[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Notices]
[Page 70814-70816]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de06-110]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54831; File No. SR-CBOE-2006-100]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to the Appointment of CBSX DPMs
November 29, 2006.
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 November 27, 2006, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been substantially prepared by
the Exchange. The Exchange has designated this proposal as non-
controversial under Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder,\4\ which renders the proposed rule change
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to adopt rules to appoint CBOE Stock Exchange DPMs.
The text of the proposed rule change is available on the Exchange's Web
site (http://www.cboe.com), at the Exchange's principal office, and at
the Commission's Public Reference Room.
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 Exchange 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In September 2006, the Commission approved Exchange Chapters 50-55
governing the trading of non-option securities on the Exchange.\5\ The
Exchange, via a separate rule filing, will be proposing to further
modify Chapters 50-55 in connection with the establishment of the CBOE
Stock Exchange (``CBSX''). CBSX will be a facility of the Exchange and
will serve as the Exchange's vehicle for trading non-option securities.
CBSX is a separate legal entity (a Delaware Limited Liability Company)
that is owned by the Exchange and several strategic partners. The
Exchange separately has submitted a rule filing governing the
allocation of securities to CBSX DPMs,\6\ and will shortly submit a
rule filing proposing to establish CBSX as a facility of the Exchange.
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\5\ See Securities Exchange Act Release No. 54422 (September 11,
2006), 71 FR 54537 (September 15, 2006) (``STOC Approval Order'')
(approving SR-CBOE-2004-21).
\6\ See Securities Exchange Act Release No. 54792 (November 20,
2006), 71 FR 68659 (November 27, 2006) (notice of filing of SR-CBOE-
2006-96).
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The purpose of this filing is to adopt rules that will allow for
the appointment of CBSX DPMs. Any such appointments would be contingent
on Commission approval of rules governing CBSX DPM trading procedures
and obligations. The Exchange hopes to
[[Page 70815]]
launch CBSX on February 5, 2007. Establishing rules to allow for
appointment of CBSX DPMs ahead of the anticipated launch of CBSX will
allow the CBSX DPM firms to immediately market CBSX as a destination
marketplace.
The Exchange expects CBSX will appoint a limited number of CBSX
DPMs. In accordance with the proposed revisions to Rule 53.53, CBSX
will select the firms that would be designated as CBSX DPMs. Factors to
be considered in making such a selection are essentially identical to
the factors set forth in the current rule applicable to STOC DPMs. Such
factors may include, but are not limited to, any one or more of the
following: (1) Adequacy of capital; (2) operational capacity; (3)
trading experience and observance of generally accepted standards of
conduct by the applicant; (4) number and experience of support
personnel of the applicant; (5) regulatory history of adherence to
Exchange rules by the applicant; (6) willingness and ability of the
applicant to promote CBSX as a marketplace; (7) performance evaluations
conducted pursuant to Exchange/CBSX rules; and (8) in the event that
one or more shareholders, directors, officers, partners, managers,
members, or other principals of an applicant is or has previously been
a shareholder, director, officer, partner, manager, member, or other
principal in another CBSX DPM, adherence by such CBSX DPM to the
requirements set forth in CBSX rules regarding CBSX DPM
responsibilities and obligations during the time period in which such
person(s) held such position(s) with the CBSX DPM.
2. Statutory Basis
CBOE believes the proposed rule change is consistent with 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.\7\ Specifically, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(5) \8\ requirements
that the rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and to protect
investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 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 would impose
any burden on competition that is 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
The Exchange neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \9\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\10\ Because the foregoing proposed rule change (i) does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) does not 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,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ Rule 19b-4(f)(6)(iii) also requires the Exchange to give
written notice to the Commission of its intent to file the proposed
rule change at least five business days prior to filing. The
Exchange complied with this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative
delay if such action is consistent with the protection of investors and
the public interest. The Exchange has asked the Commission to waive the
operative delay to permit the proposed rule change to become effective
prior to the 30th day after filing.
The Commission has determined to waive the 30-day delay and allow
the proposed rule change to become operative immediately.\12\ The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The proposed rule is substantially similar to the previous version of
the rule approved for the Exchange's STOC system.\13\
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\12\ For purposes only of waiving the operative delay of this
proposal, 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).
\13\ See STOC Approval Order, supra note 5.
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At any time within 60 days of the filing of the 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.
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 No. SR-CBOE-2006-100 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2006-100. 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 Commissions 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 inspection
and copying in the Commission's Public Reference Room. Copies of such
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
[[Page 70816]]
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-CBOE-2006-100 and should be submitted on or before
December 27, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-20656 Filed 12-5-06; 8:45 am]
BILLING CODE 8011-01-P