43742 Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices 

hedge exemption, such position cannot be used to 

take advantage of another exemption from position 

limit requirements. See Exemption Approval Order, 

supra note 7, at note 11. 10Rule 4.13 requires, among other things, that 

members report to the Exchange aggregate long or 

short positions on the same side of the market of 

200 or more contracts of any single class of options 

contracts dealt in on the Exchange. 11See Rule 4.11.04(c)(D), which provides, under 

certain conditions, that the net delta of an options 

position held by an entity entitled to rely on the 

exemption could be calculated without regard to 

positions in or relating to the security underlying 

the option position held by an affiliated entity or 

another trading unit within the same entity, 

provided that, among other things, no control 

relationship exists between such affiliates or trading 

units and the entity has designated in writing in 

advance the affiliates or trading units that are to be 

considered separate and distinct from each other. 

12See Rule 4.11.04(c)(F). 

13See Rule 4.11.04(c)(G). 

14 In approving this rule, 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). 

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

16See Securities Exchange Act Release No. 40594 

(October 23, 1998), 63 FR 59362, 59380 (November 

3, 1998) (File No. S7–30–97) (adopting rules 

relating to OTC derivatives dealers), cited in 

Exemption Approval Order, supra note 7. 

17 15 U.S.C. 78s(b)(2). 

18 17 CFR 200.30–3(a)(12). 

CBOE now proposes to amend Rule 

4.11.04(c) to extend the Exemption to 

positions of customers of members. 

Under the proposal, to avail themselves 

of the Exemption, such customers 

would be able to hedge their positions 

only in accordance with the OCC 

Model. 

In connection with this amendment, 

CBOE proposes to add new 

subparagraph (4) to Rule 4.11.04(c)(E) to 

set forth the obligations of a member 

carrying an account that includes an 

equity option position for a customer 

who intends to rely on the Exemption. 

Specifically, the member would be 

required to obtain from the customer a 

written certification to the Exchange 

that the customer is using the OCC 

Model. In addition, the member would 

be required to obtain from the customer 

a written statement confirming that such 

customer: (a) Is relying on the 

Exemption; (b) will use only the OCC 

Model for purposes of calculating the 

net delta of the customer’s option 

positions for purposes of the Exemption; 

(c) will promptly notify the member if 

the customer ceases to rely on the 

Exemption; and (d) in connection with 

using the OCC Model, has duly 

executed and delivered to the Exchange 

such documents as the Exchange may 

require to be executed and delivered to 

the Exchange as a condition to reliance 

on the Exemption. 

As under the current Exemption, each 

member that holds or carries an account 

that relies on the Exemption is required 

to report, in accordance with Rule 

4.13,10 all equity option positions 

(including those that are delta neutral) 

that are reportable under that rule, and 

also is required to report on its own 

behalf or on behalf of a designated 

aggregation unit 11 the net delta and the 

options contract equivalent of the net 

delta of such positions for each account 

that holds an equity option position 

subject to the delta hedging exemption 

in excess of the levels specified in Rule 

4.11.12 Members carrying a customer 

account that relies on the Exemption 

would be subject to this requirement. 

In addition, the Exchange proposes to 

amend Rule 4.11.04(c)(G) governing 

records so that it extends to members 

carrying customer accounts. Each 

member relying on the Exemption 

would be required to retain, and 

undertake reasonable efforts to ensure 

that its customers relying on the 

Exemption retain, a list of the options, 

securities, and other instruments 

underlying each option position net 

delta calculation reported to the 

Exchange; and to produce such 

information to the Exchange upon 

request.13

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange.14 In particular, the 

Commission believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,15 which requires, 

among other things, that CBOE rules 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. 

In approving the current Exemption, 

the Commission noted its previous 

statement in support of recognizing 

options positions hedged on a delta 

neutral basis as properly exempted from 

position limits.16 The Commission 

believes that it is appropriate and 

consistent with the Act to extend the 

current Exemption to customers. 

The Commission notes that the 

Exchange has added provisions to Rule 

4.11.04(c)(E)(4), specifically with 

respect to customers that seek to rely on 

the Exemption, that obligate members 

carrying accounts for those customers to 

obtain from them certain certifications 

and assurances as described above, 

including a written statement to the 

Exchange that the customer has duly 

executed and delivered to the member 

such documents as the Exchange may 

require to be executed and delivered to 

it. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–CBOE–2009– 

039), as modified by Amendment No. 1, 

be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20655 Filed 8–26–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Joint Open 

Meeting with the Commodity Futures 

Trading Commission to seek input from 

the public on harmonization of market 

regulation on September 2, 2009 from 9 

a.m. until 5 p.m. at the CFTC and on 

September 3, 2009 from 9 a.m. until 

12:30 p.m. at the SEC. 

The Joint Open Meeting will take 

place on September 2, 2009 at the 

CFTC’s headquarters at Three Lafayette 

Centre, 1155 21st Street, NW., Lobby 

Level Hearing Room (Room 1000), 

Washington, DC 20581 and on 

September 3, 2009 at the SEC’s 

headquarters at 100 F Street, NE., 

Auditorium (Room L–002), Washington, 

DC 20549. The Joint Open Meeting will 

be open to the public with seating on a 

first-come, first-served basis. Visitors 

will be subject to security checks. 

Discussion topics at the Joint Open 

Meeting will include the regulation of 

exchanges and markets; the regulation 

of intermediaries; the regulation of 

clearance and settlement; enforcement; 

and the regulation of investment funds. 

For further information, please contact: 

The Office of the Secretary at (202) 551– 

5400. 

Dated: August 25, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–20843 Filed 8–25–09; 4:15 pm] 

BILLING CODE 8010–01–P 

mstockstill on DSKH9S0YB1PROD with NOTICES