46654 Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / 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). 

5The ‘‘Hybrid Trading System’’ refers to the 

Exchange’s trading platform that allows individual 

Market-Makers to submit electronic quotes in their 

appointed classes. The ‘‘Hybrid 3.0 Platform’’ is an 

electronic trading platform on the Hybrid Trading 

System that allows a single quoter to submit an 

electronic quote which represents the aggregate 

Market-Maker quoting interest in a series for the 

trading crowd. Members of the trading crowd may 

also verbalize quotes (‘‘manual quotes’’) to be input 

into the Exchange’s systems by quote reporters for 

dissemination in classes trading on the Hybrid 3.0 

Platform. Additionally, bids and offers may be 

made at the trading crowd post by public outcry in 

any option class trading on either the Hybrid 

Trading System or Hybrid 3.0 Platform. See Rules 

1.1(aaa) and 6.43. 

6The Exchange notes that it is proposing to 

eliminate the requirement that there be at least 

three (3) Market-Makers quoting in the relevant 

series through a separate rule filing, SR–CBOE–

2008–42. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58307; File No. SR–CBOE–

2008–79] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to the Automated 

Improvement Mechanism 

August 5, 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 July 30, 

2008, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ 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 the Exchange. The 

Exchange filed 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 which renders it effective 

upon filing with the Commission. 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 its 

Automated Improvement Mechanism 

(‘‘AIM’’) in order to (i) give the 

Exchange the flexibility to lower the 

applicable crossing entitlement 

percentage on a class-by-class basis, and 

(ii) clarify that AIM can be made 

available in Hybrid 3.0 classes. 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 

self-regulatory organization 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 

Under the AIM auction process, a 

member that represents agency orders 

may submit an order it represents as 

agent (‘‘Agency Order’’) along with a 

second order (a principal order or a 

solicited order for the same amount as 

the Agency Order) into the AIM auction 

where other participants could compete 

with the submitting member’s second 

order to execute against the Agency 

Order. The Exchange is proposing to 

modify the AIM rule in order to provide 

the Exchange with the ability to 

determine the applicable crossing 

entitlement percentage afforded to the 

members initiating AIM executions 

(‘‘Initiating Members’’). Currently the 

crossing entitlement percentage is fixed 

at the following: 

• If the best price equals the Initiating 

Member’s single-price submission, the 

Initiating Member’s single-price 

submission shall be allocated the greater 

of one contract or 40% of the order. 

However, if only one Market-Maker 

matches the Initiating Member’s single 

price submission then the Initiating 

Member shall be allocated 50% of the 

order. 

• If the Initiating Member selected the 

auto-match option of AIM, the Initiating 

Member shall be allocated its full size 

at each price point until a price point is 

reached where the balance of the order 

can be fully executed. At such price 

point, the Initiating Member shall be 

allocated the greater of one contract or 

40% of the remainder of the order. 

Under the proposed rule change, the 

Exchange may determine the applicable 

crossing entitlement percentage on a 

class-by-class basis, provided that the 

percentage cannot exceed 40% (or, in a 

scenario involving a single price 

submission and only one other MarketMaker matching that price, 50%). This 

change would therefore allow the 

Exchange to set a lower crossing 

entitlement percentage than what is 

currently permitted under the rule. Any 

such changes to the entitlement 

percentage for a given class would be 

announced by circular. 

The Exchange believes that the ability 

to set a lower entitlement percentage for 

AIM does not present any new, unique 

or substantive issues because various 

other rules already permit the Exchange 

to modify the applicable crossing 

entitlement percentage on a class-byclass basis. For example, paragraph (d) 

of Rule 6.74, Crossing Orders, permits 

the applicable crossing entitlement 

percentage for crossing orders in open 

outcry to be established on a class-byclass basis. 

In addition, the Exchange wants to 

take this opportunity to clarify that the 

Exchange can determine to make AIM 

available in Hybrid 3.0 classes. 

Currently, the rule provides that an AIM 

auction can be initiated in classes 

designated by the Exchange as eligible. 

This could include, for example, classes 

trading on the Exchange’s Hybrid 

Trading System and Hybrid 3.0 

Platform.5 The rule also provides that 

there must be at least three MarketMakers quoting in the relevant series for 

an AIM auction to begin (the ‘‘three 

quoter requirement’’).6 In Hybrid 3.0 

classes, since only a single quoter may 

submit an electronic quote (whether 

submitted electronically or as manual 

quote) that is disseminated on behalf of 

the Market-Maker quoting interest in the 

trading crowd, the Exchange is herein 

clarifying that the three quoter 

requirement is satisfied as long as there 

are at least three Market-Makers present 

in the trading crowd for the particular 

class on behalf of whom the single 

quoter is representing the electronic 

quote. No changes to the rule text are 

proposed in connection with this 

clarification. 

The Exchange believes it is reasonable 

to clarify that AIM can be made 

available in Hybrid 3.0 classes. Making 

AIM available in such classes would 

provide additional flexibility for 

members to obtain executions on behalf 

of their customers while continuing to 

provide a meaningful, competitive 

auction. In this regard, the Exchange 

notes that while there may be only a 

single quoter submitting electronic 

quotes for dissemination in Hybrid 3.0 


rmajette on PRODPC74 with NOTICES
Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Notices 46655 

7See Rule 6.74A(b)(1)(D)—(E). 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

classes, responses may be submitted by 

all Market-Makers with an appointment 

in the relevant option class and 

Members on behalf of orders resting at 

the top of the Exchange’s book opposite 

the agency order being auctioned.7 In 

Hybrid 3.0 classes, which currently 

include options on the Standard and 

Poor’s 500 Index (SPX), American-style 

options on the Standard and Poor’s 100 

Index (OEX) and options on the Morgan 

Stanley Retail Index (MVR), there are 

many Market-Makers at any given time 

that are eligible and connected to 

participate in AIM. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act 8 in general and furthers 

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

Act 9 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 

proposed rule change will provide the 

Exchange with more flexibility to set a 

lower crossing entitlement percentage 

than what is currently permitted in the 

rule, which will allow us to determine 

the appropriate percentage for a given 

class based on competitive and other 

market considerations. With respect to 

Hybrid 3.0, the proposed rule change 

will also clarify that AIM can be made 

available in such classes and thus 

provide additional opportunities for 

price improvement. 

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 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, the proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A) of the Act 10 and 

Rule 19b–4(f)(6) thereunder.11 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–2008–79 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2008–79. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 am and 3 pm. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of 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–2008–79 and should 

be submitted on or before September 2, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18485 Filed 8–8–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58315; File No. SR–CBOE–

2008–81] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Temporary 

Membership Status and Interim 

Trading Permit Access Fees 

August 6, 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 July 31, 

2008, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ 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 the CBOE. CBOE has 

designated this proposal as one 


rmajette on PRODPC74 with NOTICES