Document ID: SEC-2009-0002-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.,
Posted Date: 2009-01-02T05:00Z

[Federal Register: January 2, 2009 (Volume 74, Number 1)]
[Notices]               
[Page 150-152]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ja09-60]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59147; File No. SR-CBOE-2008-123]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change To Adopt a 
Trade, Flash and Cancel Order Type for CBSX

December 22, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 151]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 3, 2008, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``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 prepared by CBOE. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The filing proposes to adopt a Trade, Flash and Cancel order type 
for the CBOE Stock Exchange (``CBSX''). 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to revise CBSX Rule 
51.8 to adopt a Trade, Flash and Cancel order type. This is a market or 
marketable limit order to buy or sell that is to be executed in whole 
or in part on CBSX immediately and automatically after it is received 
by the CBSX System without delay for any purpose except that it will be 
electronically exposed pursuant to Rule 52.6 prior to cancellation. 
Rule 52.6 provides that market or limit orders shall not be executed at 
a price that would cause a trade-through of a Protected Quotation as 
defined in Rule 611 of Regulation NMS; instead, these orders are 
``flashed'' to CBSX Traders \3\ for potential execution at a price that 
would not cause a trade-through.\4\ This new order type would allow 
users to send orders to CBSX for execution even when CBSX is not the 
NBBO without requiring CBSX to seek an NBBO fill for these orders at 
away trading centers when price improvement on CBSX is not achieved. 
Thus, users can seek fills on CBSX while maintaining control over 
routing.
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    \3\ ``CBSX Trader'' is defined in CBOE Rule 50.1. See e-mail 
from Angelo Evangelou, Assistant General Counsel, CBOE, to Andrew 
Madar, Attorney-Advisor, Commission, dated December 12, 2008.
    \4\ If a flash responder attempts to trade against the order by 
matching the flash price (the NBBO price at the time the order was 
received by the CBSX System), the order will be executed unless the 
system determines at the point of execution that the flash price is 
worse than a revised NBBO in which case the order will be cancelled. 
See e-mail from Angelo Evangelou, Assistant General Counsel, CBOE, 
to Michael J. Gaw, Assistant Director, and Andrew Madar, Attorney-
Advisor, Commission, dated December 19, 2008.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \5\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \6\ in particular in that, by offering users 
an enhanced price improvement feature and greater control over order 
routing, it is designed to promote just and equitable principles of 
trade, and serve to remove impediments to and perfect the mechanism of 
a free and open market and a national market system.
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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

    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

    No written comments were solicited or received with respect to 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 CBOE 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-2008-123 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-123. 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 publicly available. All 
submissions should refer to File Number SR-CBOE-2008-123 and

[[Page 152]]

should be submitted on or before January 23, 2009.

    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,
Acting Secretary.
[FR Doc. E8-31149 Filed 12-31-08; 8:45 am]

BILLING CODE 8011-01-P