68842 Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices 

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). 

5The ‘‘CBSX System’’ means the electronic system 

which performs the functions set out in the CBSX 

rules including controlling, monitoring, and 

recording trading by CBSX Traders through CBSX 

Workstations and trading between CBSX Traders. 

See Rule 50.1(a). A ‘‘CBSX Trader’’ means an 

individual who or organization which has the right 

to trade on CBSX. See Rules 50.1(f) and 50.3. A 

‘‘CBSX Workstation’’ means a computer connected 

to CBSX for the purposes of trading pursuant to the 

CBSX rules. See Rule 50.1(d). 

6 17 CFR 242.201. See Securities Exchange Act 

Release No. 61595 (February 26, 2010), 75 FR 11232 

(March 10, 2010). In connection with the adoption 

of Rule 201, Rule 200(g) of Regulation SHO, 17 CFR 

242.200(g), was amended to include a ‘‘short 

exempt’’ marking requirement. The amendments to 

Rule 201 and Rule 200(g) have a compliance date 

of November 10, 2010. 

7 Id. 

8 17 CFR 242.201(a)(1). 

9See supra note 6. 

10 17 CFR 242.200(g). 

11The ‘‘CBSX Book’’ means all unexecuted orders 

currently held by the CBSX System. See Rule 

50.1(c). The Exchange notes that additional size 

cannot be added to an order resting in the CBSX 

Book. The Exchange also notes that it currently 

does not make available any resting order types that 

are to be completely un-displayed in the CBSX 

Book. To the extent the Exchange may determine 

to make available such an un-displayed resting 

order type, it would be subject to a rule filing 

submitted pursuant to Section 19(b) of the Act, 15 

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

12 17 CFR 242.201(b)(1). 

13 Id. 

Chairperson of the RIAP is empowered 

to conduct the meeting in a fashion that 

will, to the Chairperson’s judgment, 

facilitate the orderly conduct of 

business. You may submit written 

comments by mail to 1717 Pennsylvania 

Avenue, NW., Suite 700, Washington, 

DC 20006. ‘‘RIAP comments’’ should be 

written on the envelope. Persons 

wishing to e-mail their written 

comments and/or sign up in advance to 

speak to the RIAP at the meeting should 

send their written comments and/or 

names to panel@ratb.gov and write 

‘‘November 22, 2010 RIAP public 

comment’’ in the Subject line. 

There will be a closed meeting, under 

the authority of Section 10(d) of FACA 

and under exemption (7) of Section 

552b(c) of the Government in the 

Sunshine Act (Pub. L. 92–463), that will 

be held prior to the open meeting from 

9 a.m. to 9:30 a.m. During the closed 

portion of the meeting there will be a 

discussion that would disclose 

investigative techniques and 

procedures. A summary of the activities 

at the closed session and related matters 

which are informative to the public 

consistent with the policy of 5 U.S.C. 

552b(c) will be available to the public 

within fourteen days of the meeting. 

Records will be kept of all RIAP 

proceedings and will be available for 

public inspection on http:// 

www.recovery.gov. 

Ivan J. Flores, 

Paralegal Specialist, Recovery Accountability 

and Transparency Board. 

[FR Doc. 2010–28243 Filed 11–8–10; 8:45 am] 

BILLING CODE 6821–15–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63235; File No. SR–CBOE– 

2010–099] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Short Sell 

Order Handling 

November 3, 2010. 

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 October 

26, 2010, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

CBOE Stock Exchange, LLC’s (‘‘CBSX,’’ 

the CBOE’s stock trading facility) rules 

to describe the manner in which the 

CBSX System 5 will handle short sell 

orders in relation to Rule 201 of 

Regulation SHO,6 and CBOE’s rules to 

include order marking requirements for 

stock-option orders. The text of the 

proposed rule change 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 

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 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 

Rule 201 of Regulation SHO under the 

Act 7 sets forth a short sale-related 

circuit breaker that, if triggered, will 

impose a restriction on the prices at 

which NMS stocks 8 may be sold short. 

In anticipation of the upcoming 

November 10, 2010 compliance date for 

Rule 201,9 the Exchange is proposing to 

amend CBSX’s rules to describe the 

manner in which the CBSX System will 

handle short sell orders when a circuit 

breaker is triggered under Rule 201 of 

Regulation SHO. 

In particular, the Exchange is 

proposing to adopt Interpretation and 

Policy .02 to its Rule 51.8, Types of 

Orders Handled, to provide that orders 

in equity securities that are submitted to 

the CBSX System must be marked 

‘‘long,’’ ‘‘short,’’ or ‘‘short exempt’’ in 

compliance with Regulation SHO.10 The 

Interpretation and Policy will also 

provide that, if a short sale-related 

circuit breaker is triggered under 

Regulation SHO, orders marked ‘‘short’’ 

will be handled by the CBSX System as 

follows: First, short sell orders that are 

resting in the CBSX Book 11 at the time 

a circuit breaker is triggered will be 

permitted to continue resting and/or 

execute. The Exchange believes this 

handling of resting short sell orders is 

consistent with Rule 201 because resting 

orders by definition are priced above the 

National Best Bid.12 Second, short sell 

orders that are received by the CBSX 

System after the time a circuit breaker 

is triggered that are priced above the 

National Best Bid will be permitted to 

rest and/or execute. The Exchange 

believes this handling of incoming short 

sell orders is consistent with Rule 201 

because the orders are priced above the 

National Best Bid.13 Third, short sell 

orders that are received by the CBSX 

System after the time a circuit breaker 

is triggered that are priced at or below 


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Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices 68843 

14 Id. 

15A ‘‘reserve order’’ is a limit order with a portion 

of the size that is to be displayed and with a reserve 

portion of the size at the same price that is not to 

be displayed, but is to be used to refresh the 

displayed size when the displayed size is executed 

in full. See Rule 51.8(o). 

16 17 CFR 242.201(b)(1)(iii)(A). 

17See Rule 201(b)(1)(iii)(B) of Regulation SHO, 17 

CFR 242.201(b)(1)(iii)(B). The Exchange notes that 

a broker or dealer may mark a sell order ‘‘short 

exempt’’ only if the provisions of Rule 242.201(c) 

or (d) are met. See Rule 200(g)(2) of Regulation 

SHO, 17 CFR 242.200(g)(2). 

18See Rule 6.53C(c). 

19See Rule 6.53C(d). 

20 17 CFR 242.200(g). 

21 15 U.S.C. 78f(b). 

22 15 U.S.C. 78f(b)(5). 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f)(6). In addition, CBOE has 

given the Commission written notice of its intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date on 

which the Exchange filed the proposed rule change. 

25 17 CFR 240.19b–4(f)(6)(iii). 

26 Id. 

27 17 CFR 242.200(g); 17 CFR 242.201. 

28 Id. 

the National Best Bid will be rejected/ 

cancelled by the CBSX System. The 

Exchange believes this handling of 

incoming short sell orders is consistent 

with Rule 201 because the orders are not 

priced above the National Best Bid.14

The Exchange notes that, under these 

procedures, a reserve sell order 15 that is 

marked ‘‘short’’ will be handled the 

same as any other sell order marked 

‘‘short.’’ Thus, an incoming reserve sell 

order that is received by the CBSX 

System after the time a circuit breaker 

is triggered that is marked ‘‘short’’ and 

that is priced at or below the National 

Best Bid will be rejected/cancelled by 

the CBSX System. An incoming reserve 

sell order that is received by the CBSX 

System after the time a circuit breaker 

is triggered that is marked ‘‘short’’ and 

that is priced above the National Best 

Bid will be permitted to rest and/or 

execute. The Exchange also notes that 

the entire size of a reserve sell order that 

is marked ‘‘short’’ and resting in the 

CBSX Book—both the displayed portion 

and the reserve portion at the same 

price that is not displayed—will be 

permitted to rest and/or execute. This 

handling will apply to reserve orders 

resting in the CBSX Book at the time a 

circuit breaker is triggered or to 

incoming reserve orders that rest in the 

CBSX Book after a circuit breaker is 

triggered. The Exchange believes this 

handling of reserve orders marked 

‘‘short’’ is consistent with Rule 201 

because resting reserve orders that are 

marked ‘‘short’’ by definition are priced 

above the National Best Bid at the time 

of initial display.16

Sell orders marked ‘‘short exempt’’ 

will be permitted to rest and/or execute 

without regard to when the order is 

received or whether the order is priced 

above, at or below the National Best Bid. 

This handling of sell orders marked 

‘‘short exempt’’ would be applied by the 

CBSX System at all times—without 

regard to whether a circuit breaker is 

triggered. The Exchange believes this 

handling by CBSX of sell orders marked 

‘‘short exempt’’ is consistent with Rule 

201, which permits the execution or 

display of a short sell order in an NMS 

stock marked ‘‘short exempt’’ without 

regard to whether the order is at a price 

that is less than or equal to the current 

National Best Bid.17

The Exchange is also proposing to 

amend Interpretation and Policy .06 to 

its Rule 6.53C, Complex Orders on the 

Hybrid System, to include an order 

marking requirement for stock-option 

orders. In particular, the Exchange is 

proposing to provide that, if the stock 

leg of a stock-option order submitted to 

CBOE’s electronic complex order book 

(referred to in the rules as ‘‘COB’’) 18 or 

electronic complex order request for 

response auction (referred to in the rules 

as ‘‘COA’’) 19 is a sell order, then the 

stock leg must be marked ‘‘long, ‘‘short,’’ 

or ‘‘short exempt’’ in compliance with 

Regulation SHO.20

Finally, the Exchange is proposing to 

make non-substantive technical updates 

to its Rule 53.5, ‘‘Long’’ and ‘‘Short’’ 

Sales. In particular, the Exchange is 

proposing to change the title of the rule 

to ‘‘‘Long,’ ‘Short’ and ‘Short Exempt’ 

Sales’’ and to delete an outdated 

reference to SEC Rule 10a–1 (which no 

longer exists and has been superseded 

by Regulation SHO). 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act,21 in general, and, in 

particular, furthers the objectives of 

Section 6(b)(5) of the Act,22 which 

requires that an exchange have rules 

that are designed to promote just and 

equitable principles of trade and, in 

general, to protect investors and the 

public interest. In particular, the 

Exchange believes the proposed change 

will provide clarity on the short sell 

order handling procedures that the 

CBSX System will apply when a short 

sale-related circuit breaker is triggered 

under Rule 201 of Regulation SHO in a 

manner that the Exchange believes is 

consistent with Regulation SHO. 

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 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 23 and Rule 19b– 

4(f)(6) thereunder.24

A proposed rule change filed under 

Rule 19b-4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.25 However, Rule 19b– 

4(f)(6) 26 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay to allow updating of its rules 

before the November 10, 2010 

compliance date of the amendments to 

Rule 200(g) and 201 of Regulation 

SHO 27 and thereby provide clarity on 

the short sell order handling procedures 

that the CBSX System will apply when 

a short sale-related circuit breaker is 

triggered under Rule 201 of Regulation 

SHO. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because the waiver will provide clarity 

to market participants that trade on 

CBSX System on the handling of certain 

orders in light of the amendments to 

Regulation SHO.28 The Commission 

also believes that the proposed rule 

change does not raise any new or novel 

issues. Accordingly, the Commission 

designates the proposed rule change 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
68844 Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices 

29For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

30 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. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5See Exchange Act Release No. 61152 (Dec. 10, 

2009), 74 FR 66699 (Dec. 16, 2009). 

operative upon filing with the 

Commission.29

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend 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 rulecomments@sec.gov. Please include File 

Number SR–CBOE–2010–099 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–2010–099. 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 

CBOE. 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–2010–099 and 

should be submitted on or before 

November 30, 2010 in the Federal 

Register. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–28244 Filed 11–8–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63238; File No. SR–C2– 

2010–008] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change to Update Rules Based on 

Chicago Board Options Exchange, Inc. 

Rules and Recent Chicago Board 

Options Exchange, Inc. Rule Filings 

November 3, 2010. 

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 October 

29, 2010, C2 Options Exchange, 

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

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

C2 proposes to update its rules based 

on Chicago Board Options Exchange, 

Inc. (‘‘CBOE’’) rules and recent CBOE 

rule filings. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/legal/ 

crclc2rulefiling.aspx), at the Exchange’s 

Office of the Secretary, 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 

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 

In 2009, C2 was registered as a 

national securities exchange under 

Section 6 of the Exchange Act.5 C2 is 

anticipated to launch on October 29, 

2010. The purpose of this filing is to 

update the C2 rules based on rules and 

recent rule filings of CBOE. 

First, C2 proposes to delete the 

definition of ‘‘Short Term Option’’ from 

Rule 1.1. The definition is not used 

elsewhere in the C2 Rules and is 

superfluous and unnecessary. The 

Exchange notes that CBOE Chapter V 

(specifically Rule 5.5(d)), which is 

incorporated by reference into Chapter 

V of the C2 Rules, defines ‘‘Short Term 

Option Series.’’ 

Second, C2 proposes to adopt Rule 

3.13, Educational Classes, which would 

require Trading Permit Holders (‘‘TPHs’’) 

and persons associated with TPHs to 

attend such educational classes as C2 

may require from time to time. The 

proposed rule would also provide that 

failure to attend C2 mandated 

continuing educational classes may 

subject TPHs and associated persons to 

sanctions under the Exchange’s Minor 

Rule Violation Plan. Any action taken 

by the Exchange would not preclude 

further disciplinary action under C2 

Rules. Proposed C2 Rule 3.13 is similar 

to existing CBOE Rule 6.20(e). 

Third, C2 proposes to add Rule 6.17, 

Price Check Parameters. Under the 

proposed rule, C2 would not 

automatically execute eligible orders 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1