

rule text are necessary with respect to 

this revised implementation plan. The 

Exchange is also proposing to make 

certain amendments to its rules for 

trading FLEX Options. 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On February 7, 2012, the Exchange 

received approval of a rule change 

filing, SR–CBOE–2011–122, which 

amended certain rules pertaining to the 

electronic trading of FLEX Options on 

the Exchange’s FLEX Hybrid Trading 

System platform (the ‘‘FLEX System’’ or 

‘‘System’’).6 In that filing, the Exchange 

indicated that it is in the process of 

enhancing the FLEX System in order to 

further integrate it with the Exchange’s 

existing technology platform utilized for 

Non-FLEX trading. In conjunction with 

the enhancement, the filing made some 

modifications to the existing electronic 

trading processes utilized on the FLEX 

System platform. The filing made other 

amendments to eliminate certain 

European-Capped style settlement and 

currency provisions with the FLEX rules 

that pertain to both electronic and open 

outcry trading. The filing also indicated 

that the Exchange planned to announce 

to its Trading Permit Holders (‘‘TPHs’’) 

via Regulatory Circular an 

implementation schedule for 

transitioning from the existing 

technology platform to the new 

technology platform once the rollout 

schedule is finalized. The filing 

indicated that the Exchange intended to 

begin implementation by no later than 

March 30, 2012, with the specific 

implementation schedule to be 

announced via Regulatory Circular, as 

stated above. The Exchange intended to 

transition a few classes at a time and 

anticipated full implementation within 

approximately one to three weeks of the 

initial transition. Finally, in the event 

that implementation did not begin by 

March 30, 2012, the Exchange 

represented that it would file a 

proposed rule change to establish the 

revised time period. 

The Exchange has determined that it 

needs some more time to implement the 

FLEX System enhancements. Therefore, 

in accordance with rule change filing 

SR–CBOE–2011–122, the Exchange is 

submitting this instant proposed rule 

change filing to establish a revised time 

period. Rather than March 30, 2012, the 

Exchange now intends to begin 

implementation by no later than April 

30, 2012, with the specific 

implementation schedule to be 

announced via Regulatory Circular. The 

Exchange still intends to transition a 

few classes at a time and anticipates full 

implementation within approximately 

one to three weeks of the initial 

transition. Consistent with the prior rule 

change filing, in the event the 

implementation does not begin by April 

30, 2012, the Exchange represents that 

it will file another proposed rule change 

to establish the revised time period. 

The Exchange is also proposing to 

take this opportunity to make certain 

other changes to the FLEX rules. First, 

as noted above, in rule change filing 

SR–CBOE–2011–122 the Exchange 

deleted references to certain EuropeanCapped style settlement and foreign 

currency provisions (and related index 

multiplier provisions for such 

currencies).7 The European-Capped 

style and foreign currency provisions 

have generally not been actively 

utilized.8 Since the Exchange no longer 

plans to support foreign currency 

settlements in the new FLEX System, 

the Exchange limited the currency for 

FLEX Index Options to U.S. dollars.9

Because the European-Capped style 

exercise and foreign currency provisions 

are no longer applicable, the Exchange 

is now proposing to delete certain other 

superfluous and unnecessary references 

to European-Capped style exercise 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 22013 

10The Exchange may at any time designate an 

Exchange employee or independent contractor to 

act as a FLEX Official in one or more classes of 

FLEX Options. A FLEX Official performs the 

functions set out in Rule 24B.14. 

11The reference to ‘‘FLEX Traders’’ includes any 

TPHs that have been approved by the Exchange to 

use the FLEX Hybrid Trading System and any nonTPH Sponsored Users that have been provided 

electronic access, through Sponsoring TPHs, to the 

FLEX Hybrid Trading System in accordance with 

Rule 6.20A, Sponsored Users. 

12Over the years, Exchange has offered an 

Indicative FLEX Quote service, then discontinued 

the service, then reinstated it, and is now seeking 

to discontinue the service because it continues to 

not be actively utilized. See, e.g., Securities 

Exchange Act Release No. 58719 (October 2, 2008), 

73 FR 59692 (October 9, 2008) (SR–CBOE–2008– 

103). In the future, the Exchange may determine to 

offer an Indicative FLEX Quote service and such a 

service would be the subject of a separate rule 

filing. 

13An ‘‘RFQ’’ refers to a Request for Quotes, which 

means an initial request supplied by a Submitting 

TPH to initiate FLEX bidding and offering. An 

‘‘RFQ Order’’ is an order to purchase or order to sell 

FLEX Options entered by the Submitting TPH 

during the RFQ Reaction Period. The ‘‘RFQ 

Reaction Period’’ is the period of time during which 

a Submitting TPH determines whether to accept or 

reject the RFQ Market (which is currently defined 

as the bids or offers, or both, as applicable, entered 

in response to an electronic RFQ and FLEX Orders 

resting in the electronic book). A FLEX Order refers 

to (i) FLEX bids and offers entered by FLEX MarketMakers and (ii) orders to purchase or sell FLEX 

Options entered by FLEX Traders, in each case into 

the electronic book. See Rule 24B.1(j), (r)–(t), (v). 

14See Securities Exchange Act Release No. 66052 

(December 23, 2011), 77 FR 306 (January 4, 

2012)(SR–CBOE–2011–123). In SR–CBOE–2011– 

123, the Exchange is proposing to adopt new Rule 

24B.5A (pertaining to the FLEX Automated 

Improvement Mechanism or ‘‘FLEX AIM’’ auction) 

and new Rule 24B.5B (pertaining to the FLEX SAM 

auction). The FLEX SAM would be used to cross 

FLEX Option orders through an exposed auction 

process. An original agency order and paired 

contra-side order entered into the SAM Auction 

would also be designated in the FLEX System as allor-none (i.e., an order will be executed in its 

entirety or not at all). 

15 ‘‘Intent to Cross’’ was an RFQ condition 

indicating that the Submitting TPH intends to cross 

or act as principal and receive a crossing 

participation entitlement. See former Rule 

24B.1(y)(5). 

options contained elsewhere in Rules 

24A.4(b)(2) and 24B.4(b)(2) and to 

currencies (and related index multiplier 

provisions for currencies) contained 

elsewhere in Rules 24A.1(i), (o) and (q), 

24A.4(a)(1) and (3)(i), 24A.9(a), 

24B.1(m), (w) and (z), 24B.4(a)(1), (3)(i) 

and (4)(i), and 24B.9(a) and (b). 

Second, the Exchange is proposing to 

amend Rules 24B.1(n) and 24B.14(b) 

and (c) to delete references to Indicative 

FLEX Quotes. An ‘‘Indicative FLEX 

Quote’’ refers to informational FLEX 

bids and offers submitted electronically 

by FLEX Traders in response to a call 

for such quotes from the FLEX Post 

Official or a FLEX Trader. Indicative 

FLEX Quotes are non-binding 

indications of potential market prices 

only and, as such, are neither firm nor 

the basis for a FLEX transaction. Under 

the existing procedures, a FLEX 

Official 10 may call for such Indicative 

FLEX quotes at any time during the 

course of trading and with respect to 

any series of FLEX Options that the 

FLEX Official deems appropriate. In 

addition, FLEX Traders 11 may call for 

Indicative FLEX Quotes, updates 

thereto, or cancellations thereof. FLEX 

Traders could electronically 

communicate their Indicative FLEX 

Quotes and the information would be 

disseminated over the FLEX Hybrid 

Trading System communications 

network interface. This functionality 

generally has not been utilized and the 

Exchange has determined that it will no 

longer be supported when trading 

begins on the enhanced System (the 

new System does not have a similar 

communication network interface), so 

the Exchange is proposing to delete the 

definition of an Indicative FLEX Quote 

in Rule 24B.1 and the procedures noted 

in Rule 24B.14.12

Third, the Exchange is proposing to 

amend Rules 24A.4, 24B.1, 24B.4 and 

24B.5 to revise some references to FLEX 

Terms and Trade Conditions, which are 

no longer utilized and will not be 

supported by the Exchange going 

forward. Specifically: 

• The current Trade Conditions 

available in the System for a FLEX 

Trader to choose from are described in 

Rule 24B.1(y) and include Immediateor-Cancel (a condition to execute a RFQ 

Order or FLEX Quote in its entirety or 

in part as soon as it is represented or 

cancel it), All-or-None (a condition to 

execute an RFQ Order or FLEX Order in 

its entirety or not at all) and Hedge (an 

RFQ or FLEX Order condition 

contingent on trade execution in NonFLEX Options or other Non-FLEX 

components (e.g., stock, futures, or other 

related instruments or interests)).13

These Trade Conditions only apply to 

electronic trading (not open outcry). 

Therefore, although the rule text already 

provides that these Trade Conditions are 

only available in the System and 

describes whether or not they are 

disclosed in the System, the Exchange is 

proposing to include certain references 

to ‘‘electronic RFQs’’ to make it more 

clear that the provisions only apply to 

electronic trading. In addition, the 

Exchange is proposing to delete the Allor-None Trade Condition because the 

System will no longer support the 

electronic processing of the All-or-None 

Trade Condition for electronic RFQ 

Orders or FLEX Orders. (Through a 

separate rule change filing, the 

Exchange is seeking to introduce an 

electronic FLEX Solicitation Auction 

Mechanism (the ‘‘FLEX SAM’’ auction) 

under proposed new Rule 24B.5B that 

will have an all-or-none type 

functionality).14

• Rule 24B.5(d)(2)(i) provides that the 

Exchange may from time to time 

establish a crossing participation 

entitlement subject to certain 

conditions. Previously, this provision 

described conditions with respect to 

both open outcry RFQ crossing 

participation entitlements and 

electronic RFQ crossing participation 

entitlements. However, in rule change 

filing SR–CBOE–2011–122, the 

Exchange eliminated the Intent to Cross 

Trade Condition15 and related 

references to a crossing participation 

entitlement for electronic RFQs in 

various provisions, including certain 

references in Rule 24B.5(d)(2)(i)(A) and 

(B). Given the elimination of these 

provisions, the Exchange is proposing to 

delete a superfluous and unnecessary 

reference to the ‘‘BBO clearing price’’ in 

paragraphs (A) and (B). The Exchange is 

proposing to delete these references 

because the ‘‘BBO clearing price’’ 

references in paragraphs (A) and (B) 

were/are only applicable to electronic 

RFQs and were/are not applicable to 

open outcry RFQs. (Under the former 

electronic RFQ procedures, a 

Submitting TPH could have obtained a 

crossing participation entitlement if, 

among other things, the TPH matched or 

improved the BBO clearing price.) The 

Exchange is also proposing to delete a 

superfluous and unnecessary reference 

contained in Rule 24B.5(d)(2)(i)(C) to a 

Submitting TPH utilizing the electronic 

RFQ mechanics to cross an order with 

a solicited order for a FLEX MarketMaker account (or with a solicited order 

initiated by a FLEX Market-Maker for an 

account in which the FLEX MarketMaker has in interest) pursuant to the 

crossing participation entitlement 

provisions under Rule 24B.5(d)(2)(i)(A) 

and (B). Again, the Exchange is 

proposing to delete these references in 

paragraph (C) because the electronic 

RFQ crossing participation entitlement 

provisions have been eliminated from 

the rules. 

• Currently, the terms of a FLEX RFQ 

shall contain, among other things, 

specifications on the quote type and 

form sought (i.e., specify whether bid, 

offer, or both is sought). The Exchange 

is proposing to amend the rules to 

provide that an open outcry RFQ can 

specify a quote for a bid, offer or both; 

however, electronic RFQs will be 

limited to specifying both bids and 

offers. Therefore, the Exchange is 

proposing to amend the provision in 

mstockstill on DSK4VPTVN1PROD with NOTICES

22014 Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 

16As revised, the term ‘‘RFQ Market’’ will mean 

the bids and offers entered in response to an 

electronic RFQ and FLEX Orders resting in the 

electronic book. See proposed changes to Rule 

24B.1(s); see also note 13, supra, for current 

definition of ‘‘RFQ Market.’’ 

17The Exchange notes that there is currently no 

open interest in any FLEX Index Option series with 

an exercise price specified in terms of a percentage 

of the index value calculated as of the open of 

trading on the Exchange on the trade date. 

18Thus, as revised, the text of Rule 24B.3 will 

provide in relevant part that an existing series will 

automatically open for trading at a randomly 

selected time within a number of seconds after 8:30 

a.m. (all times are CT), at which point FLEX Orders 

may be entered directly into the electronic book (if 

available) and/or a FLEX auction may be initiated 

pursuant to Rule 24B.5, 24B.5A, or 24B.5B. A new 

FLEX Option series may be established on any 

business day prior to the expiration date as 

provided for in Rule 24A.4 and opened for trading 

pursuant to the procedures and principles as 

provided for in Rule 24B.5, 24B.5A or 24B.5B. See 

proposed changes to Rule 24B.3; see also proposed 

changes to Rule 24B.5(a), and SR–CBOE–2011–123, 

note 14, supra. 

19The ‘‘RFQ Response Period’’ (commonly 

referred to as ‘‘T1’’) means the period of time during 

which FLEX Traders may provide FLEX Quotes in 

response to an RFQ. As noted in note 13, supra, the 

‘‘RFQ Reaction Period’’ (commonly referred to as 

‘‘T2’’) means the period of time during which a 

Submitting TPH determines whether to accept or 

reject the RFQ Market. See Rule 24A.1(u)–(v). 

20The Exchange also proposes to replace a 

reference to the FLEX Book with a reference to the 

electronic book in Rule 24B.5(d)(1). 

21 15 U.S.C. 78f(b). 

22 15 U.S.C. 78f(b)(5). 

23FLEX Options provide TPHs and investors with 

an improved but comparable alternative to the overthe-counter (‘‘OTC’’) market in customized options, 

which can take on contract characteristics similar 

to FLEX Options but are not subject to the same 

restrictions. The Exchange believes that making 

these changes will make the FLEX Hybrid Trading 

System an even more attractive alternative when 

market participants consider whether to execute 

their customized options in an exchange 

environment or in the OTC market. CBOE believes 

market participants benefit from being able to trade 

customized options in an exchange environment in 

several ways, including, but not limited to the 

following: (1) Enhanced efficiency in initiating and 

closing out positions; (2) increased market 

transparency; and (3) heightened contra-party 

creditworthiness due to the role of The Options 

Clearing Corporation as issuer and guarantor of 

FLEX Options. 

Rules 24B.4(a)(3) and definition of RFQ 

Market in Rule 24B.1(s).16

• Under the current special terms for 

FLEX Index Options, exercise prices 

shall be specified in terms of a specific 

index value number, a method of fixing 

such a number at the time a FLEX Quote 

is accepted, or a percentage of index 

value calculated as of the open or close 

of trading on the Exchange on the trade 

date. The Exchange is proposing to 

delete the reference to a percentage of 

the index value calculated as of the 

open of trading on the Exchange on the 

trade date. This provision has generally 

not been actively utilized 17 and will no 

longer be supported when trading 

begins on the enhanced System. 

Therefore, the Exchange is proposing to 

delete the provision under Rules 

24A.4(b)(2) and 24B.4(b)(2). 

• Under the current special terms for 

FLEX Equity Options, exercise prices 

may be rounded to the nearest 

minimum tick, one-eighth of a dollar, or 

other decimal increment determined by 

the Exchange on a class-by-class basis 

that may not be smaller than $0.01. The 

Exchange is proposing to delete the 

reference to nearest one-eighth of a 

dollar. This language used to be 

applicable when the Exchange traded in 

fractional increments and there was 

open interest in series with exercise 

prices in such an increment. However, 

there are no longer any options with 

exercise prices in this increment, so the 

Exchange is proposing to delete the 

‘‘one-eighth of a dollar’’ language under 

Rules 24A.4(c)(2) and 24B.4(c)(2). 

Finally, the Exchange is proposing to 

amend Rules 24B.3, 24B.5 and 24B.9 to 

revise some of the descriptions of the 

electronic RFQ trading procedures. 

Specifically: 

• Currently, Rule 24B.3 provides that 

there shall be no trading rotations in 

FLEX Options, either at the opening or 

at the close of trading. An existing FLEX 

Option series will automatically open 

for trading at a randomly selected time 

within a number of seconds after 8:30 

a.m. (all times are CT), at which point 

FLEX Orders may be entered directly 

into the electronic book (if available) 

and/or FLEX RFQ auctions may be 

initiated pursuant to Rule 24B.5. A new 

FLEX Option series may be established 

on any business day prior to the 

expiration date as provided for in Rule 

24A.4 and opened for trading pursuant 

to the procedures and principles as 

provided for in Rule 24B.5. The 

Exchange is proposing to amend Rules 

24B.3 and 25B.5 to make clear that, 

besides RFQs under Rule 24B.5, 

auctions may also be initiated in 

existing and new series pursuant to 

proposed new Rule 24B.5A (regarding 

FLEX AIM auctions) or proposed new 

Rule 24B.5B (regarding FLEX SAM 

auctions).18

• Currently the electronic RFQ 

process in relevant part provides in Rule 

24B.5(a)(1)(ii) and (iii) that FLEX Orders 

may be entered, modified or withdrawn 

at any point during the RFQ Response 

and Reaction Periods.19 When trading 

moves to the enhanced System, FLEX 

Orders may not be submitted to 

electronic book during the RFQ 

Response Period, but may be 

withdrawn. If a FLEX Trader attempts to 

enter a FLEX Order during the RFQ 

Response and Reaction Periods, the 

FLEX Order will be rejected by the 

System. Therefore, the Exchange is 

proposing to amend Rule 24B.5(a)(1)(ii) 

and (iii) to describe how FLEX Orders 

will be handled under the enhanced 

System. The Exchange is also proposing 

to delete references in these provisions 

indicating that FLEX Quotes may be 

modified during the RFQ Response and 

Reaction Periods (mechanically, FLEX 

Quotes submitted in response to an 

electronic RFQ may only be modified by 

withdrawing FLEX Quotes and entering 

new FLEX Quotes).20 The Exchange is 

also proposing to amend Rule 24B.9 to 

make clear that FLEX Quotes submitted 

in response to an electronic RFQ by 

FLEX Market-Makers shall be entered or 

withdrawn within the RFQ Response 

and Reaction Periods, which is 

consistent with Rule 24B.5(a)(1)(ii) and 

(iii). 

• Currently the electronic RFQ 

process provides that, if there is an 

electronic book available, any remaining 

balance of FLEX Quotes not traded at 

the conclusion of the RFQ Reaction 

Period will be automatically entered 

into the electronic book (and treated the 

same as other FLEX Orders) unless the 

FLEX Trader has indicated that the 

FLEX Quote is to be automatically 

cancelled if not traded. When trading 

moves to the enhanced System, any 

remaining balance of FLEX Quotes will 

be automatically cancelled at the 

conclusion of the RFQ Reaction Period. 

Therefore, the Exchange is proposing to 

amend Rule 24B.5(a)(iii)(E) (and to 

delete a related cross-reference in Rule 

24B.5(b)(1)) to describe how any 

remaining balance of FLEX Quotes will 

be handled under the enhanced System. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act 21 in general and furthers 

the objectives of Section 6(b)(5) of the 

Act 22 in particular in that it should 

promote just and equitable principles of 

trade, serve to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and protect investors and the 

public interest. In particular, the 

Exchange believes that the use of FLEX 

Options provides CBOE TPHs and 

investors with additional tools to trade 

customized options in an exchange 

environment 23 and greater 

opportunities to manage risk. The 

Exchange believes that the 

enhancements to the FLEX System 

adopted under rule change filing SR– 

CBOE–2011–122 should serve to further 

those objectives and encourage use of 

FLEX Options by enhancing and 

simplifying the existing processes and 

integrating the FLEX System with the 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 71 / Thursday, April 12, 2012 / Notices 22015 

24 15 U.S.C. 78s(b)(3)(A)(iii). 

25 17 CFR 240.19b–4(f)(6). 

26 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and 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. The Exchange 

has satisfied this requirement. 

27 17 CFR 240.19b–4(f)(6). 

28 17 CFR 240.19b–4(f)(6)(iii). 

29For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Exchange’s existing technology platform 

for Non-FLEX trading, which should 

make the FLEX System more efficient 

and effective and easier for users to 

understand. The Exchange believes that 

the further refinements being proposed 

in this instant rule change filing should 

also serve to further those objectives by 

more clearly and accurately describing 

the operation of the enhanced System 

and deleting superfluous and 

unnecessary provisions in the FLEX 

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 or 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 24 and Rule 

19b–4(f)(6) thereunder.25 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 

prior to 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 and Rule 19b–4(f)(6)(iii) 

thereunder.26

A proposed rule change filed under 

Rule 19b–4(f)(6) 27 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),28 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. 

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because such waiver will allow CBOE to 

codify the revisions to its rules to more 

clearly and accurately describe the 

operation of its new system for FLEX 

Options prior to implementation. 

Therefore, the Commission designates 

the proposal operative upon filing.29

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 email to rulecomments@sec.gov. Please include File 

Number SR–CBOE–2012–033 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–2012–033. 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 

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–CBOE– 

2012–033 and should be submitted on 

or before May 3, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–8839 Filed 4–11–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66768; File No. SR– 

NASDAQ–2012–048] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Customer Fees and Rebates in Penny 

Pilot Options 

April 6, 2012. 

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 2, 

2012, The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’ 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 prepared by NASDAQ. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

mstockstill on DSK4VPTVN1PROD with NOTICES