[Federal Register Volume 78, Number 56 (Friday, March 22, 2013)]
[Notices]
[Pages 17736-17738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06627]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69158; File No. SR-CBOE-2013-034]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Market-Maker Continuous Quoting
Obligations
March 18, 2013.
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 March 8, 2013, 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 and II 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 Substance
of the Proposed Rule Change
[The Exchange] [sic] proposes to delay the implementation date of
changes to Market-Makers' continuous quoting obligations. There is no
proposed rule language.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 5, 2012, the Exchange submitted a rule change filing, which
became effective on that date, to amend Rule 1.1(ccc), ``Continuous
Electronic Quotes,'' to reduce to 90% the percentage of time for which
a Market-Maker is required to provide continuous electronic quotes in
an appointed option class on a given trading day. That filing also
included a proposed rule change to amend Rules 8.13, 8.15A, 8.85, and
8.93 to increase to the lesser of 99% or 100% minus one call-put pair
the percentage of series in each class in which Preferred Market-
Makers, Lead Market-Makers, Designated Primary Market-Makers, and
Electronic Designated Primary Market-Makers, respectively
(collectively, ``Market-Makers''), must provide continuous electronic
quotes.\3\ The proposed rule changes in that filing were set to become
operative on August 4, 2012.
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\3\ Securities Exchange Act Release No. 34-67410 (July 11,
2012), 77 FR 42040 (July 17, 2012) (SR-CBOE-2012-064).
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The Exchange submitted another rule change filing on August 3,
2012, which became effective and operative upon filing, to delay
implementation of these quoting obligation changes to provide Market-
Makers with additional time to make necessary system changes to comply
with the new quoting obligations. The filing indicated that the
Exchange would announce the implementation date of the proposed rule
change in a Regulatory Circular to be published no later than 90 days
following the effective date of that rule change, which implementation
date would be no later than 150 days following the effective date.\4\
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\4\ Securities Exchange Act Release No. 34-67644 (August 13,
2012), 77 FR 49846 (August 17, 2012) (SR-CBOE-2012-077).
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Similarly, the Exchange submitted a rule change filing on November
1, 2012, which became effective and operative upon filing, to further
delay implementation of these quoting obligation changes to provide
Market-Makers with additional time to make necessary system changes to
comply with the new quoting obligations. The filing indicated that the
Exchange would announce the implementation date of the proposed rule
change in a Regulatory Circular to be published no later than 120 days
following the effective date of that rule change, which implementation
date would be no later than 180 days following the effective date.\5\
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\5\ Securities and Exchange Act Release No. 68218 (November 13,
2012), 77 FR 69667 (November 20, 2012) (SR-CBOE-2012-106).
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Since the filing of that last rule change to delay the
implementation date of the changes to quoting obligations, the Exchange
has filed two additional rule changes that modify the continuous
quoting obligations of Market-Makers. First, the Exchange filed a rule
change proposing to exclude series that have a time to expiration of
nine months or more from Preferred Market Maker's continuous quoting
obligation (LEAPS).\6\ That rule change was effective on filing but has
not yet been implemented by the Exchange. Second, the Exchange filed a
rule change proposing to exclude intra-day add-on [sic] on the day
during which such series are added for trading from Market-Makers'
quoting obligations.\7\ That rule change is pending approval by the
Commission. Both of those rule filings provided that the Exchange will
implement those rule changes in conjunction with the implementation of
the rule changes in filing SR-CBOE-2012-064 and would announce an
implementation date for all of the Market-Maker quoting obligation
changes via Regulatory Circular.
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\6\ Securities and Exchange Act Release No. 68691 (January 18,
2013), 78 FR 5548 [sic] (January 25, 2013) (SRCBOE-2013-008).
\7\ Securities and Exchange Act Release No 68944 (February 15,
2013), 78 FR 12377 (February 22, 2013) (SR-CBOE-2013-019).
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The purpose of this rule change filing is to again delay
implementation of the quoting obligation changes in filing SR-CBOE-
2012-064 so that the Exchange
[[Page 17737]]
may implement the changes in that filing at the same time as the
changes in filings SR-CBOE-2013-008 and SR-CBOE-2013-01 [sic], which
implementation date would be after receiving Commission approval of the
rule change related to intra-day add-on series. The Exchange believes
that implementing these various quoting obligations at the same time
would benefit Market-Makers, because it would allow them to make all
necessary adjustments to their systems at one time as opposed to
continuously, which would otherwise occur with a piecemeal
implementation of these rule changes.
The Exchange will announce the implementation date of the proposed
rule change in rule filing SR-CBOE-2012-064 (and the other rule changes
discussed above) in a Regulatory Circular to be published no later than
120 days following the effective date of this rule filing. The
implementation date will be no later than 180 days following the
effective date.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange 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 prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitation transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
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In particular, the Exchange believes that delaying the
implementation date of these changes to Market-Makers' continuous
quoting obligations so that the Exchange may implement them at the same
time as other changes to the quoting obligations will allow Market-
Makers to adjust their systems at one time rather than multiple times
to be consistent with the new quoting obligations. This will provide
efficiencies that will benefit investors and the public interest and
encourage more efficient order entry practices by Market-Makers. The
Exchange believes that this will also promote compliance by Market-
Makers with the new quoting obligations, which fosters cooperation
between the Market-Makers and the Exchange, which monitors Market-
Makers' compliance with quoting obligations. Additionally, the proposed
rule change will allow the Exchange to announce an implementation
schedule for all of the quoting obligations changes in a fair and
orderly manner.
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. The Exchange does not believe
the proposed rule change will cause any burden on intramarket
competition because it applies to a group of similarly situated market
participants--Market-Makers. The Exchange also does not believe the
proposed rule change to delay implementation of the quoting obligation
changes will cause any burden on intermarket competition, because the
result of the proposed rule change is that Market-Makers will continue
to be subject to the same continuous quoting obligations for an
additional period of time.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the 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 \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6)(iii). The Exchange has requested
that the Commission waive the requirement that the Exchange provide
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 date on which
the Exchange filed the proposed rule change pursuant to Rule 19b-
4(f)(6)(iii). The Commission hereby grants this request.
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The Exchange has asked the Commission to waive the 30-day operative
delay.\15\ The Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. The Commission notes that the proposed rule change does not
present any new, unique, or substantive issues, but rather is merely
delaying the implementation date of an already effective rule change,
and that waiver of the 30-day operative delay will allow the Exchange
to announce an implementation schedule in an efficient manner.
Accordingly, the Commission designates the proposal operative upon
filing.\16\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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-2013-034 on the subject line.
[[Page 17738]]
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-2013-034. 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 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
10:00 a.m. and 3:00 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-2013-034 and should be
submitted on or before April 12, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary
[FR Doc. 2013-06627 Filed 3-21-13; 8:45 am]
BILLING CODE 8011-01-P