Document ID: SEC-2010-0802-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-06-02T04:00Z

[Federal Register: June 2, 2010 (Volume 75, Number 105)]
[Notices]               
[Page 30889-30890]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn10-142]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62170; File No. SR-CBOE-2010-048]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Permit CBOE To Open Short Term Option Series on 
Thursdays

May 25, 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 May 19, 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, II, and III 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

    CBOE proposes to modify its rules to permit the Exchange, on any 
Thursday or Friday, to open Short Term Option Series that expire on the 
Friday of the following business week. The Exchange is not proposing 
any rule text changes. The rule proposal 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Securities and Exchange Commission previously approved CBOE's 
proposed rule change to permanently establish the Short Term Option 
Series Pilot Program (``Program'').\5\ The Program allows CBOE to list 
and trade equity and index option series that expire one week after 
being opened for trading. Specifically, Rules 5.5(d) and 24.9 provide 
that, after an option class has been approved for listing and trading 
on the Exchange, the Exchange may open for trading on any Friday that 
is a business day series of options on that class that expire on the 
next Friday that is a business day.\6\ Under the Program, CBOE may 
select up to five approved option classes on which Short Term Options 
Series may be opened. The Exchange has selected the following four 
option classes to participate in the Program: S&P 500 Index options 
(SPX), S&P 100 Index American-style options (OEX), Mini-S&P 500 Index 
options (XSP), and S&P 100 Index European-style options (XEO).
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    \5\ See Securities Exchange Act Release No. 59824 (April 27, 
2009), 74 FR 20518 (May 4, 2009) (SR-CBOE-2009-018).
    \6\ If the Exchange is not open for business on a Friday, the 
Short Term Opening Date will be the first business day immediately 
prior to that Friday. Similarly if the Exchange is not open for 
business on a Friday, the Short Term Option Expiration Date will be 
the first business day immediately prior to that Friday.
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    The purpose of this filing is to permit the Exchange to open Short 
Term Option Series on any Thursday (or Friday) that expire on the 
Friday of the following business week. In support of this modification, 
the Exchange states that it has received requests to begin certain 
Short Term Options on Thursday so that market participants may have an 
opportunity to ``roll'' expiring positions; that is, trade out of an 
expiring Short Term Option Series and re-establish a new position in 
Short Term Option Series expiring one week later. Since the last 
trading day for A.M.-settled Short Term Options on indexes is generally 
a Thursday, and new A.M.-settled Short Term Option Series on indexes 
are generally listed on Friday, new and expiring A.M.-settled Short 
Term Option Series on indexes are never available concurrently.
    As a result, it is impossible to implement a position roll in A.M.-
settled Short Term Options on indexes. The Exchange has been advised 
that opening A.M.-settled Short Term Options on indexes just one day 
earlier, and providing an opportunity to roll, would enhance the value 
A.M.-settled Short Term Options on indexes as a risk management tool.
    In order to avoid investor confusion, the Exchange is proposing to 
permit the listing of all Short Term Option series (equity and index) 
on any Thursday or Friday. As proposed, the rule changes give the 
Exchange the flexibility to list Short Term Option series on any 
Thursday or Friday, and do not restrict listing to a particular day.
2. Statutory Basis
    The Exchange believes this rule proposal 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.\7\ Specifically, the Exchange believes that the 
proposed rule change is consistent with the Section 6(b)(5) Act \8\ 
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. In particular, the

[[Page 30890]]

proposed rule change will benefit market participants by allowing them 
to more closely manage their risk exposures and carry out their 
investment objectives.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    Because the foregoing proposed rule does not (i) significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
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, provided that the self-regulatory 
organization has given the Commission written notice of its intent to 
file 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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) requires the 
self-regulatory organization to submit to the Commission written 
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. The 
Exchange has satisfied this requirement.
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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-2010-048 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-2010-048. 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 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-2010-048 and should be 
submitted on or before June 23, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13160 Filed 6-1-10; 8:45 am]
BILLING CODE 8010-01-P