Document ID: SEC-2008-0498-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-04-02T04:00Z

[Federal Register: April 2, 2008 (Volume 73, Number 64)]
[Notices]               
[Page 18016-18018]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap08-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57568; File No. SR-CBOE-2008-32]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Off-Floor DPMs

March 26, 2008.
    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 24, 2008, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the

[[Page 18017]]

``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been substantially 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 DPMs. The 
text of the proposed rule change is available at the Exchange, at the 
Commission's Public Reference Room, and at http://www.cboe.org/Legal.

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 Exchange 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 these 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 aspects of such 
statements.

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

1. Purpose
    Last year, CBOE amended its rules to provide DPMs with the 
flexibility to operate remotely away from CBOE's trading floor as a so-
called ``Off-Floor DPM.'' \5\ At the time, CBOE stated that a DPM could 
function as an Off-Floor DPM in equity option classes. CBOE now 
proposes to amend its rules to provide DPMs with the same flexibility 
to operate as an Off-Floor DPM in any option class traded on the Hybrid 
Trading System and Hybrid 2.0 Platform. Specifically, CBOE proposes to 
amend CBOE Rule 8.80 and CBOE Rule 8.83, which describe the option 
classes in which an Off-Floor DPM can function.\6\
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    \5\ See Securities Exchange Act Release No. 55531 (March 26, 
2007), 72 FR 15736 (April 2, 2007) (SR-CBOE-2006-94) (the ``original 
filing'').
    \6\ CBOE also proposes to amend CBOE Rule 6.45B to clarify, as 
it did CBOE Rule 6.45A in the original filing, that the DPM 
participation entitlement for orders represented in open outcry is 
only applicable to an On-Floor DPM. See CBOE Rules 8.83 and 8.87.
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    CBOE proposes to clarify that an Off-Floor DPM can function in 
option classes traded on the Hybrid 2.0 Platform \7\ in addition to the 
Hybrid Trading System.\8\ At the time CBOE's rule filing to allow Off-
Floor DPMs was approved, CBOE's trading platforms included the Hybrid 
Trading System and the Hybrid 2.0 Platform, the latter of which was 
encompassed in the definition of Hybrid Trading System under CBOE Rule 
1.1(aaa). Later in 2007, however, CBOE established a new trading 
platform--the Hybrid 3.0 Platform.\9\ Accordingly, CBOE wishes to 
clarify that Off-Floor DPMs can function in the Hybrid Trading System 
and the Hybrid 2.0 Platform, but not the Hybrid 3.0 Platform.
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    \7\ The Hybrid 2.0 Platform is an enhanced platform that allows 
remote quoting by authorized categories of members.
    \8\ See CBOE Rule 1.1(aaa).
    \9\ See Securities Exchange Act Release No. 55874 (June 7, 
2007), 72 FR 32688 (June 13, 2007) (SR-CBOE-2006-101).
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    By expanding the types of option classes in which an Off-Floor DPM 
can function, CBOE believes that the rule change will provide 
flexibility to member organizations that may wish to function remotely 
in various types of option classes. It will further provide flexibility 
to CBOE when allocating option classes, as CBOE could determine to 
allocate non-equity option classes to a DPM or an Off-Floor DPM. 
Expanding the category of option classes in which a DPM can function as 
an Off-Floor DPM also removes a potential operational issue for a DPM 
that has been allocated equity and non-equity option classes. Absent 
this change to CBOE's rules, a DPM organization that is approved to 
function as an Off-Floor DPM would need to maintain a presence on the 
trading floor as a DPM for its non-equity option classes, while being 
permitted to function as an Off-Floor DPM in its equity option classes. 
Accordingly, CBOE believes that the proposed rule change is designed to 
promote just and equitable principles of trade and also promotes 
efficiency.
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.\10\ Specifically, the Exchange believes the 
proposed rule change is consistent with the requirements of Section 
6(b)(5) of the Act \11\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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

    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 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)(iii) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6) under the Act 
requires a self-regulatory organization to give written notice of a 
proposed rule change filed pursuant to this subsection at least five 
business days prior to filing. CBOE complied with 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.

[[Page 18018]]

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-2008-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-32. 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-2008-32 and should be 
submitted on or before April 23, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary. 6
 [FR Doc. E8-6733 Filed 4-1-08; 8:45 am]

BILLING CODE 8011-01-P