10076 Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices 

21See 17 CFR 240.10A–3. 

22 15 U.S.C. 78f(b)(2). 

23 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78f(b)(10). 

4 15 U.S.C. 78l. 5 15 U.S.C. 78f(b)(10)(B). 

trading the Shares; (c) the risks involved 

in trading the Shares during the 

Opening and Late Trading Sessions 

when an updated Portfolio Indicative 

Value will not be calculated or publicly 

disseminated; (d) how information 

regarding the Portfolio Indicative Value 

is disseminated; (e) the requirement that 

ETP Holders deliver a prospectus to 

investors purchasing newly issued 

Shares prior to or concurrently with the 

confirmation of a transaction; and (f) 

trading information. 

(5) A minimum of 100,000 Shares will 

be outstanding at the commencement of 

trading on the Exchange. 

(6) For initial and/or continued 

listing, the Shares must be in 

compliance with Rule 10A–3 under the 

Act.21

This approval order is based on the 

Exchange’s representations. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,22 that the 

proposed rule change (SR–NYSEArca– 

2010–116), as modified by Amendment 

No. 1 thereto, be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–3984 Filed 2–22–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63918; File No. SR–C2– 

2011–005] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change to Adopt Supplemental 

Rule (a) to Chapter 4 Relating to Proxy 

Voting 

February 16, 2011. 

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 February 

10, 2011, the C2 Options Exchange, 

Incorporated (‘‘Exchange’’ or ‘‘C2’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II 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, and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt 

Supplemental Rule (a), Proxy Voting, to 

C2 Chapter 4 in accordance with 

provisions of Section 957 of the DoddFrank Wall Street Reform and Consumer 

Protection Act (the ‘‘Dodd-Frank Act’’). 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Section 957 of the Dodd-Frank Act 

adopted new Section 6(b)(10) of the 

Act,3 which requires the rules of each 

national securities exchange to prohibit 

any member that is not the beneficial 

owner of a security registered under 

Section 12 of the Act 4 from granting a 

proxy to vote the security in connection 

with certain shareholder votes, unless 

the beneficial owner of the security has 

instructed the member to vote the proxy 

in accordance with the voting 

instructions of the beneficial owner. The 

shareholder votes covered by Section 

957 include any vote with respect to (i) 

the election of a member of the board of 

directors of an issuer (except for a vote 

with respect to the uncontested election 

of a member of the board of directors of 

any investment company registered 

under the Investment Company Act of 

1940 (the ‘‘Investment Company Act’’), 

(ii) executive compensation, or (iii) any 

other significant matter, as determined 

by the Commission, by rule.5

Accordingly, in order to carryout the 

requirements of Section 957 of the 

Dodd-Frank Act, the Exchange is 

proposing to adopt Supplemental Rule 

(a) to C2 Chapter 4. Paragraph (1) of the 

proposed rule provides that a C2 Permit 

Holder is prohibited from giving a proxy 

to vote stock that is registered in its 

name, unless: (i) Such Permit Holder is 

the beneficial owner of such stock; (ii) 

pursuant to the written instructions of 

the beneficial owner; or (iii) pursuant to 

the rules of any national securities 

exchange or association of which it is a 

member provided that the records of the 

Permit Holder clearly indicate the 

procedure it is following. The Exchange 

is proposing to adopt these provisions 

because other national securities 

exchanges and associations do allow 

proxy voting under certain limited 

circumstances while the current 

Exchange Rules are silent on such 

matters. Therefore, a C2 Permit Holder 

that is also a member of another 

national securities exchange or 

association may vote shares held for a 

customer when allowed under its 

membership at another national 

securities exchange or association, 

provided that the records of the C2 

Permit Holder clearly indicate the 

procedure it is following. 

Notwithstanding the above, paragraph 

(2) of the proposed rule provides that a 

C2 Permit Holder that is not the 

beneficial owner of a security registered 

under Section 12 of the Act is 

prohibited from granting a proxy to vote 

the security in connection with a 

shareholder vote on the election of a 

member of the board of directors of an 

issuer (except for a vote with respect to 

uncontested election of a member of the 

board of directors of any investment 

company registered under the 

Investment Company Act), executive 

compensation, or any other significant 

matter, as determined by the 

Commission, by rule, unless the 

beneficial owner of the security has 

instructed the Permit Holder to vote the 

proxy in accordance with the voting 

instructions of the beneficial owner. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices 10077 

6 15 U.S.C. 78a et seq. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(10). 

9See Securities Exchange Act Release 63139 

(October 20, 2010), 75 FR 65680 (October 26. 2010). 

10 In approving this 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). 

11 15 U.S.C. 78f(b)(5). 

12See supra note 9. See also NYSE Arca Rule 9.4 

and FINRA Rule 2251, which are similar and 

previously approved by the Commission. See 

Securities Exchange Act Release No. 48735 (October 

31, 2003), 68 FR 63173 (November 7, 2003) (SR– 

PCX–2003–50); 61052 (November 23, 2009), 74 FR 

62857 (December 1, 2009) (SR–FINRA–2009–066) 

(finding that the proposed rule change was 

consistent with the Act because the Rule ‘‘will 

continue to provide FINRA members with guidance 

on the forwarding of proxy and other issuer-related 

materials.’’). 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 6

and the rules and regulations 

thereunder 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)(10) 8 requirements that 

all national securities exchanges adopt 

rules prohibiting members from voting, 

without receiving instructions from the 

beneficial owner of shares, on the 

election of a member of a board of 

directors of an issuer (except for a vote 

with respect to the uncontested election 

of a member of the board of directors of 

any investment company registered 

under the Investment Company Act of 

1940), executive compensation, or any 

other significant matter, as determined 

by the Commission, by rule. The 

Exchange also believes that the 

proposed rule changes is consistent 

with the Section 6(b)(5) requirements 

that an exchange have rules that are 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest. The 

Exchange is adopting this proposed rule 

change to comply with the requirements 

of Section 957 of the Dodd-Frank Act, 

and therefore believes the proposed rule 

change to be consistent with the Act, 

particularly with respect to the 

protection of investors and the public 

interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 

The Exchange neither solicited nor 

received comments on the proposal. 

III. 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 rulecomments@sec.gov. Please include File 

Number SR–C2–2011–005 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–C2–2011–005. 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, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. 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 information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–C2– 

2011–005 and should be submitted on 

or before March 16, 2011. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

In its filing, C2 requested that the 

Commission approve the proposal on an 

accelerated basis so that the Exchange 

could immediately comply with the 

requirements imposed by the DoddFrank Act, and because the proposed 

rule text is based upon International 

Securities Exchange (‘‘ISE’’) Rule 421.9

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.10

The Commission believes that 

proposed Supplemental Rule (a) to 

Chapter 4 is consistent with Section 

6(b)(5) 11 of the Act, which provides, 

among other things, that the rules of the 

Exchange must be designed to promote 

just and equitable principles of trade, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

Under proposed Supplemental Rule 

(a)(1), a Permit Holder shall be 

prohibited from voting uninstructed 

shares unless (1) that Permit Holder is 

the beneficial owner of the stock; (2) 

pursuant to the written instructions of 

the beneficial owner; or (3) pursuant to 

the rules of any national securities 

exchange or association of which it is 

also a member, provided that the Permit 

Holder’s records clearly indicate the 

procedure it is following. This provision 

is based upon ISE Rule 421, which was 

previously approved by the 

Commission.12 The Commission notes 

that the proposed change will provide 

clarity to C2 Permit Holders going 

forward on whether broker discretionary 

voting is permitted by C2 Permit 

Holders under limited circumstances 

when the Permit Holder is also a 

member of another national securities 

exchange that permits broker 

discretionary voting. In approving this 

portion of the C2 proposal, the 

Commission notes that Supplemental 

Rule (a)(1) is consistent with the 

approach taken under the rules of other 

national securities exchanges or 

national securities association, and for 

C2 Permit Holders who are not also 

members of another national securities 

exchange prohibits broker discretionary 

voting on any matter, consistent with 

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10078 Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices 

13 15 U.S.C. 78f(b)(10). 

14See S. Rep. No. 111–176, at 136 (2010). 

15The Commission has not, to date, adopted rules 

concerning other significant matters where 

uninstructed broker votes should be prohibited, 

although it may do so in the future. Should the 

Commission adopt such rules, we would expect C2 

to adopt coordinating rules promptly to comply 

with the statute. 

16 15 U.S.C. 78f(b)(5). 

17As the Commission stated in approving NYSE 

rules prohibiting broker voting in the election of 

directors, having those with an economic interest in 

the company vote the shares, rather than the broker 

who has no such economic interest, furthers the 

goal of enfranchising shareholders. See Securities 

Exchange Act Release No. 60215 (July 1, 2009), 74 

FR 33293 (July 10, 2009) (SR–NYSE–2006–92). 

18 15 U.S.C. 78s(b)(2). 

19See supra notes 9 and 12. 

20 15 U.S.C. 78s(b)(2). 

21 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

investor protection and the public 

interest. 

The Commission believes that 

proposed Supplemental Rule (a)(2) is 

consistent with Section 6(b)(10) 13 of the 

Act, which requires that national 

securities exchanges adopt rules 

prohibiting members that are not 

beneficial holders of a security from 

voting uninstructed proxies with respect 

to the election of a member of the board 

of directors of an issuer (except for 

uncontested elections of directors for 

companies registered under the 

Investment Company Act), executive 

compensation, or any other significant 

matter, as determined by the 

Commission by rule. 

The Commission believes that 

proposed Supplemental Rule (a)(2) is 

consistent with Section 6(b)(10) of the 

Act because it adopts revisions that 

comply with that section. As noted in 

the accompanying Senate Report, 

Section 957, which enacted Section 

6(b)(10), reflects the principle that ‘‘final 

vote tallies should reflect the wishes of 

the beneficial owners of the stock and 

not be affected by the wishes of the 

broker that holds the shares.’’ 14 The 

proposed rule change will make C2 

compliant with the new requirements of 

Section 6(b)(10) by specifically 

prohibiting, in C2’s rule language, 

broker-dealers, who are not beneficial 

owners of a security, from voting 

uninstructed shares in connection with 

a shareholder vote on the election of a 

member of the board of directors of an 

issuer (except for a vote with respect to 

the uncontested election of a member of 

the board of directors of any investment 

company registered under the 

Investment Company Act of 1940), 

executive compensation, or any other 

significant matter, as determined by the 

Commission by rule, unless the member 

receives voting instructions from the 

beneficial owner of the shares.15

The Commission also believes that 

proposed Supplemental Rule (a)(2) is 

consistent with Section 6(b)(5) 16 of the 

Act, which provides, among other 

things, that the rules of the Exchange 

must be designed to promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission believes that the rule 

assures that shareholder votes on the 

election of the board of directors of an 

issuer (except for a vote with respect to 

the uncontested election of a member of 

the board of directors of any investment 

company registered under the 

Investment Company Act of 1940) and 

on executive compensation matters are 

made by those with an economic 

interest in the company, rather than by 

a broker that has no such economic 

interest, which should enhance 

corporate governance and accountability 

to shareholders.17

Based on the above, the Commission 

finds that the C2 proposal will further 

the purposes of Sections 6(b)(5) and 

6(b)(10) of the Act because it should 

enhance corporate accountability to 

shareholders while also serving to fulfill 

the Congressional intent in adopting 

Section 6(b)(10) of the Act. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,18 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. The Commission 

believes that good cause exists to grant 

accelerated approval to proposed 

Supplemental Rule (a)(1), because this 

proposed rule will conform the C2 rule 

to ISE Rule 421, NYSE Arca Rule 9.4 

and FINRA Rule 2251, which were 

published for public comment in the 

Federal Register and approved by the 

Commission, and for which no 

comments were received.19 Because 

proposed Supplemental Rule (a)(1) is 

substantially similar to the ISE, NYSE 

Arca and FINRA rules, it raises no new 

regulatory issues. 

The Commission also believes that 

good cause exists to grant accelerated 

approval to proposed Supplemental 

Rule (a)(2), which conforms the C2 rules 

to the requirements of Section 6(b)(10) 

of the Act. Section 6(b)(10) of the Act, 

enacted under Section 957 of the DoddFrank Act, does not provide for a 

transition phase, and requires rules of 

national securities exchanges to prohibit 

broker voting on the election of a 

member of the board of directors of an 

issuer (except for a vote with respect to 

the uncontested election of a member of 

the board of directors of any investment 

company registered under the 

Investment Company Act of 1940), 

executive compensation, or any other 

significant matter, as determined by the 

Commission by rule. The Commission 

believes that good cause exists to grant 

accelerated approval to proposed 

Supplemental Rule (a)(2), because it 

will conform the C2 rule to the 

requirements of Section 6(b)(10) of the 

Act. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,20 that the 

proposed rule change (SR–C2–2011– 

005) be, and it hereby is, approved on 

an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–3983 Filed 2–22–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63917; File No. SR–CBOE– 

2011–017] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Order Granting Accelerated Approval 

of a Proposed Rule Change To Amend 

an Exchange Rule Relating to Giving 

Proxies 

February 16, 2011. 

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 February 

10, 2011 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 prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons and is approving the proposed 

rule change on an accelerated basis. 

mstockstill on DSKH9S0YB1PROD with NOTICES