Document ID: SEC-2006-0610-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2006-05-12T04:00Z

[Federal Register: May 12, 2006 (Volume 71, Number 92)]
[Notices]               
[Page 27757-27758]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my06-112]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53771; File No. SR-CBOE-2006-39]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change Regarding the 
e-DPM Membership Ownership Requirement

May 8, 2006.
    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 April 20, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the CBOE. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to clarify the application of the e-DPM 
membership ownership requirement. The text of the proposed rule change 
is set forth below. New text is in italics.
Chicago Board Options Exchange, Incorporated
* * * * *

Rule 8.92. Electronic DPM Program

    (a)-(c) No change.
    (d) Membership Requirement. Until July 12, 2007, each e-DPM 
organization is required to (i) own one Exchange membership for every 
30 products allocated to the e-DPM; or (ii) lease one Exchange 
membership for every 20 products allocated to the e-DPM. After July 12, 
2007, each e-DPM organization is required to own one Exchange 
membership for every 30 products allocated to the e-DPM. An Exchange 
membership shall include a transferable regular membership or a Chicago 
Board of Trade full membership that has effectively been exercised 
pursuant to Article Fifth(b) of the Certificate of Incorporation. 
Memberships used to satisfy this requirement may not be used for any 
other purpose including being leased to another member, to comply with 
the DPM membership ownership requirement of Rule 8.85(e), or for 
trading on the trading floor. For purposes of this Rule, the term 
``product'' refers to all options of the same single underlying 
security/value. An e-DPM organization shall be deemed to own or lease 
an Exchange membership for purposes of this paragraph (d) if its parent 
company owns or leases seats that are used solely for the e-DPM 
organization's e-DPM activities.
    (e) No change.
* * * * *

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

    In its filing with the Commission, CBOE 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. CBOE 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
    The Exchange proposes to clarify the application of CBOE Rule 
8.92(d)

[[Page 27758]]

relating to the e-DPM membership ownership requirement. That rule 
currently provides that, until July 12, 2007, each e-DPM organization 
is required to (i) own one Exchange membership for every 30 products 
allocated to the e-DPM; or (ii) lease one Exchange membership for every 
20 products allocated to the e-DPM. After July 12, 2007, each e-DPM 
organization is required to own one Exchange membership for every 30 
products allocated to the e-DPM.
    The rule currently also makes clear that an Exchange ``membership'' 
includes a transferable regular membership or a Chicago Board of Trade 
full membership that has effectively been exercised pursuant to Article 
Fifth(b) of the Certificate of Incorporation, and that memberships used 
to satisfy the requirement may not be used for any other purpose 
including being leased to another member, to comply with the DPM 
membership ownership requirement of CBOE Rule 8.85(e), or for trading 
on the Exchange's trading floor.
    The proposed rule change proposes to make clear that a parent 
company of an e-DPM entity may own or lease the required memberships on 
behalf of the e-DPM entity provided such memberships are dedicated 
solely to the e-DPM organization's e-DPM activity. For example, 
corporation XYZ owns multiple CBOE memberships and wholly owns e-DPM 
firm ABC. If some or all of the memberships owned by XYZ are used by 
ABC in connection with its e-DPM activity, those memberships would 
satisfy the requirements of CBOE Rule 8.92(d).
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.\3\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \4\ 
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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 CBOE 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 Number SR-CBOE-2006-39 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-2006-39. 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 Section, 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 CBOE. 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-2006-39 and should be 
submitted on or before June 2, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary. 6
 [FR Doc. E6-7267 Filed 5-11-06; 8:45 am]

BILLING CODE 8010-01-P