Document ID: SEC-2006-1101-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2006-08-28T04:00Z

[Federal Register: August 28, 2006 (Volume 71, Number 166)]
[Notices]               
[Page 50952]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28au06-78]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54338; File No. SR-CBOE-2006-49]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change and Amendment No. 
1 Thereto To Allow Listing of Up to Seven Short-Term Options Series per 
Class

August 21, 2006.
    On June 27, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange''), filed with the Securities and Exchange 
Commission (``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to modify its short-term option 
series pilot program (``Pilot Program'') \3\ to change the number of 
short-term series that may be listed in an options class from five to 
seven. The Exchange filed Amendment No. 1 with the Commission on July 
11, 2006.\4\ The amended proposal was published for comment in the 
Federal Register on July 19, 2006.\5\ No comments were received. This 
order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52011 (July 12, 
2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-63) (approving 
short-term option series on a pilot basis through July 12, 2006). 
The Pilot Program has since been extended through July 12, 2007. See 
Securities Exchange Act Release No. 53984 (June 14, 2006), 71 FR 
35718 (June 21, 2006) (SR-CBOE-2006-48).
    \4\ In Amendment No. 1, a partial amendment, the Exchange 
corrected a typographical error in the proposed rule text.
    \5\ See Securities Exchange Act Release No. 54133 (July 12, 
2006), 71 FR 41062.
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    The Pilot Program currently provides that the Exchange may open up 
to five short-term series for each expiration date in an approved 
class. CBOE has proposed to increase the maximum to seven. The Exchange 
has stated it would list approximately the same number of series with 
strike prices above and below the price of the underlying security or 
value of the index at about the time the series is opened. CBOE also 
proposed that, if the Exchange has opened less than seven series in a 
particular options class for a given expiration date, it could open 
additional series in that class if the Exchange deems it necessary to 
maintain an orderly market or meet customer demand, or when the current 
value of the underlying index moves substantially from the exercise 
price or prices of the series already opened.
    After careful review, the Commission finds that the proposal is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\6\ 
In particular, the Commission believes that the proposal is consistent 
with the requirements of section 6(b)(5) of the Act,\7\ which requires, 
among other things, that the rules of a national securities exchange be 
designed to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest. The proposal is a reasonable expansion of a 
Pilot Program that offers the market potentially useful products while 
not appearing to raise any concerns about quote capacity.\8\
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ The Exchange, should it wish to propose an extension, 
expansion, or permanent approval of the Pilot Program, must submit a 
report on the Pilot Program to the Commission. See Securities 
Exchange Act Release No. 51172 (February 9, 2005), 70 FR 7979 
(February 16, 2005). The Commission notes that the Exchange 
submitted a report on June 13, 2006, in connection with its filing 
to extend the Pilot Program through July 12, 2007. See Securities 
Exchange Act Release No. 53684 (June 14, 2006), 71 FR 35718 (June 
21, 2006).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-CBOE-2006-49), as 
amended, is approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
Nancy M. Morris,
Secretary.
[FR Doc. E6-14193 Filed 8-25-06; 8:45 am]

BILLING CODE 8010-01-P