Document ID: SEC-2007-0424-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-03-21T04:00Z

[Federal Register: March 21, 2007 (Volume 72, Number 54)]
[Notices]               
[Page 13324-13325]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr07-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55474; File No. SRCBOE-2007-20]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Extend a Pilot Program Relating to Multiple Aggregation 
Units

March 15, 2007.
    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 February 26, 2007, the Chicago Board Options Exchange, Incorporated 
(``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 substantially prepared by 
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposal effective upon filing. 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)(iii).
    \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

    CBOE proposes to extend for an additional year, until March 14, 
2008, an existing Pilot Program that allows a CBOE member or member 
firm to have multiple aggregation units operating as separate Market-
Makers or Remote Market-Makers (``RMMs'') within the same class. The 
text of the proposed rule change is available on CBOE's Web site 
(http://www.cboe.org/Legal), at the CBOE'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 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 purpose of the proposed rule change is to extend for an 
additional year, until March 14, 2008, an existing Pilot Program that 
allows a CBOE member or member firm to have multiple aggregation units 
operating as separate Market-Makers or RMMs within the same class, 
provided they satisfy certain criteria set forth in Rule 8.4(c)(ii)(A)-
(C).\5\
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    \5\ See Rule 8.3(c)(viii) and Rule 8.4(c)(ii).
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    In March 2005, CBOE amended its rules to establish a new membership 
status called RMM, who have the ability to submit quotes to the CBOE 
from a location outside of the physical trading station of the RMM's 
appointed class.\6\ In connection with the adoption of these rules, 
CBOE also adopted provisions in its rules relating to RMM affiliation 
limitations. Specifically, CBOE Rule 8.4(c) provides that except as 
otherwise provided, an RMM may not have an appointment as an RMM in any 
class in which it or its member organization serves as DPM, e-DPM, RMM, 
or Market-Maker on CBOE.
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    \6\ See Securities Exchange Act Release No. 51366 (March 14, 
2005), 70 FR 13217 (March 18, 2005) (approving SR-CBOE-2004-75).
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    One exception that was approved on a pilot basis was the ability of 
a CBOE member or member firm to have multiple aggregation units 
operating as separate RMMs within the same class, provided certain 
specific criteria were complied with.\7\
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    \7\ A second exception, also adopted on a pilot basis and 
contained in Rule 8.4(c)(i), permits a member or member firm 
operating as an RMM in a class to have one Market-Maker affiliated 
with the RMM organization trading in open outcry in any specific 
class allocated to the RMM, provided such Market-Maker trades on a 
separate membership.
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    In March 2006, the Pilot Program was extended for an additional 
year,\8\ and is also applicable to Market-Makers.\9\ CBOE believes that 
the Pilot Program has been successful, in that it allows a CBOE member 
or member firm to have multiple aggregation units operating as separate 
Market-Makers or RMMs within the same class, provided they comply with 
certain specific criteria. CBOE has not experienced any negative 
effects with respect to the Pilot Program. Thus, CBOE believes it would 
be appropriate and beneficial to extend this Pilot Program for an 
additional year, until March 14, 2008.
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    \8\ See Securities Exchange Act Release No. 53414 (March 3, 
2006), 71 FR 12753 (March 13, 2006) (approving SR-CBOE-2006-25).
    \9\ See Securities Exchange Act Release No. 54182 (July 20, 
2006), 71FR 42692 (July 20, 2006) (approving SR-CBOE-2006-51).
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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.\10\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) of the 
Act,\11\ which requires 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither received nor solicited written comments on the 
proposal.

[[Page 13325]]

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 
\13\ thereunder because it does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; (iii) become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate; and the Exchange has given the Commission 
written notice of its intention to file the proposed rule change at 
least five business days prior to filing. At any time within 60 days of 
the filing of such 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 purposes of 
the Act.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6) of the Act,\14\ the proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange has requested that 
the Commission waive the 30-day operative date, so that proposal may 
take effect upon filing. The Commission believes that the proposed rule 
change does not raise any new regulatory issues and, consistent with 
the protection of investors and the public interest, has determined to 
waive the 30-day operative date, so that the pilot may continue without 
interruption.\15\
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    \14\ Id.
    \15\ For purposes only of waiving the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
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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-2007-20 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-2007-20. 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-2007-20 and should be 
submitted on or before April 11, 2007.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5116 Filed 3-20-07; 8:45 am]

BILLING CODE 8010-01-P