[Federal Register Volume 76, Number 193 (Wednesday, October 5, 2011)]
[Notices]
[Pages 61772-61773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25572]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65417; File No. SR-CBOE-2011-089]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Adopt Two-Day Settlement on CBOE Stock Exchange
September 28, 2011.
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 September 28, 2011, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the rules of the CBOE Stock Exchange
(``CBSX'') to permit the specification of bids and offers for delivery
on the second business day following the day of the contract. 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
According to CBOE Rule 51.7, bids and offers on CBSX may specify
delivery on the day of a contract, on the business day following the
day of the contract, and on the third business day following the day of
the contract.\5\ This rule does not permit delivery on the second
business day following the day of the contract. Broker-dealers who
execute a ``cross'', resulting from the stock component of EFP
(effective-for-physical) futures transactions, have requested that CBSX
support a two-day settlement period in a similar manner as competing
stock exchanges.
---------------------------------------------------------------------------
\5\ See CBOE Rule 51.7.
---------------------------------------------------------------------------
Therefore, the Exchange wishes to amend Rule 51.7 to permit
delivery on the second business day following the day of the contract
in order to provide CBSX Traders with the ability to agree upon
delivery on any day from the day of the contract to the third business
day following the day of the contract. This additional option provides
further flexibility for investors regarding delivery of contracts.
Moreover, the addition of two-day settlement puts the Exchange on a
more even footing with other exchanges that permit delivery of a
contract on second business day following the day of the contract.\6\
---------------------------------------------------------------------------
\6\ See New York Stock Exchange LLC (``NYSE'') chart titled
``Delivery Dates on Exchange Contracts'' at the beginning of the
Section titled ``Dealings and Settlements (Rules 45-299C) (the
``NYSE Chart'') and NYSE Amex LLC (``Amex'') Equities Rule 14. The
``Seller's Option'' form of delivery described on the NYSE chart
stipulates that delivery may occur ``not less than two business days
nor more than 180 days'' following the day of the contract. Amex
Equities Rule 14 stipulates that delivery may occur ``not less than
two business days after trade date and not more than 60 days after
trade date.'' While these rules differ from the proposed rule change
in that they permit settlement at a later date than the proposed
rule, they also permit settlement on the second business day
following the trade date (like the proposed rule change).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act \7\ and the rules and regulations thereunder and, in
particular, the requirements of Section 6(b) of the Act.\8\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \9\ requirements that the rules of
an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest. The proposed rule change perfects the mechanism
for a free and open market by providing another option for the delivery
of contracts and permitting CBSX Traders to agree upon delivery on any
day from the day of the contract to the third business day following
the day of the contract. Other exchanges already provide this
option.\10\
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(1).
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ See Note 6.
---------------------------------------------------------------------------
[[Page 61773]]
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
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder \12\
because the proposal does not: (i) Significantly affect the protection
of investors or the public interest; (ii) impose any significant burden
on competition; and (iii) by its terms, 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.\13\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 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.
---------------------------------------------------------------------------
The Exchange has requested that the Commission waive the 30-day
operative delay period. The Exchange proposes to add an additional
option for settlement delivery consistent with the practices of other
exchanges. Therefore, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, and designates the proposed rule change to be
operative upon filing with the Commission.\14\
---------------------------------------------------------------------------
\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-2011-089 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-2011-089. 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 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 such 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-2011-089 and should be
submitted on or before October 26, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25572 Filed 10-4-11; 8:45 am]
BILLING CODE 8011-01-P