[Federal Register Volume 75, Number 27 (Wednesday, February 10, 2010)]
[Notices]
[Pages 6776-6777]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2950]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61494; File No. SR-CBOE-2010-012]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Rule 8.85 and Rule 8.92 Regarding the
Requirement To Own an Exchange Membership
February 4, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 2, 2010, Chicago Board Options Exchange, Incorporated
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``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 Substance
of the Proposed Rule Change
CBOE proposes to amend proposes to amend proposes to amend [sic]
Rule 8.85 and Rule 8.92 regarding the requirement to own an Exchange
membership. The text of the rule proposal is available on the
Exchange's Web site (http://www.cboe.org/legal), 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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBOE proposes to amend Rule 8.85 and Rule 8.92 to eliminate the
requirement that a DPM organization and an e-DPM organization are
required to own at least one Exchange membership. Instead, each DPM
organization and each e-DPM organization will be required to own or
lease such number of Exchange memberships as may be necessary based on
the aggregate ``appointment cost'' for the classes allocated to the DPM
organization or e-DPM organization. CBOE established this ownership
requirement with respect to DPMs in 2000 and, at the time, believed
that it was appropriate and would encourage DPMs to have a long-term
commitment to CBOE.\3\ CBOE later included this requirement when its e-
DPM program was adopted.
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\3\ See Exchange Act Release No. 43186 (August 21, 2000), 65 FR
51880 (August 25, 2000) (SR-CBOE-99-37).
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CBOE no longer believes that this requirement is necessary
particularly as its proposed restructuring approaches, and eliminating
it may attract new DPM organizations to CBOE who otherwise may not be
willing to apply to be a DPM due to this membership ownership
requirement. CBOE notes that in connection with its plan to restructure
from a Delaware non-stock corporation owned by its members to a
Delaware stock corporation that will be a wholly-owned subsidiary of
CBOE Holdings, this requirement will be eliminated.
[[Page 6777]]
Specifically, as part of CBOE's restructuring, the owners of membership
interests will become stockholders of CBOE Holdings through the
conversion of their memberships into shares of common stock of CBOE
Holdings. Additionally, Trading Permits will provide trading access to
the Exchange, and not Exchange memberships as is currently the case. A
Trading Permit will not convey any ownership interest in the Exchange,
and will only be available through the Exchange.\4\ As part of this
proposed rule change, CBOE proposes conforming changes to Rule 3.27,
and proposes to delete Interpretation .04 of Rule 8.85 and
Interpretation .01 of Rule 8.92 which are no longer necessary in light
of the elimination of the membership ownership requirement.\5\
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\4\ See Exchange Act Release No. 58425 (August 26, 2008), 73 FR
51652 (September 4, 2008) (noticing for comment SR-CBOE-2008-088).
CBOE has consented to an extension of time for Commission action on
this proposed rule change pending a membership vote.
\5\ CBOE notes that Temporary Members under Rule 3.19.02 will
not be adversely impacted by this proposed rule change.
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In connection with this proposed rule change, CBOE proposes to
delete Interpretation .03 of Rule 8.85, which was adopted in 2003 for
the purpose of allowing a senior principal's ownership of a membership
to satisfy the requirement on behalf of the DPM organization, but only
if the senior principal meets certain criteria. In light of the fact
that CBOE is eliminating the membership ownership requirement,
Interpretation .03 no longer is applicable or necessary.
2. Statutory Basis
The Exchange believes the rule proposal is consistent with the
Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations under the Act applicable to a national securities exchange
and, in particular, the requirements of Section 6(b) of the Act.\6\
Specifically, the Exchange believes that the proposed rule change is
consistent with the Section 6(b)(5) Act \7\ requirements that the rules
of an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts and, in general, to
protect investors and the public interest. The DPM and e-DPM membership
ownership requirement is no longer necessary and eliminating it may
attract new organizations to act in the capacity of a DPM (or e-DPM).
Additionally, this requirement will be eliminated in connection with
CBOE's restructuring.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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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 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
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule 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 if consistent with the protection of
investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file the proposed rule change at least five business days prior to the
date of filing of the proposed rule change or such shorter time as
designated by the Commission, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\ At any time within 60 days of the filing of such
proposed rule change, the Commission may summarily abrogate 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
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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 e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2010-012 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-2010-012. This file
number should be included on the subject line if e-mail 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, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
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-2010-012 and should be submitted on or before March
3, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2950 Filed 2-9-10; 8:45 am]
BILLING CODE 8011-01-P