Document ID: SEC-2007-1208-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-08-29T04:00Z

[Federal Register: August 29, 2007 (Volume 72, Number 167)]
[Notices]               
[Page 49752-49753]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29au07-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56302; File No. SR-CBOE-2007-88]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change To Amend its 
Rule Regarding the Hybrid Opening System Opening Rotations

August 22, 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 July 25, 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, II, and III below, which Items have been prepared by the 
Exchange. 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 Exchange is proposing to amend its rule related to opening 
rotations conducted via the Hybrid Opening System (``HOSS''). The text 
of the proposed rule change is available on the Exchange's Web site 
(http://www.cboe.com), at the Office of the Secretary, CBOE 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend its HOSS procedures contained in 
CBOE Rule 6.2B. HOSS is the Exchange's automated system for initiating 
trading at the beginning of each trading day. The HOSS procedures 
currently provide that an opening rotation for an options class shall 
be initiated by HOSS at a randomly selected time within a number of 
seconds after the primary market \3\ for the underlying security opens 
(or after 8:30 a.m. (Central Time) for index options).\4\
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    \3\ For purposes of CBOE Rule 6.2B, the Exchange has interpreted 
the ``primary market'' to be the primary listing market.
    \4\ For purposes of CBOE Rule 6.2B, when the underlying market 
``opens'' is determined, on a class-by-class basis, to be either the 
opening trade and/or opening quote (or whichever occurs first). Once 
the underlying market open occurs, HOSS initiates the overlying 
option class opening and sends a Rotation Notice to market 
participants. Thereafter, HOSS will open the series of a class in a 
random order.
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    The Exchange is proposing to amend Rule 6.2B to permit the opening 
rotation for an options class to be initiated by HOSS after the opening 
of the underlying security on either the primary listing market, the 
primary volume market \5\ or the first market to open the underlying 
security. Determinations on the particular configuration for the market 
for the underlying security would be made on a class-by-class by the 
appropriate Exchange Procedure Committee and announced to the 
membership via Regulatory Circular. The Exchange believes that the 
proposed rule change will provide it with more flexibility to determine 
when to permit the HOSS opening rotation process to begin, which should 
contribute to the Exchange's ability to conduct openings in a fairly 
and orderly manner.
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    \5\ For purposes of CBOE Rule 6.2B, the primary volume market 
will be defined as the market with the most liquidity in that 
underlying security for the previous two calendar months.
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2. Statutory Basis
    By allowing for more flexibility in the manner in which HOSS is 
programmed to initiate an opening rotation, the Exchange is enhancing 
its ability to conduct fair and orderly openings, and, as such, the 
Exchange believes this 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, to prevent fraudulent and 
manipulative acts, to remove impediments to and to perfect the 
mechanism for a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \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 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

[[Page 49753]]

(ii) as to which the self-regulatory organization 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-2007-88 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-2007-88. 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 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-2007-88 and should be 
submitted on or before September 19, 2007.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-17079 Filed 8-28-07; 8:45 am]

BILLING CODE 8010-01-P