Document ID: SEC-2006-0259-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2006-03-01T05:00Z

[Federal Register: March 1, 2006 (Volume 71, Number 40)]
[Notices]               
[Page 10574-10576]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr06-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53348; File No. SR-CBOE-2006-11]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the Extension of a Pilot Program That Increases 
the Standard Position and Exercise Limits for Certain Options Traded on 
the Exchange

February 22, 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 January 31, 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 and II below, which Items have been prepared by the CBOE. The 
Exchange has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. 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).
    \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 CBOE proposes to extend an existing pilot program that 
increases the standard position and exercise limits for certain options 
traded on the Exchange (``Pilot Program''). The text of the proposed 
rule change is available on the CBOE's Web site (http://www.cboe.com), 

at the CBOE's principal office, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the 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. 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
    The Pilot Program, as previously approved by the Commission, 
provides for an increase to the standard position and exercise limits 
for equity option contracts and for options on QQQQs for a six-month 
period.\5\ Specifically, the

[[Page 10575]]

Pilot Program increased the applicable position and exercise limits for 
equity options on the QQQQ in accordance with the following levels:
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    \5\ The proposed extension is actually for six months and ten 
days. The Pilot Program, which the Commission approved for February 
23, 2005, and extended for an additional six months, is set to 
expire on February 23, 2006. See Securities Exchange Act Release No. 
51244 (February 23, 2005) 70 FR 10010 (March 1, 2005) (order 
approving SR-CBOE-2003-30, as amended) (``Pilot Program Order''). 
See also Securities Exchange Act Release No. 52262 (August 15, 
2005), 70 FR 48995 (August 22, 2005) (order approving SR-CBOE-2005-
61).

------------------------------------------------------------------------
   Current equity option contract        Pilot program equity option
             limit \6\                          contract limit
------------------------------------------------------------------------
                         13,500                               25,000
                         22,500                               50,000
                         31,500                               75,000
                         60,000                              200,000
                         75,000                              250,000
------------------------------------------------------------------------
                               CurrenPilot program QQQQ option contract
                                                               limit
------------------------------------------------------------------------
                        300,000                              900,000
------------------------------------------------------------------------

    The purpose of the proposed rule change is to extend the Pilot 
Program for an additional period of slightly over six months, through 
September 1, 2006. The Exchange believes that extending the Pilot 
Program for six months is warranted due to the positive feedback from 
members and for the reasons cited in the original rule filing that 
proposed the adoption of the Pilot Program.\7\ Also, the Exchange has 
not encountered any problems or difficulties relating to the Pilot 
Program since its inception. For these reasons, the Exchange requests 
that the Commission extend the Pilot Program for the aforementioned 
additional period.
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    \6\ Except when the Pilot Program is in effect.
    \7\ See Pilot Program Order, supra note5.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements provided under Section 6(b)(5) of the Act 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule change will impose 
any burden on competition.

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\10\ 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day pre-operative delay. The Commission 
believes that waiving the 30-day pre-operative delay is consistent with 
the protection of investors and in the public interest because it will 
allow the Pilot Program to continue uninterrupted.\12\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ Id.
    \12\ For the purposes only of waiving the pre-operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 
The Commission is also exercising its authority to waive the five-
day pre-filing requirement.
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    At any time within 60 days of the filing of the 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 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 from (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File No. SR-CBOE-2006-11 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-CBOE-2006-11. 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. Copies of such filing will also 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 No. SR-CBOE-2006-11 and should be 
submitted on or before March 22, 2006.

[[Page 10576]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. 06-1907 Filed 2-28-06; 8:45 am]

BILLING CODE 8010-01-M