Document ID: SEC-2012-1778-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-11-02T04:00Z

[Federal Register Volume 77, Number 213 (Friday, November 2, 2012)]
[Notices]
[Pages 66194-66196]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26853]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68110; File No. SR-CBOE-2012-099]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Make Technical Change to SPY Position Limit 
Pilot Program and Representation Regarding Timing of Submission of 
Pilot Report

October 26, 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 October 17, 2012, the Chicago Board Options Exchange, 
Incorporated (the ``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 filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) 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.
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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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to make a technical amendment to Interpretation and 
Policy

[[Page 66195]]

.07 to Rule 4.11 to insert the specific expiration date for a pilot 
program that eliminates position and exercise limits for physically-
settled options on the SPDR S&P 500 ETF Trust (``SPY''). The Exchange 
is also making a clarifying representation regarding the timing of when 
the pilot report will be submitted to the Commission. 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'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 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 Commission recently noticed the Exchange's proposal to amend 
Interpretation and Policy .07 to Rule 4.11 to eliminate position and 
exercise limits for physically-settled SPY options purpose to a pilot 
program (``Program'').\5\ This rule change proposes to amend the text 
of Interpretation and Policy .07 to Rule 4.11 to insert the specific 
conclusion date of the Program, which is November 27, 2013.
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    \5\ See Securities Exchange Act Release No. 67937 (September 27, 
2012) (Notice of Filing and Immediate Effectiveness of Proposed Rule 
to Eliminate Position and Exercise Limits for Physically-Settled SPY 
Options on a Pilot Basis) (SR-CBOE-2012-091).
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    In addition, in the filing to establish the Program, CBOE committed 
to perform an analysis of the Program after the first twelve (12) 
months of the pilot program (the ``Pilot Report'').\6\ In connection 
with that commitment, CBOE represents that it will submit the Pilot 
Report to the Commission at least 30 days prior to the expiration date 
of the Program.
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    \6\ The Pilot Report will detail the size and different types of 
strategies employed with respect to positions established as a 
result of the elimination of position limits in SPY. In addition, 
the report will note whether any problems resulted due to the no 
limit approach and any other information that may be useful in 
evaluating the effectiveness of the Program. The Pilot Report will 
compare the impact of the Program, if any, on the volumes of SPY 
options and the volatility in the price of the underlying SPY 
shares, particularly at expiration. In preparing the report the 
Exchange will utilize various data elements such as volume and open 
interest. In addition the Exchange will make available to Commission 
staff data elements relating to the effectiveness of the pilot 
program
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2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 
6(b)(5)\7\ that an exchange have rules that are designed to promote 
just and equitable principles of trade, and to remove impediments to 
and perfect the mechanism for a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. In particular, the proposed rule change seeks to update rule 
text to insert the specific conclusion date for the Program in a manner 
that is consistent with the Commission's notice of the Program. In 
addition, the representation that the Exchange will submit the Pilot 
Report to the Commission at least 30 days prior to the expiration date 
of the Program clarifies the administration of the Program by the 
Exchange.
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    \7\ 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 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

    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

    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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
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 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \11\ permits the Commission to 
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, noting that doing 
so will permit the text of the Exchange's rules to reflect the 
expiration date of the Program as soon as possible in order to 
eliminate any potential confusion. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposal operative 
upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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).
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    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 Number SR-CBOE-2012-099 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 66196]]

Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-CBOE-2012-099. 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 the 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-2012-099 and 
should be submitted on or before November 23, 2012.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26853 Filed 11-1-12; 8:45 am]
BILLING CODE 8011-01-P