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3404 Federal Register / Vol. 70, No.

14 / Monday, January 24, 2005 / Notices

rapid fire orders has been addressed of the Act 6 and Rule 19b–4(f)(6) 7 subject line if e-mail is used. To help the
through systemic enhancements which, thereunder. Commission process and review your
according to ILA rules, automatically A proposed rule change filed under comments more efficiently, please use
cancel an ILA order if it can not be Rule 19b–4(f)(6) 8 normally does not only one method. The Commission will
immediately executed. Accordingly, become operative prior to thirty days post all comments on the Commission’s
since the concerns behind the thirty- after the date of filing. However, Internet Web site (http://www.sec.gov/
second restriction never materialized, pursuant to Rule 19b–4(f)(6)(iii),9 the rules/sro.shtml). Copies of the
and because systemic enhancements Commission may designate a shorter submission, all subsequent
have obviated the need for such a time if such action is consistent with the amendments, all written statements
restriction, the Exchange is seeking to protection of investors and the public with respect to the proposed rule
abolish the limitation. Moreover, the interest. The Exchange seeks to have the change that are filed with the
Exchange believes that removing the proposed rule change become operative Commission, and all written
thirty-second restriction will encourage immediately so that it can eliminate a communications relating to the
more customers to utilize ILA, and restriction in its rules that is no longer proposed rule change between the
thereby have their orders immediately necessary. Commission and any person, other than
executed, without the intervention of a The Commission, consistent with the those that may be withheld from the
specialist. protection of investors and the public public in accordance with the
interest, has determined to make the provisions of 5 U.S.C. 552, will be
2. Statutory Basis proposed rule change effective as of the available for inspection and copying in
The Exchange believes that the date of this order.10 The Commission the Commission’s Public Reference
proposal is consistent with the believes that the proposal could Room. Copies of such filing also will be
requirements of Section 6(b) of the Act,4 enhance the use of automatic executions available for inspection and copying at
in general, and Section 6(b)(5) 5 in on the Exchange and may result in more the principal office of the BSE. All
particular, in that it is designed to timely and orderly executions of orders. comments received will be posted
promote just and equitable principles of At any time within 60 days of the without change; the Commission does
trade, to remove impediments to and filing of such proposed rule change, the not edit personal identifying
perfect the mechanism of a free and Commission may summarily abrogate information from submissions. You
open market and a national market such rule change if it appears to the should submit only information that
system, and is not designed to permit Commission that such action is you wish to make available publicly. All
unfair discrimination between necessary or appropriate in the public submissions should refer to File
customers, brokers, or dealers, or to interest, for the protection of investors, Number SR–BSE–2004–46 and should
regulate by virtue of any authority or otherwise in furtherance of the be submitted on or before February 14,
matters not related to the administration purposes of the Act. 2005.
of the Exchange. For the Commission, by the Division of
IV. Solicitation of Comments
Market Regulation, pursuant to delegated
B. Self-Regulatory Organization’s Interested persons are invited to authority.11
Statement on Burden on Competition submit written data, views, and J. Lynn Taylor,
The Exchange does not believe that arguments concerning the foregoing, Assistant Secretary.
the proposed rule change will impose including whether the proposed rule [FR Doc. E5–212 Filed 1–21–05; 8:45 am]
any burden on competition not change is consistent with the Act. BILLING CODE 8010–01–P
necessary or appropriate in furtherance Comments may be submitted by any of
of the purposes of the Act. the following methods:
C. Self-Regulatory Organization’s Electronic Comments SECURITIES AND EXCHANGE
Statement on Comments on the COMMISSION
• Use the Commission’s Internet
Proposed Rule Change Received From comment form (http://www.sec.gov/ [Release No. 34–51030; File No. SR–CBOE–
Members, Participants, or Others rules/sro.shtml); or 2004–91]
The Exchange has neither solicited • Send E-mail to rule-
Self-Regulatory Organizations; Notice
nor received comments on the proposed comments@sec.gov. Please include File
of Filing and Immediate Effectiveness
rule change. Number SR–BSE–2004–46 on the
of Proposed Rule Change and
subject line.
III. Date of Effectiveness of the Amendment No. 1 Thereto by the
Proposed Rule Change and Timing for Paper Comments Chicago Board Options Exchange,
Commission Action • Send paper comments in triplicate Incorporated To Extend a Pilot
The Exchange has designated the to Jonathan G. Katz, Secretary, Program and Eliminate the Rule
Securities and Exchange Commission, Prohibiting Electronically Generated
proposed rule change as one that: (1)
450 Fifth Street, NW., Washington, DC and Communicated Orders
Does not significantly affect the
protection of investors or the public 20549–0609. January 12, 2005.
interest; (2) does not impose any All submissions should refer to File Pursuant to Section 19(b)(1) of the
significant burden on competition; and Number SR–BSE–2004–46. This file Securities Exchange Act of 1934
(3) does not become operative for 30 number should be included on the (‘‘Act’’),1 and Rule 19b–4 2 thereunder,
days from the date of filing, or such notice is hereby given that on December
6 15 U.S.C. 78s(b)(3)(A).
shorter time as the Commission may 29, 2004, the Chicago Board Options
7 17 CFR 240.19b–4(f)(6).
designate if consistent with the Exchange, Incorporated (‘‘CBOE’’ or
8 Id.
protection of investors and the public 9 17
‘‘Exchange’’) filed with the Securities
CFR 240.19b–4(f)(6)(iii).
interest pursuant to Section 19(b)(3)(A) 10 For
purposes of only accelerating the operative
11 17 CFR 200.30–3(a)(12).
date of this proposal, the Commission has
4 15 U.S.C. 78f(b). 1 15 U.S.C. 78s(b)(1).
considered the rule’s impact on efficiency,
5 15 U.S.C. 78f(b)(5). competition and capital formation. 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.

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Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices 3405

and Exchange Commission pursuant to the RAES auto step-up [(C)] Effecting transactions that
(‘‘Commission’’) the proposed rule feature at the time it is sent; or for constitute manipulation as provided in
change as described in Items I and II broker-dealer orders, the order is Rule 4.7 and Exchange Act Rule 10b–5.
below, which Items have been prepared otherwise submitted in accordance with (d)–(e) No change.
by the Exchange. On January 7, 2005, Interpretation .01 of Rule 6.8; and * * * * *
the Exchange filed Amendment No. 1 to (3) If the order has either no
the proposed rule change.3 The contingency or has a contingency that is II. Self-Regulatory Organization’s
Exchange filed the proposal, as accepted for execution by the RAES Statement of the Purpose of, and
amended, as a ‘‘non-controversial’’ system. Statutory Basis for, the Proposed Rule
proposed rule change pursuant to A marketable order is a market order Change
Section 19(b)(3)(A)(iii) of the Act 4 and or a limit order where the specified In its filing with the Commission, the
Rule 19b–4(f)(6) thereunder.5 The price to sell is below or at the current Exchange included statements
Commission is publishing this notice to bid, or if to buy is above or at the concerning the purpose of and basis for
solicit comments on the proposed rule current offer. An order is tradable the proposed rule change and discussed
change, as amended, from interested pursuant to the RAES auto step-up any comments it received on the
persons. feature if the appropriate Floor proposed rule change. The text of these
Procedure Committee has designated statements may be examined at the
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of the class as an automatic step-up class places specified in Item IV below. The
the Proposed Rule Change and if the National Best Bid or Offer for Exchange has prepared summaries, set
the particular series is reflected by the forth in Sections A, B, and C below, of
The Exchange proposes to extend the current best bid or offer in another the most significant aspects of such
pilot program in CBOE Rule 6.13 market by no more than the step-up statements.
relating to market maker access to the amount as defined in Interpretation .02
Exchange’s automatic execution system of Rule 6.8. A. Self-Regulatory Organization’s
and to eliminate CBOE Rule 6.8A (b) The Exchange’s Order Routing Statement of the Purpose of, and
prohibiting the electronic generation System (‘‘ORS’’) is the Exchange’s Statutory Basis for, the Proposed Rule
and communication of orders. electronic order routing and delivery Change
Below is the text of the proposed rule system which routes orders to the 1. Purpose
change. Proposed additions are Exchange’s automatic and electronic
italicized; proposed deletions are The Commission in 2004 approved on
execution systems and to other
[bracketed]. a pilot basis CBOE Rule 6.13(b)(i)(C)(iii)
Exchange systems, such as handheld
relating to the frequency with which
Rules of the Chicago Board Options terminals and trade match systems. The
certain market participants could
Exchange ORS also delivers electronic fill reports
submit orders for execution through the
and order status reports.]
* * * * * Exchange’s Hybrid Trading System.6
Rule 6.8A. [Electronically Generated Rule 6.13. CBOE Hybrid System’s Rule 6.13(b)(i)(C)(iii) provides in
and Communicated Orders] Reserved Automatic Execution Feature relevant part:
[(a) Members may not enter, nor (a) No change. (iii) 15-Second Limitation: With respect to
permit the entry of, orders into the (b) Automatic Execution. orders eligible for submission pursuant to
Exchange’s Order Routing System if (i) * * * paragraph (b)(i)(C)(ii), members shall neither
those orders are created and (A)–(B) No change. enter nor permit the entry of multiple orders
communicated electronically without (C) Access: on the same side of the market in an option
manual input (i.e., order entry must (i)–(ii) No Change. class within any 15-second period for an
involve manual input such as entering (iii) 15-Second Limitation: With account or accounts of the same beneficial
the terms of an order into an order-entry respect to orders eligible for submission owner. The appropriate FPC may shorten the
duration of this 15-second period by
screen or manually selecting a displayed pursuant to paragraph (b)(i)(C)(ii), providing notice to the membership via a
order against which an off-setting order members shall neither enter nor permit Regulatory Circular that is issued at least one
should be sent), and if such orders are the entry of multiple orders on the same day prior to implementation. The
eligible for execution on RAES at the side of the market in an option class effectiveness of this rule shall terminate on
time they are sent. Nothing in this within any 15-second period for an January 12, 2005. * * *
paragraph, however, prohibits members account or accounts of the same Upon approval of CBOE Rule
from electronically communicating to beneficial owner. The appropriate FPC 6.13(b)(i)(C)(iii), the Exchange began
the Exchange orders manually entered may shorten the duration of this 15- allowing orders from options market
by customers into front-end second period by providing notice to the makers to be eligible for automatic
communication systems (e.g., Internet membership via a Regulatory Circular execution, subject to the 15-second
gateways, online networks, etc.). An that is issued at least one day prior to limitation described above. As the pilot
order is eligible for execution on RAES implementation. The effectiveness of period is scheduled to expire on January
if: this rule shall terminate on [January 12, 12, 2005, the Exchange proposes to
(1) Its size is equal to or less than the 2005] October 12, 2005. extend the pilot program for a nine-
maximum RAES order size for the * * * * * month period. The Exchange believes
particular series; (ii)–(iv) No change.
(2) For public customer orders, the that the pilot program has been
(c) * * * successful in attracting market maker
order is marketable or is tradable (i) No change. volume to the Exchange. In this regard,
(ii) * * * the Exchange represents that during
3 See Form 19b–4 dated January 7, 2005
(A) No change. November 2004, the number of average
(‘‘Amendment No. 1’’). Amendment No. 1 made
minor revisions to Item 7 of the proposed rule
(B) [Electronic generation and
change as originally filed. communication of orders in violation of 6 See Securities Exchange Act Release No. 50005
4 15 U.S.C. 78s(b)(3)(A)(iii). Rule 6.8A by non-trading crowd (July 12, 2004), 69 FR 43032 (July 19, 2004) (SR–
5 17 CFR 240.19b–4(f)(6). participants.] CBOE–2004–33).

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3406 Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices

daily transactions involving options B. Self-Regulatory Organization’s electronically generated and


market maker orders submitted through Statement on Burden on Competition communicated orders.15 For this reason,
the Exchange’s Order Routing System The Exchange does not believe that the Commission designates this
(‘‘ORS’’) increased more than 300% the proposed rule change will impose proposal to be operative upon filing
compared to pre-pilot period any burden on competition not with the Commission.
transactions, and the average daily necessary or appropriate in furtherance IV. Solicitation of Comments
volume involving options market maker of the purposes of the Act.
orders submitted through the Interested persons are invited to
C. Self-Regulatory Organization’s submit written data, views, and
Exchange’s ORS almost doubled when Statement on Comments on the arguments concerning the foregoing,
compared to pre-pilot period volume. Proposed Rule Change Received From including whether the proposed rule
The Exchange notes that given the early Members, Participants, or Others change is consistent with the Act.
success of the pilot program, the
The Exchange neither solicited nor Comments may be submitted by any of
Exchange proposes to extend the pilot the following methods:
received comments on the proposal.
program’s duration nine months, until
October 12, 2005. III. Date of Effectiveness of the Electronic Comments
The Exchange also proposes to delete Proposed Rule Change and Timing for • Use the Commission’s Internet
CBOE Rule 6.8A, Electronically Commission Action comment form (http://www.sec.gov/
Generated and Communicated Orders, Because the foregoing rule does not (i) rules/sro.shtml); or
and all other existing references to significantly affect the protection of • Send an e-mail to rule-
CBOE Rule 6.8A. When the Exchange investors or the public interest; (ii) comments@sec.gov. Please include File
adopted CBOE Rule 6.13(b)(i)(C)(iii), impose any significant burden on Number SR–CBOE–2004–91 on the
CBOE market makers and Designated competition; and (iii) become operative subject line.
Primary Market Makers (DPMs) did not for 30 days from the date on which it
Paper Comments
have the protections available to them was filed, or such shorter time as the
Commission may designate if consistent • Send paper comments in triplicate
that they have today to prevent the
with the protection of investors and the to Jonathan G. Katz, Secretary,
rapid influx of orders. For this reason, Securities and Exchange Commission,
public interest, provided that the self-
CBOE Rule 6.8A when adopted was 450 Fifth Street, NW., Washington, DC
regulatory organization has given the
necessary to prevent excessive 20549–0609.
Commission written notice of its intent
exposure. Today, market makers have All submissions should refer to File
to file the proposed rule change at least
the ability to manage their exposure five business days prior to the date of Number SR–CBOE–2004–91. This file
more quickly and efficiently, thereby filing of the proposed rule change or number should be included on the
obviating the need for the CBOE Rule such shorter time as designated by the subject line if e-mail is used. To help the
6.8A.7 Commission, the proposed rule change Commission process and review your
2. Statutory Basis has become effective pursuant to comments more efficiently, please use
Section 19(b)(3)(A) of the Act 11 and only one method. The Commission will
The Exchange believes that the Rule 19b–4(f)(6) thereunder.12 At any post all comments on the Commission’s
extension of the pilot program will time within 60 days of the filing of such Internet Web site (http://www.sec.gov/
allow the Exchange to continue to proposed rule change, the Commission rules/sro.shtml). Copies of the
provide auto-ex access to all options may summarily abrogate such rule submission, all subsequent
market makers, and that elimination of change if it appears to the Commission amendments, all written statements
the electronic generation of orders that such action is necessary or with respect to the proposed rule
prohibition will enhance access to the appropriate in the public interest, for change that are filed with the
Exchange. Accordingly, the Exchange the protection of investors, or otherwise Commission, and all written
believes the proposed rule change is in furtherance of the purposes of the communications relating to the
consistent with the Act 8 and the rules Act.13 proposed rule change between the
and regulations under the Act The Exchange has requested that the Commission and any person, other than
applicable to a national securities Commission waive the 30-day operative those that may be withheld from the
exchange and, in particular, the delay under Rule 19b–4(f)(6)(iii).14 The public in accordance with the
Commission believes that the waiver of provisions of 5 U.S.C. 552, will be
requirements of Section 6(b) of the Act.9
the 30-day operative delay is consistent available for inspection and copying in
Specifically, the Exchange believes the
with the protection of investors and the the Commission’s Public Reference
proposed rule change is consistent with
public interest. Acceleration of the 30- Room. Copies of the filing also will be
the Section 6(b)(5) 10 requirements that available for inspection and copying at
day operative period delay would allow
the rules of an exchange be designed to the principal office of the Exchange. All
the pilot program to continue
promote just and equitable principles of uninterrupted and would remove comments received will be posted
trade, to prevent fraudulent and immediately the restriction on the entry without change; the Commission does
manipulative acts and, in general, to into the Exchange’s ORS of not edit personal identifying
protect investors and the public interest. information from submissions. You
11 15
U.S.C. 78s(b)(3)(A). should submit only information that
7 Inthis regard, the Exchange notes that the 12 17
CFR 240.19b–4(f)(6). you wish to make available publicly. All
Philadelphia Stock Exchange eliminated its 13 For purposes of calculating the 60-day period
electronic generation rule in 2003. See Securities
submissions should refer to File
within which the Commission may summarily
Exchange Act Release No. 48648 (October 16, 2003), abrogate the proposed rule change under Section
Number SR–CBOE–2004–91 and should
68 FR 60762 (October 23, 2003) (SR–Phlx–2003– 19(b)(3)(C) of the Act, the Commission considers
37). that period to commence on January 7, 2005, the 15 For purposes only of waiving the 30-day
8 15 U.S.C. 78a et seq.
date the Exchange filed Amendment No. 1 to the operative delay, the Commission has considered the
9 15 U.S.C. 78f(b). proposed rule change. See 15 U.S.C. 78s(b)(3)(C). proposed rule’s impact on efficiency, competition,
10 15 U.S.C. 78f(b)(5). 14 17 CFR 240.19b–4(f)(6)(iii). and capital formation. 15 U.S.C. 78c(f).

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Federal Register / Vol. 70, No. 14 / Monday, January 24, 2005 / Notices 3407

be submitted on or before February 14, proposed rule change. The text of these any burden on competition that is not
2005. statements may be examined at the necessary or appropriate in furtherance
For the Commission, by the Division of places specified in Item IV below. The of the purposes of the Act.
Market Regulation, pursuant to delegated Exchange has prepared summaries, set
C. Self-Regulatory Organization’s
authority.16 forth in sections A, B and C below, of
Statement on Comments on the
the most significant aspects of such
J. Lynn Taylor, Proposed Rule Change Received From
statements.
Assistant Secretary. Members, Participants or Others
[FR Doc. E5–213 Filed 1–21–05; 8:45 am] A. Self-Regulatory Organization’s No written comments were solicited
BILLING CODE 8010–01–P
Statement of the Purpose of, and or received with respect to the proposed
Statutory Basis for, the Proposed Rule rule change.
Change
SECURITIES AND EXCHANGE III. Date of Effectiveness of the
1. Purpose Proposed Rule Change and Timing for
COMMISSION
The Exchange proposes to amend its Commission Action
[Release No. 34–51027; File No. SR–CBOE– Fee Schedule to establish fees for
2005–07]
Because the foregoing rule change
transactions in options on SPDRs. establishes or changes a due, fee or
The transaction fee for customer other charge imposed by the Exchange,
Self-Regulatory Organizations; Notice orders in options on SPDRs will be $.15
of Filing and Immediate Effectiveness it has become effective pursuant to
per contract.3 All other transaction fees Section 19(b)(3)(A)(ii) of the Act 6 and
of Proposed Rule Change by the for options on SPDRs will be equal to
Chicago Board Options Exchange, Rule 19b–4(f)(2) 7 thereunder. At any
the transaction fees currently applied to time within 60 days of the filing of the
Inc., Relating to Fees for Transactions options on the Nasdaq-100 Index
in Options on the Standard & Poor’s proposed rule change, the Commission
Tracking Stock (‘‘QQQ’’). Specifically, may summarily abrogate such rule
Depository Receipts market-maker and DPM transaction fees change if it appears to the Commission
January 12, 2005. will be $.24 per contract, member firm that such action is necessary or
Pursuant to Section 19(b)(1) of the proprietary transaction fees will be $.20 appropriate in the public interest, for
Securities Exchange Act of 1934 for facilitation of customer orders and the protection of investors, or otherwise
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 $.24 for non-facilitation orders, broker- in furtherance of the purposes of the
notice is hereby given that on January dealer transaction fees will be $.25 per Act.
11, 2005, the Chicago Board Options contract, non-member market-maker
Exchange, Inc. (‘‘Exchange’’ or ‘‘CBOE’’) transaction fees will be $.26 per IV. Solicitation of Comments
filed with the Securities and Exchange contract, and linkage fees will be $.24 Interested persons are invited to
Commission (‘‘Commission’’) the per contract. submit written data, views, and
proposed rule change as described in As per the current CBOE Fee arguments concerning the foregoing,
Items I, II, and III below, which Items Schedule, the floor brokerage fee for including whether the proposed rule
have been prepared by the Exchange. options on SPDRs will be $.04 per change is consistent with the Act.
The Commission is publishing this contract and $.02 per contract for Comments may be submitted by any of
notice to solicit comments on the crossed orders. The RAES Access Fee the following methods:
proposed rule change from interested will not apply as options on SPDRs will
trade on the Exchange’s Hybrid Trading Electronic Comments
persons.
System. The $.22 marketing fee will • Use the Commission’s Internet
I. Self-Regulatory Organization’s apply to market-maker, DPM and e– comment form (http://www.sec.gov/
Statement of the Terms of Substance of DPM transactions in options on SPDRs.4 rules/sro.shtml); or
the Proposed Rule Change The proposed rule change is intended • Send an E-mail to rule-
The Exchange is proposing to amend to establish fees for CBOE’s options on comments@sec.gov. Please include File
its Fee Schedule to establish fees for SPDRs that are competitive with the fees No. SR–CBOE–2005–07 on the subject
transactions in options on the Standard charged by other exchanges for line.
& Poor’s Depository Receipts transactions in options on SPDRs.
Paper Comments
(‘‘SPDRs’’). The text of the proposed 2. Statutory Basis
rule change is available on CBOE’s Web • Send paper comments in triplicate
site (http://www.cboe.org/legal/), at The Exchange believes that the to Jonathan G. Katz, Secretary,
CBOE’s Office of the Secretary, and at proposal is consistent with Section Securities and Exchange Commission,
the Commission’s Public Reference 6(b)(4) of the Act,5 in that it provides for 450 Fifth Street, NW., Washington, DC
Room. the equitable allocation of reasonable 20549–0609.
dues, fees and other charges among its All submissions should refer to File
II. Self-Regulatory Organization’s members and other persons using its Number SR–CBOE–2005–07. This file
Statement of the Purpose of, and facilities. number should be included on the
Statutory Basis for, the Proposed Rule subject line if e-mail is used. To help the
Change B. Self-Regulatory Organization’s
Statement on Burden on Competition Commission process and review your
In its filing with the Commission, the comments more efficiently, please use
Exchange included statements The Exchange does not believe that only one method. The Commission will
concerning the purpose of, and basis for, the proposed rule change will impose post all comments on the Commissions
the proposed rule change and discussed Internet Web site (http://www.sec.gov/
3 Under the current CBOE Fee Schedule, the
any comments it received on the customer transaction fee for all options on
rules/sro.shtml). Copies of the
exchange-traded funds (other than QQQ and DIA submission, all subsequent
16 17 CFR 200.30–3(a)(12). options) is $.15 per contract.
1 15 U.S.C. 78s(b)(1). 4 See File No. SR–CBOE–2005–05. 6 15 U.S.C. 78s(b)(3)(A)(ii).
2 17 CFR 240.19b–4. 5 15 U.S.C. 78f(b)(4). 7 17 CFR 19b–4(f)(2).

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