Document ID: SEC-2009-0415-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2009-03-26T04:00Z

[Federal Register: March 26, 2009 (Volume 74, Number 57)]
[Notices]               
[Page 13281-13283]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr09-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59601; File No. SR-CBOE-2009-018]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change Related to 
Short Term Option Series

March 19, 2009.
    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 March 13, 2009, the Chicago Board Options Exchange, 
Incorporated (the ``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 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to make permanent its Short Term Option 
Series pilot program (the ``Weeklys Program''). In addition, the 
Exchange is proposing certain non-substantive changes to reorganize its 
rule text related to the Weeklys Program so that applicable terms are 
located within a single section of the relevant rules. Conforming, non-
substantive changes are being proposed to the text of the Exchange's 
Quarterly Option Series Pilot Program (the ``Quarterlys Program''). The 
text of the proposed rule change is available on the Exchange's Web 
site (http://www.cboe.org/Legal), at the Office of the Secretary, CBOE 
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.

[[Page 13282]]

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

1. Purpose
    On July 12, 2005, the Commission approved the Weeklys Program.\3\ 
The Weeklys Program allows CBOE to list and trade Short Term Option 
Series, which would expire one week after the date on which a series is 
opened. Under the Weeklys Program, CBOE can select up to five approved 
option classes on which Short Term Option Series could be opened. If 
selected for the Weeklys Program, the Exchange may open up to twenty 
Short Term Option Series for each expiration date in that class. The 
strike price of each Short Term Option Series are fixed at a price per 
share, with approximately the same number of strike prices above and 
below the value of the underlying security or calculated index value at 
about the time that the Short Term Option Series is opened.\4\ If the 
Exchange opens less than twenty Short Term Option Series for a given 
expiration date, additional series may be opened for trading on the 
Exchange when the Exchange deems it necessary to maintain an orderly 
market, to meet customer demand or when the current value of the 
underlying security or index moves substantially from the exercise 
price or prices of the series already opened. In any event, the total 
number of series for a given expiration date will not exceed twenty 
series.
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    \3\ See Securities Exchange Act Release No. 52011 (July 12, 
2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-63) (``Weeklys 
Program Approval Order''). The Weeklys Program has since been 
extended and is currently scheduled to expire on July 12, 2009. See 
Securities Exchange Act Release No. 53984 (June 14, 2006), 71 FR 
35718 (June 21, 2006) (SR-CBOE-2006-48) (immediately effective rule 
change extending the Weeklys Program, which would have otherwise 
expired on July 12, 2006, through July 12, 2007), 56050 (July 11, 
2007), 72 FR 39472 (July 18, 2007) (SR-CBOE-2007-76) (immediately 
effective rule change extending the Weeklys Program through July 12, 
2008); and 58094 (July 3, 2008), 73 FR 40000 (July 11, 2008) (SR-
CBOE-2008-70) (immediately effective rule change extending the 
Weeklys Program through July 12, 2009); see also Securities Exchange 
Act Release Nos. 54338 (August 21, 2006), 71 FR 50952 (August 28, 
2006) (SR-CBOE-2006-49) (order approving an amendment to the Weeklys 
Program that increased the number of series that may be listed for a 
class selected to participate in the Weeklys Program from five 
series to seven series), and 58870 (October 28, 2008), 73 FR 65430 
(November 3, 2008) (SR-CBOE-2008-110) (immediately effective rule 
change increasing the number of series that may be listed for a 
classes selected to participate in the Weeklys Program from seven 
series to twenty series).
    \4\ For example, if seven series are initially opened, there 
will be at least three strike prices above and three strike prices 
below the value of the underlying security or calculated index 
value.
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    The Exchange has selected the following four options classes to 
participate in the Weeklys 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). CBOE believes 
the Weeklys Program has been successful and well received by its 
members and the investing public for the nearly four years that it has 
been in operation as a pilot.
    CBOE is now proposing to make the Weeklys Program permanent. In 
support of approving the Weeklys Program on a permanent basis, and as 
required by the Weeklys Program Approval Order, the Exchange has 
submitted to the Commission a Weeklys Program report (the ``Report'') 
detailing the Exchange's experience with the Weeklys Program. 
Specifically, the Report contains data and written analysis regarding 
the four options classes included in the Weeklys Program. The Report 
was submitted under separate cover and seeks confidential treatment 
under the Freedom of Information Act.
    The Exchange believes there is sufficient investor interest and 
demand in the Weeklys Program to warrant its permanent approval. The 
Exchange believes that, for the nearly four years that it has been in 
operation, the Weeklys Program has provided investors with additional 
means of managing their risk exposures and carrying out their 
investment objectives. Furthermore, the Exchange has not experienced 
any capacity-related problems with respect to Short Term Option Series. 
The Exchange also represents that is has the necessary system capacity 
to continue to support the option series listed under the Weeklys 
Program.
    In seeking permanent approval, the Exchange is taking this 
opportunity to propose certain non-substantive changes to reorganize 
the rule text related to the Weeklys Program so that applicable terms 
are located within a single section of Rules 5.5, and 24.9. Conforming, 
non-substantive changes are being proposed to the text of the 
Exchange's Quarterlys Program. The revisions do not change the 
substance of either the Weeklys Program or the Quarterlys Program.
 2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act \5\ and the rules and regulations thereunder and, in 
particular, the requirements of Section 6(b) of the Act.\6\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \7\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest. The Exchange believes that permanent approval of 
the Weeklys Program will result in an ongoing benefit to investors, and 
will continue to allow them additional means to manage their risk 
exposures and carry out their investment objectives.
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    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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

[[Page 13283]]

Number SR-CBOE-018 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-2009-018. 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, on business days 
between the hours of 10 a.m. and 3 p.m., located at 100 F Street, NE., 
Washington, DC 20549. 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-2009-018 and should be 
submitted on or before April 16, 2009.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-6703 Filed 3-25-09; 8:45 am]

BILLING CODE 8010-01-P