# Self-Regulatory Organizations; Order Approving Proposed Rule Change by the Chicago Board Options Exchange, Inc. Relating to Minimum Trading Increments for Spread, Straddle, and Combination Orders in Options on the S&P 500 Index
On December 13, 2001, the Chicago Board Options Exchange, Inc. (“CBOE or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), [^1] and Rule 19b-4 thereunder, [^2] a proposed rule change to amend CBOE Rule 6.42, *Minimum Increments for Bids and Offers,* to require that bids and offers on spread, straddle, or combination orders in options on the S&P 500 Index (“SPX”), except for box spreads, be expressed in decimal increments no smaller than $0.05. In addition, the proposed rule change adds new interpretation .05 to CBOE to define the term “box spreads.” The proposed rule change was published for comment in the *Federal Register* on March 5, 2002. [^3]
[^1] 15 U.S.C. 78s(b)(1).
[^2] 17 CFR 240.19b-4.
[^3] Securities Exchange Act Release No. 45479 (February 26, 2002), 67 FR 10026.
The Commission finds that the proposed rule change in consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange [^4] and, in particular, the requirements of Section 6 of the Act [^5] and the rules and regulations thereunder. The Commission believes that the proposed rule change is consistent with Section 6(b)(5) of the Act, [^6] which, among other things, requires that the Exchange's rules be designed to promote just and equitable principles of trade and facilitate transactions in securities. The commission believes that requiring bids and offers, in spread, straddle, and combination orders in SPX options to be expressed in decimal increments no smaller that $0.05 should increase the ability of SPX options traders to execute these types of orders efficiently by reducing the number of steps necessary to break the orders down into the required contract quantities and prices.
[^4] In approving this proposed rule change, the Commission notes that it has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
[^5] 15 U.S.C. 78f.
[^6] 15 U.S.C. 78f(b)(5).
It is therefore ordered, pursuant to Section 19(b)(2) of the Act, [^7] that the proposed rule change (SR-CBOE-2001-62) is approved.
[^7] 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation, pursuant to delegated authority. [^8]
[^8] 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.