8816 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54987 

(December 20, 2006), 71 FR 78481. 

4 15 U.S.C. 78f(b)(3). 

5Further, the Exchange has represented that 

Permit holders would be eligible to sit on 

disciplinary panels and on any committee(s) that 

All submissions should refer to File 

Number SR–Amex–2007–14. 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. Copies of the filing also will be 

available for inspection and copying at 

the principal office of the Amex. 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–Amex–2007–14 and should 

be submitted on or before March 20, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3285 Filed 2–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55326; File No. SR–CBOE–

2006–107] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Granting Approval 

to Proposed Rule Change Regarding a 

Permit Program for CBSX 

February 21, 2007. 

I. Introduction 

On December 18, 2006, the Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

establish a permit program for CBSX, 

the Exchange’s proposed stock-trading 

facility (‘‘Permit Program’’). The 

proposed rule change was published for 

comment in the Federal Register on 

December 29, 2006.3 The Commission 

received no comments regarding the 

proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

CBSX will be a facility of the 

Exchange and will serve as the 

Exchange’s vehicle for trading nonoption securities. The Exchange 

proposed to modify its Constitution and 

Rules to establish the Permit Program 

and thereby allow non-CBOE seat 

holders access to CBSX. The Exchange 

noted that expanding access to CBSX 

beyond CBOE’s options user base would 

enhance liquidity on CBSX and make it 

a more attractive stock trading venue. 

The principal features of the Permit 

Program are as follows: 

• The permits may only be used for 

trading stock on CBSX. A Permit does 

not entitle the holder to trade options on 

CBOE or to physically enter an option 

trading post on the trading floor; 

• Up to 100 permits may be issued; 

• The Permit Program could be 

terminated by the Exchange pursuant to 

a rule filing approved by the 

Commission. This provision is 

incorporated in the Exchange’s 

Constitution to allow the CBSX Permit 

Program to be terminated without a 

corresponding membership vote (i.e., 

the Exchange’s membership has already 

approved the notion that a future 

termination of the Permit Program could 

occur without another membership 

vote); 

• Permit holders would be deemed 

statutory members of CBOE. 

Accordingly, they would have the same 

petition and voting rights as regular 

members except for matters relating to 

Exchange ownership (specifically, 

matters relating to demutualization, 

mergers, consolidations, dissolution, 

liquidation, transfer, or conversion of 

assets of the Exchange), and except for 

matters relating the Chicago Board of 

Trade exercise right; 

• Permit holders would have no 

interest in the assets or property of 

CBOE and would have no right to share 

in any distribution by the Exchange; 

• Permit holders (or an executive 

officer of a Permit holder) would be 

eligible to run for an at-large director 

position and a Nominating Committee 

position; 

• Permit holders would have to be 

registered broker-dealers; 

• Permits would not be transferable; 

and 

• All Permits would expire every 

October and would be eligible for 

renewal. 

If there are fewer available CBSX 

Permits than qualified applicants, the 

Exchange will determine which of the 

applicants to approve by lot. Applicants 

that are affiliated will be deemed one 

applicant in cases where there are fewer 

available CBSX Permits than qualified 

applicants. 

A Permit holder and its associated 

persons must comply with and be 

subject to CBOE Rules to the same 

extent that Exchange members and their 

associated persons are obligated to 

comply with and are subject to 

Exchange Rules. A Permit holder and its 

associated persons shall also be subject 

to the disciplinary, appeals, and 

arbitration jurisdiction and rules of the 

Exchange and entitled to the procedural 

rights under those rules to the same 

extent that Exchange members and their 

associated persons are subject to such 

jurisdiction and rules and entitled to 

such procedural rights. 

III. Discussion 

The Commission finds that the 

Exchange’s proposal relating to CBSX 

Permits is consistent with Section 

6(b)(3) of the Act,4 which requires that 

the rules of the exchange assure a fair 

representation of its members in the 

selection of its directors and 

administration of its affairs and provide 

that one or more directors shall be 

representative of issuers and investors 

and not be associated with a member of 

the exchange, broker, or dealer. The 

Commission notes that, for purposes of 

the Act, Permit holders would be 

considered members of CBOE. Permit 

holders would be eligible to be 

nominated for an at-large position on 

CBOE’s Board of Directors and to serve 

on the Exchange’s Nominating 

Committee and would have the same 

petition and voting rights as CBOE 

members except for matters relating to 

Exchange ownership (specifically, 

matters relating to demutualization, 

mergers, consolidations, dissolution, 

liquidation, transfer, or conversion of 

assets of the Exchange), and except for 

matters relating to the Chicago Board of 

Trade exercise right.5


cprice-sewell on PROD1PC62 with NOTICES
Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices 8817 

develop trading rules. Telephone conversation 

between Angelo Evangelou, Assistant General 

Counsel, CBOE and David Michehl, Special 

Counsel, Commission, Division of Market 

Regulation, on February 16, 2007. 

6 15 U.S.C. 78f(b)(5). 

7 In approving this proposed rule change 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). 

8 15 U.S.C. 78s(b)(2). 

9 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). 

4 17 CFR 240.19b–4(f)(5). 5See Form 19b–4 dated February 20, 2007 

(‘‘Amendment No. 1’’). 6The Exchange’s Brokerplex system currently can 

be used by CHX institutional brokers to receive and 

enter orders, manage their orders, route orders to 

the Exchange’s Matching System and other 

destinations for execution and report executed 

trades. 

7A ‘‘SOLD’’ indicator is used, when reporting 

trades in Tape A and B securities, to identify trades 

that are being reported late (i.e., after some delay 

from the time of execution) and out of sequence. 

The Consolidated Tape Association Plan (the ‘‘CTA 

Plan’’), which governs trade reporting in Tape A 

and B securities, provides that a market should 

‘‘designate as ‘late’ any last sale price not collected 

and reported’’ within 90 seconds after the execution 

occurs. 

8The CTA Plan and specifications currently 

provide that the indicator must be placed on trades 

reported more than 90 seconds after they are 

executed. 

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

10 15 U.S.C. 78f(b)(5). 

The Commission also finds that the 

Exchange’s proposal relating to the 

Permit Program is consistent with 

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

requires that the rules of the exchange 

be 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; and not be designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange has imposed various 

requirements and limitations in 

connection with the issuance of CBSX 

Permits. In this regard, the Commission 

notes that although the number of 

Permits to be issued is limited to a 

maximum of 100 Permits, the Exchange 

will allocate Permits by lot if demand 

for them exceeds 100 Permits.7

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (SR–CBOE–2006–

107) is hereby approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3373 Filed 2–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55319; File No. SR–CHX–

2007–01] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

the Use of a ‘‘SOLD’’ Indicator 

February 20, 2007. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

30, 2007, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or ‘‘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 substantially prepared by the 

Exchange. The CHX has filed this 

proposal pursuant to Section 19(b)(3)(A) 

of the Act 3 and Rule 19b–4(f)(5) 

thereunder,4 which renders it effective 

upon filing with the Commission. On 

February 20, 2007, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.5 The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as amended, 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 

rules to specify that a ‘‘SOLD’’ indicator 

must only be affixed to a trade to the 

extent required by applicable 

intermarket trade reporting plans. 

The text of the proposed rule change 

is available on the CHX’s Web site at 

http://www.chx.com, the Exchange’s 

principal office, 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 

CHX 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 CHX 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange’s institutional brokers 

may execute transactions in the 

Exchange’s Matching System or may 

report transactions through the 

Exchange’s Brokerplex system.6 Under 

Article 17, Rule 3(e) of the Exchange’s 

rules, if institutional brokers use the 

Brokerplex system’s trade reporting 

functionality, these brokers are required 

to use their best efforts to report 

transactions within 10 seconds after 

execution. A ‘‘SOLD’’ indicator must be 

affixed to the trade if this 10-second 

window is exceeded.7

The CHX had established this 10- 

second time frame for affixing the 

‘‘SOLD’’ indicator as part of its new 

trading model rules in the belief that the 

CTA Plan would be amended to contain 

a similar provision. At this point, 

however, the CTA Plan has not been 

amended to reflect this shorter time 

frame.8

This proposal would change the 

Exchange’s rules to specify that the 

‘‘SOLD’’ indicator must only be affixed 

to a trade to the extent that the indicator 

is required by an intermarket trade 

reporting plan, such as the CTA Plan. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the Act 9

in general and furthers the objectives of 

Section 6(b)(5) 10 in particular, in that it 

is 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 


cprice-sewell on PROD1PC62 with NOTICES