[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Notices]
[Page 70810]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de06-108]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54827; File No. SR-CBOE-2006-81]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, Relating to Minor Rule Violations in
Connection With Trade Reporting
November 29, 2006.
On October 4, 2006, 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'')\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend CBOE Rule 17.50,
``Imposition of Fines for Minor Rule Violations,'' (the ``MRVP''),
particularly the provisions of CBOE Rule 17.50(g)(4), in order to: (a)
Increase the fines for failures to submit trade information in
accordance with CBOE Rule 6.51, and (b) extend the ``look-back'' period
for assessing such rule violations. On October 17, 2006, the Exchange
filed Amendment No. 1 to the proposed rule change. The proposed rule
change, as amended, was published for comment in the Federal Register
on October 27, 2006.\3\ The Commission received no comments regarding
the proposal.
The Commission finds that the proposal is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\4\ In particular, the
Commission believes that the proposal is consistent with Section
6(b)(5) of the Act,\5\ because a proposed rule change that is
reasonably designed to require Exchange members to comply with its
trade reporting rules should help protect investors and the public
interest.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 54631 (October 20,
2006), 71 FR 63057.
\4\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\5\ 15 U.S.C. 78f(b)(5).
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The Commission also believes that handling violations of trade
reporting rules pursuant to the MRVP is consistent with Sections
6(b)(1) and 6(b)(6) of the Act,\6\ which require that the rules of an
exchange enforce compliance with, and provide appropriate discipline
for, violations of Commission and Exchange rules. In addition, because
existing CBOE Rule 17.50 provides procedural rights to a person fined
under the MRVP to contest the fine and permits a hearing on the matter,
the Commission believes that the MRVP, as amended by this proposal,
provides a fair procedure for the disciplining of members and persons
associated with members, consistent with Sections 6(b)(7) and 6(d)(1)
of the Act.\7\
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\6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\7\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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Finally, the Commission finds that the proposal is consistent with
the public interest, the protection of investors, or otherwise in
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2)
under the Act,\8\ which governs minor rule violation plans. The
Commission believes that the proposed change to the MRVP should
strengthen the Exchange's ability to carry out its oversight and
enforcement responsibilities as a self-regulatory organization in cases
where full disciplinary proceedings are unsuitable in view of the minor
nature of the particular violation.
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\8\ 17 CFR 240.19d-1(c)(2).
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In approving this proposed rule change, the Commission in no way
minimizes the importance of compliance with CBOE rules and all other
rules subject to the imposition of fines under the MRVP. The Commission
believes that the violation of any self-regulatory organization's
rules, as well as Commission rules, is a serious matter. However, the
MRVP provides a reasonable means of addressing rule violations that do
not rise to the level of requiring formal disciplinary proceedings,
while providing greater flexibility in handling certain violations. The
Commission expects that CBOE will continue to conduct surveillance with
due diligence and make a determination based on its findings, on a
case-by-case basis, whether a fine of more or less than the recommended
amount is appropriate for a violation under the MRVP or whether a
violation requires formal disciplinary action under CBOE Rules 17.1-
17.10.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\9\ and Rule 19d-1(c)(2) under the Act,\10\ that the proposed rule
change (SR-CBOE-2006-81), as amended, be, and hereby is, approved and
declared effective.
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\9\ 15 U.S.C. 78s(b)(2).
\10\ 17 CFR 240.19d-1(c)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
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\11\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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[FR Doc. 06-9544 Filed 12-5-06; 8:45am]
BILLING CODE 8011-01-P