Document ID: SEC-2012-0588-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-04-12T04:00Z

[Federal Register Volume 77, Number 71 (Thursday, April 12, 2012)]
[Notices]
[Pages 22012-22015]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8839]

[[Page 22012]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66769; File No. SR-CBOE-2012-033]

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

April 6, 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 March 30, 2012, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') 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 Exchange. 
The Exchange has designated the proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A) 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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

    The Exchange is proposing to provide for additional time to 
implement new system enhancements for trading Flexible Exchange Options 
(``FLEX Options'') \5\ that were the subject of another rule change 
filing that was recently approved. No changes to the rule text are 
necessary with respect to this revised implementation plan. The 
Exchange is also proposing to make certain amendments to its rules for 
trading FLEX Options. The text of the proposed rule change is available 
on the Exchange's Web site (http://www.cboe.org/legal), at the 
Exchange's Office of the Secretary, and at the Commission's Public 
Reference Room.
---------------------------------------------------------------------------

    \5\ FLEX Options provide investors with the ability to customize 
basic option features including size, expiration date, exercise 
style, and certain exercise prices. FLEX Options can be FLEX Index 
Options or FLEX Equity Options. In addition, other products are 
permitted to be traded pursuant to the FLEX trading procedures. For 
example, credit options are eligible for trading as FLEX Options 
pursuant to the FLEX rules in Chapters XXIVA and XXIVB. See CBOE 
Rules 24A.1(e) and (f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 
24B.4(b)(1) and (c)(1), and 28.17. The rules governing the trading 
of FLEX Options on the FLEX Request for Quote (``RFQ'') System 
platform (which is limited to open outcry trading only) are 
contained in Chapter XXIVA. The rules governing the trading of FLEX 
Options on the FLEX Hybrid Trading System platform (which combines 
both open outcry and electronic trading) are contained in Chapter 
XXIVB. The Exchange notes that, currently, all FLEX Options are 
traded on the FLEX Hybrid Trading System platform.
---------------------------------------------------------------------------

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
    On February 7, 2012, the Exchange received approval of a rule 
change filing, SR-CBOE-2011-122, which amended certain rules pertaining 
to the electronic trading of FLEX Options on the Exchange's FLEX Hybrid 
Trading System platform (the ``FLEX System'' or ``System'').\6\ In that 
filing, the Exchange indicated that it is in the process of enhancing 
the FLEX System in order to further integrate it with the Exchange's 
existing technology platform utilized for Non-FLEX trading. In 
conjunction with the enhancement, the filing made some modifications to 
the existing electronic trading processes utilized on the FLEX System 
platform. The filing made other amendments to eliminate certain 
European-Capped style settlement and currency provisions with the FLEX 
rules that pertain to both electronic and open outcry trading. The 
filing also indicated that the Exchange planned to announce to its 
Trading Permit Holders (``TPHs'') via Regulatory Circular an 
implementation schedule for transitioning from the existing technology 
platform to the new technology platform once the rollout schedule is 
finalized. The filing indicated that the Exchange intended to begin 
implementation by no later than March 30, 2012, with the specific 
implementation schedule to be announced via Regulatory Circular, as 
stated above. The Exchange intended to transition a few classes at a 
time and anticipated full implementation within approximately one to 
three weeks of the initial transition. Finally, in the event that 
implementation did not begin by March 30, 2012, the Exchange 
represented that it would file a proposed rule change to establish the 
revised time period.
---------------------------------------------------------------------------

    \6\ Securities Exchange Act No. 66348 (February 7, 2012), 77 FR 
8304 (February 14, 2012) (SR-CBOE-2011-122).
---------------------------------------------------------------------------

    The Exchange has determined that it needs some more time to 
implement the FLEX System enhancements. Therefore, in accordance with 
rule change filing SR-CBOE-2011-122, the Exchange is submitting this 
instant proposed rule change filing to establish a revised time period. 
Rather than March 30, 2012, the Exchange now intends to begin 
implementation by no later than April 30, 2012, with the specific 
implementation schedule to be announced via Regulatory Circular. The 
Exchange still intends to transition a few classes at a time and 
anticipates full implementation within approximately one to three weeks 
of the initial transition. Consistent with the prior rule change 
filing, in the event the implementation does not begin by April 30, 
2012, the Exchange represents that it will file another proposed rule 
change to establish the revised time period.
    The Exchange is also proposing to take this opportunity to make 
certain other changes to the FLEX rules. First, as noted above, in rule 
change filing SR-CBOE-2011-122 the Exchange deleted references to 
certain European-Capped style settlement and foreign currency 
provisions (and related index multiplier provisions for such 
currencies).\7\ The European-Capped style and foreign currency 
provisions have generally not been actively utilized.\8\ Since the 
Exchange no longer plans to support foreign currency settlements in the 
new FLEX System, the Exchange limited the currency for FLEX Index 
Options to U.S. dollars.\9\ Because the European-Capped style exercise 
and foreign currency provisions are no longer applicable, the Exchange 
is now proposing to delete certain other superfluous and unnecessary 
references to European-Capped style exercise

[[Page 22013]]

options contained elsewhere in Rules 24A.4(b)(2) and 24B.4(b)(2) and to 
currencies (and related index multiplier provisions for currencies) 
contained elsewhere in Rules 24A.1(i), (o) and (q), 24A.4(a)(1) and 
(3)(i), 24A.9(a), 24B.1(m), (w) and (z), 24B.4(a)(1), (3)(i) and 
(4)(i), and 24B.9(a) and (b).
---------------------------------------------------------------------------

    \7\ Specifically, the Exchange eliminated references to 
European-capped style settlement and foreign currency provisions 
(and related index multiplier provisions) that were formerly 
contained in Rules 24A.1(c) and (i), 24A.4(a)(2)(iii) and (b)(4), 
24A.5(f), 24B.1(c) and (m), 24B.4(a)(2)(iii) and (b)(4), and 
24B.5(e).
    \8\ The Exchange notes that there is currently no open interest 
in any FLEX Option series with a European-Capped style exercise and 
currently no open interest in any FLEX Index Option series that is 
designated for settlement in a foreign currency.
    \9\ In the future, the Exchange may determine to re-enable the 
capability for settlement of FLEX Index Options in a foreign 
currency, and such foreign currency settlement provisions would be 
the subject of a separate rule filing.
---------------------------------------------------------------------------

    Second, the Exchange is proposing to amend Rules 24B.1(n) and 
24B.14(b) and (c) to delete references to Indicative FLEX Quotes. An 
``Indicative FLEX Quote'' refers to informational FLEX bids and offers 
submitted electronically by FLEX Traders in response to a call for such 
quotes from the FLEX Post Official or a FLEX Trader. Indicative FLEX 
Quotes are non-binding indications of potential market prices only and, 
as such, are neither firm nor the basis for a FLEX transaction. Under 
the existing procedures, a FLEX Official \10\ may call for such 
Indicative FLEX quotes at any time during the course of trading and 
with respect to any series of FLEX Options that the FLEX Official deems 
appropriate. In addition, FLEX Traders \11\ may call for Indicative 
FLEX Quotes, updates thereto, or cancellations thereof. FLEX Traders 
could electronically communicate their Indicative FLEX Quotes and the 
information would be disseminated over the FLEX Hybrid Trading System 
communications network interface. This functionality generally has not 
been utilized and the Exchange has determined that it will no longer be 
supported when trading begins on the enhanced System (the new System 
does not have a similar communication network interface), so the 
Exchange is proposing to delete the definition of an Indicative FLEX 
Quote in Rule 24B.1 and the procedures noted in Rule 24B.14.\12\
---------------------------------------------------------------------------

    \10\ The Exchange may at any time designate an Exchange employee 
or independent contractor to act as a FLEX Official in one or more 
classes of FLEX Options. A FLEX Official performs the functions set 
out in Rule 24B.14.
    \11\ The reference to ``FLEX Traders'' includes any TPHs that 
have been approved by the Exchange to use the FLEX Hybrid Trading 
System and any non-TPH Sponsored Users that have been provided 
electronic access, through Sponsoring TPHs, to the FLEX Hybrid 
Trading System in accordance with Rule 6.20A, Sponsored Users.
    \12\ Over the years, Exchange has offered an Indicative FLEX 
Quote service, then discontinued the service, then reinstated it, 
and is now seeking to discontinue the service because it continues 
to not be actively utilized. See, e.g., Securities Exchange Act 
Release No. 58719 (October 2, 2008), 73 FR 59692 (October 9, 2008) 
(SR-CBOE-2008-103). In the future, the Exchange may determine to 
offer an Indicative FLEX Quote service and such a service would be 
the subject of a separate rule filing.
---------------------------------------------------------------------------

    Third, the Exchange is proposing to amend Rules 24A.4, 24B.1, 24B.4 
and 24B.5 to revise some references to FLEX Terms and Trade Conditions, 
which are no longer utilized and will not be supported by the Exchange 
going forward. Specifically:
     The current Trade Conditions available in the System for a 
FLEX Trader to choose from are described in Rule 24B.1(y) and include 
Immediate-or-Cancel (a condition to execute a RFQ Order or FLEX Quote 
in its entirety or in part as soon as it is represented or cancel it), 
All-or-None (a condition to execute an RFQ Order or FLEX Order in its 
entirety or not at all) and Hedge (an RFQ or FLEX Order condition 
contingent on trade execution in Non-FLEX Options or other Non-FLEX 
components (e.g., stock, futures, or other related instruments or 
interests)).\13\ These Trade Conditions only apply to electronic 
trading (not open outcry). Therefore, although the rule text already 
provides that these Trade Conditions are only available in the System 
and describes whether or not they are disclosed in the System, the 
Exchange is proposing to include certain references to ``electronic 
RFQs'' to make it more clear that the provisions only apply to 
electronic trading. In addition, the Exchange is proposing to delete 
the All-or-None Trade Condition because the System will no longer 
support the electronic processing of the All-or-None Trade Condition 
for electronic RFQ Orders or FLEX Orders. (Through a separate rule 
change filing, the Exchange is seeking to introduce an electronic FLEX 
Solicitation Auction Mechanism (the ``FLEX SAM'' auction) under 
proposed new Rule 24B.5B that will have an all-or-none type 
functionality).\14\
---------------------------------------------------------------------------

    \13\ An ``RFQ'' refers to a Request for Quotes, which means an 
initial request supplied by a Submitting TPH to initiate FLEX 
bidding and offering. An ``RFQ Order'' is an order to purchase or 
order to sell FLEX Options entered by the Submitting TPH during the 
RFQ Reaction Period. The ``RFQ Reaction Period'' is the period of 
time during which a Submitting TPH determines whether to accept or 
reject the RFQ Market (which is currently defined as the bids or 
offers, or both, as applicable, entered in response to an electronic 
RFQ and FLEX Orders resting in the electronic book). A FLEX Order 
refers to (i) FLEX bids and offers entered by FLEX Market-Makers and 
(ii) orders to purchase or sell FLEX Options entered by FLEX 
Traders, in each case into the electronic book. See Rule 24B.1(j), 
(r)-(t), (v).
    \14\ See Securities Exchange Act Release No. 66052 (December 23, 
2011), 77 FR 306 (January 4, 2012)(SR-CBOE-2011-123). In SR-CBOE-
2011-123, the Exchange is proposing to adopt new Rule 24B.5A 
(pertaining to the FLEX Automated Improvement Mechanism or ``FLEX 
AIM'' auction) and new Rule 24B.5B (pertaining to the FLEX SAM 
auction). The FLEX SAM would be used to cross FLEX Option orders 
through an exposed auction process. An original agency order and 
paired contra-side order entered into the SAM Auction would also be 
designated in the FLEX System as all-or-none (i.e., an order will be 
executed in its entirety or not at all).
---------------------------------------------------------------------------

     Rule 24B.5(d)(2)(i) provides that the Exchange may from 
time to time establish a crossing participation entitlement subject to 
certain conditions. Previously, this provision described conditions 
with respect to both open outcry RFQ crossing participation 
entitlements and electronic RFQ crossing participation entitlements. 
However, in rule change filing SR-CBOE-2011-122, the Exchange 
eliminated the Intent to Cross Trade Condition\15\ and related 
references to a crossing participation entitlement for electronic RFQs 
in various provisions, including certain references in Rule 
24B.5(d)(2)(i)(A) and (B). Given the elimination of these provisions, 
the Exchange is proposing to delete a superfluous and unnecessary 
reference to the ``BBO clearing price'' in paragraphs (A) and (B). The 
Exchange is proposing to delete these references because the ``BBO 
clearing price'' references in paragraphs (A) and (B) were/are only 
applicable to electronic RFQs and were/are not applicable to open 
outcry RFQs. (Under the former electronic RFQ procedures, a Submitting 
TPH could have obtained a crossing participation entitlement if, among 
other things, the TPH matched or improved the BBO clearing price.) The 
Exchange is also proposing to delete a superfluous and unnecessary 
reference contained in Rule 24B.5(d)(2)(i)(C) to a Submitting TPH 
utilizing the electronic RFQ mechanics to cross an order with a 
solicited order for a FLEX Market-Maker account (or with a solicited 
order initiated by a FLEX Market-Maker for an account in which the FLEX 
Market-Maker has in interest) pursuant to the crossing participation 
entitlement provisions under Rule 24B.5(d)(2)(i)(A) and (B). Again, the 
Exchange is proposing to delete these references in paragraph (C) 
because the electronic RFQ crossing participation entitlement 
provisions have been eliminated from the rules.
---------------------------------------------------------------------------

    \15\ ``Intent to Cross'' was an RFQ condition indicating that 
the Submitting TPH intends to cross or act as principal and receive 
a crossing participation entitlement. See former Rule 24B.1(y)(5).
---------------------------------------------------------------------------

     Currently, the terms of a FLEX RFQ shall contain, among 
other things, specifications on the quote type and form sought (i.e., 
specify whether bid, offer, or both is sought). The Exchange is 
proposing to amend the rules to provide that an open outcry RFQ can 
specify a quote for a bid, offer or both; however, electronic RFQs will 
be limited to specifying both bids and offers. Therefore, the Exchange 
is proposing to amend the provision in

[[Page 22014]]

Rules 24B.4(a)(3) and definition of RFQ Market in Rule 24B.1(s).\16\
---------------------------------------------------------------------------

    \16\ As revised, the term ``RFQ Market'' will mean the bids and 
offers entered in response to an electronic RFQ and FLEX Orders 
resting in the electronic book. See proposed changes to Rule 
24B.1(s); see also note 13, supra, for current definition of ``RFQ 
Market.''
---------------------------------------------------------------------------

     Under the current special terms for FLEX Index Options, 
exercise prices shall be specified in terms of a specific index value 
number, a method of fixing such a number at the time a FLEX Quote is 
accepted, or a percentage of index value calculated as of the open or 
close of trading on the Exchange on the trade date. The Exchange is 
proposing to delete the reference to a percentage of the index value 
calculated as of the open of trading on the Exchange on the trade date. 
This provision has generally not been actively utilized \17\ and will 
no longer be supported when trading begins on the enhanced System. 
Therefore, the Exchange is proposing to delete the provision under 
Rules 24A.4(b)(2) and 24B.4(b)(2).
---------------------------------------------------------------------------

    \17\ The Exchange notes that there is currently no open interest 
in any FLEX Index Option series with an exercise price specified in 
terms of a percentage of the index value calculated as of the open 
of trading on the Exchange on the trade date.
---------------------------------------------------------------------------

     Under the current special terms for FLEX Equity Options, 
exercise prices may be rounded to the nearest minimum tick, one-eighth 
of a dollar, or other decimal increment determined by the Exchange on a 
class-by-class basis that may not be smaller than $0.01. The Exchange 
is proposing to delete the reference to nearest one-eighth of a dollar. 
This language used to be applicable when the Exchange traded in 
fractional increments and there was open interest in series with 
exercise prices in such an increment. However, there are no longer any 
options with exercise prices in this increment, so the Exchange is 
proposing to delete the ``one-eighth of a dollar'' language under Rules 
24A.4(c)(2) and 24B.4(c)(2).
    Finally, the Exchange is proposing to amend Rules 24B.3, 24B.5 and 
24B.9 to revise some of the descriptions of the electronic RFQ trading 
procedures. Specifically:
     Currently, Rule 24B.3 provides that there shall be no 
trading rotations in FLEX Options, either at the opening or at the 
close of trading. An existing FLEX Option series will automatically 
open for trading at a randomly selected time within a number of seconds 
after 8:30 a.m. (all times are CT), at which point FLEX Orders may be 
entered directly into the electronic book (if available) and/or FLEX 
RFQ auctions may be initiated pursuant to Rule 24B.5. A new FLEX Option 
series may be established on any business day prior to the expiration 
date as provided for in Rule 24A.4 and opened for trading pursuant to 
the procedures and principles as provided for in Rule 24B.5. The 
Exchange is proposing to amend Rules 24B.3 and 25B.5 to make clear 
that, besides RFQs under Rule 24B.5, auctions may also be initiated in 
existing and new series pursuant to proposed new Rule 24B.5A (regarding 
FLEX AIM auctions) or proposed new Rule 24B.5B (regarding FLEX SAM 
auctions).\18\
---------------------------------------------------------------------------

    \18\ Thus, as revised, the text of Rule 24B.3 will provide in 
relevant part that an existing series will automatically open for 
trading at a randomly selected time within a number of seconds after 
8:30 a.m. (all times are CT), at which point FLEX Orders may be 
entered directly into the electronic book (if available) and/or a 
FLEX auction may be initiated pursuant to Rule 24B.5, 24B.5A, or 
24B.5B. A new FLEX Option series may be established on any business 
day prior to the expiration date as provided for in Rule 24A.4 and 
opened for trading pursuant to the procedures and principles as 
provided for in Rule 24B.5, 24B.5A or 24B.5B. See proposed changes 
to Rule 24B.3; see also proposed changes to Rule 24B.5(a), and SR-
CBOE-2011-123, note 14, supra.
---------------------------------------------------------------------------

     Currently the electronic RFQ process in relevant part 
provides in Rule 24B.5(a)(1)(ii) and (iii) that FLEX Orders may be 
entered, modified or withdrawn at any point during the RFQ Response and 
Reaction Periods.\19\ When trading moves to the enhanced System, FLEX 
Orders may not be submitted to electronic book during the RFQ Response 
Period, but may be withdrawn. If a FLEX Trader attempts to enter a FLEX 
Order during the RFQ Response and Reaction Periods, the FLEX Order will 
be rejected by the System. Therefore, the Exchange is proposing to 
amend Rule 24B.5(a)(1)(ii) and (iii) to describe how FLEX Orders will 
be handled under the enhanced System. The Exchange is also proposing to 
delete references in these provisions indicating that FLEX Quotes may 
be modified during the RFQ Response and Reaction Periods (mechanically, 
FLEX Quotes submitted in response to an electronic RFQ may only be 
modified by withdrawing FLEX Quotes and entering new FLEX Quotes).\20\ 
The Exchange is also proposing to amend Rule 24B.9 to make clear that 
FLEX Quotes submitted in response to an electronic RFQ by FLEX Market-
Makers shall be entered or withdrawn within the RFQ Response and 
Reaction Periods, which is consistent with Rule 24B.5(a)(1)(ii) and 
(iii).
---------------------------------------------------------------------------

    \19\ The ``RFQ Response Period'' (commonly referred to as 
``T1'') means the period of time during which FLEX Traders may 
provide FLEX Quotes in response to an RFQ. As noted in note 13, 
supra, the ``RFQ Reaction Period'' (commonly referred to as ``T2'') 
means the period of time during which a Submitting TPH determines 
whether to accept or reject the RFQ Market. See Rule 24A.1(u)-(v).
    \20\ The Exchange also proposes to replace a reference to the 
FLEX Book with a reference to the electronic book in Rule 
24B.5(d)(1).
---------------------------------------------------------------------------

     Currently the electronic RFQ process provides that, if 
there is an electronic book available, any remaining balance of FLEX 
Quotes not traded at the conclusion of the RFQ Reaction Period will be 
automatically entered into the electronic book (and treated the same as 
other FLEX Orders) unless the FLEX Trader has indicated that the FLEX 
Quote is to be automatically cancelled if not traded. When trading 
moves to the enhanced System, any remaining balance of FLEX Quotes will 
be automatically cancelled at the conclusion of the RFQ Reaction 
Period. Therefore, the Exchange is proposing to amend Rule 
24B.5(a)(iii)(E) (and to delete a related cross-reference in Rule 
24B.5(b)(1)) to describe how any remaining balance of FLEX Quotes will 
be handled under the enhanced System.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \21\ in general and furthers the objectives of 
Section 6(b)(5) of the Act \22\ in particular in that it should promote 
just and equitable principles of trade, serve to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. In 
particular, the Exchange believes that the use of FLEX Options provides 
CBOE TPHs and investors with additional tools to trade customized 
options in an exchange environment \23\ and greater opportunities to 
manage risk. The Exchange believes that the enhancements to the FLEX 
System adopted under rule change filing SR-CBOE-2011-122 should serve 
to further those objectives and encourage use of FLEX Options by 
enhancing and simplifying the existing processes and integrating the 
FLEX System with the

[[Page 22015]]

Exchange's existing technology platform for Non-FLEX trading, which 
should make the FLEX System more efficient and effective and easier for 
users to understand. The Exchange believes that the further refinements 
being proposed in this instant rule change filing should also serve to 
further those objectives by more clearly and accurately describing the 
operation of the enhanced System and deleting superfluous and 
unnecessary provisions in the FLEX rules.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ FLEX Options provide TPHs and investors with an improved 
but comparable alternative to the over-the-counter (``OTC'') market 
in customized options, which can take on contract characteristics 
similar to FLEX Options but are not subject to the same 
restrictions. The Exchange believes that making these changes will 
make the FLEX Hybrid Trading System an even more attractive 
alternative when market participants consider whether to execute 
their customized options in an exchange environment or in the OTC 
market. CBOE believes market participants benefit from being able to 
trade customized options in an exchange environment in several ways, 
including, but not limited to the following: (1) Enhanced efficiency 
in initiating and closing out positions; (2) increased market 
transparency; and (3) heightened contra-party creditworthiness due 
to the role of The Options Clearing Corporation as issuer and 
guarantor of FLEX Options.
---------------------------------------------------------------------------

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 or received comments on the 
proposal.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \24\ and Rule 19b-4(f)(6) thereunder.\25\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\26\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \25\ 17 CFR 240.19b-4(f)(6).
    \26\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \27\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\28\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
---------------------------------------------------------------------------

    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because such waiver will allow CBOE to codify the revisions to 
its rules to more clearly and accurately describe the operation of its 
new system for FLEX Options prior to implementation. Therefore, the 
Commission designates the proposal operative upon filing.\29\
---------------------------------------------------------------------------

    \29\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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-2012-033 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-2012-033. 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 the 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-2012-033 and should be 
submitted on or before May 3, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
---------------------------------------------------------------------------

    \30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-8839 Filed 4-11-12; 8:45 am]
BILLING CODE 8011-01-P