Document ID: SEC-2007-1409-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2007-10-10T04:00Z

[Federal Register: October 10, 2007 (Volume 72, Number 195)]
[Notices]               
[Page 57619-57620]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc07-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56600; File No. SR-CBOE-2007-88]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval of Proposed Rule Change To Amend 
the Hybrid Opening System Opening Rotations Rules

October 2, 2007.
    On July 25, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend its opening rotations 
rules conducted via the Hybrid Opening System (``HOSS''). The proposed 
rule change was published in the Federal Register on August 29, 
2007.\3\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 56302 (August 22, 
2007), 72 FR 49752.
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    HOSS is the Exchange's automated system for initiating trading at 
the beginning of each trading day. The Exchange proposes to amend HOSS 
procedures contained in CBOE Rule 6.2B. HOSS procedures currently 
provide that HOSS initiates an opening rotation for an options class at 
a randomly selected time within a number of seconds after the primary 
market \4\ for the underlying security opens (or after 8:30 a.m. 
(Central Time) for index options).\5\
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    \4\ According to the Exchange, for purposes of CBOE Rule 6.2B, 
the Exchange has interpreted the ``primary market'' to be the 
primary listing market.
    \5\ According to the Exchange, for purposes of CBOE Rule 6.2B, 
the Exchange determines when the underlying market ``opens'', on a 
class-by-class basis, to be either the opening trade and/or opening 
quote (or whichever occurs first). Once the underlying market opens, 
HOSS initiates the overlying option class opening and sends a 
Rotation Notice to market participants. Thereafter, HOSS would open 
the series of a class in a random order.
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    The Exchange proposes to permit HOSS to initiate the opening 
rotation for an options class after the opening of the underlying 
security on: (1) The primary listing market; (2) the primary volume 
market,\6\ or (3) the first market to open the underlying security. 
Determinations on the particular configuration for the market for the 
underlying security would be made on a class-by-class basis by the 
appropriate Exchange Procedure Committee and announced to the 
membership via a Regulatory Circular.
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    \6\ Proposed CBOE Rule 6.2B(b) would define the primary volume 
market as the market with the most liquidity in that underlying 
security for the previous two calendar months.
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    After a careful review of the proposed rule change, the Commission 
finds that the proposed rule change is consistent with the requirements 
of the Act and the regulations thereunder applicable to a national 
securities exchange.\7\ In particular, the Commission believes that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\8\ 
which requires that the rules of an exchange be designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Commission believes that the proposal will provide

[[Page 57620]]

the Exchange more flexibility to determine when to permit the HOSS 
opening rotation process to begin, and should contribute to the 
Exchange's ability to conduct openings in a fair and orderly manner. 
Further, the Commission notes that it previously approved a similar 
rule changes for the American Stock Exchange LLC.\9\
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    \7\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See Securities Exchange Act Release No. 55272 (February 12, 
2007), 72 FR 7779 (February 20, 2007) (approving SR-Amex-2006-77, 
permitting the American Stock Exchange LLC to open its trading 
rotation once the underlying security has opened for trading in any 
market).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-CBOE-2007-88) be, and hereby 
is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-19905 Filed 10-9-07; 8:45 am]

BILLING CODE 8011-01-P