Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 67417 

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). 

5The Exchange would also have the authority to 

determine whether to change the trading platform 

on which the group of series trades and change the 

eligible categories of Market-Maker participants for 

the group. 

6Specifically, the group of series could be 

designated to trade on the Hybrid Trading System 

without a DPM or LMM provided the following 

conditions, as applicable, are satisfied: (1) There are 

at least four (4) Market-Makers quoting in the group 

of series; (2) Each Market-Maker with an 

appointment in the group of series is subject to the 

continuous quoting obligations imposed by CBOE 

Rule 8.7(d); and (3) In the event the Exchange 

activates request-for-quote (‘‘RFQ’’) functionality 

(which has not been activated for any class traded 

on the Exchange), each Market-Maker would have 

an obligation to respond to that percentage of RFQs 

as determined by the Exchange for the group of 

series subject to certain requirements specified in 

Rule 8.14(b)3. 

7To the extent that the Exchange would 

determine to designate SPX end-of-week series for 

trading on the Hybrid Trading System without a 

DPM or LMM, certain conditions set forth in Rule 

8.14(b) would have to be satisfied, as applicable. Id. 

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 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 

publicly available. All submissions 

should refer to File Number SR–BX– 

2010–070 and should be submitted on 

or before November 23, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27670 Filed 11–1–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63186; File No. SR–CBOE– 

2010–095] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Hybrid 3.0 

Classes 

October 27, 2010. 

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 October 

25, 2010, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘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 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 amend 

its rules that relate to the designation of 

index options and options on exchangetraded funds (‘‘ETFs’’) for trading on 

CBOE’s Hybrid Trading System and 

Hybrid 3.0 Platform and eligible 

categories of Market-Maker participants. 

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 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

its rules that relate to the designation of 

index options and options on ETFs for 

trading on the Hybrid Trading System 

and Hybrid 3.0 Platform. The ‘‘Hybrid 

Trading System’’ refers to the 

Exchange’s trading platform that allows 

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 one or more quoters 

to submit electronic quotes which 

represent the aggregate Market-Maker 

quoting interest in the series for the 

trading crowd. 

Currently, the particular trading 

platform on which such an option 

contract is traded and the eligible 

categories of Market-Maker participants 

for those options are designated by the 

Exchange on a class-by-class basis 

pursuant to Rule 8.14, Index Hybrid 

Trading System Classes: Market-Maker 

Participants. The Exchange is now 

proposing to amend this rule as it 

relates to classes designated for trading 

on the Hybrid 3.0 Platform. Specifically, 

the Exchange is proposing to provide 

that, for each Hybrid 3.0 class, the 

Exchange may determine to authorize a 

group of series of the class for trading 

on the Hybrid Trading System and, if 

that authorization is granted, the 

Exchange would determine the eligible 

categories of Market-Maker participants 

for that group of series.5 The Exchange 

would assign a Designated Primary 

Market-Maker (‘‘DPM’’) or Lead MarketMaker (‘‘LMM’’) to the group of series. 

Alternatively, the Exchange could 

determine to designate the group of 

series for trading without a DPM or 

LMM provided certain conditions set 

forth in Rule 8.14(b) are satisfied with 

respect to the group of series.6

EXAMPLE (for illustrative purposes only): 

Currently options on the Standard & Poor’s 

500 Index (symbol SPX) are the only class of 

options traded on the Hybrid 3.0 Platform. 

Pursuant to the proposed rule change, the 

Exchange could determine to designate all 

end-of-week option series in the SPX option 

class for trading on the Hybrid Trading 

System without a DPM or LMM.7 All other 

series of the SPX option class could continue 

to be designated for trading on the Hybrid 3.0 

Platform with two rotating LMMs. 

When selecting series to trade on the 

Hybrid Trading Platform, the Exchange 

intends to generally select series with 

common expirations or classifications, 

e.g., end-of-week series or end-of-month 

series, short term option series, or series 

that expire on a particular expiration 

date. The Exchange notes that an 

individual series would only trade on 

one trading platform at a given time, not 

both. What trading platform an 

individual series trades on is controlled 

by CBOE in how the series is set up in 


hsrobinson on DSK69SOYB1PROD with NOTICES
67418 Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 

8SAL is a feature within the Hybrid System that 

auctions marketable orders for price improvement 

over the National Best Bid or Offer (‘‘NBBO’’). 

9HAL2 is a feature in the Hybrid System that 

provides automated order handling in designated 

classes for qualifying electronic orders that are not 

automated executed by the Hybrid System. 

10AIM is a feature within the Hybrid System that 

provides Trading Permit Holders with the ability to 

electronically execute agency orders against 

principal interest or against a solicited order 

provided the agency order is submitted for 

electronic execution into an auction. 

11See, e.g., Securities Exchange Act Release No. 

56761 (November 7, 2007), 72 FR 64094 (November 

14, 2007). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). 

CBOEdirect (the trading engine for the 

Hybrid Trading System and Hybrid 3.0 

Platform). Using the example above, 

CBOE would change the platform 

designation for SPX end-of-week series 

in CBOEdirect to the Hybrid Trading 

System and keep the platform 

designation for all other SPX series on 

the Hybrid 3.0 Platform. In addition, the 

Exchange plans to introduce a new 

option symbol to denote the series that 

are trading on a different platform. 

Using the example above, SPX end-ofweek series might trade under symbol 

SPXW while all other SPX series would 

continue to trade under symbol SPX. 

The Exchange notes that CBOE has 

had several trading platform changes 

over the years for entire option classes 

(e.g., CBOE has moved certain other 

option classes from the Hybrid 3.0 

Platform to the Hybrid Trading System). 

The move of a group of series within a 

class would operate similar to the way 

other option class moves have operated 

in the past. In this regard, the Exchange 

generally provides CBOE Trading 

Permit Holders at least one trading day’s 

advance notice of trading platform 

changes via regulatory circular. For the 

initial changeover of any SPX series that 

may be traded on the Hybrid Trading 

System, however, the Exchange plans to 

give at least one week advance notice so 

that Trading Permit Holders can be 

made aware that the platform change 

would only be for a select group of 

series and not the whole class, and so 

that the Exchange can schedule 

education sessions to explain the 

change to Trading Permit Holders. Once 

the Exchange has made an initial 

changeover, if we would determine to 

add (or remove) series from the Hybrid 

Trading Platform we plan to revert back 

to the general approach of providing at 

least one trading day’s advance notice 

for those subsequent changes. 

The following would also apply: 

Market-Maker appointments would 

continue to apply on a class basis, 

except DPM, LMM and Electronic DPM 

(‘‘e-DPM’’) appointments would apply 

only to the group of series to which the 

respective DPM, LMM or e-DPM is 

assigned, if applicable. In addition, the 

Hybrid Trading System trading 

parameters (e.g., applicable matching 

algorithm parameters under Rule 6.45B, 

Priority and Allocation of Trading in 

Index Options and Options on ETFs on 

the CBOE Hybrid System; opening 

rotation parameters under Rule 6.2B, 

Hybrid Opening System (‘‘HOSS’’); 

automatic execution parameters under 

Rule 6.13, CBOE Hybrid System’s 

Automatic Execution Feature; Simple 

Auction Liaison parameters under Rule 

6.13A, Simple Auction Liaison (SAL),8

Hybrid Agency Liaison parameters 

under Rule 6.14A, Hybrid Agency 

Liaison 2 (HAL2),9 complex order book 

(‘‘COB’’) and complex order request-forresponse auction (‘‘COA’’) parameters 

under Rule 6.53C, Complex Orders on 

the Hybrid System, Automated 

Improvement Mechanism parameters 

under Rule 6.74A, Automated 

Improvement Mechanism (‘‘AIM’’),10

etc.) would be established by the 

Exchange on a group basis, instead of on 

a class basis, to the extent the Exchange 

Rules otherwise provide for such 

parameters to be established on a class 

basis. Thus, using the example above, 

CBOE would set the trading parameters 

(e.g., parameters for the matching 

algorithm, HOSS, automatic execution, 

SAL, HAL2, COB, COA, AIM, etc.) for 

the SPX end-of-week series group that 

would trade on the Hybrid Trading 

System platform, and separately set the 

trading parameter for all other SPX 

series that would remain on the Hybrid 

3.0 platform. 

Finally, the Exchange is proposing to 

amend the text of Rule 8.14 to delete 

paragraph (b)(4), which is outdated and 

no longer applicable. Paragraph (b)(4) 

contains an outdated provision related 

to the Intermarket Options Linkage Plan, 

which has been replaced by the Plan for 

the Purpose of Creating and Operating 

an Intermarket Option Linkage.11

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 12 that an 

exchange have rules that are designed to 

promote just and equitable principles of 

trade, and to remove impediments to 

and perfect the mechanism for a free 

and open market and a national market 

system, and, in general, to protect 

investors and the public interest. In 

particular, the Exchange believes the 

proposed change would provide more 

flexibility to designate trading platform 

and Market-Maker categories based on a 

group of series in a manner that is 

consistent with existing CBOE rules that 

permit such designations on a class 

basis. 

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 13 and 

Rule 19b–4(f)(6) thereunder.14 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 e-mail to rulecomments@sec.gov. Please include File 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Notices 67419 

15 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). 

5CBOE does not believe that Rule 5.5.03 limits 

the maximum number of expiration months that 

may be listed. Rule 5.5(a) and 5.5(c) provide CBOE 

with the flexibility to add additional expiration 

months, which the Exchange has previously done. 

By establishing the pilot program proposed in this 

filing, CBOE is not limited to its existing ability. 

Number SR–CBOE–2010–095 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–2010–095. 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 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 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- 2010–095 and 

should be submitted on or before 

November 23, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27588 Filed 11–1–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63185; File No. SR–CBOE– 

2010–097] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Establish a Pilot 

Program To List Series With Additional 

Expiration Months for Each Class of 

Options Opened for Trading on the 

Exchange 

October 27, 2010. 

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 October 

26, 2010, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 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 

CBOE proposes to amend its rules to 

adopt a pilot program to list additional 

expiration months for each class of 

options opened for trading on the 

Exchange. The text of the rule proposal 

is available on the Exchange’s Web site 

(http://www.cboe.org/legal), at the 

Exchange’s principal office, 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 

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 

The Exchange proposes to amend its 

rules to adopt a pilot program to list 

additional expiration months for each 

class of options opened for trading on 

the Exchange. Pursuant to Interpretation 

and Policy .03 to Rule 5.5, the Exchange 

currently opens four expiration months 

for each class of options open for 

trading on the Exchange: the first two 

being the two nearest months, regardless 

of the quarterly cycle on which that 

class trades; the third and fourth being 

the next two months of the quarterly 

cycle previously designated by the 

Exchange for that specific class. For 

example, if the Exchange listed, in late 

April, a new stock option on a January– 

April—July–October quarterly cycle, the 

Exchange would list the two nearest 

term months (May and June) and the 

next two expiration months of the cycle 

(July and October). When the May series 

expires, the Exchange would add 

January series. When the June series 

expires, the Exchange would add 

August series as the next month, and 

would not add April. 

The Exchange believes that there is 

market demand for a greater number of 

expiration months. The Exchange 

therefore proposes to adopt a pilot 

program pursuant to which it will list 

up to an additional two expiration 

months, for a total of six expiration 

months for each class of options open 

for trading on the Exchange.5 The 

proposal will become effective on a 

pilot basis for a period of twelve months 

to commence on the next full month 

after approval is received to establish 

the pilot program. Under the proposal, 

the additional months listed pursuant to 

the pilot program will result in four 

consecutive expiration months plus two 

months from the quarterly cycle. For 

example, for option classes in the 

January cycle that have expiration 

months of June, July, October, and 

January, the Exchange would 

additionally list the August and 

September series. For option classes in 

the February quarterly cycle that have 

expiration months of October, 

November, February and May, the 


hsrobinson on DSK69SOYB1PROD with NOTICES