Document ID: SEC-2006-0346-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2006-03-16T05:00Z

[Federal Register: March 16, 2006 (Volume 71, Number 51)]
[Notices]               
[Page 13641-13642]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16mr06-87]                         

[[Page 13641]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53438; File No. SR-CBOE-2006-19]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend CBOE Rule 11.1 Relating to the Exercise of Option 
Contracts

March 7, 2006.
    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 March 3, 2006, 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 and II below, which Items have been prepared by the Exchange. 
The CBOE filed 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\ which renders it effective upon filing with the 
Commission.\5\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \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).
    \5\ As required by Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii), the CBOE submitted written notice of its intent to 
file the proposed rule change, along with a brief description and 
text of the proposed rule change, at least five days prior to the 
date of filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE, pursuant to section 19(b)(1) of the Act \6\ and Rule 19b-
4 thereunder,\7\ proposes to amend CBOE Rule 11.1 relating to the 
exercise of option contracts. The text of the proposed rule change is 
available on the CBOE's Web site (http://www.cboe.com), at the CBOE's 

Office of the Secretary, and at the Commission's Public Reference Room.
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    \6\ 15 U.S.C. 78s(b)(1).
    \7\ 17 CFR 240.19b-4.
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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 proposal. 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 purpose of the proposed rule change is to amend CBOE Rule 11.1 
relating to the exercise of option contracts.
    On February 13, 2006, CBOE changed its closing time for trading in 
equity options and options on narrow-based indices from 3:02 p.m. to 3 
p.m. (Chicago time).\8\ However, at that time, CBOE did not make a 
corresponding change to CBOE Rule 11.1 as it relates to situations 
where there is a modified time for the close of trading in non cash-
settled equity options on the last business day before expiration will 
occur.
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    \8\ See Securities Exchange Act Release No. 53246 (February 7, 
2006), 71 FR 8014 (February 15, 2006).
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    CBOE believes that, consistent with its decision to change the 
closing time for equity options and options on narrow-based indices to 
3 p.m., the references to 1 hour and 28 minutes and 2 hours and 28 
minutes in CBOE Rule 11.1(c)(1) and (2) should be changed to 1 hour 30 
minutes and 2 hours 30 minutes, respectively. CBOE believes that this 
proposed rule change is consistent with a Commission approved amendment 
that the Pacific Exchange, Inc. (``PCX'') recently made to PCX Rule 
6.24(g).\9\ CBOE also notes that it believes that the other option 
exchanges intend to make similar changes as well.\10\
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    \9\ See Securities Exchange Act Release No. 53249 (February 7, 
2006), 71 FR 8035 (February 15, 2006) (order granting accelerated 
approval of SR-PCX-2005-138).
    \10\ See SR-ISE-2006-11 and SR-Phlx-2006-12.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \11\ in general, and furthers the 
objectives of section 6(b)(5) of the Act \12\ in particular, because it 
is 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.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 CBOE has neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after 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 \13\ and Rule 19b-4(f)(6) 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The CBOE has asked the Commission to 
waive the 30-day operative delay. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because such waiver will allow the 
CBOE to immediately clarify its rule and conform it to the industry-
wide close of trading times now in effect. Accelerating the operative 
date will allow for a more efficient and effective market operation by 
offering clarity and internal consistency with existing CBOE rules. For 
these reasons, the Commission designates the proposed rule change as 
effective and operative immediately upon filing with the 
Commission.\16\
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    \15\ Id.
    \16\ For the purposes only of waiving the 30-day operative date 
of this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).

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[[Page 13642]]

    At any time within 60 days after the filing of the proposed rule 
change, the Commission may summarily abrogate the 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 rule-comments@sec.gov. Please include 

File Number SR-CBOE-2006-19 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-2006-19. 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. 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-2006-19 and should be submitted on or before April 
6, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-3787 Filed 3-15-06; 8:45 am]

BILLING CODE 8010-01-P