Document ID: SEC-2012-1305-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-08-08T04:00Z

[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47450-47452]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19356]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67574; File No. SR-CBOE-2012-0690]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to the Extension of the CBSX Individual Stock 
Trading Pause Pilot Program

August 2, 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 July 20, 2012, 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 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the individual stock trading pause 
pilot program pertaining to the CBOE Stock Exchange, LLC (``CBSX,'' the 
CBOE's stock trading facility). This rule change simply seeks to extend 
the pilot. No other changes to the pilot are being proposed. 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Rule 6.3C, Individual Stock Trading Pauses Due to Extraordinary 
Market Volatility, was approved by the Commission on June 10, 2010 on a 
pilot basis. The pilot is currently set to expire on July 31, 2012.\5\ 
The rule was developed in consultation with U.S. listing markets to 
provide for uniform market-wide trading pause standards for certain 
individual stocks that experience rapid price movement.\6\ As the 
duration of the pilot expires on July 31, 2012, the Exchange is 
proposing to

[[Page 47451]]

extend the effectiveness of Rule 6.3C through February 4, 2013. A 
February 4, 2013 extension date would coincide with the date on which 
the pilot National Market System Plan to Address Extraordinary Market 
Volatility (the ``Limit Up-Limit Down Plan'') becomes effective.\7\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 62252 (June 10, 
2010), 75 FR 34186 (June 16, 2010) (SR-CBOE-2010-047) (approval 
order establishing pilot through December 10, 2010); 63502 (December 
9, 2010), 75 FR 78306 (December 15, 2010) (SR-CBOE-2010-112) 
(extension of pilot through April 11, 2011); 64194 (April 5, 2011), 
76 FR 2-389 (April 12, 2011) (SR-CBOE-2011-031) (extension of pilot 
through the earlier of August 11, 2011 or the date on which a limit 
up-limit down mechanism to address extraordinary market volatility, 
if adopted, applies to the Circuit Breaker Stocks); 65070 (August 9, 
2011), 76 FR 50516 (August 15, 2011) (SR-CBOE-2011-076) (extension 
of pilot through January 31, 2012); and 66166 (January 17, 2012), 77 
FR 3311 (January 23, 2012) (extension of pilot through July 31, 
2012).
    \6\ The pilot list of stocks originally included all stocks in 
the S&P 500 Index, but it has been expanded over time to include all 
NMS stocks, other than rights and warrants. See Securities Exchange 
Act Release Nos. 62884 (September 10, 2010), 75 FR 56618 (September 
16, 2010) (SR-CBOE-2010-065) (order approving expansion of the 
individual stock trading pause pilot to include all stocks in the 
Russell 1000 index and a pilot list of Exchange Traded Products); 
64735 (June 23, 2011), 76 FR 38243 (June 29, 2011) (SR-CBOE-2011-
049) (order approving further expansion of the individual stock 
trading pause pilot to include all NMS stocks effective August 8, 
2011); and 65824 (November 23, 2011), 76 FR 74111 (November 30, 
2011) (SR-CBOE-2011-111) (immediately effective rule change to amend 
the individual stock trading pause pilot to exclude all rights and 
warrants).
    \7\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012).
---------------------------------------------------------------------------

2. Statutory Basis
    Extension of the pilot period will allow the Exchange to continue 
to operate the pilot on an uninterrupted basis until the Limit Up-Down 
Plan pilot becomes effective. Accordingly, the Exchange believes the 
proposed rule change is consistent with the Act \8\ and the rules and 
regulations under the Act applicable to a national securities exchange 
and, in particular, the requirements of Section 6(b) of the Act.\9\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \10\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts and, in general, to 
protect investors and the public interest. The proposed rule change is 
also designed to support the principles of Section 11A(a)(1) \11\ of 
the Act in that it seeks to assure fair competition among brokers and 
dealers and among exchange markets. The Exchange believes that the 
proposed rule meets these requirements in that it promotes transparency 
and uniformity across markets concerning decisions to pause trading in 
a stock when there are significant price movements.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78a et seq.
    \9\ 15 U.S.C. 78(f)(b).
    \10\ 15 U.S.C. 78(f)(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

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 neither solicited nor 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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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 \14\ and Rule 19b-
4(f)(6)(iii) thereunder.\15\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \17\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot program to continue uninterrupted, thereby 
avoiding the investor confusion that could result from a temporary 
interruption in the pilot program. For this reason, the Commission 
designates the proposed rule change to be operative upon filing.\18\
---------------------------------------------------------------------------

    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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 rule-comments@sec.gov. Please include 
File No. SR-CBOE-2012-069 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 No. SR-CBOE-2012-069. 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 
10:00 a.m. and 3:00 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 No. SR-CBOE-2012-069 and should be 
submitted on or before August 29, 2012.
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).

[[Page 47452]]

---------------------------------------------------------------------------

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19356 Filed 8-7-12; 8:45 am]
BILLING CODE 8011-01-P