19556 Federal Register / Vol. 72, No. 74 / Wednesday, April 18, 2007 / Notices 

1 15 U.S.C. 78q(d). 

2 17 CFR 240.17d–2. 

3 15 U.S.C. 78s(g)(1). 

4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), 

respectively. 

5 15 U.S.C. 78q(d)(1). 

6See Securities Act Amendments of 1975, Report 

of the Senate Committee on Banking, Housing, and 

Urban Affairs to Accompany S. 249, S. Rep. No. 94–

75, 94th Cong., 1st Session 32 (1975). 7 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 

8See Securities Exchange Act Release No. 12352 

(April 20, 1976), 41 FR 18808 (May 7, 1976). 

9See Securities Exchange Act Release No. 12935 

(October 28, 1976), 41 FR 49091 (November 8, 

1976). 

10Accordingly, CBOE serves as CBSX’s selfregulatory organization and has regulatory 

responsibility for the activities of CBSX. See 

Securities Exchange Act Release Nos. 55326 

(February 21, 2007), 72 FR 8816 (February 27, 2007) 

(SR–CBOE–2006–106) (relating to a permit program 

for CBSX); 55389 (March 2, 2007), 72 FR 10575 

(March 8, 2007) (SR–CBOE–2006–110) (relating to 

governance structure of CBSX); and 55392 (March 

2, 2007), 72 FR 10572 (March 8, 2007) (SR–CBOE–

2006–112) (relating to trading rules for CBSX). 

11The proposed 17d–2 Plan refers to these 

common members as ‘‘Dual Members.’’ See 

Paragraph 1(c) of the proposed 17d–2 Plan. 

Charles.Mierzwa@RRB.GOV. Comments 

regarding the information collection 

should be addressed to Ronald J. 

Hodapp, Railroad Retirement Board, 844 

North Rush Street, Chicago, Illinois 

60611–2092 or send an e-mail to 

Ronald.Hodapp@RRB.GOV. Written 

comments should be received within 60 

days of this notice. 

Charles Mierzwa, 

Clearance Officer. 

[FR Doc. E7–7303 Filed 4–17–07; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55612; File No. 4–536] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d–

2; Notice of Filing of Proposed Plan for 

the Allocation of Regulatory 

Responsibilities Between the Chicago 

Board Options Exchange, Incorporated 

and the National Association of 

Securities Dealers, Inc. 

April 10, 2007. 

Pursuant to Section 17(d) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 17d–2 thereunder,2

notice is hereby given that on April 5, 

2007, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’) and 

the National Association of Securities 

Dealers, Inc. (‘‘NASD’’) (together with 

the CBOE, the ‘‘Parties’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) a plan for the 

allocation of regulatory responsibilities 

with respect to the CBOE Stock 

Exchange, LLC (‘‘CBSX’’), dated April 4, 

2007 (‘‘17d–2 Plan’’). The Commission 

is publishing this notice to solicit 

comments on the 17d–2 Plan from 

interested persons. 

I. Introduction 

Section 19(g)(1) of the Act,3 among 

other things, requires every selfregulatory organization (‘‘SRO’’) 

registered as either a national securities 

exchange or national securities 

association to examine for, and enforce 

compliance by, its members and persons 

associated with its members with the 

Act, the rules and regulations 

thereunder, and the SRO’s own rules, 

unless the SRO is relieved of this 

responsibility pursuant to Section 17(d) 

or Section 19(g)(2) of the Act.4 Without 

this relief, the statutory obligation of 

each individual SRO could result in a 

pattern of multiple examinations of 

broker-dealers that maintain 

memberships in more than one SRO 

(‘‘common members’’). Such regulatory 

duplication would add unnecessary 

expenses for common members and 

their SROs. 

Section 17(d)(1) of the Act 5 was 

intended, in part, to eliminate 

unnecessary multiple examinations and 

regulatory duplication.6 With respect to 

a common member, Section 17(d)(1) 

authorizes the Commission, by rule or 

order, to relieve an SRO of the 

responsibility to receive regulatory 

reports, to examine for and enforce 

compliance with applicable statutes, 

rules, and regulations, or to perform 

other specified regulatory functions. 

To implement Section 17(d)(1), the 

Commission adopted two rules: Rule 

17d–1 and Rule 17d–2 under the Act.7

Rule 17d–1 authorizes the Commission 

to name a single SRO as the designated 

examining authority (‘‘DEA’’) to 

examine common members for 

compliance with the financial 

responsibility requirements imposed by 

the Act, or by Commission or SRO 

rules.8 When an SRO has been named as 

a common member’s DEA, all other 

SROs to which the common member 

belongs are relieved of the responsibility 

to examine the firm for compliance with 

the applicable financial responsibility 

rules. On its face, Rule 17d–1 deals only 

with an SRO’s obligations to enforce 

member compliance with financial 

responsibility requirements. Rule 17d–1 

does not relieve an SRO from its 

obligation to examine a common 

member for compliance with its own 

rules and provisions of the federal 

securities laws governing matters other 

than financial responsibility, including 

sales practices and trading activities and 

practices. 

To address regulatory duplication in 

these and other areas, the Commission 

adopted Rule 17d–2 under the Act.9

Rule 17d–2 permits SROs to propose 

joint plans for the allocation of 

regulatory responsibilities with respect 

to their common members. Under 

paragraph (c) of Rule 17d–2, the 

Commission may declare such a plan 

effective if, after providing for 

appropriate notice and comment, it 

determines that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors; to foster 

cooperation and coordination among the 

SROs; to remove impediments to, and 

foster the development of, a national 

market system and a national clearance 

and settlement system; and is in 

conformity with the factors set forth in 

Section 17(d) of the Act. Commission 

approval of a plan filed pursuant to Rule 

17d–2 relieves an SRO of those 

regulatory responsibilities allocated by 

the plan to another SRO. 

II. Proposed Plan 

The Commission recently approved 

proposed rule changes submitted by 

CBOE to establish the CBSX as a facility 

of CBOE.10 CBSX is a fully automated 

marketplace for trading of non-option 

securities by CBOE members. 

Pursuant to the proposed 17d–2 Plan, 

NASD would assume certain 

examination and enforcement 

responsibilities for common members 

with respect to certain applicable laws, 

rules, and regulations. The proposed 

17d–2 Plan is intended to reduce 

regulatory duplication, with respect to 

CBSX, for firms that are common 

members of both CBOE and NASD.11

The text of the plan delineates 

regulatory responsibilities with respect 

to the Parties, including responsibility 

for CBOE rules applicable to the CBSX. 

Included in the proposed plan is an 

exhibit (the ‘‘CBOE Certification of 

Common Rules,’’ referred to herein as 

the ‘‘Certification’’) that lists every 

CBOE rule, and the federal securities 

laws, rules, and regulations thereunder, 

for which NASD would bear 

responsibility under the plan for 

overseeing and enforcing with respect to 

common members. 

In particular, under the 17d–2 Plan, 

NASD would assume examination and 

enforcement responsibility relating to 

compliance by dual members and 

persons associated therewith with the 

rules of CBOE that are substantially 

similar to the applicable rules of NASD 


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12See paragraph 1(b) of the proposed 17d–2 plan 

(defining Common Rules). 

13See paragraph 1(f) of the proposed 17d–2 plan. 

(‘‘Common Rules’’),12 as well as any 

provisions of the federal securities laws 

and the rules and regulations 

thereunder delineated in the 

Certification.13 Under the plan, CBOE 

would retain full responsibility for 

surveillance and enforcement with 

respect to trading activities or practices 

involving CBOE’s own marketplace, 

including, without limitation, CBOE’s 

rules relating to the rights and 

obligations of market makers; 

registration pursuant to its unique rules 

(i.e., non-Common Rules); its duties as 

a DEA pursuant to Rule 17d–1 under the 

Act; and any rules that are not Common 

Rules. 

The text of the 17d–2 Plan is as 

follows: 

Agreement Between NASD and Chicago 

Board Options Exchange, Incorporated 

Pursuant to Rule 17d–2 Under the 

Securities Exchange Act of 1934 

This Agreement, by and between the 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’) and the Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’), is made this 4th day of April, 

2007 (the ‘‘Agreement’’), pursuant to 

section 17(d) of the Securities Exchange 

Act of 1934 (the ‘‘Exchange Act’’) and 

rule 17d–2 thereunder which permits 

agreements between self-regulatory 

organizations to allocate regulatory 

responsibility to eliminate regulatory 

duplication. NASD and CBOE may be 

referred to individually as a ‘‘party’’ and 

together as the ‘‘parties.’’

Whereas, NASD and CBOE desire to 

reduce duplication in the examination 

of their Dual Members (as defined 

herein) and in the filing and processing 

of certain registration and membership 

records as it relates to the CBOE Stock 

Exchange, LLC; and 

Whereas, NASD and CBOE desire to 

execute an agreement covering such 

subjects pursuant to the provisions of 

Rule 17d–2 under the Exchange Act and 

to file such agreement with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’) for its 

approval. 

Now, therefore, in consideration of 

the mutual covenants contained 

hereinafter, NASD and CBOE hereby 

agree as follows: 

1. Definitions. Unless otherwise 

defined in this Agreement or the context 

otherwise requires, the terms used in 

this Agreement shall have the same 

meaning as they have under the 

Exchange Act and the rules and 

regulations thereunder. As used in this 

Agreement, the following terms shall 

have the following meanings: 

(a) ‘‘CBOE Rules’’ or ‘‘NASD Rules’’

shall mean the rules of the CBOE or 

NASD, respectively, as the rules of an 

exchange or association are defined in 

Exchange Act section 3(a)(27). 

(b) ‘‘Common Rules’’ shall mean the 

CBOE Rules that are substantially 

similar to the applicable NASD Rules in 

that examination for compliance with 

such rules would not require NASD to 

develop one or more new examination 

standards, modules, procedures, or 

criteria in order to analyze the 

application of the rule, or a Dual 

Member’s activity, conduct, or output in 

relation to such rule. 

(c) ‘‘Dual Members’’ shall mean those 

CBOE members that are also members of 

NASD and the associated persons 

therewith. 

(d) ‘‘Effective Date’’ shall have the 

meaning set forth in paragraph 14. 

(e) ‘‘Enforcement Responsibilities’’

shall mean the conduct of appropriate 

proceedings, in accordance with the 

NASD Code of Procedure (the Rule 9000 

Series) and other applicable NASD 

procedural rules, to determine whether 

violations of pertinent laws, rules or 

regulations have occurred, and if such 

violations are deemed to have occurred, 

the imposition of appropriate sanctions 

as specified under the NASD’s Code of 

Procedure and sanctions guidelines. 

(f) ‘‘Regulatory Responsibilities’’ shall 

mean the examination responsibilities 

and Enforcement Responsibilities 

relating to compliance by the Dual 

Members with the Common Rules and 

the provisions of the Exchange Act and 

the rules and regulations thereunder, 

and other applicable laws, rules and 

regulations, each as set forth on Exhibit 

1 attached hereto. 

2. Regulatory and Enforcement 

Responsibilities. NASD shall assume 

Regulatory Responsibilities and 

Enforcement Responsibilities for Dual 

Members. Attached as Exhibit 1 to this 

Agreement and made part hereof, CBOE 

furnished NASD with a current list of 

Common Rules and certified to NASD 

that such rules are substantially similar 

to the corresponding NASD rule (the 

‘‘Certification’’). NASD hereby agrees 

that the rules listed in the Certification 

are Common Rules as defined in this 

Agreement. Each year following the 

Effective Date of this Agreement, or 

more frequently if required by changes 

in either the rules of CBOE or NASD, 

CBOE shall submit an updated list of 

Common Rules to NASD for review 

which shall add CBOE rules not 

included in the current list of Common 

Rules that qualify as Common Rules as 

defined in this Agreement; delete CBOE 

rules included in the current list of 

Common Rules that no longer qualify as 

Common Rules as defined in this 

Agreement; and confirm that the 

remaining rules on the current list of 

Common Rules continue to be CBOE 

rules that qualify as Common Rules as 

defined in this Agreement. Within 30 

days of receipt of such updated list, 

NASD shall confirm in writing whether 

the rules listed in any updated list are 

Common Rules as defined in this 

Agreement. Notwithstanding anything 

herein to the contrary, it is explicitly 

understood that the term ‘‘Regulatory 

Responsibilities’’ does not include, and 

CBOE shall retain full responsibility for 

(unless otherwise addressed by separate 

agreement or rule) the following: 

(a) surveillance and enforcement with 

respect to trading activities or practices 

involving CBOE’s own marketplace, 

including without limitation CBOE’s 

rules relating to the rights and 

obligations of market makers; 

(b) registration pursuant to its 

applicable rules of associated persons 

(i.e., registration rules that are not 

Common Rules); 

(c) discharge of its duties and 

obligations as a Designated Examining 

Authority pursuant to Rule 17d-1 under 

the Exchange Act; and 

(d) any CBOE Rules that are not 

Common Rules. 

3. Dual Members. Prior to the 

Effective Date, CBOE shall furnish 

NASD with a current list of Dual 

Members, which shall be updated no 

less frequently than once each quarter. 

4. No Charge. There shall be no 

charge to CBOE by NASD for performing 

the Regulatory Responsibilities and 

Enforcement Responsibilities under this 

Agreement except as hereinafter 

provided. NASD shall provide CBOE 

with ninety (90) days advance written 

notice in the event NASD decides to 

impose any charges to CBOE for 

performing the Regulatory 

Responsibilities under this Agreement. 

If NASD determines to impose a charge, 

CBOE shall have the right at the time of 

the imposition of such charge to 

terminate this Agreement; provided, 

however, that NASD’s Regulatory 

Responsibilities under this Agreement 

shall continue until the Commission 

approves the termination of this 

Agreement. 

5. Reassignment of Regulatory 

Responsibilities. Notwithstanding any 

provision hereof, this Agreement shall 

be subject to any statute, or any rule or 

order of the Commission, or industry 

agreement, restructuring the regulatory 

framework of the securities industry or 

reassigning Regulatory Responsibilities 

between self-regulatory organizations. 


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To the extent such action is inconsistent 

with this Agreement, such action shall 

supersede the provisions hereof to the 

extent necessary for them to be properly 

effectuated and the provisions hereof in 

that respect shall be null and void. 

6. Notification of Violations. In the 

event that NASD becomes aware of 

apparent violations of any CBOE Rules, 

which are not listed as Common Rules, 

discovered pursuant to the performance 

of the Regulatory Responsibilities 

assumed hereunder, NASD shall notify 

CBOE of those apparent violations for 

such response as CBOE deems 

appropriate. Apparent violations of all 

other applicable rules, including 

violations of the Common Rules, various 

securities acts, and rules and regulations 

thereunder, shall be processed by, and 

enforcement proceedings in respect 

thereto shall be conducted by NASD as 

provided hereinbefore; provided, 

however, that in the event a Dual 

Member is the subject of an 

investigation relating to a transaction on 

the CBOE, CBOE may in its discretion 

assume concurrent jurisdiction and 

responsibility. Each party agrees to 

make available promptly all files, 

records and witnesses necessary to 

assist the other in its investigation or 

proceedings. 

7. Continued Assistance. NASD shall 

make available to CBOE all information 

obtained by NASD in the performance 

by it of the Regulatory Responsibilities 

hereunder in respect to the Dual 

Members subject to this Agreement. In 

particular, and not in limitation of the 

foregoing, NASD shall furnish CBOE 

any information it obtains about Dual 

Members which reflects adversely on 

their financial condition. It is 

understood that such information is of 

an extremely sensitive nature and, 

accordingly, CBOE acknowledges and 

agrees to take all reasonable steps to 

maintain its confidentiality. CBOE shall 

make available to NASD any 

information coming to its attention that 

reflects adversely on the financial 

condition of Dual Members or indicates 

possible violations of applicable laws, 

rules or regulations by such firms. 

8. Dual Member Applications. 

(a) Dual Members subject to this 

Agreement shall be required to submit, 

and NASD shall be responsible for 

processing and acting upon all 

applications submitted on behalf of 

allied persons, partners, officers, 

registered personnel and any other 

person required to be approved by the 

rules of both CBOE and NASD or 

associated with Dual Members thereof. 

Upon request, NASD shall advise CBOE 

of any changes of allied members, 

partners, officers, registered personnel 

and other persons required to be 

approved by the rules of both CBOE and 

NASD. 

(b) Dual Members shall be required to 

send to NASD all letters, termination 

notices or other material respecting the 

individuals listed in paragraph 8(a). 

(c) When as a result of processing 

such submissions NASD becomes aware 

of a statutory disqualification as defined 

in the Exchange Act with respect to a 

Dual Member, NASD shall determine 

pursuant to Sections 15A(g) and/or 

Section 6(c) of the Exchange Act the 

acceptability or continued applicability 

of the person to whom such 

disqualification applies and keep CBOE 

advised of its actions in this regard for 

such subsequent proceedings as CBOE 

may initiate. 

(d) Notwithstanding the foregoing, 

NASD shall not review the membership 

application, reports, filings, fingerprint 

cards, notices, or other writings filed to 

determine if such documentation 

submitted by a broker or dealer, or a 

person associated therewith or other 

persons required to register or qualify by 

examination meets the CBOE 

requirements for general membership or 

for specified categories of membership 

or participation in the CBOE. NASD 

shall not review applications or other 

documentation filed to request a change 

in the rights or status described in this 

paragraph 8(d), including termination or 

limitation on activities, of a member or 

a participant of the CBOE, or a person 

associated with, or requesting 

association with, a member or 

participant of the CBOE. 

9. Branch Office Information. NASD 

shall also be responsible for processing 

and, if required, acting upon all requests 

for the opening, address changes, and 

terminations of branch offices by Dual 

Members and any other applications 

required of Dual Members with respect 

to the Common Rules as they may be 

amended from time to time. Upon 

request, NASD shall advise CBOE of the 

opening, address change and 

termination of branch and main offices 

of Dual Members and the names of such 

branch office managers. 

10. Customer Complaints. CBOE shall 

forward to NASD copies of all customer 

complaints involving Dual Members 

received by CBOE relating to NASD’s 

Regulatory Responsibilities under this 

Agreement. It shall be NASD’s 

responsibility to review and take 

appropriate action in respect to such 

complaints. 

11. Advertising. NASD shall assume 

responsibility to review the advertising 

of Dual Members subject to the 

Agreement, provided that such material 

is filed with NASD in accordance with 

NASD’s filing procedures and is 

accompanied with any applicable filing 

fees set forth in NASD Rules. Such 

review shall be made in accordance 

with then applicable NASD rules and 

interpretations. The advertising of Dual 

Members shall be subject only to 

compliance with appropriate NASD 

rules and interpretations. 

12. No Restrictions on Regulatory 

Action. Nothing contained in this 

Agreement shall restrict or in any way 

encumber the right of either party to 

conduct its own independent or 

concurrent investigation, examination 

or enforcement proceeding of or against 

Dual Members, as either party, in its 

sole discretion, shall deem appropriate 

or necessary. 

13. Termination. This Agreement may 

be terminated by CBOE or NASD at any 

time upon the approval of the 

Commission after one (1) year’s written 

notice to the other party, except as 

provided in paragraph 4. 

14. Effective Date. This Agreement 

shall be effective upon approval of the 

Commission. 

15. Arbitration. In the event of a 

dispute between the parties as to the 

operation of this Agreement, CBOE and 

NASD hereby agree that any such 

dispute shall be settled by arbitration in 

Washington, D.C. in accordance with 

the rules of the American Arbitration 

Association then in effect, or such other 

procedures as the parties may mutually 

agree upon. Judgment on the award 

rendered by the arbitrator(s) may be 

entered in any court having jurisdiction. 

16. Separate Agreement. This 

Agreement is wholly separate from the 

multiparty Agreement made pursuant to 

Rule 17d-2 of the Exchange Act between 

the American Stock Exchange LLC, the 

Boston Stock Exchange, Inc., the 

Chicago Board Options Exchange, 

Incorporated, the International 

Securities Exchange LLC, the National 

Association of Securities Dealers, Inc., 

the New York Stock Exchange, LLC, the 

NYSE Arca, Inc., and the Philadelphia 

Stock Exchange, Inc. involving the 

allocation of regulatory responsibilities 

with respect to common members for 

compliance with common rules relating 

to the conduct by broker-dealers of 

accounts for listed options or index 

warrants entered into on December 1, 

2006, and as may be amended from time 

to time. 

17. Notification of Members. CBOE 

and NASD shall notify Dual Members of 

this Agreement after the Effective Date 

by means of a uniform joint notice. 

18. Amendment. This Agreement may 

be amended in writing duly approved 

by each party. All such amendments 

must be filed with and approved by the 


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Commission before they become 

effective. 

19. Limitation of Liability. Neither 

NASD nor CBOE nor any of their 

respective directors, governors, officers 

or employees shall be liable to the other 

party to this Agreement for any liability, 

loss or damage resulting from or 

claimed to have resulted from any 

delays, inaccuracies, errors or omissions 

with respect to the provision of 

Regulatory Responsibilities as provided 

hereby or for the failure to provide any 

such responsibility, except with respect 

to such liability, loss or damages as 

shall have been suffered by one or the 

other of NASD or CBOE and caused by 

the willful misconduct of the other 

party or their respective directors, 

governors, officers or employees. No 

warranties, express or implied, are made 

by NASD or CBOE with respect to any 

of the responsibilities to be performed 

by each of them hereunder. 

20. Relief from Responsibility. 

Pursuant to Sections 17(d)(1)(A) and 

19(g) of the Exchange Act and Rule 17d–

2 thereunder, NASD and CBOE join in 

requesting the Commission, upon its 

approval of this Agreement or any part 

thereof, to relieve CBOE of any and all 

responsibilities with respect to matters 

allocated to NASD pursuant to this 

Agreement; provided, however, that this 

Agreement shall not be effective until 

the Effective Date. 

In witness whereof, each party has 

executed or caused this Agreement to be 

executed on its behalf by a duly 

authorized officer as of the date first 

written above. 

National Association Of Securities 

Dealers, Inc. 

By lllllllllllllllll

Name: 

Title: 

Chicago Board Options Exchange, 

Incorporated 

By lllllllllllllllll

Name: 

Title: 

Exhibit 1 

CBOE Certification of Common Rules 

CBOE hereby certifies that the 

requirements contained in the CBOE 

Rules listed below are identical to, or 

substantially similar to, the NASD or 

SEC Rules identified.†

CBOE rule(s) NASD or SEC rule(s)††

4.18 Prevention of the Misuse of Material, Nonpublic Information ....... Section 15(f) of the Securities Exchange Act of 1934 (Exchange 

Act).†††

4.20 Anti-Money Laundering Compliance Program ............................... 3011 Anti-Money Laundering Compliance Program. 

9.3 Registration and Termination of Representatives ........................... 1031(a), (b) Registration Requirements 1140(a), (d) Electronic Filing 

Rules, and NASD By-Laws, Art. V, Sections 2 and 3 Registered 

Representatives and Associated Persons. 

9.3A Continuing Education For Registered Persons ............................. 1120 Continuing Education Requirements. 

9.4(a) Other Affiliations of Registered Associated Persons .................. 3030 Outside Business Activities of an Associated Person. 

9.12 Statements of Accounts to Customers†††† .................................. 2340 Customer Account Statements. 

9.13 Statement of Financial Condition to Customers ............................ Exchange Act Rule 17a–5. 

9.16 Restrictions on Pledge and Lending of Customers’ Securities ..... 2330(a)–(d) Customers’ Securities or Funds. 

9.18 Guarantees and Profit Sharing ...................................................... 2330(e) & (f) Customers’ Securities or Funds.†††††

9.20 Transfer of Accounts ...................................................................... 11870 Customer Account Transfer Contracts. 

9.23 Customer Complaints†††††† ........................................................ 3110(d) Books and Records. 

9.24 Telephone Solicitation .................................................................... 2212 Telemarketing and 3110(g) Books and Records. 

9.25 Borrowing From or Lending to Customers .................................... 2370 Borrowing From or Lending to Customers. 

53.6(c) Duty to Know and Approve Customers ..................................... 2310 Recommendations to Customers (Suitability) and 3110(c) Books 

and Records. 

53.6(d) Branch Offices of Member Organizations ................................. 1021(a) Registration Requirements and IM–1000–4 Branch Offices and 

Offices of Supervisory Jurisdiction. 

53.6(e) Discretionary Accounts .............................................................. 2510 Discretionary Accounts. 

53.6(f) Confirmation to Customers ......................................................... 2230 Confirmations and Exchange Act Rule 10b–10.†††††††

53.6(g) Communications to Customers ................................................. 2210(b) and(d) Communications with the Public and IM–2210–1(6) 

Guidelines to Ensure That Communications With the Public Are Not 

Misleading. 

53.6(h) Supervision of Accounts ............................................................ 3010(a), (b) Supervision and 3110(c) Books and Records. 

† To the extent that any CBOE Rule listed herein makes reference to options, such rule shall be read to apply to equity securities as provided 

in CBOE Rule 53.6. 

†† CBOE will be responsible for any significant differences between its rules and the comparable NASD rule identified. 

††† NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement to have Form X–17A–5 filed with CBOE; responsibility for such requirement remains with CBOE. 

†††† NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement that the statement have a legend requesting the 

customer to advise the member of any material change in the customer’s investment objectives or financial situation; responsibility for such requirement remains with CBOE. 

††††† The NASD Rule requires, among other things, prior written approval of the member employing the associated person in order for such 

associated person to share in accounts of a customer, whereas the CBOE rule requires consent of the member carrying the account. To the extent that the employing member and carrying member are different firms, the NASD’s and CBOE’s rule differ, and NASD’s Regulatory Responsibility will not cover CBOE’s rule; responsibility for such requirement remains with CBOE. 

†††††† NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement of what must be contained in the complaint file 

or the timing during which the complaint must be sent to the central file by the branch office; responsibility for such requirement remains with 

CBOE. 

†††††††NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement to disclose on a confirmation whether a transaction was executed on the CBOE; responsibility for such requirement remains with CBOE. 


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14 15 U.S.C. 78q(d)(1). 

15 17 CFR 240.17d–2. 

16 17 CFR 200.30–3(a)(34). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55458 

(March 13, 2007), 72 FR 13320 (March 21, 2007) 

(SR–Amex–2007–23). 

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

* * * * * 

III. Date of Effectiveness of the 

Proposed Plan and Timing for 

Commission Action 

Pursuant to Section 17(d)(1) of the 

Act 14 and Rule 17d–2 thereunder,15

after May 9, 2007, the Commission may, 

by written notice, declare the plan 

submitted by CBOE and NASD, File No. 

4–536, to be effective if the Commission 

finds that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors, to foster 

cooperation and coordination among 

self-regulatory organizations, or to 

remove impediments to and foster the 

development of the national market 

system and a national system for the 

clearance and settlement of securities 

transactions and in conformity with the 

factors set forth in Section 17(d) of the 

Act. 

IV. Solicitation of Comments 

In order to assist the Commission in 

determining whether to approve 

proposed 17d–2 Plan and to relieve 

CBOE of the responsibilities which 

would be assigned to NASD, interested 

persons are invited to submit written 

data, views, and arguments concerning 

the foregoing. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/other.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number 4–536 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number 4–536. 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/ 

other.shtml). Copies of the submission, 

all subsequent amendments, all written 

statements with respect to the proposed 

plan that are filed with the Commission, 

and all written communications relating 

to the proposed plan 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 plan also will be 

available for inspection and copying at 

the principal offices of the CBOE and 

NASD. 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 4–536 and should be submitted 

on or before May 9, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7321 Filed 4–17–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55619; File No. SR–Amex–

2007–31] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

Transaction Charges for Equities, 

ETFs, and Nasdaq UTP Securities 

April 12, 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 30, 

2007, the American Stock Exchange LLC 

(‘‘Amex’’ 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 Amex. On 

April 10, 2007, the Exchange filed 

Amendment No. 1 to the proposed rule 

change. The Commission is publishing 

this notice, as amended, 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 revise the 

equities, Exchange Traded Funds and 

Trust Issued Receipts (‘‘ETFs’’), and 

Nasdaq UTP Fee Schedules to eliminate 

the five percent discount applied to 

each firm’s total charges for customer 

orders in equities, ETFs, and Nasdaq 

UTP securities. The text of the proposed 

rule change is available on Amex’s Web 

site at http://www.amex.com, at Amex, 

and in 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 

Exchange 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 

The Exchange recently revised the 

transaction charges for its members and 

member organizations largely relating to 

the Exchange’s new hybrid market 

trading platform (known as AEMI), the 

implementation of Regulation NMS, and 

changes in the competitive landscape 

for equities and ETFs.3 These new 

transaction charges became effective on 

February 22, 2007. As part of the new 

transaction charges, the Exchange 

provided that a five percent discount 

will be applied to each firm’s total 

charges for customer orders in equities, 

ETFs, and Nasdaq UTP securities. The 

five percent discount does not apply to 

charges for specialists and registered 

traders. The Exchange is now proposing 

to eliminate the five percent discount in 

all product lines. The Exchange will 

eliminate the five percent discount 

effective April 1, 2007. 

2. Statutory Basis 

The proposed fee change is consistent 

with Section 6(b)(4) of the Act 4

regarding the equitable allocation of 

reasonable dues, fees, and other charges 

among exchange members and other 

persons using exchange facilities. 


pwalker on PROD1PC71 with NOTICES