69148 Federal Register / Vol. 75, No. 217 / Wednesday, November 10, 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5See Securities Exchange Act Release No. 62286 

(June 11, 2010), 75 FR 34799 (June 18, 2010) (SR– 

CBOE–2010–051). TPHs were previously referred to 

as ‘‘members’’ in the Exchange Rules, however, 

references to ‘‘members’’ have been replaced with 

the term Trading Permit Holders or TPH. See, e.g., 

Securities Exchange Act Release No. 62382 (June 

25, 2010), 75 FR 38164 (July 1, 2010) (SR–CBOE– 

2010–058). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63244; File No. SR–CBOE– 

2010–100] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated: Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to PULSe Fees 

November 4, 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 

28, 2010, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or the 

‘‘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 Exchange has designated 

this proposal as one establishing or 

changing a due, fee, or other charge 

imposed by CBOE under Section 

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

4(f)(2) 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 

its fees schedule as it relates to the 

PULSe workstation. 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, 

CBOE 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. 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, Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to address the use of the 

PULSe workstation for C2 Options 

Exchange, Incorporated (‘‘C2’’), to 

expand on the description of the PULSe 

workstation licensing process, to revise 

the monthly PULSe workstation fee 

schedule to introduce a reduction for 

certain non-Trading Permit Holder 

(‘‘TPH’’) workstations, to introduce a 

new fee for non-standard services, to 

extend the Routing Intermediary fee 

waiver, and to delete outdated text from 

the CBOE fees schedule. 

By way of background, the PULSe 

workstation is a front-end order entry 

system designed for use with respect to 

orders that may be sent to the trading 

systems of CBOE and CBOE Stock 

Exchange (‘‘CBSX’’). In addition, the 

PULSe workstation provides a user with 

the capability to send options orders to 

other U.S. options exchanges and stock 

orders to other U.S. stock exchanges 

through a ‘‘PULSe Routing 

Intermediary’’ (‘‘away-market routing’’). 

In anticipation of the launch of the 

PULSe workstation, the Exchange 

previously filed a rule change, SR– 

CBOE–2010–051, that established a 

monthly PULSe workstation fee, an 

away-market routing fee, and a Routing 

Intermediary fee (which fee has been 

waived through November 30, 2010) for 

CBOE and CBSX TPHs.5

The first purpose of this proposed 

rule change is to address the use of the 

PULSe workstation for CBOE/CBSX 

affiliate, C2, which is anticipated to 

initiate trading on October 29, 2010. In 

rule filing SR–CBOE–2010–051, the 

Exchange noted that C2 had not yet 

begun trading and that use of the PULSe 

workstation as a front-end system 

interface to C2 would be addressed in a 

separate rule filing prior to the initiation 

of trading on C2. In that regard, C2 

intends to submit a separate rule change 

proposing that Signal Trading Systems, 

LLC (‘‘STS’’), an affiliate of CBOE, make 

the PULSe workstation available to C2 

TPHs and to incorporate the PULSe 

workstation, away-market routing and 

Routing Intermediary fees into the C2 

fees schedule. 

The Exchange notes that the PULSe 

workstation offers the ability to route 

orders to any market, including C2. 

Therefore, to the extent a CBOE TPH 

that is also a C2 TPH obtains a PULSe 

workstation through CBOE, it is not 

necessary for that TPH to obtain a 

separate PULSe workstation through C2 

to route orders to C2. When the PULSe 

workstation is made available through 

CBOE to a CBOE TPH that is also a C2 

TPH, the PULSe workstation, awaymarket routing and Routing 

Intermediary fees would be assessed by 

CBOE only (e.g., the monthly fee for a 

CBOE TPH for one PULSe workstation 

is $350 and the monthly fee for a C2 

TPH for one PULSe workstation is $350; 

if a PULSe workstation is made 

available through CBOE to a CBOE TPH 

that is also a C2 TPH, the monthly fee 

would be $350, not $700). To the extent 

a CBOE TPH is also a C2 TPH, the awaymarket routing fee would not apply for 

the TPH’s executions on CBOE or C2 

because the fee is only applicable for 

away-market routing. The TPH would 

not be routing away, but instead would 

be submitting orders directly to CBOE as 

a CBOE TPH or C2 as a C2 TPH, as 

applicable, where the TPH’s activity 

would be subject to the transaction fee 

schedule of CBOE or C2, respectively. 

However, to the extent a CBOE TPH is 

not a C2 TPH, the away-market routing 

fee would apply to the CBOE TPH’s 

executions on C2. 

As described in rule filing SR–CBOE– 

2010–051, the PULSe workstation is 

currently configured by the Exchange to 

cause CBOE (CBSX) to be the default 

destination exchange for individually 

executed marketable option (stock) 

orders if CBOE (CBSX) is at the national 

best bid or offer (‘‘NBBO’’), regardless of 

size or time, but allow any user to 

manually override CBOE (CBSX) as the 

default destination on an order-by-order 

basis. The workstation also incorporates 

a function allowing option (stock) 

orders at a specified price to be sent to 

multiple exchanges with a single click 

(‘‘sweep function’’), and the sweep 

function is configured by the Exchange 

to cause an option (stock) order to be 

sent to CBOE (CBSX) for up to the full 

size quoted by CBOE (CBSX) if CBOE 

(CBSX) is at the NBBO. Given the 

initiation of trading on C2, the Exchange 

is herein proposing to revise the default 

parameters with respect to options to 

provide that the PULSe workstation may 

be configured by the Exchange to cause 

CBOE and/or C2 to be the default 

destination exchange(s). Consistent with 

rule filing SR–CBOE–2010–051, any 

user may manually override CBOE and/ 

or C2 as the default option exchange 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 217 / Wednesday, November 10, 2010 / Notices 69149 

6With respect to options (stocks), the Exchange 

also notes that the away-market functionality in the 

PULSe workstation will not displace the provisions 

of the Options Order Protection and Locked/ 

Crossed Market Plan (Regulation NMS), which will 

continue to apply in the circumstances described in 

the Plan (Regulation NMS). 

7The PULSe workstation may be made available 

by a TPH to its customers on a pass-through basis 

(where orders pass through the TPH’s systems prior 

to reaching the Exchange) or a sponsored access 

basis. To the extent that a TPH makes the 

workstation available to a customer on a sponsored 

access basis, the customer would be considered a 

‘‘sponsored user’’ and the TPH-customer 

relationship would be considered a Sponsoring 

Participant/Sponsored User relationship subject to 

the requirements of Rule 6.20A, Sponsored Users. 

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

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78s(b)(3)(A)(ii). 

11 17 CFR 240.19b–4(f)(2). 

destination(s) on an order-by-order 

basis. The Exchange notes that the 

away-market routing functionality is 

offered as a convenience to TPHs and is 

not an exclusive means available to a 

TPH to send orders intermarket.6

The second purpose of this proposed 

rule change is to refine the PULSe 

workstation licensing process. In rule 

filing SR–CBOE–2010–051, the 

Exchange indicated that the PULSe 

workstation will be made available by 

STS. The filing indicated that STS will 

grant licenses to use the workstation 

directly to CBOE and CBSX TPHs. In 

addition, the filing indicated that TPHs 

may also make the workstation available 

to their customers, including sponsored 

users.7 CBOE is herein proposing to 

expand on the description of the 

licensing process to provide that STS 

has the ability to grant licenses to use 

the workstation directly to TPHs or 

TPHs’ customers. STS would also have 

the ability, if it determines to do so, to 

permit TPHs to make the workstation 

available to their customers, including 

sponsored users, through the use of a 

sublicense. Whether the workstation 

technology is made available to TPHs’ 

customers through a direct license or 

sublicense, any order routed to CBOE or 

CBSX through a PULSe workstation 

must continue to be routed through a 

TPH or by a sponsored user (whose 

orders are sponsored by a TPH). The 

TPH will also remain responsible for 

any applicable PULSe fees. 

The third purpose of this proposed 

rule change is to revise the monthly 

PULSe workstation fee schedule. As 

indicated above, TPHs may make the 

workstation available to their customers, 

which may include non-broker dealer 

public customers and non-TPH broker 

dealers (referred to herein as ‘‘nonTPHs’’). For such non-TPH workstations, 

the Exchange is proposing to introduce 

a flat fee of $350/month per 

workstation. In instances where two or 

more TPHs wish to make a PULSe 

workstation available to the same nonTPH customer, the Exchange is 

proposing to introduce a fee reduction. 

Under the reduction, if two or more 

TPHs make the PULSe workstation 

available to the same non-TPH 

customer, then the monthly fee will be 

$250 per workstation per TPH. The 

Exchange believes it is reasonable and 

appropriate to reduce the monthly fee in 

these instances because, while we 

would still establish and maintain 

PULSe workstation technology 

arrangements with each TPH, we also 

anticipate that the non-TPH’s use of the 

workstation would be distributed among 

the TPHs. 

The fourth purpose of this proposed 

rule change is to introduce a fee for nonstandard services provided by STS. 

Non-standard services may include time 

and materials for non-standard 

installations of or modifications to 

PULSe to accommodate a TPH’s use of 

PULSe with other technologies. The 

Exchange is proposing a fee of $350 per 

hour plus costs. 

The fifth purpose of this proposed 

rule change is to extend the waiver of 

the Routing Intermediary fee. Currently 

the Exchange has waived the Routing 

Intermediary through November 30, 

2010. The Exchange is proposing to 

extend this waiver through December 

31, 2010. Thus this fee will be assessed 

beginning January 1, 2011. 

Finally, the sixth purpose of this 

proposed rule change is to delete 

outdated text from the CBOE fees 

schedule. Specifically, the Exchange 

had waived the PULSe workstation and 

away-market routing fees through 

September 15, 2010 and September 30, 

2010, respectively. As those dates have 

passed and the Exchange does not 

intend to extend the fee waivers, the 

Exchange is proposing to remove 

references to the waiver dates from the 

fees schedule. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act,8

in general, and furthers the objectives of 

Section 6(b)(4) of the Act,9 in particular, 

in that it is designed to provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among TPHs in 

that the same fees and fee waivers are 

applicable to all users of the PULSe 

workstation. 

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 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 

The proposed rule change is 

designated by the Exchange as 

establishing or changing a due, fee, or 

other charge, thereby qualifying for 

effectiveness on filing pursuant to 

Section 19(b)(3)(A)(ii) of the Act 10 and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder. 

At any time within 60 days of the 

filing of the 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–2010–100 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–2010–100. 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 Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 


emcdonald on DSK2BSOYB1PROD with NOTICES
69150 Federal Register / Vol. 75, No. 217 / Wednesday, November 10, 2010 / Notices 

12 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 62990 

(September 24, 2010), 75 FR 60158. 

3 15 U.S.C. 78q–1(b)(3)(F). 

4 17 CFR 200.30–3(a)(12). 

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 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–2010–100 and 

should be submitted on or before 

December 1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–28330 Filed 11–9–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63245; File No. SR–DTC– 

2010–12] 

Self-Regulatory Organizations; The 

Depository Trust Company; Order 

Approving Proposed Rule Change To 

Automate the Approval Process in 

Providing Trustee Access to the 

Security Position Report Service 

November 4, 2010. 

I. Introduction 

On September 14, 2010, The 

Depository Trust Company (‘‘DTC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–DTC–2010–12 pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’).1 Notice of 

the proposal was published in the 

Federal Register on September 29, 

2010.2 The Commission received no 

comment letters in response to the 

proposed rule change. For the reasons 

discussed below, the Commission is 

approving the proposed rule change. 

II. Description 

DTC’s Security Position Report 

(‘‘SPR’’) service provides valuable 

information on the record date holdings 

of an issuer’s security in DTC 

Participant accounts. An SPR provides 

information needed to contact 

shareholders about corporate-related 

events such as annual meetings. DTC 

currently provides SPRs to issuers, 

trustees, and authorized third parties. 

DTC’s Proxy area receives requests for 

SPR services access and reviews such 

requests to ensure that only appropriate 

parties receive access. The current 

review process to approve a trustee’s 

access to the SPR service for a security 

is done manually, and the process is 

therefore subject to error. Currently, the 

SPR system sends an e-mail to the DTC 

Proxy mailbox notifying the Proxy staff 

that a trustee has added a CUSIP to its 

eligible issues list. Any trustee can add 

a CUSIP to its eligible issues list. The 

CUSIP will show ‘‘unauthorized’’ until 

reviewed and approved by the DTC 

Proxy staff. DTC Proxy staff requires 

that the trustee provide to it one of the 

following: Trust agreement, Annual 

Report, 10K, 10Q, SEC filing, or any 

other document deemed necessary and 

appropriate to prove that the trustee is 

in fact the trustee for the CUSIP and 

therefore is entitled to access to SPRs for 

the CUSIP. Generally, it takes two or 

more days for a decision on access 

requests because of the manual process 

associated with the review of trustee 

information. 

To increase the efficiency by which 

DTC provides trustees with access to the 

SPR service, DTC is seeking to collect 

trustee data at the point of eligibility of 

the issue. This will allow DTC to store 

and maintain trustee data on the Entity 

Master File and the Security Master File 

(‘‘Master Files’’). DTC will then have the 

ability to automate the validation using 

the information stored on the Master 

Files in response to a trustee’s request 

for SPR access. 

Initially, DTC will populate and 

update the trustee field on the Master 

Files through DTC’s Participant 

Terminal System. Ultimately and as set 

forth below this information will be 

supplied by underwriters at the time of 

issue eligibility through DTC’s UW 

(underwriting) Source System. This 

change requires DTC to update the UW 

Source System to designate trustee data 

as a mandatory field at the time of 

eligibility. In order to provide the time 

it may take for underwriters to update 

their systems to supply the information 

required by this new mandatory field, 

DTC plans to implement the change to 

the UW Source System in the fourth 

quarter of 2011. In the event of a change 

in trustee, DTC will require that the new 

and the prior trustees both update the 

trustee information using Form 17Ad16, which is used today to update 

transfer agent changes. By automating 

the trustee authorization process, DTC 

will increase the efficiency of the SPR 

system and will reduce the risk of error 

associated with the manual processing 

of trustee data. 

III. Discussion 

Section 19(b) of the Act directs the 

Commission to approve a proposed rule 

change of a self-regulatory organization 

if it finds that such proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

such organization. Section 17A(b)(3)(F) 

of the Act requires that the rules of a 

clearing agency be designed to protect 

investors and the public interest.3 The 

Commission believes that DTC’s rule 

change is consistent with this 

requirement because by replacing the 

current manual process for approving a 

trustee’s access to DTC’s SPR service for 

an issue with an automated approval 

process, DTC will be able to reduce the 

number of errors associated with 

manual processing and thereby better 

protect investors’ confidential 

information. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular Section 17A of the Act and 

the rules and regulations thereunder. In 

approving the proposed rule change, the 

Commission considered the proposal’s 

impact on efficiency, competition, and 

capital formation. 

IT IS THEREFORE ORDERED, 

pursuant to Section 19(b)(2) of the Act, 

that the proposed rule change (File No. 

SR–DTC–2010–12) be and hereby is 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.4

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–28331 Filed 11–9–10; 8:45 am] 

BILLING CODE 8011–01–P 


emcdonald on DSK2BSOYB1PROD with NOTICES