[Federal Register Volume 75, Number 237 (Friday, December 10, 2010)]
[Notices]
[Pages 77019-77021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31049]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63431; File No. SR-C2-2010-009]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Related to the Penny Pilot Program
December 3, 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 December 2, 2010, the C2 Options Exchange, Incorporated
(``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II 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
[[Page 77020]]
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/crclc2rulefiling.aspx),
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 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 Exchange proposes to amend Rule 6.4--Minimum Increments for
Bids and Offers to ensure that the C2 rule language regarding the Penny
Pilot Program tracks that of the language of Chicago Board Options
Exchange, Incorporated (``CBOE'') regarding CBOE's Penny Pilot Program,
as relevant to C2. CBOE recently proposed a rule change to amend its
Rule 6.42 to extend CBOE's Penny Pilot Program's expiration date.\5\ C2
hereby amends its Rule 6.4 to further clarify and ensure that the C2
Penny Pilot Program mirrors that of CBOE, as applicable.
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\5\ See Securities Exchange Act Release No. 34-63386 (November
29, 2010).
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CBOE's Penny Pilot Program is scheduled to expire on December 31,
2010. CBOE proposed to extend the Penny Pilot Program until December
31, 2011.\6\ C2 desires to clarify that C2 also wants to include
December 31, 2011 as the expiration date for the C2 Penny Pilot
Program. 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.
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\6\ Id.
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During this extension of the Pilot Program, C2 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 class 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.\7\
C2 will announce any replacement classes by circular.
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\7\ 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 day following January 1 would be identified
based on OCC volume data from June 1 through November 30.
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C2 is specifically authorized to act jointly with the other options
exchanges participating in the Penny Pilot Program in identifying any
replacement class. C2 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 its 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.\8\
Specifically, the Exchange believes that the proposed rule change is
consistent with the Section 6(b)(5) Act \9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
C2 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: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, 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 \10\ and Rule 19b-4(f)(6)
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with 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 date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. C2 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-C2-2010-009 on the subject line.
[[Page 77021]]
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-C2-2010-009. 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 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-C2-2010-009 and should be submitted on
or before January 3, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31049 Filed 12-9-10; 8:45 am]
BILLING CODE 8011-01-P