Document ID: SEC-2012-1010-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-06-27T04:00Z

[Federal Register Volume 77, Number 124 (Wednesday, June 27, 2012)]
[Notices]
[Pages 38362-38363]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15634]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67231; File No. SR-CBOE-2012-057]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Increase the Class Quoting Limit for Options on 
Facebook

 June 21, 2012.
    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 June 15, 2012, 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 and II 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

    CBOE proposes to amend the Class Quoting Limit (``CQL'') for 
options on Facebook. The text of the proposed rule change is available 
on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary and at the Commission's Public Reference Room.

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 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
    A CQL is the maximum number of Trading Permit Holders (``TPHs'') 
that may quote electronically in a given product.\3\ CBOE Rule 8.3A, 
Interpretation .01 states that the CQL for products trading on the 
Exchange's Hybrid Trading System (``Hybrid'') is 50.\4\ However, the 
President of the Exchange may increase the CQL for an existing or new 
product if he determines that it would be appropriate.\5\ Such an 
increase can be accomplished by submitting to the Commission a rule 
filing pursuant to Section 19b(3)(A) of the Act and announcing the 
increase to TPHs via Information Circular.\6\ The Exchange has 
previously increased the CQLs for other products to 60 via rule 
filing.\7\
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    \3\ See CBOE Rule 8.3A.
    \4\ See CBOE Rule 8.3A, Interpretation .01(a).
    \5\ See CBOE Rule 8.3A, Interpretation .01(b).
    \6\ See CBOE Rule 8.3A, Interpretation .01(c).
    \7\ See Securities Exchange Act Release No. 55664 (April 24, 
2007), 72 FR 23867 (May 1, 2007) (SR-CBOE-2007-36), which increased 
the CQLs for Apple Inc. and Research In Motion to 60.
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    Since the Exchange recently began electronically trading options on 
Facebook, trading volume and TPH interest in quoting on that product 
has increased rapidly. As such, CBOE's President has determined that it 
would be appropriate to increase the CQL for Facebook from 50 to 60. 
The Exchange has prepared an Information Circular to inform TPHs of 
this change, and hereby submits this proposed rule filing to effect 
such change. The Exchange has the system capacity to manage the 
proposed increase.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations

[[Page 38363]]

thereunder applicable to the Exchange and, in particular, the 
requirements of Section 6(b) of the Act.\8\ Specifically, the Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5) \9\ 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. Increasing 
the CQL for Facebook allows more Market-Makers to quote in that 
product, which provides greater volume and more trading activity for 
all market participants, thereby perfecting the mechanism for a free 
and open market.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 that is 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 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change 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 after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give 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 Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange notes that 
waiving the 30-day operative delay will enable the additional Market-
Makers to start quoting on Facebook immediately, thereby providing 
greater volume and more trading activity in that product. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow CBOE to respond without delay to what it has identified 
to be current market demand for increased quoting capacity in options 
overlying Facebook stock and thereby will help accommodate current 
market interest. Further, the Exchange has represented that it has the 
systems capacity to accommodate the additional quotation activity. 
Accordingly, the Commission designates the proposed rule change to be 
operative upon filing with the Commission.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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.

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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2012-057 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-2012-057. This file 
number should be included on the subject line if email 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 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-2012-057 and should be 
submitted on or before July 18, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15634 Filed 6-26-12; 8:45 am]
BILLING CODE 8011-01-P