Document ID: SEC-2009-1022-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend Two Pilot Programs Related to the Exchange's Automated Improvement Mechanism
Posted Date: 2009-07-24T04:00Z

[Federal Register: July 24, 2009 (Volume 74, Number 141)]
[Notices]               
[Page 36803-36805]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24jy09-155]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60338; File No. SR-CBOE-2009-051]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Extend Two Pilot Programs Related to the Exchange's 
Automated Improvement Mechanism

July 17, 2009.
    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 16, 2009, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'')

[[Page 36804]]

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\ which renders the proposed rule change effective upon 
filing with the Commission. 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 extend two pilot programs related to the 
Exchange's Automated Improvement Mechanism. 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.

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
    In February, 2006, CBOE obtained approval of a filing adopting the 
AIM auction process.\5\ AIM exposes certain orders electronically to an 
auction process to provide such orders with the opportunity to receive 
an execution at an improved price. The AIM auction is available only 
for orders that an Exchange member represents as agent and for which a 
second order of the same size as the ``Agency Order'' (and on the 
opposite side of the market) is also submitted (effectively stopping 
the Agency Order at a given price).
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    \5\ See Securities Exchange Act Release No. 53222 (February 3, 
2006), 71 FR 7089 (February 10, 2006) approving SR-CBOE-2005-60.
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    Two components of AIM were approved on a pilot basis: (1) that 
there is no minimum size requirement for orders to be eligible for the 
auction, and (2) that the auction will conclude prematurely anytime 
there is a quote lock on the Exchange pursuant to Rule 6.45A(d).\6\ In 
connection with the pilot programs, the Exchange has submitted to the 
Commission reports providing detailed AIM auction and order execution 
data. In July 2006, the Exchange extended the pilot program until July 
18, 2007.\7\ In July 2007, the Exchange extended the pilot program 
until July 18, 2008.\8\ In July 2008, the Exchange extended the pilot 
program until July 18, 2009.\9\ The proposed rule change merely extends 
the duration of the pilot programs until July 17, 2010. Extending the 
pilots for an additional year will allow the Commission more time to 
consider the impact of the pilot programs on AIM order executions.
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    \6\ That rule relates to situations where a Market-Maker's quote 
interacts with the quote of another CBOE Market-Maker (i.e. when 
internal quotes lock).
    \7\ See Securities Exchange Act Release No. 54147 (July 14, 
2006), 71 FR 41487 (July 21, 2006) approving SR-CBOE-2006-64.
    \8\ See Securities Exchange Act Release No. 56094 (July 18, 
2007), 72 FR 40910 (July 25, 2007) approving SR-CBOE-2007-80.
    \9\ See Securities Exchange Act Release No. 58196 (July 18, 
2008), 73 FR 43803 (July 28, 2008) approving SR-CBOE-2008-76. In 
this filing, the Exchange agreed to provide additional information 
relating to the AIM auctions each month in order to aid the 
Commission in its evaluation of the pilot program. The Exchange will 
continue to provide this information.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act in general \10\ and furthers the objectives of 
Section 6(b)(5) \11\ in particular in that by allowing the Commission 
additional time to evaluate the AIM pilot programs, it should serve to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and protect investors and the 
public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78(f)(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

    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: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, 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) \12\ of the Act and Rule 19b-4(f)(6) 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to provide the Commission with written notice 
of its intention to file the proposed rule change along with a brief 
description of the text of the proposed rule change, at least five 
business days prior to filing the proposal with the Commission, or 
such shorter time as designated by the Commission. The Exchange has 
fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay, which would make the rule 
change operative upon filing. The Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest because such waiver would allow the AIM pilot 
programs to continue without interruption.\14\ Accordingly, the 
Commission designates the proposed rule change operative upon filing 
with the Commission.
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    \14\ For purposes only of waiving the operative delay for this 
proposal, 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 such 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.

[[Page 36805]]

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-2009-051 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-2009-051. 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-2009-051 and should be 
submitted on or before August 14, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-17638 Filed 7-23-09; 8:45 am]

BILLING CODE 8010-01-P