Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices 41953 

9See PCAOB Release No. 2008–004, June 10, 

2008 [page 22]. 

10See, e.g., http://www.pcaob.org/Registration/ 

Registration_FAQ.pdf; and http://www.pcaob.org/ 

Registration/2004-03-11_FAQ.pdf. 

11 15 U.S.C. 7212(f). 

12See Release No. 34–56986 (December 18, 2007). 

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

2 17 CFR 240.19b–4. 

entities that are effectively restricted 

from providing auditing services.’’ 9

Both commenters disagreed with the 

Board’s response. 

The Commission believes the Board 

appropriately explained its rationale for 

the difference in the Form 2 and Form 

3 reporting requirements and believes 

that it is not unreasonable for the Board 

to request this information in the 

current manner in which it is requested. 

6. Requests for Additional 

Implementation Guidance 

As noted in the above discussion, the 

Commission has considered the 

concerns and issues raised by 

commenters and appreciates the 

feedback. While the Commission 

believes the aforementioned matters are 

not unreasonable requirements, the 

Commission does encourage the Board 

to monitor implementation of its annual 

and special reporting rules and to be 

open to issuing timely implementation 

guidance as necessary as to these and 

the other comments raised, as was done 

with the Board’s implementation of its 

registration rules.10

B. Recommendation as to the Annual 

Fee 

Section 102(f) of the Act requires the 

Board to ‘‘assess and collect a 

registration fee and an annual fee from 

each registered firm in amounts that are 

sufficient to recover the Board’s costs of 

processing and reviewing applications 

and annual reports.’’ 11 The PCAOB has 

collected registration fees from every 

firm that has registered with the Board 

since 2003. However, the Board has not 

assessed or collected annual fees from 

any registered firms. 

In our order approving the PCAOB’s 

budget and accounting support fee for 

2008, the Commission directed the 

PCAOB to, among other things, analyze 

historical and planned expenditures 

related to the review and processing of 

registrations and annual reports of 

public accounting firms.12 We 

understand from this analysis that there 

are unrecovered historical costs that 

need to be collected from registered 

firms. In addition, the Board needs to 

determine the amount of current and 

future costs of reviewing and processing 

registrations and annual reports and 

how and over what period to recover 

those costs. These matters also are 

impacted due to changes to the Board’s 

registration profile that may occur as a 

result of the requirement for auditors of 

non-public broker dealers to be 

registered with the Board for fiscal 

periods ending on or after January 1, 

2009. 

The Commission recommends that, in 

setting its annual fee under PCAOB Rule 

2202, Annual Fee, the Board recover all 

of the unrecovered historical costs 

associated with the Board’s review and 

processing of registration applications 

in the first annual fee billed to 

registered public accounting firms and 

that these costs be recovered only from 

registered public accounting firms that 

were registered prior to January 1, 2009, 

and that such bill be separately 

itemized. In addition, for consistency 

and to aid transparency, the 

Commission recommends that future 

costs associated with reviewing and 

processing registration applications, 

processing annual and special reporting, 

and related system maintenance and 

development costs be recovered over a 

time period that is consistent with the 

time period the PCAOB uses for its 

financial statement purposes to 

depreciate long-lived assets similar to 

that used by the PCAOB in processing 

registration applications and annual and 

special reports. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

PCAOB rules on annual and special 

reporting by registered public 

accounting firms are consistent with the 

requirements of the Act and the 

securities laws and are necessary or 

appropriate in the public interest or for 

the protection of investors. 

It is therefore ordered, pursuant to 

Section 107 of the Act and Section 

19(b)(2) of the Exchange Act, that 

proposed PCAOB Rules on Annual and 

Special Reporting by Registered Public 

Accounting Firms (File No. PCAOB– 

2008–04) be and hereby are approved. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–19838 Filed 8–18–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60491; File No. SR–CBOE– 

2009–057] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change Related to 

Market-Maker Orders 

August 12, 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 August 

10, 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 is proposing to 

eliminate an order identification rule for 

Market-Maker and Specialist orders. 

The text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.org/Legal), at the 

Office of the Secretary, CBOE 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 

Rule 6.73(d) currently provides that a 

Floor Broker holding an order for the 

account of a Market-Maker or Specialist 

shall verbally identify the order as such 


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41954 Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices 

3See Securities Exchange Act Release No. 46102 

(June 21, 2002), 67 FR 43692 (June 28, 2002) (SR– 

CBOE–2002–33) (immediately effective rule change 

relating to the identification of Market-Maker and 

Specialist orders). 

4When RAES was utilized, the Exchange had also 

determined that clearing firm and broker-dealer 

orders utilizing origin codes ‘‘F’’ and ‘‘B’’ (but not 

Market-Makers or Specialist orders) were allowed to 

access RAES for automatic executions, but such 

broker-dealer orders could not be placed in the 

limit order book. 

5 15 U.S.C. 78s(b)(1). 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

in open outcry prior to requesting a 

quote. The rule was originally adopted 

in 2002 to ensure that Market-Maker 

and Specialist orders are not 

inadvertently represented as public 

customer orders, which receive 

preferential treatment in certain 

instances under CBOE Rules.3

When the rule was adopted, CBOE 

noted that orders submitted 

electronically are required to contain an 

account origin code. An origin code 

identifies the type of order such that 

CBOE can route it to the proper 

location. For example, ‘‘C’’ orders 

represent public customer orders. At 

that time, ‘‘C’’ orders were eligible for 

routing to the Retail Automatic 

Execution System (‘‘RAES’’), which 

CBOE no longer utilizes. In addition, 

only ‘‘C’’ orders were eligible for entry 

into the limit order book when RAES 

was utilized, and public customer 

orders resting in the limit order book 

had priority over other bids and offers 

represented in the trading crowd at the 

same price. ‘‘M’’ orders, on the other 

hand, indicate the order emanates from 

a CBOE Market-Maker. ‘‘M’’ orders were 

not eligible for routing to RAES or for 

entry into the limit order book when 

RAES was in use and instead were 

routed to a crowd printer.4 Origin codes 

also assisted, and continue to assist, 

CBOE and The Options Clearing 

Corporation in the clearing of trades. 

The 2002 rule change simply 

extended the origin code requirement to 

the open outcry environment by 

requiring Market-Maker and Specialist 

orders to be verbally identified as such. 

The premise was that requiring the 

identification of the orders as MarketMaker or Specialist orders would reduce 

the likelihood that such orders would be 

inadvertently treated as public customer 

orders. 

The Exchange is proposing to 

eliminate this requirement as it is 

superfluous and unnecessary. First, as 

indicated above, the requirement to 

verbally identify Market-Maker and 

Specialist orders was introduced as an 

added requirement beyond the order 

marking requirement so that such orders 

would not be inadvertently represented 

as public customer orders on the RAES 

trading platform. However, the 

preferential treatment afforded to public 

customer orders was system enforced 

through the order marking requirement 

and, therefore, the requirement to 

verbally identify such orders was 

superfluous and unnecessary. Second, 

as indicated above, the Exchange no 

longer utilizes the RAES trading 

platform for which the order 

identification procedure was 

introduced. Instead CBOE utilizes the 

Hybrid Trading System, which permits 

public customer, Market-Maker, 

Specialist and other types of brokerdealer orders to be routed for automatic 

execution and to rest in a consolidated 

electronic book. Public customer orders 

resting in the consolidated electronic 

book do generally continue to have 

priority over other bids and offers at the 

same price when utilizing the Hybrid 

Trading System, however, this priority 

is system enforced for electronic 

transactions. For open outcry 

transactions, members are able to 

distinguish public customer orders in 

the consolidated electronic book 

because they are separately displayed 

through a public customer limit order 

book. Thus, the Market-Maker and 

Specialist verbal order identification 

requirement continues to be superfluous 

and unnecessary for the Hybrid Trading 

System. Third, the Exchange also notes 

that the CBOE Rules do not require the 

verbal identification of other order 

types, such as clearing firm and brokerdealer orders, in open outcry and the 

Exchange no longer believes it is 

necessary to single out and verbally 

identify Market-Maker and Specialist 

orders in open outcry either. 

The Exchange notes that this rule 

change simply eliminates the 

requirement to verbally identify MarketMaker and Specialist orders in open 

outcry. Orders will continue to be 

required to contain an account origin 

code that identifies the type of order 

(e.g., an origin code of ‘‘M’’ is still used 

for Market-Maker orders). 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 5

and the rules and regulations 

thereunder and, in particular, the 

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

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 7 requirements that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts, to remove 

impediments to and to perfect the 

mechanism for a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. In particular, by 

proposing to eliminate Rule 6.73(d) and 

its requirement to verbally identify 

Market-Maker and Specialist orders, 

which the Exchange as [sic] determined 

to be superfluous and unnecessary, the 

Exchange believes the proposed rule 

change should serve to remove an 

unnecessary burden and simplify the 

administration of its rules, while also 

maintaining other existing procedures 

that would reduce the likelihood that 

such orders would be inadvertently 

treated as public customer orders. 

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. 

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 

(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 rulecomments@sec.gov. Please include File 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 159 / Wednesday, August 19, 2009 / Notices 41955 

8 17 CFR 200.30–3(a)(12). 

1See Release No. 34–60108 (June 12, 2009); 74 FR 

29005 (June 18, 2009). 

Number SR–CBOE–2009–057 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–2009–057. 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 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 the 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–CBOE–2009–057 and 

should be submitted on or before 

September 9, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–19893 Filed 8–18–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60496; File No. PCAOB– 

2008–05] 

Public Company Accounting Oversight 

Board; Order Approving Proposed 

Rules on Succeeding to the Status of 

a Predecessor Firm 

August 13, 2009. 

I. Introduction 

On August 4, 2008, the Public 

Company Accounting Oversight Board 

(the ‘‘Board’’ or the ‘‘PCAOB’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) 

proposed rules (File No. PCAOB–2008– 

05) on succeeding to the status of a 

predecessor firm, pursuant to Section 

107 of the Sarbanes-Oxley Act of 2002 

(the ‘‘Act’’). Notice of the proposed rules 

was published in the Federal Register 

on June 18, 2009.1 The Commission did 

not receive any comment letters relating 

to this rule proposal. For the reasons 

discussed below, the Commission is 

granting approval of the proposed rules. 

II. Description 

On July 28, 2008, the Board adopted 

rules and submitted to the Commission 

a rule proposal consisting of two new 

rules (PCAOB Rules 2108–2109) and a 

new form, Form 4, related to succeeding 

to the registration status of a 

predecessor firm. The proposed rules 

allow, in certain circumstances, a 

registered public accounting firm’s 

registration status to continue with a 

firm that survives a merger or other 

change in the registered firm’s legal 

form. If approved by the Commission, 

the rules on succession reporting would 

take effect 60 days after Commission 

approval. For firms that had a change in 

legal form, or that resulted from an 

acquisition or combination, in the 

period between the firm’s registration 

and the effective date of the rules, those 

firms will be required to report the 

change on Form 4 within 14 days after 

the Commission’s approval date. 

The proposed rules provide the 

opportunity for continuity of a firm’s 

registration in two categories: (1) 

changes related to a firm’s legal form of 

organization or jurisdiction; and (2) 

transactions in which a registered firm 

is acquired by an unregistered entity or 

combines with other entities to form a 

new legal entity. The events to which 

the rules apply are events for which a 

firm plans, not unanticipated events to 

which a firm reacts. The proposed rules 

are designed to facilitate a firm’s ability 

to factor into its planning, and to predict 

with certainty, whether and how 

continuity of registration can be 

maintained. 

The proposed rules set a deadline of 

14 days for a firm to file a report on 

Form 4, and require certain information 

and representations in the form. If the 

firm files the form within the required 

timeframe, provides the required 

representations, and certifies that all 

required information is included, then 

continuity of registration is automatic, 

without the need for separate Board 

action. The rules and Form 4 also build 

in safeguards to ensure that the Form 1 

registration process is not circumvented 

in circumstances where that process is 

more appropriate than Form 4 

succession. 

III. Discussion 

The Commission did not receive any 

comment letters relating to the rule 

proposal. 

IV. Conclusion 

The Commission finds that the 

proposed PCAOB rules on succeeding to 

the registration status of a predecessor 

firm are consistent with the 

requirements of the Act and the 

securities laws and are necessary or 

appropriate in the public interest or for 

the protection of investors. 

It is therefore ordered, pursuant to 

Section 107 of the Act and Section 

19(b)(2) of the Exchange Act, that 

proposed PCAOB Rules on Succeeding 

to the Registration Status of a 

Predecessor Firm (File No. PCAOB– 

2008–05) be and hereby are approved. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–19839 Filed 8–18–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60492; File No. SR– 

NASDAQ–2009–074] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Members Using the NASDAQ 

Market Center 

August 12, 2009. 

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

Securities Exchange Act of 1934 


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