Document ID: SEC-2010-1695-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-11-04T04:00Z

[Federal Register: November 4, 2010 (Volume 75, Number 213)]
[Notices]               
[Page 68015-68017]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04no10-86]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63213; File No. SR-CBOE-2010-098]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Market Maker Tier Appointment Cost for SPX

October 29, 2010.
    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 25, 2010, the Chicago Board Options Exchange, 
Incorporated (``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

    The Exchange proposes to amend CBOE rules relating to the 
appointment cost for options on the Standard and Poor's 500 Index 
(SPX). 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.

[[Page 68016]]

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

1. Purpose
    The purpose of this rule change is to amend CBOE Rule 8.3, 
Appointment of Market-Makers, to revise the appointment cost for SPX 
options. Specifically, CBOE is proposing to amend Rule 8.3(c)(iii) to 
increase the appointment cost for SPX from .95 to 1.0. Among other 
reasons, the Exchange believes the appointment cost change is 
reasonable in light of the planned introduction of a multi-platform 
feature to SPX (discussed below).
    By way of background, CBOE currently operates the Hybrid Trading 
System and the Hybrid 3.0 Platform.\5\ The particular trading platform 
on which index options and options on exchange-traded funds (``ETFs'') 
are traded are designated by the Exchange on a class-by-class basis 
pursuant to Rule 8.14, Index Hybrid Trading System Classes: Market-
Maker Participants. However, CBOE recently submitted a rule change to 
amend Rule 8.14 to provide that, for each Hybrid 3.0 class, the 
Exchange may determine to authorize a group of series of the class for 
trading on the Hybrid Trading System.\6\
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    \5\ The ``Hybrid Trading System'' refers to the Exchange's 
trading platform that allows Market-Makers to submit electronic 
quotes in their appointed classes. The ``Hybrid 3.0 Platform'' is an 
electronic trading platform on the Hybrid Trading System that allows 
one or more quoters to submit electronic quotes which represent the 
aggregate Market-Maker quoting interest in the series for the 
trading crowd. See Rule 1.1(aaa).
    \6\ See SR-CBOE-2010-095.
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    Currently, all series of the SPX option class trade on the Hybrid 
3.0 Platform. Pursuant to Rule 8.14, as amended, the Exchange may 
determine to designate a group of series in the SPX index option class 
for trading on the Hybrid Trading System. In conjunction with this 
change, the Exchange is proposing to increase the SPX appointment cost 
from .95 back to 1.0 effective December 1, 2010.\7\ The appointment 
cost would confer the right to trade in open outcry the SPX series that 
are traded on the Hybrid 3.0 Platform and also confer the right to 
trade any group of series of SPX that the exchange may determine to 
authorize for trading on the Hybrid Trading System pursuant to Rule 
8.14, as amended.
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    \7\ The Exchange notes that the appointment cost for SPX had 
previously been 1.0. See Securities Exchange Act Release No. 57752 
(May 1, 2008), 73 FR 25813 (May 7, 2008) (SR-CBOE-2008-051) 
(immediately effective rule change that changed the SPX appointment 
cost from 1.0 to .95).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\8\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) Act \9\ 
requirements that the rules of an exchange be designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts and, in general, to protect investors and the public 
interest. Among other reasons, the Exchange believes that the 
appointment cost change for SPX is reasonable in light of the 
introduction of the multi-platform feature to SPX.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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

    The Exchange neither solicited nor received comments on the 
proposal.

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

    Because the foregoing 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 if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\10\ and Rule 19b-4(f)(6)(iii) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the 
Commission 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. CBOE has satisfied this requirement.
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2010-098 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-CBOE-2010-098. 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 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2010-098 and should be submitted on or before November 26, 2010.

[[Page 68017]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27858 Filed 11-3-10; 8:45 am]
BILLING CODE 8011-01-P