[Federal Register Volume 77, Number 237 (Monday, December 10, 2012)]
[Notices]
[Pages 73498-73500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29701]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68350; File No. SR-CBOE-2012-117]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Rule Related to Multi-Class Broad-
Based Index Option Spread Orders
December 4, 2012.
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 29, 2012, Chicago Board Options Exchange, Incorporated
(the ``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 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.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend its rule related to multi-class
broad-based index option spread orders. The text of the proposed rule
change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 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 these 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 aspects of such
statements.
[[Page 73499]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this rule filing is to (i) clarify that the term
``Multi-Class Broad-Based Index Option Spread Order (Multi-Class Spread
Order)'' may refer to either an order or a quote; (ii) clarify who
Trading Permit Holders (``TPHs'') initiating a Multi-Class Spread Order
in the primary trading station must notify in the secondary trading
station; (iii) provide that the recipient Order Book Official
(``OBO''), Designated Primary Market-Maker (``DPM'') or Exchange staff
in the secondary trading station must verbalize the terms of a Multi-
Class Spread Order to the secondary trading crowd; and (iv) require
that the recipient OBO, DPM or Exchange staff in the secondary trading
station document the terms of the order.
Exchange Rule 24.19 describes a Multi-Class Spread Order as ``an
order'' to buy a stated number of contracts of a Broad-Based Index
Option and sell an equal number, or an equivalent number, of contracts
of a different Broad-Based Index Option. Market-Makers however, may
also enter a ``Multi-Class Spread Order'' quote. Accordingly, the
Exchange is seeking to clarify in its rules that the term ``Multi-Class
Spread Order'' may refer to either an order or a quote, thereby
maintaining clarity in the rules and reducing potential confusion.
The Exchange is also seeking to clarify the procedure for which
notice regarding a Multi-Class Spread Order is given to the trading
crowd at a secondary trading station. Rule 24.19 provides that a Multi-
Class Spread Order may be represented at the trading station of either
Broad-Based Index, subject to certain conditions. First, Rule
24.19(b)(i) currently requires that upon an announcement of a Multi-
Class Spread Order at the primary trading station, the TPH initiating
the order must contact either an OBO or the DPM at the secondary
trading station, who then must disseminate notice of the order to the
secondary trading crowd. In some classes however, it is possible that
neither an OBO nor DPM is assigned. Therefore, the Exchange is
proposing to clarify that, in addition to an OBO or DPM, a TPH may
contact otherwise appropriate Exchange staff (e.g. PAR official or
trading official). Trading stations which do not have an OBO or DPM
assigned must ensure that an appropriate Exchange staff is present for
purposes of disseminating a notice of a Multi-Class Spread Order. The
proposed rule change would reduce confusion, as well as provide
guidance in situations where neither an OBO nor DPM exists.
Next, the Exchange proposes to specify the manner in which the
recipient OBO, DPM, or Exchange staff in the secondary trading station
must disseminate a notice of a Multi-Class-Spread Order. The proposed
rule change requires the recipient OBO, DPM, or Exchange staff in the
secondary trading station to verbalize the terms of the order to the
secondary trading crowd. This proposed change ensures adequate
dissemination of a notice of an order and its terms and promotes
transparency. Finally, the Exchange seeks to require that the recipient
OBO, DPM, or Exchange staff document the terms of the order for
purposes of record retention and aiding surveillance.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act, in general. Specifically, the Exchange believes the proposed rule
change is consistent with the Section 6(b)(5) 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. Clarifying that a ``Multi-Class
Spread Order'' may refer to an order or a quote should clear up any
potential confusion and therefore inform investors. Clarifying and
specifying the procedures in which a notice of a Multi-Class Spread
Order is disseminated and documented also reduces potential confusion
and maintains clarity in the rules. Further, it promotes transparency
and aids in surveillance, thereby protecting investors.
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
proposed rule change.
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 for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) \3\ of the Act and
Rule 19b-4(f)(6) \4\ thereunder.
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\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of this 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 email to [email protected]. Please include
File Number SR-CBOE-2012-117 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-2012-117. This file
number should be included on the subject line if email 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
[[Page 73500]]
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 on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of such filing also will be available for
inspection and copying at the principal offices 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-2012-117, and should be
submitted on or before December 31, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29701 Filed 12-7-12; 8:45 am]
BILLING CODE 8011-01-P