Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change To Prohibit the Practice of Unbundling Orders To Maximize Rebates of Fees

I. Introduction

On November 7, 2005, the Chicago Board Options Exchange, Incorporated (“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”) and Rule 19b-4 thereunder, a proposed rule change to prohibit the practice of unbundling orders to maximize rebates of fees. The proposed rule change was published for notice and comment in the Federal Register on December 8, 2005. The Commission received no comments on the proposal. This order approves the proposed rule change.

II. Description of the Proposal

CBOE proposed to adopt a new rule to expressly prohibit its members from dividing single orders into multiple orders for the sole purpose of maximizing market data rebates.

III. Discussion and Commission Findings

The Commission has reviewed carefully the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange, particularly section 6(b)(5) of the Act which, among other things, requires that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating securities transactions, to remove impediments to perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Commission believes that the proposed rule change should help eliminate the distortive practice of trade shredding, and, therefore, promote just and equitable principles of trade.

IV. Conclusion

It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-CBOE-2005-92), be and hereby is, approved.