Document ID: SEC-2008-0403-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-03-17T04:00Z

[Federal Register: March 17, 2008 (Volume 73, Number 52)]
[Notices]               
[Page 14284-14285]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17mr08-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57465; File No. SR-CBOE-2005-11]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change, as Modified 
by Amendments No. 1 and 2, Relating to the Listing and Trading on the 
Exchange of Options on the streetTRACKS Gold Trust

March 11, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on January 25, 2005, 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 
substantially prepared by the Exchange. On April 12, 2005, the Exchange 
submitted Amendment No. 1 to the proposed rule change. On March 7, 
2008, the Exchange submitted Amendment No. 2 to the proposed rule 
change. The Commission is publishing this notice to solicit comments on 
the proposed rule change, as amended, from interested persons.
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    \1\15 U.S.C. 78s(b)(1).
    \2\17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend certain CBOE rules to enable the 
listing and trading on the Exchange of options on the streetTRACKS Gold 
Trust. The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and http://
www.cboe.com.

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 CBOE included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CBOE has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects 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 states that the purpose of the proposed rule change is 
to permit the listing and trading of options on the streetTRACKS Gold 
Trust.
    Currently, Interpretation and Policy .06 to CBOE Rule 5.3 permits 
only certain Units (also referred to herein as exchange traded funds 
(``ETFs'')) to underlie options traded on the Exchange. Specifically, 
to be eligible as an underlying security for options traded on the 
Exchange, an ETF must represent: (i) Interests in registered investment 
companies (or series thereof) organized as open-end management 
investment companies, unit investment trusts or similar entities that 
hold portfolios of securities, and/or financial instruments including, 
but not limited to, stock index futures contracts, options on futures, 
options on securities and indexes, equity caps, collars and floors, 
swap agreements, forward contracts, repurchase agreements and reverse 
purchase agreements (the ``Financial Instruments''), and money market 
instruments, including, but no limited to, U.S. government securities 
and repurchase agreements (the ``Money Market Instruments'') comprising 
or otherwise based on or representing investments in indexes or 
portfolios of securities and/or Financial Instruments and Money Market 
Instruments (or that hold securities in one or more other registered 
investment companies that themselves hold such portfolios of securities 
and/or Financial Instruments and Money Market Instruments); or (ii) 
interests in a trust or similar entity that holds a specified non-U.S. 
currency deposited with the trust or similar entity when aggregated in 
some specified minimum number may be surrendered to the trust by the 
beneficial owner to receive the specified non-U.S. currency and pays 
the beneficial owner interest and other distributions on deposited non-
U.S. currency, if any, declared and paid by the trust; or (iii) 
commodity pool interests principally engaged, directly or indirectly, 
in holding and/or managing portfolios or baskets of securities, 
commodity futures contracts, options on commodity futures contracts, 
swaps, forward contracts and/or options on physical commodities and/or 
non-U.S. currency. The proposed rule change would expand the types of 
ETFs that may be approved for options trading on the Exchange to 
include the streetTRACKS Gold Trust.
    Apart from allowing the streetTRACKS Gold Trust to be an underlying 
for options traded on the Exchange as described above, the listing 
standards for ETFs would remain unchanged from those that apply under 
current Exchange rules. ETFs on which options may be listed and traded 
would still have to be listed and traded on a national securities 
exchange and satisfy the other listing standards set forth in 
Interpretation and Policy .06 to CBOE Rule 5.3.
    Specifically, in addition to satisfying the aforementioned listing 
requirements, Units would have to: (1) Meet the criteria and guidelines 
under Rule 5.3 Criteria for Underlying Securities and Interpretation 
and Policy .01 thereunder; or (2) be available for creation or 
redemption each business day from or through the issuer in cash or in 
kind at a price related to net asset value, and the issuer must be 
obligated to issue Units in a specified aggregate number even if some 
or all of the investment assets required to be deposited have not been 
received by the issuer, subject to the condition that the person 
obligated to deposit the investments has undertaken to deliver the 
investment assets as soon as possible and such undertaking is secured 
by the delivery and maintenance of collateral consisting of cash or 
cash equivalents satisfactory to the issuer, as provided in the 
respective prospectus.
    The Exchange proposes that the current continued listing standards 
for

[[Page 14285]]

options on ETFs would apply to options on the streetTRACKS Gold Trust. 
Specifically, under Interpretation and Policy .08 to CBOE Rule 5.4, 
options on Units may be subject to the suspension of opening 
transactions as follows: (1) Following the initial twelve-month period 
beginning upon the commencement of trading of the Units, there are 
fewer than 50 record and/or beneficial holders of the Units for 30 or 
more consecutive trading days; (2) the value of the index or portfolio 
of securities, non-U.S. currency, or portfolio of commodities including 
commodity futures contracts, options on commodity futures contracts, 
swaps, forward contracts and/or options on physical commodities and/or 
Financial Instruments and Money Market Instruments on which Units are 
based is no longer calculated or available; or (3) such other event 
occurs or condition exists that in the opinion of the Exchange makes 
further dealing on the Exchange inadvisable.
    Additionally, the streetTRACKS Gold Trust would not be deemed to 
meet the requirements for continued approval, and the Exchange would 
not open for trading any additional series of option contracts of the 
class covering the streetTRACKS Gold Trust, if the streetTRACKS Gold 
Trust ceases to be an ``NMS stock'' as provided for in paragraph (f) of 
Interpretation and Policy .01 of CBOE Rule 5.4 or the streetTRACKS Gold 
Trust is halted from trading on its primary market.
    The Exchange believes that the addition of the streetTRACKS Gold 
Trust to Interpretation and Policy .06 to CBOE Rule 5.3 would not have 
any effect on the rules pertaining to position and exercise limits \3\ 
or margin.\4\
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    \3\ See CBOE Rules 4.11, Position Limits, and 4.12, Exercise 
Limits.
    \4\ See CBOE Rule 12.3, Margin Requirements.
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    The Exchange represents that its surveillance procedures applicable 
to trading in options on the streetTRACKS Gold Trust would be similar 
to those applicable to all other options on other ETFs currently traded 
on the Exchange. Also, the Exchange may obtain information from the New 
York Mercantile Exchange, Inc. (a member of the Intermarket 
Surveillance Group) related to any financial instrument traded there 
that is based, in whole or in part, upon an interest in, or performance 
of, gold.
2. Statutory Basis
    The Exchange believes that amending its rules to accommodate the 
listing and trading of options on the streetTRACKS Gold Trust will 
benefit investors by providing them with valuable risk management 
tools. Accordingly, the CBOE believes that the proposed rule change is 
consistent with the requirements of Section 6(b) of the Act \5\ in 
general, and furthers the objectives of Section 6(b)(5),\6\ of the Act 
in particular, in that it is designed to remove impediments to and 
perfect the mechanism of a free and open market in a manner consistent 
with the protection of investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) As the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2005-11 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-2005-11. 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 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-2005-11 and should be 
submitted on or before April 7, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-5201 Filed 3-14-08; 8:45 am]

BILLING CODE 8011-01-P