Document ID: SEC-2007-0757-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-06-01T04:00Z

[Federal Register: June 1, 2007 (Volume 72, Number 105)]
[Notices]               
[Page 30647]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jn07-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55814; File No. SR-CBOE-2007-27]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change and Amendment No. 
1 Thereto Relating to Class Quoting Limits

May 25, 2007.

I. Introduction

    On March 5, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to provide for termination of a 
Market-Maker or Remote Market-Maker (``RMM'') appointment in an option 
class traded on Hybrid if the Market-Maker or RMM has not submitted any 
electronic quotations in that option class during the preceding 30 
days. The Exchange submitted Amendment No. 1 to the proposed rule 
change on April 18, 2007. The proposed rule change, as amended, was 
published for comment in the Federal Register on April 25, 2007.\3\ The 
Commission received no comments on the proposal. This order approves 
the proposal, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55644 (April 19, 
2007), 72 FR 20570.
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II. Description of the Proposal

    CBOE Rule 8.3A establishes the upper limit, i.e., Class Quoting 
Limit (``CQL''), on the number of members that may quote electronically 
in a particular product traded on CBOE's Hybrid Trading System and 
Hybrid 2.0 Platform (collectively ``Hybrid'').\4\
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    \4\ See Securities Exchange Act Release No. 51429 (March 24, 
2005), 70 FR 16536 (March 31, 2005) (approving SR-CBOE-2005-58).
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    The purpose of this rule change is to amend CBOE Rule 8.3A to adopt 
an interpretation which is applicable only in those option classes 
traded on Hybrid in which the CQL for the option class is full and 
there is a waiting list of member(s) requesting the ability to quote 
electronically in the option class. Specifically, in the event a 
Market-Maker or RMM who holds an appointment in an option class traded 
on Hybrid has not submitted any electronic quotations in that option 
class during the preceding 30 days (calculated on a rolling basis), 
then the Market-Maker or RMM's appointment in that option class will be 
terminated effective immediately. CBOE will notify the Market-Maker or 
RMM prior to terminating its appointment, and the rule provides that 
CBOE can make exceptions to this Interpretation and Policy in unusual 
circumstances.
    The Market-Maker or RMM can subsequently request an appointment in 
the option class. If there is a wait-list of members requesting the 
ability to quote electronically, then the Market-Maker or RMM will be 
placed on the wait-list for the option class. CBOE intends to implement 
the proposal upon approval by the Commission.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange \5\ and, in particular, the requirements of Section 
6 of the Act.\6\ Specifically, the Commission finds that the proposal 
is consistent with Section 6(b)(5) of the Act,\7\ in that the proposal 
has been designed to promote just and equitable principles of trade, 
and to protect investors and the public interest. The Commission 
believes that the proposal should enhance liquidity by helping to 
ensure that members who might be willing to provide competitive 
quotations and liquidity in an option class are given an opportunity to 
do so.
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    \5\ The Commission has considered the amended proposed rule 
change's impact on efficiency, competition and capital formation. 15 
U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-CBOE-2007-27), as modified by 
Amendment No. 1, is approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-10555 Filed 5-31-07; 8:45 am]

BILLING CODE 8010-01-P