[Federal Register Volume 75, Number 233 (Monday, December 6, 2010)]
[Notices]
[Pages 75713-75715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30428]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63386; File No. SR-CBOE-2010-102]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to the Penny Pilot Program
November 29, 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 November 24, 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, II, and III below, which Items have been prepared
by the Exchange. The Exchange has designated 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 is proposing to amend its rules relating to the Penny
Pilot Program. 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'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 those statements may be examined at the
[[Page 75714]]
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 Penny Pilot Program is scheduled to expire on December 31,
2010. CBOE proposes to extend the Penny Pilot Program until December
31, 2011. CBOE believes that extending the Pilot Program will allow for
further analysis of the Pilot Program and a determination of how the
Pilot Program should be structured in the future.
During this extension of the Pilot Program, CBOE may replace any
option class which is currently included in the Pilot Program and which
is delisted with the next most actively-traded, multiple-listed option
class that is not yet participating in the Pilot Program (``replacement
class''). Any replacement option would be determined based on national
average daily volume in the preceding six months, and would be added on
the second trading day following January 1, 2011 and July 1, 2011.\5\
CBOE will employ the same parameters to prospective replacement issues
as approved and applicable in determining the existing classes in the
Penny Pilot Program, including excluding high-priced underlying
securities.\6\ CBOE will announce any replacement classes by circular.
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\5\ The month immediately preceding their addition to the Pilot
Program, i.e., December or June, would not be used for purposes of
the six month analysis. For example, a replacement class to be added
on the second trading following January 1 would be identified based
on OCC volume data from June 1 through November 30.
\6\ See Securities Exchange Act Release No. 60864 (October 22,
2009), granting immediate effectiveness to SR-CBOE-2009-76.
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CBOE is specifically authorized to act jointly with the other
options exchanges participating in the Penny Pilot Program in
identifying any replacement class. CBOE will submit to the SEC semi-
annual reports that will analyze the impact of the Penny Pilot on
market quality and systems capacity. This report will include, but is
not limited to the following: (1) Data and analysis of the number of
quotations generated for options included in the report; (2) an
assessment of the quotation spreads for the options included in the
report; (3) an assessment of the impact of the Pilot Program on CBOE's
automated systems; (4) data reflecting the size and depth of markets;
and (5) any capacity problems or other problems that arose related to
the operation of the Pilot Program and how the Exchange addressed them.
2. Statutory Basis
The Exchange believes the rule proposal is consistent with the
Securities Exchange Act of 1934 (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.\7\
Specifically, the Exchange believes that the proposed rule change is
consistent with the Section 6(b)(5) Act \8\ requirements 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. In particular, the proposed
rule change allows for an extension of the Penny Pilot Program for the
benefit of market participants.
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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 that is 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 proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative prior to 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, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\9\ and Rule 19b-4(f)(6)(iii) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the self-regulatory organization to give the
Commission 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 date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. CBOE has satisfied this requirement.
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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 e-mail to [email protected]. Please include
File Number SR-CBOE-2010-102 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-2010-102. 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 the filing also will be available for
inspection and copying at the principal office of the self-regulatory
organization. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that
[[Page 75715]]
you wish to make available publicly. All submissions should refer to
File Number SR-CBOE-2010-102 and should be submitted on or before
December 27, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30428 Filed 12-3-10; 8:45 am]
BILLING CODE 8011-01-P