Document ID: SEC-2007-0835-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-06-18T04:00Z

[Federal Register: June 18, 2007 (Volume 72, Number 116)]
[Notices]               
[Page 33547-33549]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn07-90]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55894; File No. SR-CBOE-2007-57]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Adopt an Interpretation to CBOE Rule 8.95

 June 11, 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 May 31, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``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 substantially 
prepared by the CBOE. The Exchange has designated this proposal as one 
constituting a stated interpretation with respect to the meaning, 
administration, or enforcement of an existing rule under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. The 
Commission is publishing this notice to

[[Page 33548]]

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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to adopt an interpretation to CBOE Rule 8.95 
clarifying that in the event an existing Designated Primary Market-
Maker (``DPM'') organization is authorized to act as an Off-Floor DPM 
in one or more option classes, such authorization will be considered a 
reallocation of securities pursuant to CBOE Rule 8.95. The text of the 
proposed rule change is available on CBOE's Web site (http://www.cboe.com/Legal
), at the CBOE'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 CBOE 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 CBOE 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
    The Exchange proposes to adopt an interpretation to CBOE Rule 8.95 
clarifying that in the event an existing DPM organization is authorized 
to act as an Off-Floor DPM in one or more option classes, such 
authorization will be considered a reallocation of securities pursuant 
to CBOE Rule 8.95. In adopting this interpretation, the appropriate 
Exchange committee will retain jurisdiction for the first 12 months 
following the reallocation of securities to review the Off-Floor DPM's 
market performance commitments that were made in connection with the 
appropriate Exchange committee's authorization to permit the DPM 
organization to act as an Off-Floor DPM.
    Pursuant to CBOE Rule 8.83(g), an On-Floor DPM may request that the 
appropriate Exchange committee authorize it to operate as an Off-Floor 
DPM in one or more equity option classes traded on the Hybrid Trading 
System.\5\ If an On-Floor DPM is approved to act as an Off-Floor DPM, 
CBOE proposes to adopt an interpretation to CBOE Rule 8.95 clarifying 
that the option classes in which the On-Floor DPM is authorized to act 
as an Off-Floor DPM are considered a reallocation of securities.
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    \5\ See Securities Exchange Act Release No. 34-55531 (March 26, 
2007) 72 FR 15736 (April 2, 2007) (Order approving SR-CBOE-2006-94).
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    Consistent with the way CBOE Rule 8.95(c) is currently applied to 
allocations and reallocations of securities, the appropriate Exchange 
committee will then have the flexibility during the first 12 months 
following the reallocation of securities to the Off-Floor DPM to 
conduct a review at any time during that first 12 months to ensure that 
the Off-Floor DPM is adhering to any market performance commitments 
made by the DPM organization in connection with being authorized to act 
as an Off-Floor DPM. If the Off-Floor DPM is not adhering to the market 
performance commitments that it made in connection with being 
authorized to act as an Off-Floor DPM, then the appropriate Exchange 
committee may remove the allocated security from the Off-Floor DPM and 
reallocate the security pursuant to CBOE Rule 8.95(c). This in turn 
gives Off-Floor DPMs incentive to abide by these commitments.
2. Statutory Basis
    The Exchange believes that its proposal 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 perfect the mechanism 
of 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

    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.

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

    No written comments were either solicited or receive d by the 
Exchange.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \8\ and Rule 19b-4(f)(1) thereunder,\9\ 
because it constitutes a stated policy, practice, or interpretation 
with respect to the meaning, administration, or enforcement of an 
existing rule.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.\10\
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    \10\ See 15 U.S.C. 78s(b)(3)(C).
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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-2007-57 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-2007-57. 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

[[Page 33549]]

provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of the filing 
also will be available for inspection and copying at the principal 
office of the 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 available publicly. All submissions should refer to File Number 
SR-CBOE-2007-57 and should be submitted on or before July 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-11628 Filed 6-15-07; 8:45 am]

BILLING CODE 8010-01-P