Federal Register / Vol. 73, No. 27 / Friday, February 8, 2008 / Notices 7621 

9 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

10 15 U.S.C. 78f. 

11 15 U.S.C. 78s(b)(2). 

12See supra Note 3. 

13 15 U.S.C. 78s(b)(2). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57036 

(December 21, 2007), 72 FR 74381 (December 31, 

2007) (‘‘Notice’’) at footnote 3 (defining a ‘‘give-up’’

as a multi-character symbol that identifies a CHX 

participant firm. In the context of this rule, if a 

participant executes a trade using another 

participant’s give-up, the firm is identifying the 

other firm as a party to the trade and allocating the 

trade to the other firm’s account for clearing). 

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. 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–2008–05 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–2008–05. 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 a.m. and 3 p.m. 

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–2008–05 and should 

be submitted on or before February 29, 

2008. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

After careful review, the Commission 

finds that CBOE’s proposal to amend 

Rule 24.9(a)(2), Terms of Index Option 

Contracts to allow the Exchange to list 

up to seven expiration months for 

reduced-value and jumbo options that 

overlie broad-based security indexes for 

which full-value options are used by the 

Exchange to calculate a constant threemonth volatility index is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange 9 and, in particular, the 

requirements of section 6 of the Act 10

and the rules and regulations 

thereunder. The Commission believes 

that increasing, from six to seven, the 

number of expiration months for these 

options (to accomodate a fourth 

consecutive near-term month while 

maintaining the listing of three months 

on a quarterly expiration cycle) will 

result in a more consistent and 

predictable calculation in which the 

option series that bracket three months 

to expiration will always expire one 

month apart, thereby promoting just and 

equitable principles of trade while 

protecting investors and the public 

interest. 

The Commission also notes CBOE’s 

representations that it possesses the 

necessary systems capacity to handle 

the additional traffic associated with the 

additional listing of a seventh contract 

month for reduced-value and jumbo 

options that overlie broad-based 

security indexes for which full-value 

options are used by the Exchange to 

calculate a constant three-month 

volatility index. 

The Exchange has requested 

accelerated approval of the proposed 

rule change. The Commission finds 

good cause, consistent with Section 

19(b)(2) of the Act,11 for approving this 

proposed rule change before the 

thirtieth day after the publication of 

notice thereof in the Federal Register 

because accelerating approval will 

enable CBOE to harmonize the contract 

month listings between full-value SPX 

options and reduced-value SPX options 

(i.e., XSP options) by listing a seventh 

expiration month (May 2008) in order to 

maintain four consecutive near term 

contract months and three quarterly 

cycle contracts months. The 

Commission notes that this proposed 

rule change does not raise any new 

regulatory issues from those raised in 

the rule filing which allowed CBOE to 

list add a seventh expiration month for 

full-value broad-based security index 

options.12

V. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,13 that the 

proposed rule change (SR–CBOE–2008–

05), as modified by Amendment No. 1, 

be, and it hereby is approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2330 Filed 2–7–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57264; File No. SR–CHX–

2007–27] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Order 

Approving a Proposed Rule Change To 

Eliminate a Requirement That a 

Participant Have a Formal Written 

Agreement To Use Another 

Participant’s Give-Up 

February 4, 2008. 

On December 12, 2007, the Chicago 

Stock Exchange, Inc (‘‘CHX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend CHX Article 9, Rule 25 to 

eliminate the requirement that a 

participant have a formal written 

agreement to use another participant’s 

give-up.3 The proposed rule change was 

published for comment in the Federal 


pwalker on PROD1PC71 with NOTICES
7622 Federal Register / Vol. 73, No. 27 / Friday, February 8, 2008 / Notices 

4See id. 

5See Securities Exchange Act Release No. 54550 

(September 29, 2006), 71 FR 59563 (October 10, 

2006) (approval order for the new trading model). 6See File No. SR–CHX–2006–32. The Exchange 

withdrew that proposal on December 12, 2007. 7See Notice, supra note 3, at 74381. 

8See id. 

9 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57018 

(December 20, 2007), 72 FR 74392 (‘‘Notice’’). 

4See Partial Amendment dated January 29, 2008 

(‘‘Amendment No. 2’’). Amendment No. 2 made one 

technical correction to the rule text. This correction 

is not subject to notice and comment. 

5See Securities Exchange Act Release No. 39549 

(January 14, 1998), 63 FR 3601 (January 23, 1998) 

(adopting SR–Phlx–96–38). The term ‘‘FLEX’’ is a 

trademark of the Chicago Board Options Exchange, 

Inc. 

6The Exchange also proposes to amend Floor 

Procedure Advice F–28, Trading FLEX Index and 

Equity Options, to make corresponding changes to 

those being proposed to Rule 1079(b). 

7Currently, a variety of customized physical 

delivery FCOs are traded on the Exchange pursuant 

to Rule 1069, Customized Foreign Currency 

Options. Users currently have the ability with 

respect to physical delivery FCOs to customize the 

strike price and quotation method and to choose 

underlying and base currency combinations from 

among various Exchange listed currencies, 

including the U.S. dollar. See Securities Exchange 

Act Release No. 34925 (November 1, 1994), 59 FR 

55720 (November 8, 1994). References in Exchange 

rules to ‘‘FLEX currency options’’ will apply only 

to U.S. dollar-settled FCOs and will not include 

customized physical delivery FCOs that trade 

pursuant to Phlx Rule 1069. 

8 Generally, like FLEX index and equity options, 

FLEX currency options will be traded in accordance 

with many existing options rules. Rule 1079 states 

that to the extent that the provisions of Rule 1079 

are inconsistent with other applicable Exchange 

rules, Rule 1079 takes precedence with respect to 

FLEX options. 

9FLEX currency options will be margined at the 

same levels as the Exchange’s non-FLEX U.S. 

dollar-settled FCOs. See Phlx Rule 722. 

Register on December 31, 2007.4 The 

Commission received no comments on 

the proposal. This order approves the 

proposed rule change, as amended. 

When the CHX adopted rules for its 

new trading model, it included a 

provision that requires a participant that 

executes a trade using another 

participant’s give-up to have a written 

agreement authorizing the use of the 

give-up.5 Soon after implementing its 

new trading model, the Exchange 

contemplated limiting the way in which 

the rule would apply to its institutional 

brokers by allowing institutional brokers 

to use other participants’ give-ups in 

accordance with reasonable written 

order-handling procedures, without 

specifically requiring that a written 

agreement be in place.6 The Exchange 

believed that the rule provided an 

appropriate general standard, but did 

not intend to require a potentially 

substantial change in the long-standing 

business practices of the Exchange’s 

institutional brokers, who often execute 

a trade using another participant’s giveup, pursuant to instructions from such 

participant or its customer.7

The Exchange now proposes to 

eliminate the ‘‘give-up agreement’’ rule 

altogether. The Exchange believes the 

rule sets a good business standard, but 

does not believe that it is appropriate to 

put a hard-and-fast rule to that effect in 

place because of its potential impact on 

the day-to-day business practices of 

some of its institutional brokers.8

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.9 In particular, the 

Commission finds that the proposal is 

consistent with section 6(b)(5) of the 

Act,10 which requires, among other 

things, that the rules of an exchange be 

designed to promote just and equitable 

principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. Repealing this rule will permit 

the Exchange’s members to execute 

trades using another CHX participant’s 

give-up pursuant to instructions from 

either that participant or its customer 

without requiring that a written 

agreement first be in place between 

those participants, thereby providing 

greater flexibility for members to 

execute trades on the Exchange. The 

Commission notes, however, that 

participants may choose to continue 

entering into formal written give-up 

agreements as they consider 

appropriate. 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–CHX–2007–

27) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2331 Filed 2–7–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57265; File No. SR–Phlx–

2007–68] 

Self-Regulatory Organizations; 

Philadelphia Stock Exchange, Inc.; 

Order Granting Approval to Proposed 

Rule Change as Modified by 

Amendment Nos. 1 and 2 Thereto 

Relating to Customized U.S. DollarSettled Foreign Currency Options 

February 4, 2008. 

I. Introduction 

On September 6, 2007, the 

Philadelphia Stock Exchange, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934, as amended (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change relating to trading of 

individually tailored U.S. dollar-settled 

foreign currency options (‘‘FCOs’’). On 

December 18, 2007, the Exchange filed 

Amendment No. 1. The proposed rule 

change, as amended, was published for 

comment in the Federal Register on 

December 31, 2007.3 The Commission 

received no comments on the proposal. 

On January 29, 2008, the Exchange filed 

Amendment No. 2.4 This order approves 

the proposed rule change, as amended. 

II. Description of the Proposal 

Individually tailored index and equity 

options currently may be traded 

pursuant to Rule 1079, FLEX Index and 

Equity Options.5 Phlx proposes to 

amend Rule 1079 6 to permit trading of 

U.S. dollar-settled FCOs with 

individually tailored expiration dates 

and exercise prices (‘‘FLEX currency 

options’’).7 Provisions of Rule 1079 that 

are not limited by their terms to FLEX 

index or equity options will be equally 

applicable to FLEX currency options.8

The Options Clearing Corporation 

(‘‘OCC’’) will be the issuer and 

guarantor of these new options. 

A. Characteristics of FLEX Currency 

Options 

Pursuant to proposed Rule 

1079(a)(3)(C), users will be able to 

individually tailor the strike prices of 

FLEX currency options. Strike prices 

need not be consistent with strike price 

intervals permissible for non-FLEX U.S. 

dollar-settled FCOs. The strike price 

may be specified in terms of a specific 

dollar amount rounded to the nearest 

ten thousandth of a dollar (expressed 

without reference to the first two 

decimal places) for FLEX currency 

options other than the Japanese yen 

currency option. FLEX options on the 

Japanese yen may be specified in terms 

of a specific dollar amount rounded to 

the nearest one millionth of a dollar 

(expressed without reference to the first 

four decimal places).9


pwalker on PROD1PC71 with NOTICES