15736 Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55275 

(February 12, 2007), 72 FR 7782. 

4See CBOE Rule 8.93(vii). 

5CBOE proposes to make a corresponding change 

to the ‘‘Guidelines for Exemptive Relief Under Rule 

8.91(e) for Members Affiliated with DPMs.’’ See 

Guidelines, Paragraph (b)(viii). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55531; File No. SR–CBOE–

2006–94] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Approving a 

Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

Off-Floor DPMs 

March 26, 2007. 

I. Introduction 

On November 13, 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 

allow DPMs to operate off-floor. The 

Exchange filed Amendment No. 1 to the 

proposed rule change on January 18, 

2007. The proposed rule change was 

published for comment in the Federal 

Register on February 20, 2007.3 The 

Commission received no comments on 

the proposal. 

II. Description of the Proposal 

CBOE proposes to amend its rules to 

allow a DPM to operate remotely away 

from CBOE’s trading floor. DPMs are 

member organizations that function in 

option classes allocated to them as 

Market-Makers, and also are subject to 

the obligations under Rule 8.85 or as 

otherwise provided in CBOE’s Rules. 

Currently, all DPMs operate on CBOE’s 

trading floor. However, some member 

organizations have expressed an interest 

in acting as DPM remotely away from 

CBOE’s trading floor. As discussed 

below, the proposed rule change is 

intended to provide DPMs with the 

flexibility to operate on CBOE’s trading 

floor (‘‘On-Floor DPM’’) or remotely 

away from CBOE’s trading floor (‘‘OffFloor DPM’’). A DPM would only be 

permitted to operate as an Off-Floor 

DPM in equity option classes traded on 

the Hybrid Trading System. 

CBOE proposes to amend Rule 8.83 to 

provide that in selecting an applicant 

for approval as a DPM, the appropriate 

exchange committee may place one or 

more conditions on the approval, 

including, but not limited to, whether 

the DPM will operate on-floor or offfloor. Additionally, CBOE proposes to 

amend Rule 8.83 to provide that an OnFloor DPM can request that the 

appropriate Exchange committee 

authorize it to operate as an Off-Floor 

DPM in one or more equity option 

classes traded on the Hybrid Trading 

System. The appropriate Exchange 

committee will consider the factors 

specified in Rule 8.83(b) in determining 

whether to permit an On-Floor DPM to 

operate as an Off-Floor DPM. In the 

event a DPM is approved to operate as 

an Off-Floor DPM, Rule 8.83 provides 

that the Off-Floor DPM can have a DPM 

Designee trade in open outcry in the 

option classes allocated to the Off-Floor 

DPM, but the Off-Floor DPM shall not 

receive a participation entitlement 

under Rule 8.87 with respect to orders 

represented in open outcry. CBOE also 

proposes to amend Rule 6.45A(a)(C) and 

Rule 6.74 to make clear that the DPM 

participation entitlement is only 

applicable to an On-Floor DPM. 

As provided in new Interpretation .01 

to Rule 8.83, if an Off-Floor DPM wishes 

to operate as an On-Floor DPM, the OffFloor DPM can request that the 

appropriate Exchange Committee 

authorize it to do so. In making a 

determination pursuant to this 

Interpretation, the appropriate Exchange 

committee would evaluate whether the 

change is in the best interests of the 

Exchange, and the committee may 

consider any information that it believes 

will be of assistance to it. Factors to be 

considered may include, but are not 

limited to, any one or more of the 

following: Performance, operational 

capacity of the Exchange or the DPM, 

efficiency, number and experience of 

personnel of the DPM who will be 

performing functions related to the 

trading of the applicable securities, 

number of securities involved, number 

of Market-Makers affected, and trading 

volume of the securities. 

In connection with this rule change, 

CBOE proposes to amend certain DPM 

obligations contained in Rule 8.85. In 

particular, CBOE proposes to amend the 

obligation contained in subparagraph 

(a)(iv), which currently provides that 

the DPM must assure that the number of 

DPM Designees and support personnel 

continuously present at the trading 

station throughout every business day is 

not less than the minimum required by 

the appropriate Exchange committee. 

CBOE proposes to amend subparagraph 

(a)(iv) to state that an Off-Floor DPM 

similarly shall assure that the number of 

DPM Designees and support personnel 

continuously overseeing the DPM’s 

activities is not less than the minimum 

required by the appropriate Exchange 

committee. Additionally, an Off-Floor 

DPM shall provide members with 

telephone access to a DPM Designee at 

all times during market hours for 

purposes of resolving problems 

involving trading on the Exchange. 

CBOE also proposes to amend 

subparagraph (a)(v) of Rule 8.85, which 

states that a DPM shall trade in all 

securities allocated to the DPM only in 

the capacity of a DPM and not in any 

other capacity. CBOE proposes to allow, 

as part of an existing pilot program 

applicable to e-DPMs,4 an Off-Floor 

DPM to have not more than one MarketMaker affiliated with the Off-Floor DPM 

trade on CBOE’s trading floor in any 

specific option class allocated to the 

Off-Floor DPM, provided such MarketMaker is trading on a separate 

membership.5 The affiliated MarketMaker would also have to comply with 

the ‘‘Guidelines for Exemptive Relief 

Under Rule 8.91(e) for Members 

Affiliated with DPMs,’’ set forth in Rule 

8.91. (Absent the pilot program, an OffFloor DPM may not allow any MarketMakers affiliated with the Off-Floor 

DPM to trade on CBOE’s trading floor in 

any class allocated to the Off-Floor 

DPM.) If the Off-Floor DPM has an 

affiliated Marker-Maker trade on CBOE’s 

trading floor in any specific option class 

allocated to the Off-Floor DPM pursuant 

to the pilot program, Rule 8.85(a)(v) 

provides that the Off-Floor DPM cannot 

also have a DPM Designee trading in 

open outcry in the option classes 

allocated to the Off-Floor DPM. 

Finally, CBOE proposes to amend 

Interpretation .02 of Rule 3.8 to allow an 

Off-Floor DPM to appoint one 

individual to be the nominee for all 

memberships utilized by the 

organization in an Off-Floor DPM 

capacity. Interpretation .02 of Rule 3.8 

currently provides that a member 

organization can appoint one individual 

to be the nominee for all memberships 

utilized by the organization in an RMM 

capacity or an e-DPM capacity. This is 

an exception to the general requirement 

of Rule 3.8(a)(ii) which provides that ‘‘if 

a member organization is the owner or 

lessee of more than one membership, 

the organization must designate a 

different individual to be the nominee 

for each of the memberships.’’

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change, as 

amended, is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 


hsrobinson on PROD1PC76 with NOTICES
Federal Register / Vol. 72, No. 62 / Monday, April 2, 2007 / Notices 15737 

6The Commission has considered the amended 

proposed rule change’s impact on efficiency, 

competition and capital formation. 15 U.S.C. 78c(f). 

7 15 U.S.C. 78f. 

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 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). 

5This includes securities listed on Nasdaq’s 

predecessor market, operated as a facility of the 

NASD. 

6See Head Trader Alert 2005–133 (November 14, 

2005), available at: http://www.nasdaqtrader.com/ 

Trader/News/2005/headtraderalerts/hta2005-133.

stm and Vendor Alert 2005–070 (November 14, 

2005), available at: http://www.nasdaqtrader.com/ 

Trader/News/2005/vendoralerts/nva2005-070.stm. 

See also Head Trader Alert 2006–144 (September 

29, 2006), available at: http://www.nasdaqtrader.

com/Trader/News/2006/headtraderalerts/hta2006- 

144.stm, Head Trader Alert 2006–193 (November 

16, 2006), available at: http://www.nasdaqtrader.

com/Trader/News/2006/headtraderalerts/hta2006- 

193.stm and Vendor Alert 2006–065 (October 4, 

2006), available at: http://www.nasdaqtrader.com/ 

Trader/News/2006/vendoralerts/nva2006-065.stm. 

7See Head Trader Alert 2006–201 (December 6, 

2006), available at: http://www.nasdaqtrader.com/ 

Trader/News/2006/headtraderalerts/hta2006-201.

stm, Head Trader Alert 2007–008 (January 25, 

2007), available at: http://www.nasdaqtrader.com/ 

Trader/News/2007/headtraderalerts/hta2007-008.

stm, Head Trader Alert 2007–011 (January 30, 

2007), available at: http://www.nasdaqtrader.com/ 

Trader/News/2007/headtraderalerts/hta2007-011.

stm, Head Trader Alert 2007–020 (February 7, 

2007), available at: http://www.nasdaqtrader.com/ 

Trader/News/2007/headtraderalerts/hta2007-020.

stm, and Head Trader Alert 2007–034 (February 16, 

2007), available at: http://www.nasdaqtrader.com/ 

Trader/News/2007/headtraderalerts/hta2007-034.

stm. 

8Head Trader Alert 2007–050 (March 1, 2007), 

available at: http://www.nasdaqtrader.com/Trader/ 

News/2007/headtraderalerts/hta2007-050.stm. 

a national securities exchange 6 and, in 

particular, the requirements of Section 6 

of the Act.7 Specifically, the 

Commission finds that the proposal is 

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

Act,8 in that the proposal has been 

designed to promote just and equitable 

principles of trade, and to protect 

investors and the public interest. 

In addition, the Commission believes 

that a Market Maker must have an 

affirmative obligation to hold itself out 

as willing to buy and sell options for its 

own account on a regular or continuous 

basis to justify receiving market maker 

margin. The Commission believes that 

CBOE’s rules impose such affirmative 

obligations on DPMs that choose to 

operate remotely and notes that, under 

the proposal, a DPM acting from a 

remote location would still be required 

to meet the obligations of a DPM set 

forth in CBOE Rule 8.85. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–CBOE–2006–

94), as modified by Amendment No. 1, 

is approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5980 Filed 3–30–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55491A; File No. SR–

CBOE–2006–95] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Order Granting Accelerated Approval 

of Proposed Rule Change as Modified 

by Amendment Nos. 1 and 2 Thereto to 

List for Trading Options on the 

Vanguard Emerging Markets 

Exchange Traded Fund 

March 26, 2007. 

Correction 

FR Doc. E7–5423, issued on March 26, 

2007 on page 14145, regarding 

Securities Exchange Act Release No. 34–

55491, incorrectly cited the date of the 

release as March 19, 2006. The date 

should read March 19, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.1

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5986 Filed 3–30–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Release No. 34–55519; File No. SR–

NASDAQ–2007–025) 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Trading One-, Two-, and ThreeCharacter Symbols 

March 26, 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 March 21, 

2007, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’) 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 

Nasdaq. Nasdaq 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 the proposal effective 

upon filing with the Commission. 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 the Substance 

of the Proposed Rule Change 

Nasdaq proposes to trade the 

securities of Delta Financial Corporation 

using the three-character symbol ‘‘DFC.’’

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

Nasdaq 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. Nasdaq 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 

Historically, securities listed on 

Nasdaq have traded using four or five 

character symbols.5 In 2005, however, 

Nasdaq announced its intent to allow 

companies listed on Nasdaq to also use 

one-, two-, or three-character symbols.6

Nasdaq announced a series of dates 

throughout December 2006 and January 

and February 2007 where market 

participants could test trading Nasdaq 

stocks using one-, two-, or threecharacter symbols on weekends, in after 

hour sessions, and during full day 

sessions.7 Beginning February 20, 2007, 

Nasdaq had the ability to accept and 

distribute Nasdaq-listed securities with 

one-, two-, or three-character symbols. 

Nasdaq reminded market participants 

about this change again on March 1, 

2007, stressing that ‘‘[a]ll customers 

should have completed their coding and 

testing efforts to ensure their readiness 

to support 1-, 2- and 3-character 

NASDAQ-listed issues.’’ 8

Nasdaq believes that the changes to its 

systems to accommodate one-, two-, and 

three-character symbols will promote 

competition among exchanges and 

enhance the strength of the U.S. capital 


hsrobinson on PROD1PC76 with NOTICES