[Federal Register: June 2, 2006 (Volume 71, Number 106)]
[Notices]
[Page 32156-32158]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn06-134]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34-53872; File No. SR-CBOE-2006-45]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Regarding Its
Board Review Authority
May 25, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 5, 2006, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``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 CBOE. 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
The Exchange proposes to amend its rules to clarify the authority
of its Board of Directors (``Board'') with respect to actions or
inactions of committees of CBOE and CBOE staff. The text of the
proposed rule change is below. Proposed new language is in italics;
proposed deletions are in [brackets].
* * * * *
Chicago Board Options Exchange, Incorporated
Rules
* * * * *
Chapter II Organization and Administration (Rules 2.1-2.40)
Part A--Committees (Rule 2.1)
Rule 2.1. Committees of the Exchange
(a)-(c) No change.
(d) General Duties and Powers of Committees. Each committee shall
administer the provisions of the Constitution and the rules of the
Exchange pertaining to matters within its jurisdiction. In addition to
any powers and duties specifically granted in the Constitution or
Rules, e[E]ach committee shall have only such other powers and duties
as may be delegated to it by the Board of Directors. Each committee is
subject to the control and supervision of the Board of Directors.
Part B--Board Review (Rule 2.2)
Rule 2.2. Power of the Board to Review Exchange Decisions
In connection with any delegation to a committee or committees
pursuant to Article EIGHTH of the Certificate of Incorporation, the
Board retains the power and authority to review, affirm, modify,
suspend or overrule any and all actions or inactions of committees and
of all officers, representatives or designees of the Exchange;
provided, however, that such power and authority shall not apply to (a)
actions taken (or inactions) pursuant to Chapters XVII, XVIII and XIX
of the Rules, unless specifically provided for in those Rules, or (b)
actions taken by (or inactions of) the Nominating Committee or
Executive Committee pursuant to Article IV of the Constitution.
Part [B]C--Departments (Rule 2.15)
No change.
Part [C]D--Dues, Fees and Other Charges (Rules 2.20-2.40)
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, CBOE included statements
concerning
[[Page 32157]]
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.
CBOE 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
CBOE's Certificate of Incorporation provides that the Board shall
manage the business and affairs of the Exchange except to the extent
that the authority, powers, and duties of such management shall be
delegated to a committee or committees of the Exchange that are
established pursuant to the Exchange's Constitution. The Certificate of
Incorporation and Constitution of CBOE also provide that the Board may
establish one or more committees, each of which shall have the
authority, power, and duties as may be prescribed in the Exchange's
Constitution or Rules, or by resolution of the Board.\3\
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\3\ See Article EIGHTH of the CBOE Certificate of Incorporation
and Section 7.6 of the CBOE Constitution.
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Over time the Board has established various committees, several of
which have specific authorities described in the Exchange's
Constitution or Rules. Though CBOE Rule 2.1, Committees of the
Exchange, currently provides that each committee ``is subject to the
control and supervision of the Board,'' this supervisory power alone
does not make explicit the power of the Board to directly modify or
overrule the action (or inaction) of a committee when the
decisionmaking authority with respect to the action has been delegated
to the committee in the Exchange's Rules. The proposed rule change will
address this by explicitly reserving the Board's review authority over
all actions taken by (or inactions of) committees of CBOE, as well as
CBOE staff. Specifically, this proposed rule change seeks to adopt CBOE
Rule 2.2, Power of the Board to Review Exchange Decisions, which
clarifies that the Board retains the power and authority to review,
affirm, modify, suspend, or overrule any and all actions or inactions
of committees of CBOE and of CBOE officers, representatives, or
designees. Proposed CBOE Rule 2.2 would not apply to actions taken (or
inactions) pursuant to Chapters XVII (Discipline), XVIII (Arbitration),
and XIX (Hearings and Review) of the Exchange's Rules, unless
specifically provided for in those Rules, or to actions taken by (or
inactions of) the Nominating Committee or Executive Committee relating
to the nominating process pursuant to Article IV of the Exchange's
Constitution. The proposed rule change also seeks to amend CBOE Rule
2.1 to make clear that committees will only have such powers and duties
as are specifically granted in the Exchange's Constitution or Rules and
only such other powers and duties as may be delegated to them by the
Board.
2. Statutory Basis
The Exchange believes that, because it clarifies the Board's
authority, the proposed rule change is consistent with the requirements
of Section 6(b)(5) of the Act \4\ which requires, among other things,
that the rules of the Exchange be designed to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, and in general, to protect investors and the public
interest. The Exchange also believes that the proposed rule change is
consistent with the requirements of Section 6(b)(1) of the Act,\5\
which requires that an exchange be so organized so as to have the
capacity to be able to carry out the purposes of the Act and to comply,
and (subject to any rule or order of the Commission pursuant to Section
17(d)\6\ or 19(g)(2)\7\ of the Act) to enforce compliance by its
members and persons associated with its members, with the provisions of
the Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\4\ 15 U.S.C. 78f(b)(5).
\5\ 15 U.S.C. 78f(b)(1).
\6\ 15 U.S.C. 78q(d).
\7\ 15 U.S.C. 78s(g)(2).
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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 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
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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall:
(A) By order approve such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2006-45 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2006-45. 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 CBOE.
All
[[Page 32158]]
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-2006-45 and should be
submitted on or before June 23, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
J. Lynn Taylor,
Assistant Secretary.
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\8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E6-8552 Filed 6-1-06; 8:45 am]
BILLING CODE 8010-01-P