Document ID: SEC-2009-0861-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; One Chicago, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Widening the Bid/Ask Spread for Quoting Market-Makers
Posted Date: 2009-06-25T04:00Z

[Federal Register: June 25, 2009 (Volume 74, Number 121)]
[Notices]               
[Page 30345-30346]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn09-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60143; File No. SR-OC-2009-02]

 
Self-Regulatory Organizations; One Chicago, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Widening the Bid/
Ask Spread for Quoting Market-Makers

June 19, 2009.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-7 under the Act \2\ notice is hereby given 
that on June 9, 2009, One Chicago, LLC (``OneChicago'' or ``OCX'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons. 
OneChicago also has filed the proposed rule change with the Commodity 
Futures Trading Commission (``CFTC'') under Section 5c(c) of the 
Commodity Exchange Act \3\ on June 9, 2009.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
    \3\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    OneChicago is proposing to amend its Rule 515(n)(C)(1)(y) to change 
the quoting requirements for Market Makers. Additionally, OCX is 
proposing to amend its ``Market Maker Registration Policy and 
Procedures'' to reflect this amendment.
    Presently a market-maker, when providing quotations, quotes with a 
maximum bid/ask spread of no more than the greater of $0.20 (the ``20 
Cent Spread'') or 150% of the bid/ask spread in the primary market for 
the security underlying each Contract (the ``150% Spread''). The 
proposed rule change will raise the 20 Cent Spread to $5. A copy of 
this filing is available on the Exchange's Web site at http://
www.onechicago.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 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. OneChicago 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 purpose of this proposed rule change is to modify the quoting 
requirements for OCX market makers. Presently a market-maker, when 
providing quotations, quotes with a maximum bid/ask spread of no more 
than the greater of the 20 Cent Spread or the150% Spread. The proposed 
rule change will raise the 20 Cent Spread to $5. Currently, the 
volatile market conditions have caused several OneChicago market makers 
to either stop quoting in a particular name or seek relief from 
OneChicago to widen their quotes to a competitive level, which could be 
$5.
    The proposed rule change would harmonize the maximum bid/ask spread 
requirements with those of the listed options exchanges, e.g. the 
Chicago Board Options Exchange (CBOE) and the International Securities 
Exchange (ISE). Both of those exchanges permit ``bidding and offering 
so as to create differences of no more than $5 between the bid and 
offering following the opening rotation * * *.''
    The Exchange believes that the 20 Cent Spread is no longer 
necessary or appropriate considering the increased volatility of the 
underlying securities. The Exchange further believes that the current 
20 Cent Spread could have a negative effect on investors because market 
makers, rather than complying with these requirements, will stop 
quoting a security futures product altogether, leaving the investor 
with the possibility of an illiquid position. The Exchange has been 
able to mitigate this problem by granting ``relief'' from the 20 Cent 
Spread ``during unusual market

[[Page 30346]]

conditions,'' \4\ such as those in the current environment. 
Nevertheless, OCX believes that for the integrity of the marketplace, 
that the $5 spread be codified.
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    \4\ Exchange Rule 515(n)(C)(1).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act \5\ in that it is designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to protect investors and the public interest, and to remove impediments 
to and perfect the mechanism for a free and open market and a national 
market system. Further, this proposed rule change is nearly identical 
to those of the CBOE \6\ and the ISE \7\ and therefore under Section 
6(h)(3)(C), the requirements for listing standards and conditions for 
trading for security futures must ``be no less restrictive than 
comparable listing standards for options traded on a national 
securities exchange * * *.''
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    \5\ 15 U.S.C. 78f (b)(5).
    \6\ CBOE Rule 8.7(b)(iv)(C).
    \7\ ISE Rule 803(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    OneChicago does not believe that the proposed rule change will have 
an impact on competition.

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

    Comments on the OneChicago proposed rule change have not been 
solicited and none has been received.

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

    The proposed rule change will become effective on June 9, 2009. At 
any time within 60 days of the date of effectiveness of the proposed 
rule change, the Commission, after consultation with the CFTC, may 
summarily abrogate the proposed rule change and require that the 
proposed rule change be refilled in accordance with the provisions of 
Section 19(b)(1) of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(1).
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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-OC-2009-02 on the subject line.

Paper Comments:

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OC-2009-02. 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 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-OC-2009-02 and should be 
submitted on or before July 16, 2009.

    For the Commission, by the Division of Trading and Markets, 
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. E9-14958 Filed 6-24-09; 8:45 am]

BILLING CODE 8010-01-P