Document ID: SEC-2012-0417-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-03-15T04:00Z

[Federal Register Volume 77, Number 51 (Thursday, March 15, 2012)]
[Notices]
[Pages 15426-15428]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6241]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66563; File No. SR-CBOE-2012-026]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Expand the Weeklys Program

March 9, 2012.
    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 March 7, 2012, 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 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\ 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 amend Rules 5.5 and 24.9 to allow the Exchange to 
open Short Term Option Series (``Weeklys options'') that are opened by 
other securities exchanges in option classes selected by such exchanges 
under their respective short term option rule. 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.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to amend Rules 5.5 and 
24.9 to allow the Exchange to open Short Term Option Series (``Weeklys 
options'') that are opened by other securities exchanges in option 
classes selected by other exchanges under their respective short term 
option rules.\5\
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    \5\ On July 12, 2005, the Commission approved the Weeklys 
Program on a pilot basis. See Securities Exchange Act Release No. 
52011 (July 12, 2005), 70 FR 41451 (July 19, 2005) (SR-CBOE-2004-
63). The Weeklys Program was made permanent on April 27, 2009. See 
Securities Exchange Act Release No. 59824 (April 27, 2009), 74 FR 
20518 (May 4, 2009) (SR-CBOE-2009-018).
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    Currently, the Exchange may select up to 30 currently listed option 
classes on which Weekly options may be opened in the Weeklys Program 
and the Exchange may also match any option classes that are selected by 
other securities exchanges that employ a similar program under their 
respective rules. For each option class eligible for participation in 
the Weeklys Program, the Exchange may open up to 30 Short Term Option 
Series for each expiration date in that class.
    This proposal seeks to allow the Exchange to open Weekly option 
series that are opened by other securities exchanges in option classes 
selected by other exchanges under their respective short term option 
rules. This change is being proposed notwithstanding the current cap of 
30 series per class under the Weeklys Program. This is a competitive 
filing and is based on

[[Page 15427]]

approved filings and existing rules of The NASDAQ Stock Market LLC for 
the NASDAQ Options Market (``NOM'') and NASDAQ OMX PHLX, Inc. 
(``PHLX'').\6\
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    \6\ See Securities Exchange Act Release Nos. 65775 (November 17, 
2011), 76 FR 72476 (November 23, 2011) (SR-NASDAQ-2011-138) and 
65776 (November 17, 2011), 76 FR 72482 (November 23, 2011) (SR-PHLX-
2011-131).
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    CBOE is competitively disadvantaged since it operates a 
substantially similar Weeklys Program as NOM and PHLX but is limited to 
listing a maximum of 30 series per options class that participates in 
its Weeklys Program (whereas PHLX and NOM are not similarly 
restricted).
    The Exchange is not proposing any changes to the Weeklys Program 
other than the ability to open Weekly option series that are opened by 
other securities exchanges in option classes selected by other 
exchanges under their respective short term option rules.
    The Exchange notes that the Weeklys Program has been well-received 
by market participants, in particular by retail investors. The Exchange 
believes that the current proposed revision to the Weeklys Program will 
permit the Exchange to meet increased customer demand and provide 
market participants with the ability to hedge in a greater number of 
option classes and series.
    With regard to the impact of this proposal on system capacity, the 
Exchange has analyzed its capacity and represents that it and the 
Options Price Reporting Authority (``OPRA'') have the necessary systems 
capacity to handle the potential additional traffic associated with 
trading of an expanded number of series for the classes that 
participate in the Weeklys Program.
    The proposed increase to the number of series per classes eligible 
to participate in the Weeklys Program is required for competitive 
purposes as well as to ensure consistency and uniformity among the 
competing options exchanges that have adopted similar Weeklys Programs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \7\ of the Act and the rules and regulations under 
the Act, in general, and furthers the objectives of Section 6(b)(5),\8\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest. The Exchange believes that expanding 
the Weeklys Program will result in a continuing benefit to investors by 
giving them more flexibility to closely tailor their investment 
decisions and hedging decisions in a greater number of securities. The 
Exchange also believes that expanding the Weeklys Program will provide 
the investing public and other market participants with additional 
opportunities to hedge their investment thus allowing these investors 
to better manage their risk exposure. While the expansion of the 
Weeklys Program will generate additional quote traffic, the Exchange 
does not believe that this increased traffic will become unmanageable 
since the proposal remains limited to a fixed number of classes.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 not necessary or appropriate in furtherance of 
the purposes of the Act. In this regard and as indicated above, the 
Exchange notes that the rule change is being proposed as a competitive 
response to existing NOM and PHLX rules. CBOE believes this proposed 
rule change is necessary to permit fair competition among the options 
exchanges with respect to their short term options programs.

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 proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.
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    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 the proposal is substantially similar to those of 
other exchanges that have been approved by the Commission and permit 
such exchanges to open Weekly option series that are opened by other 
securities exchanges under their respective short term option 
rules.\11\ Therefore, the Commission designates the proposal operative 
upon filing.\12\
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    \11\ See supra note 6.
    \12\ 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).
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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-2012-026 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-2012-026. 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/

[[Page 15428]]

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-2012-026 and should be 
submitted on or before April 5, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6241 Filed 3-14-12; 8:45 am]
BILLING CODE 8011-01-P