[Federal Register Volume 75, Number 180 (Friday, September 17, 2010)]
[Notices]
[Pages 57100-57102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23297]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62897; File No. SR-CBOE-2010-083]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to the Complex Order Book
September 13, 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 September 9, 2010, the Chicago Board Options Exchange,
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I and II
[[Page 57101]]
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
The Exchange proposes to amend CBOE Rule 6.53C, Complex Orders on
the Hybrid System, to incorporate a provision related to option classes
in which the electronic complex order book (``COB'') is activated. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBOE Rule 6.53C governs the operation of the Exchange's electronic
COB system. The purpose of this proposed rule change is to incorporate
a provision to provide the Exchange with additional flexibility to
determine the applicable matching algorithm \5\ for option classes in
which COB is activated. Currently, Rule 6.53C(c)(ii)(2) specifies that
the allocation of complex orders within COB shall be pursuant to the
rules of trading priority otherwise applicable to incoming electronic
orders in the individual component legs, and Rule 6.53C(iii)(3)
specifies that the allocation of complex orders among market
participants that submit orders or quotes to trade against the COB
shall be pursuant to paragraph (c) of Rule 6.45A or Rule 6.45B, as
applicable.
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\5\ The matching algorithms include price-time, pro-rata, and
the ultimate matching algorithm (``UMA'') base priorities and a
combination of various optional priority overlays pertaining to
public customer priority, Market-Maker participation entitlements,
small order preference, and market turner. See Rules 6.45A, Priority
and Allocation of Equity Option Trades on the CBOE Hybrid System,
and 6.45B, Priority and Allocation of Trades in Index Options and
Options on ETFs on the CBOE Hybrid System.
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This filing proposes to provide the Exchange with additional
flexibility regarding the allocation to permit the matching algorithm
in effect for COB to be different from the matching algorithm in effect
for the option class. Specifically, we are proposing that the Exchange
may determine on a class-by-class basis which electronic matching
algorithm shall apply to COB executions. Pursuant to Rule 6.53C.01, all
pronouncements regarding COB matching algorithm determinations by the
Exchange will be announced to CBOE Trading Permit Holders via
Regulatory Circular.
The matching algorithm applied to COB for each option class will
continue to be pursuant to Rule 6.45A or 6.45B, as applicable. Thus,
the Exchange is not creating any new algorithms for COB, but is
amending Rule 6.53C to provide the flexibility to choose an algorithm
from among the existing algorithms to be applied to COB rather than
simply defaulting to the algorithm in effect for an option class. All
other aspects of COB pursuant to Rule 6.53C shall apply unchanged.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \6\ that an exchange have rules that
are designed to promote just and equitable principles of trade, and to
remove impediments to and perfect the mechanism for a free and open
market and a national market system, and, in general, to protect
investors and the public interest. In particular, the Exchange believes
the proposed change would provide more flexibility for the Exchange to
designate the matching algorithm for COB in a manner that is consistent
with existing CBOE rules.
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\6\ 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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 proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6)
thereunder.\8\ 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.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization submit to the Commission
written notice of its 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 filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Commission notes that the Exchange has satisfied this requirement.
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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 [email protected]. Please include
File Number SR-CBOE-2010-083 on the subject line.
[[Page 57102]]
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-2010-083. 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 website (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 website 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-2010-083 and should be submitted on
or before October 8, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-23297 Filed 9-16-10; 8:45 am]
BILLING CODE 8010-01-P