Document ID: SEC-2010-0766-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-05-24T04:00Z

[Federal Register: May 24, 2010 (Volume 75, Number 99)]
[Notices]               
[Page 28847-28848]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24my10-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62132; File No. SR-CBOE-2010-047]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change Related to 
Individual Stock Trading Pauses Due to Extraordinary Market Volatility

May 19, 2010.
    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 May 18, 2010, 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, II, and III 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

    The Exchange is proposing to amend trading procedures on a pilot 
basis for certain stocks traded on the CBOE Stock Exchange (``CBSX''), 
the CBOE's stock trading facility. The text of the proposed rule change 
is available on the Exchange's Web site (http://www.cboe.org/Legal), at 
the Office of the Secretary, CBOE and at the Commission.

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 self-regulatory organization 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The primary listing markets for U.S. stocks are in the process of 
amending their rules so that they may, from time to time, issue a 
trading pause for an individual stock if the price of such stock moves 
10% or more from a sale in a preceding five-minute period. The Exchange 
is proposing the rule change described below in consultation with U.S. 
listing markets and Commission staff to provide for uniform market-wide 
trading pause standards for individual stocks in the S&P 500 Index that 
experience rapid price movement, as set forth below. The Exchange is 
not currently the primary listing market for any stocks, and thus, will 
not be issuing any trading pauses pursuant to its rules.
    The Exchange proposes to add a new Rule 6.3C to allow CBSX to halt 
trading in an individual stock when the primary listing market for such 
stock issues a trading pause in any Circuit Breaker Stocks, as defined 
below and in proposed Rule 6.3C.03. CBSX will resume trading once 
trading has resumed on the primary listing market. If, however, trading 
has not resumed on the primary listing market after ten minutes have 
passed since the individual stock trading pause message has been 
received from the responsible single plan processor, CBSX may resume 
trading in such stock.
    The proposed rule would apply to trading pauses issued by primary 
listing markets in ``Circuit Breaker Stocks,'' as defined in proposed 
Rule 6.3C.03. Specifically, on a pilot basis, set to end on December 
10, 2010, Circuit Breaker Stocks would mean the stocks included in the 
S&P 500 Index. Thus, proposed Rule 6.3C would be in effect only with 
respect to stocks in the S&P 500 Index.
    Upon reopening, a rotation shall be held in the individual stock on 
CBSX unless the Exchange concludes that a different method of reopening 
is appropriate under the circumstances, including but not limited to, 
no rotation, an abbreviated rotation or any other variation in the 
manner of the rotation. Lastly, nothing in the proposed Rule shall be 
construed to limit the ability of the Exchange to halt or suspend 
trading in any security or securities traded on the Exchange pursuant 
to any other Exchange rule or policy.
    In addition to adding a new Rule 6.3C, the Exchange has also 
proposed minor changes to Rules 6.2B and 52.3. To make clear that the 
existing trading halt described in Rule 6.2B applies to all stocks 
traded on the Exchange, the Exchange has added the word ``marketwide'' 
to the title of Rule 6.2B. Finally, the Exchange has proposed to 
include a cross-reference to proposed Rule 6.2C in Rule 52.3.
2. Statutory Basis
    Approval of the rule change proposed in this submission is 
consistent with the requirements of the Act and the rules and 
regulations thereunder that are applicable to a national securities 
exchange, and, in particular, with the requirements of Section 6(b) of 
the Act.\3\ In particular, the proposed change is consistent with 
Section 6(b)(5) of the Act,\4\ because it would promote just and 
equitable principles of trade, remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and, 
in general, protect investors and the public interest. The proposed 
rule change is also designed to support the principles of Section 
11A(a)(1) \5\ of the Act in that it seeks to assure fair competition 
among brokers and dealers and among exchange markets. The Exchange 
believes that the proposed rule meets these requirements in that it 
promotes transparency and uniformity across markets concerning 
decisions to pause trading in a stock when there are significant price 
movements.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78k-1(a)(1).
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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.

[[Page 28848]]

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 the self-regulatory organization 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.\6\
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    \6\ The Commission notes that the exchange has requested 
accelerated approval of the filing.
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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. 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-2010-047 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-2010-047. 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 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 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-2010-047 
and should be submitted on or before June 3, 2010.\7\
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    \7\ The Commission believes that a 10-day comment period is 
reasonable, given the urgency of the matter. It will provide 
adequate time for comment.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12425 Filed 5-21-10; 8:45 am]
BILLING CODE 8010-01-P