38068 Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices 

5See CBOE Rule 6.53C(c)(ii)(3). 

6Only Market Makers may enter quotes. 

7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

The CBOE proposes to amend CBOE 

Rule 6.53C(c)(ii)(3) to require market 

participants whose quotes or orders are 

not eligible to rest in the COB to enter 

only IOC orders and such other order or 

quote types as the CBOE may determine 

on a class-by-class basis. Quote types 

that are not eligible to rest in or trade 

against the COB will be cancelled 

automatically.5 According to the CBOE, 

Market Makers whose quotes are not 

eligible to rest in or trade against the 

COB would be able, at a minimum, to 

submit IOC orders to trade against the 

COB.6

Finally, the CBOE proposes to amend 

CBOE Rule 6.53C(c)(i) to clarify that an 

order entry firm whose complex orders 

are not eligible to route to the COB 

could route its orders to the firm’s 

booth, as well as to PAR. 

III. Discussion and Commission 

Findings 

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.7 In particular, the 

Commission finds that the proposal is 

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

Act,8 which requires, in part, that the 

rules of a national securities exchange 

be 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 a national market 

system, and, in general, to protect 

investors and the public interest. CBOE 

Rule 6.53C(c)(i) currently allows the 

Exchange to determine the class of 

entities that may enter orders to rest in 

the COB. By requiring market 

participants who are not eligible to rest 

orders or quotes in the COB to enter 

only IOC orders and such other order or 

quote types as the CBOE determines, 

and by providing for the automatic 

cancellation of quote types that are not 

eligible to rest in or trade against the 

COB, the proposal could help to prevent 

the entry of ineligible orders and quote 

types in the COB. The Commission 

notes that Market Makers that are not 

eligible to enter quotes to rest in or trade 

against the COB would be permitted, at 

a minimum, to enter IOC orders to trade 

against orders in the COB. Finally, the 

Commission believes that the 

amendment to CBOE Rule 6.53C(c)(i) to 

indicate that an order entry firm may 

route its orders to the firm’s booth, as 

well as to PAR, should clarify the 

operation of CBOE Rule 6.53C. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (File No. SR– 

CBOE–2009–038) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–18168 Filed 7–29–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60382; File No. SR–ISE– 

2009–45] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

International Securities Exchange, LLC 

Relating to Changes to Rule 312 in 

Connection With the Purchase of 

Equity Interests by International 

Securities Exchange Holdings, Inc. in 

Optifreeze, LLC 

July 24, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’),1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on July 23, 2009, the International 

Securities Exchange, LLC (the 

‘‘Exchange’’ or ‘‘ISE’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) the proposed 

rule change as described in Items I, II, 

and III 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is submitting this 

proposed rule change (the ‘‘Proposed 

Rule Change’’) to the Commission to 

amend ISE Rule 312 (Limitation on 

Affiliation between the Exchange and 

Members) in connection with the capital 

contribution by its parent company, 

International Securities Exchange 

Holdings, Inc. (‘‘ISE Holdings’’), in 

Optifreeze LLC, a Delaware Limited 

Liability Company (‘‘Optifreeze’’). The 

text of the proposed rule change is 

available on the Exchange’s Web site 

http://www.ise.com, at the principal 

office of the Exchange, 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 

self-regulatory organization 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 

On June 5, 2009, ISE Holdings entered 

into a Membership Purchase Agreement 

(‘‘Purchase Agreement’’) with 

Optifreeze. Pursuant to the Purchase 

Agreement, ISE Holdings contributed 

cash to the capital of Optifreeze in 

exchange for membership interests 

representing on the date of such 

issuance 8.57% of the aggregate 

membership interests in Optifreeze 

(‘‘Purchased Interests’’). ISE Holdings 

and its subsidiaries and affiliates do not 

have any voting or other ‘‘control’’ 

arrangements with any of the other 

members of Optifreeze relating to its 

investment in Optifreeze. The purchase 

by ISE Holdings of the Purchased 

Interests (the ‘‘Transaction’’) was 

consummated on June 5, 2009. As a 

result of such purchase, ISE Holdings 

became a member of Optifreeze 

pursuant to the Third Amended and 

Restated Operating Agreement of 

Optifreeze dated June 5, 2009, and is 

entitled to appoint one representative to 

the Optifreeze Board of Directors. 

Ballista Securities LLC (‘‘Ballista 

Securities’’), a wholly-owned subsidiary 

of Optifreeze, is an electronic access 

member (‘‘EAM’’) of the Exchange. 

In connection with the capital 

contribution by ISE Holdings in 

Optifreeze, the Exchange proposes to 

amend ISE Rule 312 (Limitation on 

Affiliation between the Exchange and 

Members) to reflect ISE Holdings’ 

ownership interest in Ballista Securities, 

and to set forth certain limitations and 

obligations relating to such relationship. 


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Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices 38069 

3The non-affiliated SRO will perform certain 

regulatory responsibilities for Ballista Securities 

other than market surveillance, including, but not 

limited to, investigative and disciplinary services. 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(3), (5). 

In particular, the Exchange proposes 

that there be an exemption from Rule 

312 of the Exchange with respect to the 

investment by ISE Holdings in 

Optifreeze. In relevant part, Rule 312 

provides that, without prior SEC 

approval, the Exchange, or any entity 

with which the Exchange is affiliated 

shall not, directly or indirectly, acquire 

or maintain an ownership interest in a 

member or non-member owner. In 

addition, the Rule 312 provides that 

nothing in that rule shall prohibit a 

member or non-member owner from 

being or becoming an affiliate of the 

Exchange, or an affiliate of an affiliate 

of the Exchange solely by reason of any 

officer, director or partner of such 

member becoming an Exchange Director 

(as defined in the Amended and 

Restated Constitution of the ISE). As a 

result of the Transaction, the Exchange, 

through ISE Holdings, will maintain an 

ownership interest in an ISE member, 

Ballista Securities, which, without 

Commission approval, would be 

prohibited by Rule 312. The 

Commission has also has previously 

noted its concern regarding (1) the 

potential for conflicts of interest in 

instances where an exchange is 

affiliated with one of its members, and 

(2) the potential for informational 

advantages that could place an affiliated 

member of an exchange at a competitive 

advantage vis-a`-vis the other nonaffiliated members. The Commission 

has also noted its concerns about 

potential unfair competition and 

conflicts of interest between an 

exchange’s self-regulatory obligations 

and its commercial interest when the 

exchange is affiliated with one of its 

members. As such, ISE proposes to 

amend Rule 312 to permit the proposed 

relationship subject to several 

conditions and limitations. 

Accordingly, the Exchange is 

proposing to adopt subsection (c) to 

Rule 312 to require that, for so long as 

(i) ISE Holdings maintains an ownership 

interest in Ballista Securities; and (ii) 

Ballista Securities remains a member of 

the Exchange: (1) Financial Industry 

Regulatory Authority (‘‘FINRA’’), a selfregulatory organization unaffiliated with 

the Exchange or any of its affiliates, will 

carry out oversight and enforcement 

responsibilities as the designated 

examining authority designated by the 

Commission pursuant to Rule 17d-1 of 

the Exchange Act with the 

responsibility for examining Ballista 

Securities for compliance with 

applicable financial responsibility rules; 

(2) the Exchange shall (a) enter into a 

plan pursuant to Rule 17d-2 under the 

Exchange Act with a non-affiliated selfregulatory organization (‘‘SRO’’) to 

relieve the Exchange of regulatory 

responsibilities for Ballista Securities 

with respect to rules that are common 

rules between the Exchange and the 

SRO, and (b) enter into a regulatory 

services contract with a non-affiliated 

SRO to perform certain regulatory 

responsibilities for Ballista Securities 

for unique Exchange rules; 3 (3) the 

regulatory services contract shall require 

the Exchange to provide the nonaffiliated SRO with information, in an 

easily accessible manner, regarding all 

exception reports, alerts, complaints, 

trading errors, cancellations, 

investigations, and enforcement matters 

(collectively, ‘‘Exceptions’’) in which 

Ballista Securities is identified as a 

participant that has potentially violated 

Exchange or SEC rules, and shall require 

that the nonaffiliated SRO provide a 

report to the Exchange quantifying 

Exceptions on not less than a quarterly 

basis; (4) the Exchange shall establish 

and maintain procedures and internal 

controls reasonably designed to ensure 

that Ballista Securities and its affiliates 

do not have access to nonpublic 

information obtained as a result of ISE 

Holdings’ ownership interest in Ballista 

Securities, until such information is 

available generally to similarly situated 

members of the Exchange in connection 

with the provision of inbound order 

routing to the Exchange; and (5) the 

ownership interest of ISE Holdings, Inc. 

in Ballista Securities is subject to the 

conditions set forth above and is granted 

on a temporary basis, for not longer than 

one year from the date of Commission 

approval of this filing. 

In addition, the Exchange notes that 

ISE Holdings owns less than 9% of the 

equity in Optifreeze and therefore does 

not own a controlling interest in 

Optifreeze or otherwise have any veto or 

other special voting rights with respect 

to the management or operation of 

Optifreeze. The Exchange acknowledges 

that if the Exchange or any of its 

affiliates were to directly or indirectly 

increase the equity ownership of 

Optifreeze, such increase would require 

prior Commission approval. The 

Exchange believes that the foregoing 

measures and factors minimize the 

concerns identified by the Commission 

regarding potential conflicts of interest. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the 

Exchange Act,4 in general, and with 

Sections 6(b)(1) and (b)(5) of the 

Exchange Act,5 in particular, in that the 

proposal enables the Exchange to be so 

organized as to have the capacity to be 

able to carry out the purposes of the 

Exchange Act and to comply with and 

enforce compliance by members and 

persons associated with members with 

provisions of the Exchange Act, the 

rules and regulations thereunder, and 

SRO rules, and is designed to prevent 

fraudulent and manipulative acts and 

practices, 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, to 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. In 

particular, this rule change will address 

any potential regulatory issues that 

could arise with ISE Holdings’ 

investment in, and providing capital to, 

an innovative brokerage operation. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members, participants or others. 

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 self-regulatory 

organization consents, the Commission 

will: 

(a) By order approve such proposed 

rule change; or 


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38070 Federal Register / Vol. 74, No. 145 / Thursday, July 30, 2009 / Notices 

6 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Perimeter booths are located in rows that are 

situated around the perimeter of the trading floor. 

These booths are typically utilized by Floor 

Brokers. 

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

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

(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–ISE–2009–45 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 No. 

SR–ISE–2009–45. 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 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 changes 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, 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 ISE. 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 No. 

SR–ISE–2009–45 and should be 

submitted on or before August 20, 2009. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–18169 Filed 7–29–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60376; File No. SR–CBOE– 

2009–044] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Chicago 

Board Options Exchange Stock 

Exchange Fees Schedule To Establish 

Facility Fees 

July 23, 2009. 

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 July 2, 

2009, the Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

CBOE Stock Exchange (‘‘CBSX’’) Fees 

Schedule to establish facility fees. 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’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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

CBSX Fees Schedule to adopt a facility 

fee for the use of a perimeter booth by 

CBSX Trading Permit Holders that are 

not CBSX Market-Makers at a cost of 

$350 per month.3 This fee is applicable 

to CBSX Trading Permit Holders seeking 

perimeter booth space, as opposed to a 

regular CBOE member (who is eligible 

to trade on CBSX) who pays for 

perimeter booth space pursuant to the 

CBOE fee schedule. 

The Exchange also proposes to amend 

the CBSX Fees Schedule to adopt a 

facility fee for the use of a CBSX Floor 

Post booth by CBSX Market Makers at 

a cost of $350 per month. CBSX MarketMakers that are not CBSX DPMs may 

not use the Floor Post until a change to 

Rule 51.12 allowing such use is 

approved. The proposed fee changes 

will take effect on July 2, 2009. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),4 in general, and furthers the 

objectives of Section 6(b)(4) 5 of the Act 

in particular, in that it is designed to 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among CBOE members and other 

persons using its facilities. 

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 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. 


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