Document ID: SEC-2007-0954-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-07-16T04:00Z

[Federal Register: July 16, 2007 (Volume 72, Number 135)]
[Notices]               
[Page 38851-38853]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jy07-61]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56035; File No. SR-CBOE-2007-70]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto To Extend the Quarterly Options 
Series Pilot Program

July 10, 2007.
    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 June 26, 2007, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been substantially prepared by 
the Exchange. On July 9, 2007, the Exchange filed Amendment No. 1 to 
the proposed rule change. The Exchange has designated this proposal as 
non-controversial under section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposed rule change 
effective upon filing with the Commission. 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).

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

[[Page 38852]]

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

    The Exchange proposes to extend for one year a pilot program 
(``Pilot Program'') in which the Exchange lists Quarterly Options 
Series, which are options series that expire at the close of business 
on the last business day of a calendar quarter. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.com
), at the Exchange's principal office, and at the 

Commission's Public Reference Room.

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 these 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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On July 10, 2006, the Exchange filed with the Securities and 
Exchange Commission (``Commission'') SR-CBOE-2006-65, which was 
effective on filing.\5\ That proposed rule change allowed the Exchange 
to establish a pilot program in which the Exchange lists Quarterly 
Options Series. The Exchange hereby proposes to extend the Pilot 
Program for one year, so that it will expire on July 10, 2008. This 
proposal does not request any other changes to the Pilot Program.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 54123 (July 11, 
2006), 71 FR 40558 (July 17, 2006) (``Pilot Program Release'').
---------------------------------------------------------------------------

    In SR-CBOE-2006-65, the Exchange stated that it would submit, in 
connection with any proposed extension of the Pilot Program, a Pilot 
Program Report (``Report'') that would provide an analysis of the Pilot 
Program covering the entire period during which the Pilot Program was 
in effect. The Exchange further stated that the Report would include, 
at a minimum: (1) Data and written analysis on the open interest and 
trading volume in the classes for which Quarterly Options Series were 
opened; (2) an assessment of the appropriateness of the option classes 
selected for the Pilot Program; (3) an assessment of the impact of the 
Pilot Program on the capacity of CBOE, the Options Price Reporting 
Authority (``OPRA''), and on market data vendors (to the extent data 
from market data vendors is available); (4) any capacity problems or 
other problems that arose during the operation of the Pilot Program and 
how CBOE addressed such problems; and (5) any complaints that CBOE 
received during the operation of the Pilot Program and how CBOE 
addressed them; and (6) any additional information that would assist in 
assessing the operation of the Pilot Program. The Exchange has 
submitted a Report in connection with the present proposed rule change 
under separate cover, along with a request for confidential treatment 
under the Freedom of Information Act.
    The Exchange represents that the Report clearly supports its belief 
that extension of the Pilot Program is proper. Among other things, the 
Report shows the strength and efficacy of the Pilot Program on the 
Exchange as reflected by the strong volume of Quarterly Options traded 
on the Exchange since the Pilot's inception in July 2006. The Report 
establishes that the Pilot Program has not created, and in the future 
should not create, capacity problems for the Exchange's or OPRA's 
systems. Moreover, the Exchange believes that the proposed extension of 
the Pilot Program will not have an adverse impact on capacity.
2. Statutory Basis
    The Exchange believes that Quarterly Options Series attract order-
flow to the Exchange, increase the variety of listed options to 
investors, and provide a valuable hedging tool to investors. For these 
reasons, the Exchange believes that the proposed rule change is 
consistent with section 6(b) of the Act \6\ in general, and furthers 
the objectives of section 6(b)(5) of the Act \7\ in particular, in that 
it is designed to promote just and equitable principles of trade and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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. Indeed, the Exchange 
believes that Quarterly Options Series enhance competition by offering 
a new variety of listed options to investors.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
section 19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) of Rule 19b-
4 thereunder.\9\ The Exchange has asked the Commission to waive the 
operative delay to permit the Pilot Program extension to become 
operative prior to the 30th day after filing.\10\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change at least five business days before doing 
so.
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the benefits of the Pilot Program to continue 
without interruption.\11\ Therefore, the Commission designates the 
proposal operative upon filing.\12\
---------------------------------------------------------------------------

    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \12\ As set forth in the Pilot Program Release, if the Exchange 
were to propose an extension, an expansion, or permanent approval of 
the Pilot Program, the Exchange would submit, along with any filing 
proposing such amendments to the program, a report that would 
provide an analysis of the Pilot Program covering the entire period 
during which the Pilot Program was in effect. The report would 
include, at a minimum: (1) Data and written analysis on the open 
interest and trading volume in the classes for which Quarterly 
Options Series were opened; (2) an assessment of the appropriateness 
of the option classes selected for the Pilot Program; (3) an 
assessment of the impact of the Pilot Program on the capacity of the 
Exchange, OPRA, and market data vendors (to the extent data from 
market data vendors is available); (4) any capacity problems or 
other problems that arose during the operation of the Pilot Program 
and how the Exchange addressed such problems; (5) any complaints 
that the Exchange received during the operation of the Pilot Program 
and how the Exchange addressed them; and (6) any additional 
information that would assist in assessing the operation of the 
Pilot Program. The report must be submitted to the Commission at 
least sixty (60) days prior to the expiration date of the Pilot 
Program. See Pilot Program Release, supra note 5.

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

[[Page 38853]]

    At any time within 60 days of 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 No. SR-CBOE-2007-70 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-2007-70. 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 Commissions 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-2007-70 and should be 
submitted on or before August 6, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-13696 Filed 7-13-07; 8:45 am]

BILLING CODE 8010-01-P