Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Notices 1965 

1Restricted Stock is stock that is subject to 

restrictions on transferability, risk of forfeiture and/ 

or other restrictions. 

2Restricted Stock Units represent rights to receive 

stock and are subject to certain restrictions and a 

risk of forfeiture. 

3Except as otherwise determined by the 

compensation committee (‘‘Committee’’), Bonus 

Stock will vest immediately and will not be subject 

to any restrictions. 

4 ‘‘Eligible Persons’’ is defined to mean full-time 

employees, including officers, of the Company and 

its subsidiaries (‘‘Employees’’) and directors of the 

Company who at the time an Award is to be granted 

under the Plan are not Employees (‘‘Non-employee 

Directors’’). Any future subsidiaries will comply 

with the terms and conditions of any order granted 

pursuant to this application. 

5Performance Awards are defined under the Plan 

as Awards granted to Eligible Persons who are 

Employees that are conditioned upon satisfaction, 

during a period of at least one year but no more 

than ten years, of performance criteria established 

by the Committee. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–29915; File No. 812–13857] 

Central Securities Corporation; Notice 

of Application 

January 6, 2012. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

sections 6(c), 17(d) and 23(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) and rule 17d–1 under the Act. 

SUMMARY: Summary of Application: 

Applicant requests an order to permit 

the adoption of an incentive 

compensation plan. The plan would 

permit the applicant to issue restricted 

shares of common stock, restricted stock 

units, shares of common stock granted 

as a bonus, and awards denominated in 

cash. 

Applicant: Central Securities 

Corporation (‘‘Company’’). 

DATES: Filing Dates: The application was 

filed on January 3, 2011 and amended 

on October 31, 2011. The applicant has 

agreed to file an amendment during the 

notice period, the substance of which is 

reflected in this notice. 

Hearing or Notification of Hearing: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicant with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on January 31, 2012, and 

should be accompanied by proof of 

service on the applicant, in the form of 

an affidavit or, for lawyers, a certificate 

of service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Elizabeth M. Murphy, 

Secretary, Commission, 100 F Street 

NE., Washington, DC 20549. Applicant, 

c/o Marlene A. Krumholz, Vice 

President and Secretary, Central 

Securities Corporation, 630 Fifth 

Avenue, New York, NY 10111. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel, 

at (202) 551–6812, or Mary Kay Frech, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

Applicant’s Representations 

1. The Company, a Delaware 

corporation, is registered under the Act 

as a closed-end management investment 

company. The principal business of the 

Company is the ownership and 

management of its investment portfolio, 

which consists predominantly of equity 

securities. The Company is internally 

managed. The Company has six 

directors (‘‘Board’’), five of whom are 

not ‘‘interested persons’’ of the 

Company, as defined in section 2(a)(19) 

of the Act (‘‘Non-interested Directors’’), 

and six Employees (as defined below), 

including three officers, one of whom is 

also a director and an interested person 

of the Company. Shares of the Company 

are listed on the NYSE Amex. As of 

October 31, 2011, there were 22,779,391 

shares of common stock of the Company 

(‘‘Shares’’) outstanding. 

2. Because the investment 

management business is highly 

competitive, the Company believes that 

its successful operation will depend on 

its ability to attract, motivate and retain 

its professional staff with competitive 

compensation packages similar to those 

offered by its competitors. Many of the 

companies with which the Company 

competes for management talent are not 

registered investment companies subject 

to the restrictions of the Act and thus 

are able to offer their directors, officers 

and other personnel various types of 

non-cash, deferred compensation, 

including opportunities for equity 

participation in the enterprise, as well 

as cash incentive and performancebased compensation. Accordingly, the 

Company seeks an order permitting the 

adoption of the Central Securities 

Corporation 2012 Incentive 

Compensation Plan (‘‘Plan’’). The Plan 

would permit the Company to issue 

restricted Shares (‘‘Restricted Stock’’),1

restricted stock units (‘‘Restricted Stock 

Units’’),2 grants of Shares as a bonus 

(‘‘Bonus Stock’’),3 and awards 

denominated in cash (‘‘Cash Awards’’) 

(collectively, ‘‘Awards’’) to Eligible 

Persons who are Employees.4 Under the 

Plan, dividend equivalents could be 

awarded in connection with any 

Awards under the Plan while the 

Awards are outstanding or otherwise 

subject to a restriction period on a like 

number of Shares. Certain Awards may 

be subject to performance conditions 

(‘‘Performance Awards’’).5

3. The Plan also would permit the 

Company to make grants of vested 

Bonus Stock to Non-employee Directors 

without restrictions. Immediately 

following each annual meeting of 

stockholders, each Non-employee 

Director who is elected a director at, or 

who was previously elected and 

continues as a director after, that annual 

meeting shall receive an award of 500 

Shares of Bonus Stock. In addition, at 

the effective date of any Non-employee 

Director’s initial election to the Board, 

the Non-employee Director will be 

granted 500 Shares of Bonus Stock. 

4. The Plan as proposed has been 

approved by the Board, including a 

majority of the Non-interested Directors. 

To the extent any material revisions are 

made to the proposed form of the Plan 

before it becomes final, the revised form 

of the Plan will be subject to final 

approval by the Board, including a 

majority of the Non-interested Directors. 

Subject to receipt of the order, the Board 

is expected to approve the submission 

of the Plan to stockholders for approval 

at the annual meeting of the Company 

in March 2012. 

5. The Plan will be administered by 

the Committee, which will be composed 

of three or more directors of the 

Company who (i) are Non-interested 

Directors, (ii) are ‘‘non-employee 

directors’’ within the meaning of rule 

16b–3 under the Securities Exchange 

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

(iii) are ‘‘outside directors’’ as defined 

under section 162(m) of the Internal 

Revenue Code of 1986 (the ‘‘Code’’). The 

Plan permits the Committee to approve 

and recommend to the Board, and the 

Board has the full and final authority to 

ratify, grants of Awards. 

6. Grants under the Plan may be made 

only to Eligible Persons. In any thirtyVerDate Mar<15>2010 16:26 Jan 11, 2012 Jkt 226001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 E:\FR\FM\12JAN1.SGM 12JAN1

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1966 Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Notices 

6Cash Awards may be satisfied in cash, by 

delivery of the number of Shares valued at the fair 

market value on the payout date, or a combination 

thereof, as determined by the Committee. The 

amount that may be paid to any one Eligible Person 

with respect to Cash Awards may not exceed $3 

million with respect to any fiscal year. 

7Section 18(d) permits a fund to issue only 

warrants or rights, ratably to a class of stockholders, 

that have an exercise period of no more than 120 

days or in exchange for warrants in connection with 

a reorganization. 

8For purposes of the Plan, ‘‘Fair Market Value’’ 

means the mean of the high and low sale prices of 

Shares as reported on the NYSE Amex (or such 

other national securities exchange or automated 

inter-dealer quotation system on which the Shares 

have been duly listed and approved for quotation 

and trading) on the relevant date, or if no sale of 

Shares is reported for such date, the next preceding 

day for which there is a reported sale. 

six month period during which the Plan 

is in effect, an Eligible Person may not 

be granted Awards under the Plan 

relating to more than 250,000 Shares. In 

any event, no Eligible Person may be 

granted Awards denominated by 

reference to Shares, or be issued Shares 

in settlement of Awards not initially 

denominated by reference to Shares, 

that in the aggregate exceed 35% of the 

Shares initially reserved for issuance 

under the Plan, subject to adjustment 

under the Plan. Cash Awards that are 

settled in cash will not count against the 

limit described in the preceding 

sentence.6

7. The total number of Shares 

reserved and available for delivery in 

connection with Awards under the Plan 

is one million Shares. As of October 31, 

2011, this represented 4.39% of the 

outstanding Shares. In no event will the 

number of Shares reserved and available 

for delivery in connection with Awards 

under the Plan exceed 4.4% of the 

outstanding Shares. The total maximum 

dilution to the Company’s stockholders 

(in terms of net asset value (‘‘NAV’’) per 

Share) that would result from grants of 

Awards under the Plan would be 

approximately 4.21% (assuming that 

immediately after the effective date of 

the Plan, Awards covering all Shares 

available under the Plan are granted as 

Restricted Stock). 

8. In the event that a dividend, capital 

gain distribution or other distribution, 

recapitalization, forward or reverse 

stock split, reorganization, merger, 

consolidation, spin-off, combination, 

repurchase, share exchange, liquidation, 

dissolution or other similar corporate 

transaction affects the Shares, the 

Committee will, in such manner as it 

may deem equitable, adjust any or all of 

(i) the aggregate number of Shares 

subject to the Plan; (ii) the number and 

kind of Shares which may be delivered 

under the Plan; (iii) the number and 

kind of Shares by which per-person 

Award limitations are measured; and 

(iv) the number and kind of Shares 

subject to or deliverable in respect of 

outstanding Awards. In addition, after 

the occurrence of any such corporate 

transaction, the Committee will also 

have the authority to make provision for 

payment of cash or other property in 

respect of an Award. 

9. In addition, the Plan provides that 

Shares subject to Awards under the Plan 

that are canceled, expired, forfeited, 

settled in cash or otherwise terminated 

without a delivery of Shares to an 

Eligible Person, plus (i) the number of 

Shares withheld in payment of any 

taxes relating to any Award and (ii) the 

number of Shares surrendered in 

payment of any taxes relating to any 

Award, will again be available for 

Awards under the Plan, except that if 

any such shares could not again be 

available for Awards to a particular 

Eligible Person under any applicable 

law or regulation, such Shares will 

again be available exclusively for 

Awards to Eligible Persons who are not 

subject to such limitation. 

Applicant’s Legal Analysis 

Sections 18(d), 23(a) and 23(b) of the 

Act 

1. Section 18(d) of the Act generally 

prohibits a registered management 

investment company from issuing rights 

to purchase the company’s shares.7 The 

Company states that section 18(d) 

would prohibit the issuance of certain 

Awards to Eligible Persons because no 

corresponding warrants or rights would 

be issued to shareholders, and such 

Awards would not be issued in 

connection with a reorganization. 

2. Section 23(a) of the Act generally 

prohibits a registered closed-end 

investment company from issuing 

securities for services. The Company 

states that because Awards are a form of 

compensation, the issuance of stockbased Awards to Eligible Persons would 

constitute the issuance of securities for 

‘‘services’’ and, therefore, absent an 

exemption, would fall within the 

prohibitions of section 23(a). 

3. Section 23(b) of the Act prohibits 

a registered closed-end investment 

company from selling common stock at 

below its current NAV. The Company 

states that, since Shares have often 

traded at a discount to their NAV and 

Awards under the Plan will be valued 

at the Fair Market Value of the stock,8

section 23(b) would in most cases 

prohibit the issuance of the Awards. 

4. Section 6(c) of the Act provides, in 

part, that the Commission may, by order 

upon application, conditionally or 

unconditionally exempt any person, 

security or transaction, or any class or 

classes thereof, from any provision of 

the Act, if and to the extent that the 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. The Company 

requests an order under section 6(c) 

granting exemptions from section 18(d) 

and sections 23(a) and (b) of the Act to 

the extent necessary to implement the 

Plan. 

5. The Company states that, because 

Awards under the Plan may be issued 

only to Eligible Persons, Awards will 

not be granted to individuals with 

interests contrary to those of the 

Company’s stockholders. The Company 

also asserts that the Plan would not 

become a means for insiders to obtain 

control of the Company because the 

number of shares of stock issuable 

under the Plan would not exceed 4.4% 

of the outstanding Shares of the 

Company. Moreover, as a condition to 

the requested order, no Eligible Person 

could be issued more than 35% of the 

Shares reserved for issuance under the 

Plan. In addition, in no event may the 

total number of Shares of the Company, 

with respect to which all types of 

Awards may be granted to an Eligible 

Person under the Plan, exceed 250,000 

Shares within any thirty-six month 

period during which the Plan is in 

effect. 

6. The Company believes that the 

potential dilutive impact of the Plan 

would not be significant, particularly if 

the establishment of the Plan attracts 

talented professionals who enhance 

management of the Company’s assets, 

thus increasing the value of the 

Company’s assets and enhancing 

stockholders’ interests. The Company 

asserts that it needs the flexibility to 

provide equity-based employee 

compensation in order to be able to 

compete effectively with investment 

management companies for talented 

professionals. The Company also asserts 

that equity-based compensation would 

more closely align the interests of 

Eligible Persons with those of its 

stockholders. 

7. The Company further states that the 

Plan will be submitted to stockholders 

for their approval. The Company 

represents that the proxy statement to be 

submitted to its stockholders will 

contain a concise, ‘‘plain English’’ 

description of the Plan and its potential 

dilutive effect and will comply with the 

proxy disclosure requirements in Item 

10 of Schedule 14A under the Exchange 

Act. The Company further notes that the 

existence and nature of the Awards 

granted will be disclosed to investors in 


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Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Notices 1967 

accordance with standards or guidelines 

adopted by the Financial Accounting 

Standards Board and the requirements 

of the Commission under Item 402 of 

Regulation S–K, Item 8 of Schedule 14A 

under the Exchange Act, and Item 18 of 

Form N–2. In addition, the Company 

will comply with the disclosure 

requirements for executive 

compensation plans applicable to 

operating companies under the 

Exchange Act. The Company concludes 

that the Plan will be adequately 

disclosed to investors and appropriately 

reflected in the market value of its stock. 

8. The Company also states that 

stockholders will be protected by the 

conditions to the requested order that 

assure continuing oversight of the 

operation of the Plan by the Board. 

Under these conditions, the Board will 

review the Plan at least annually. In 

addition, the Committee periodically 

will review the potential impact that the 

grant or vesting of Awards could have 

on the Company’s earnings and NAV 

per Share, such review to take place 

prior to any decisions to grant Awards, 

but in no event less frequently than 

annually. Adequate procedures and 

records will be maintained to permit 

such review. The Committee will be 

authorized to take appropriate steps to 

ensure that neither the grant nor the 

vesting of Awards would have an effect 

contrary to the interests of the 

stockholders of the Company. This 

authority will include the authority to 

prevent or limit the grant of additional 

Awards. 

Section 17(d) of the Act 

9. Section 17(d) of the Act and rule 

17d–1 under the Act, generally prohibit 

an affiliated person of a registered 

investment company, or an affiliated 

person of such a person, from 

participating in a joint enterprise, joint 

arrangement, or profit-sharing plan in 

which the registered investment 

company is a participant, unless the 

Commission by order approves the 

transaction. Rule 17d–1(c) defines a 

joint enterprise to include any stock 

purchase plan. Section 2(a)(3) of the Act 

defines an ‘‘affiliated person’’ of another 

person to include any officer, director, 

partner, copartner or employee of such 

other person. Because all Eligible 

Persons are either Non-employee 

Directors or Employees of the Company, 

the Eligible Persons fall within the 

scope of section 17(d) and rule 17d–1 

and, consequently, are prohibited from 

participating in the Plan, absent the 

requested relief. 

10. The Company requests an order 

pursuant to section 17(d) and rule 17d– 

1 to permit the operation of the Plan. 

Rule 17d–1 provides that, in 

considering relief pursuant to the rule, 

the Commission will consider whether 

the participation of the registered 

investment company in such joint 

enterprise, arrangement or plan is 

consistent with the policies and 

purposes of the Act, and the extent to 

which such participation is on a basis 

different from, or less advantageous 

than, that of other participants. The 

Company states that the Plan, although 

benefiting Eligible Persons and the 

Company in different ways, is in the 

interests of stockholders of the 

Company because the Plan will help 

attract, motivate and retain talented 

professionals and help align the 

interests of employees with those of its 

stockholders. Thus, the Company 

asserts that the Plan is consistent with 

the policies and purposes of the Act and 

that the Company’s participation in the 

Plan will be on a basis no less 

advantageous than that of other 

participants. 

Section 23(c) of the Act 

11. Section 23(c) of the Act generally 

prohibits a registered closed-end 

investment company from purchasing 

any securities of which it is the issuer 

except in the open market, pursuant to 

tender offers or under other 

circumstances as the Commission may 

permit by order to insure that the 

purchase is made on a basis that does 

not unfairly discriminate against any 

holders of the class or classes of 

securities to be purchased. 

12. The Company states that to the 

extent that the withholding of Shares by 

the Company or the delivery of Shares 

by the Eligible Person in satisfaction of 

withholding taxes is considered to be a 

‘‘purchase’’ by the Company of its own 

securities, section 23(c) would prohibit 

the transaction. The Company therefore 

requests an order under section 23(c) to 

permit these purchases. The Company 

states that these purchases will be made 

on a basis which does not unfairly 

discriminate against the stockholders of 

the Company because the Company will 

purchase its shares from Eligible 

Persons at their Fair Market Value, as 

defined in the Plan, on the relevant 

date, which would not be significantly 

different from the price at which all 

other stockholders could sell their 

shares on the NYSE Amex. 

Applicant’s Conditions 

The Company agrees that any order of 

the Commission granting the requested 

relief will be subject to the following 

conditions: 

1. The Board will maintain a 

Committee, none of the members of 

which will be ‘‘interested persons’’ of 

the Company as defined in the Act. The 

Committee will administer the Plan and 

will be composed of three or more 

directors of the Company who (i) are 

Non-interested Directors, (ii) are ‘‘nonemployee directors’’ within the meaning 

of rule 16b–3 under the Exchange Act, 

and (iii) are ‘‘outside directors’’ as 

defined under section 162(m) of the 

Code. 

2. The Plan will not be implemented 

unless it is approved by a majority of 

the votes cast by stockholders at a 

meeting called to consider the Plan. Any 

amendment to the Plan will be subject 

to the approval of the Company’s 

stockholders to the extent such approval 

is required by applicable law or 

regulation or the Board otherwise 

determines. Unless terminated or 

amended, during the fifth year of the 

Plan (and each fifth year thereafter), the 

Plan shall be submitted for reapproval 

to the Company’s stockholders and all 

Awards made during that year shall be 

contingent upon stockholder 

reapproval. 

3. Awards are not transferable or 

assignable, except as the Committee will 

specifically approve to facilitate estate 

planning or to a beneficiary upon an 

Eligible Person’s death or by will or the 

laws of descent and distribution. 

Awards may also be transferred 

pursuant to a qualified domestic 

relations order. 

4. The maximum number of Shares 

available for delivery in connection 

with Awards under the Plan (other than 

any Shares issued in payment of 

dividend equivalents) will be 1 million 

Shares, subject to adjustment for 

corporate transactions, and in no event 

will the number of Shares reserved and 

available for delivery in connection 

with Awards under the Plan exceed 

4.4% of the outstanding Shares. 

5. The Board will review the Plan at 

least annually. In addition, the 

Committee periodically will review the 

potential impact that the grant or 

vesting of Awards could have on the 

Company’s earnings and NAV per 

Share, such review to take place prior to 

any decisions to grant Awards, but in no 

event less frequently than annually. 

Adequate procedures and records will 

be maintained to permit such review, 

and the Committee will be authorized to 

take appropriate steps to ensure that 

neither the grant nor the vesting of 

Awards would have an effect contrary to 

the interests of investors in the 

Company. This will include the 

authority to prevent or limit the grant of 

additional Awards. All records 

maintained pursuant to this condition 


tkelley on DSK3SPTVN1PROD with NOTICES
1968 Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Notices 

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)(6). 

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

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

will be subject to examination by the 

Commission and its staff. 

6. Awards under the Plan are issuable 

only to Eligible Persons. No person will 

be granted Awards denominated by 

reference to Shares, or be issued Shares 

in settlement of Awards not initially 

denominated by reference to Shares, 

that in the aggregate exceed 35% of the 

Shares initially reserved for issuance 

under the Plan, subject to adjustment 

under the Plan. Subject to the 

immediately preceding limitation, in 

any thirty-six month period during 

which the Plan is in effect, no person 

may be granted Awards under the Plan 

relating to more than 250,000 Shares, 

which amount may be adjusted to 

reflect certain corporate transactions or 

events that affect the Company’s stock. 

Grants to Non-employee Directors are 

limited to those described in condition 

7 below. 

7. In each fiscal year, a Non-employee 

Director will be granted 500 Shares of 

vested Bonus Stock without restrictions, 

which amount may be adjusted to 

reflect certain corporate transactions. At 

the effective date of any Non-employee 

Director’s initial election to the Board, 

such Non-employee Director will be 

granted 500 Shares of vested Bonus 

Stock without restrictions, which 

amount may be adjusted to reflect 

certain corporate transactions. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–418 Filed 1–11–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66116; File No. SR–BX– 

2012–001] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Remove 

References to the Russell® 2000 Index 

(RUT) 

January 6, 2012. 

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 5, 

2012, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Chapter XIV (Index Rules) of the Rules 

of the Boston Options Exchange Group, 

LLC (‘‘BOX’’) to remove references to 

the Russell® 2000 Index (RUT). The text 

of the proposed rule change is available 

from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s Internet Web site at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 

Options on the Russell® 2000 Index 

(RUT) are no longer listed or traded on 

BOX, and as such, the Exchange 

proposes to remove the references to 

RUT cited below from Chapter XIV 

(Index Rules) of the BOX Trading Rules. 

Supplementary Material .01 to 

Section 2 of the Index Rules identifies 

the reporting authorities designated in 

respect of each underlying index for 

options traded on BOX, including the 

Frank Russell Company for RUT. 

Section 5 of the Index Rules specifies 

position limits for certain broad-based 

index options, including RUT, and the 

Russell 2000 Value Index and Russell 

2000 Growth Index. Neither of these 

indexes is traded on BOX so the 

Exchange proposes to delete these 

references as well. 

Section 7 of the Index Rules provides 

certain exemptions from position limits, 

and provides a specific exemption 

related to RUT or the Nasdaq 100 Index. 

The Exchange proposes to delete the 

reference to RUT as inapplicable. 

Section 10 of the Index Rules permits 

the Exchange to list up to seven 

expiration months at any one time for 

certain broad-based index options, 

including RUT. Additionally, Section 

10(a)(4) specifically references options 

on RUT as one of the European-style 

index options approved for trading on 

BOX, Section 10(a)(5)(ii) references 

options on RUT as A.M.-settled index 

options approved for trading on BOX 

and Section 10 (c) references RUT in its 

‘‘Procedures for Adding and Deleting 

Strike Prices.’’ These references will 

now be inapplicable as RUT will no 

longer be traded on BOX. As such, the 

Exchange proposes to delete them. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

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

in general, and Section 6(b)(5) of the 

Act,6 in particular, in that it is designed 

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 for a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. In particular, this 

proposed change removes from the BOX 

Trading Rules references to RUT that are 

no longer applicable because options on 

RUT have been delisted and are no 

longer traded on BOX. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 


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