Federal Register / Vol. 75, No. 100 / Tuesday, May 25, 2010 / Notices 29375 

10 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)(1). 

4The term ‘‘Restructuring Transaction’’ is defined 

in proposed CBOE Rule 1.1(hhh) in the proposed 

rule change to effectuate the demutualization of 

CBOE (the ‘‘CBOE Demutualization Filing’’) as ‘‘the 

restructuring of the Exchange from a non-stock 

corporation to a stock corporation and whollyowned subsidiary of CBOE Holdings, Inc.’’ The 

Commission has noticed the CBOE Demutualization 

Filing for comment, and has not received any 

comments on it. See Exchange Act Release No. 

58425 (Aug. 26, 2008), 73 FR 51652 (Sept. 4, 2008) 

(File No. SR–CBOE–2008–88). 

5The CBOE Demutualization Filing also includes 

the proposed Certificate of Incorporation and 

Bylaws of CBOE Holdings, as well as the proposed 

Certificate of Incorporation of CBOE, the proposed 

Bylaws of CBOE, the proposed amendments to the 

Rules of CBOE, and the proposed Voting Agreement 

between CBOE Holdings and CBOE. C2 notes that 

this rule filing includes and contains descriptions 

of the most recent versions of the proposed 

Certificate of Incorporation and Bylaws of CBOE 

Holdings. 

6C2 was recently registered as a national 

securities exchange under Section 6 of the 

Exchange Act. See Exchange Act Release No. 61152 

(Dec. 10, 2009), 74 FR 66699 (Dec. 16, 2009). When 

operational, C2 will operate an all-electronic 

marketplace for the trading of listed options. It will 

not maintain a physical trading floor. 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Electronic comments may be 

submitted by using the Commission’s 

Internet comment form (http:// 

www.sec.gov/rules/sro.shtml), or 

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

No. SR–DTC–2010–04 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–DTC–2010–08. 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 Web site viewing and 

printing in the Commission’s Public 

Reference Section, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filings 

also will be available for inspection and 

copying at the principal office of DTC 

and on DTC’s Web site at http:// 

www.dtcc.com/downloads/legal/ 

rule_filings/2010/dtc/2010-08.pdf. 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–DTC–2010–08 and should be 

submitted on or before June 15, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12508 Filed 5–24–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62118; File No. SR–C2– 

2010–002] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing of a Proposed Rule 

Change Relating to Corporate 

Structure 

May 18, 2010. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule 

19b–4 thereunder,2 notice is hereby 

given that on May 14, 2010, C2 Options 

Exchange, Incorporated (‘‘C2’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’ or 

‘‘SEC’’) the proposed rule change as 

described in Items I, II, and III below, 

which Items have been prepared by C2. 

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 

C2, a wholly-owned subsidiary of 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’), is filing this 

proposed rule change with the 

Commission under Section 19(b)(1) of 

the Act in connection with the plan of 

CBOE to restructure from a Delaware 

non-stock corporation to a Delaware 

stock corporation that will be a whollyowned subsidiary of CBOE Holdings, 

Inc. (‘‘CBOE Holdings’’), a holding 

company organized as a Delaware stock 

corporation.3 As a result of this 

Restructuring Transaction, C2 will 

become a wholly-owned subsidiary 

CBOE Holdings.4

The text of the proposed Certificate of 

Incorporation of CBOE Holdings, the 

proposed Bylaws of CBOE Holdings, the 

proposed amendments to C2’s 

Certificate of Incorporation, the 

proposed amendments to C2’s Bylaws, 

the proposed amendments to C2’s Rules, 

and the proposed Voting Agreement 

between CBOE Holdings and C2 are 

available on C2’s Web site (http:// 

www.cboe.org/Legal), on the 

Commission’s Web site at http:// 

www.sec.gov, at C2’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room.5

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, C2 

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. C2 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 

(1) The Restructuring Transaction 

C2 is filing this proposed rule change 

in connection with the plan of its parent 

company CBOE to restructure from a 

Delaware non-stock corporation owned 

by its members to a Delaware stock 

corporation that will be a wholly-owned 

subsidiary of CBOE Holdings, a holding 

company organized as a Delaware stock 

corporation.6 After the Restructuring 

Transaction, the owners of membership 


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7CME Group Inc. et al. v. CBOE Inc. et al., Civil 

Action No. 2369–VCN (Filed Aug. 23, 2006). CBOE 

entered into a Stipulation of Settlement 

(‘‘Stipulation’’) on August 20, 2008 with the CBOT 

Parties to resolve this lawsuit. The Stipulation and 

amendments to it can be found at (http:// 

www.cboe.org/Legal/). 

8While certain provisions of the Certificate of 

Incorporation and Bylaws for CBOE Holdings are 

not related to the operation of C2 or CBOE, for so 

long as CBOE Holdings controls any Regulated 

Securities Exchange Subsidiary (currently, C2 and 

CBOE), before any amendment, alteration or repeal 

of any provision of the Certificate of Incorporation 

and Bylaws of CBOE Holdings becomes effective, 

such amendment, alteration or repeal will be 

submitted to the Board of Directors of each 

Regulated Securities Exchange Subsidiary, and if 

such amendment, alteration or repeal must be filed 

with or filed with and approved by the 

Commission, then such amendment, alteration or 

repeal will not become effective until filed with or 

filed with and approved by the Commission, as the 

case may be. See proposed Article Eleventh of the 

CBOE Holdings Certificate of Incorporation and 

proposed Article 10.2 of the CBOE Holdings 

Bylaws. The term ‘‘Regulated Securities Exchange 

Subsidiary’’ is defined as ‘‘any national securities 

exchange controlled, directly or indirectly, by 

[CBOE Holdings], including, but not limited to 

CBOE.’’ See proposed Article Fifth(a) of the CBOE 

Holdings Certificate of Incorporation. 

9See proposed Article Seventh(b) of the CBOE 

Holdings Certificate of Incorporation and proposed 

Article 3.2 of the CBOE Holdings Bylaws. 10See proposed Article 3.3 of the CBOE Holdings 

Bylaws. 11See proposed Article 3.6 of the CBOE Holdings 

Bylaws. 12See proposed Article 5.1 of the CBOE Holdings 

Bylaws. 13See proposed Article 3.7 of the CBOE Holdings 

Bylaws. 14See proposed Article 3.2 of the CBOE Holdings 

Bylaws. Directors will serve one-year terms ending 

on the annual meeting following the meeting at 

which such directors were elected or at such time 

as their successors are elected or appointed and 

qualified, except in the event of earlier death, 

resignation or removal. 

15See proposed Article 2.11 of the CBOE 

Holdings Bylaws. Subject to certain conditions, 

stockholders also have the right under this 

provision to nominate persons for the CBOE 

Holdings Board. 

16See proposed Article 2.8 of the CBOE Holdings 

Bylaws. 

17See proposed Article 2.10 of the CBOE 

Holdings Bylaws. Except as otherwise provided by 

law or the Certificate of Incorporation or Bylaws of 

CBOE Holdings, the holders of a majority in voting 

power of the shares of the capital stock of CBOE 

Holdings issued and outstanding and entitled to 

vote at the meeting (after taking into account the 

effect of any reduction of the number of shares 

entitled to vote as a result of the voting limitations 

imposed by Article Sixth of the Certificate of 

Incorporation of CBOE Holdings, if any), present in 

person or represented by proxy, will constitute a 

quorum for the transaction of business. See 

proposed Article 2.6 of the CBOE Holdings Bylaws. 

The voting limitations in Article Sixth are 

discussed below. 

18See proposed Article 4.1 of the CBOE Holdings 

Bylaws. The CBOE Holdings Board will designate 

the members of these other committees and may 

designate a Chairman and a Vice-Chairman thereof. 

19See proposed Article 4.5 of the CBOE Holdings 

Bylaws. 

20See proposed Articles 4.2, 4.3 and 4.4 of the 

CBOE Holdings Bylaws. 

interests in CBOE will become 

stockholders of CBOE Holdings through 

the conversion of their memberships 

into shares of common stock of CBOE 

Holdings. In addition, members of the 

settlement class in the lawsuit brought 

by The Board of Trade of the City of 

Chicago, Inc., its parent company CME 

Group, Inc. and a class of individuals 

(collectively, the ‘‘CBOT Parties’’) 

against CBOE and CBOE’s Board of 

Directors will become stockholders of 

CBOE Holdings.7

As noted above, C2 currently is a 

wholly-owned subsidiary of CBOE. In 

connection with the Restructuring 

Transaction, CBOE will dividend up to 

CBOE Holdings all of the shares of C2. 

As a result of the Restructuring 

Transaction, CBOE Holdings will hold 

all of the outstanding common stock of 

C2 and CBOE, as well as certain 

subsidiaries of CBOE. C2 and CBOE will 

continue to function as self-regulatory 

organizations (‘‘SROs’’) and to operate 

their exchange businesses and facilities. 

(2) CBOE Holdings 

After the Restructuring Transaction, 

CBOE Holdings will be the parent 

company and sole shareholder of C2 

and CBOE. The Certificate of 

Incorporation and the Bylaws of CBOE 

Holdings will govern the activities of 

CBOE Holdings.8

(A) CBOE Holdings Board of Directors 

The business and affairs of CBOE 

Holdings will be managed by or under 

the direction of its Board of Directors 

(‘‘CBOE Holdings Board’’). The CBOE 

Holdings Board will consist of between 

11 and 23 directors, the exact number to 

be fixed by the CBOE Holdings Board 

from time to time pursuant to resolution 

adopted by the Board.9 It is intended 

that the initial CBOE Holdings Board 

following the Restructuring Transaction 

will be composed of the 22 individuals 

that are the directors of CBOE 

immediately prior to the Restructuring 

Transaction. At all times at least twothirds of the CBOE Holdings directors 

will satisfy the independence 

requirements adopted by the CBOE 

Holdings Board, as may be modified and 

amended by the Board from time to 

time, and which shall satisfy the 

independence requirements contained 

in the listing standards of NYSE or The 

Nasdaq Stock Market.10

The CBOE Holdings Board will 

appoint one of the directors on the 

CBOE Holdings Board to serve as 

Chairman of the CBOE Holdings 

Board.11 The CBOE Holdings Bylaws do 

not restrict the Chief Executive Officer 

of CBOE Holdings from serving in this 

role.12 The CBOE Holdings Board also 

may appoint an independent director to 

serve as Lead Director, who will 

perform such duties and possess such 

powers as the CBOE Holdings Board 

may from time to time prescribe.13 All 

CBOE Holdings directors will serve oneyear terms.14 There is no limit on the 

number of terms a director may serve on 

the CBOE Holdings Board. 

The CBOE Holdings Board or a 

committee thereof each year will 

nominate CBOE Holdings director 

candidates for election at the CBOE 

Holdings annual meeting of 

shareholders.15 In this regard, the 

Nominating and Governance 

Committee, which is described below, 

will nominate candidates for the CBOE 

Holdings Board. Each holder of CBOE 

Holdings voting stock will be entitled to 

one vote for each share of voting stock 

he or she holds, except as otherwise 

provided by the General Corporation 

Law of the State of Delaware or the 

Certificate of Incorporation or Bylaws of 

CBOE Holdings.16 At each annual 

meeting of the shareholders of CBOE 

Holdings at which a quorum is present, 

the individuals receiving a plurality of 

the votes cast will be elected directors 

of CBOE Holdings.17

(B) Committees of CBOE Holdings 

CBOE Holdings will have an 

Executive Committee, an Audit 

Committee, a Compensation Committee, 

a Nominating and Governance 

Committee, as well as such other 

committees that the CBOE Holdings 

Board establishes.18 The Nominating 

and Governance Committee will consist 

of at least five directors, all of whom 

will be Independent Directors and be 

recommended by the Nominating and 

Governance Committee for approval by 

the CBOE Holdings Board.19 Members 

of the Executive, Audit, and 

Compensation Committees of CBOE 

Holdings will be recommended by the 

Nominating and Governance Committee 

for approval by the CBOE Holdings 

Board.20

The Executive Committee will have 

and may exercise all the powers and 

authority of the CBOE Holdings Board 

in the management of the business and 

affairs of CBOE Holdings, except it will 

not have the power or authority of the 

CBOE Holdings Board in reference to, 

among other things, amending the CBOE 

Holdings Certificate of Incorporation, 

adopting an agreement of merger or 

consolidation, approving the sale, lease 

or exchange of all or substantially all of 

the CBOE Holdings’ property and assets, 

or approving the dissolution of CBOE 

Holdings or a revocation of a 


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21See proposed Article 4.2 of the CBOE Holdings 

Bylaws. 

22See proposed Articles 4.3, 4.4 and 4.5 of the 

CBOE Holdings Bylaws. 

23See proposed Article 5.1 of the CBOE Holdings 

Bylaws. 

24See proposed Articles 5.1 and 5.2 of the CBOE 

Holdings Bylaws. 

25See proposed Articles 5.3, 5.4, 5.5, 5.6 and 5.7 

of the CBOE Holdings Bylaws. 

26The term ‘‘Related Person’’ is defined in 

proposed Article Fifth(a) of the CBOE Holdings 

Certificate of Incorporation and includes, among 

other things, any ‘‘person associated with a 

member’’ (as such term is defined in Section 

3(a)(21) of the Exchange Act). 

27 In 2004, the Commission proposed rules that 

were designed to address conflicts of interest 

relating to for-profit SROs. See, e.g., Securities 

Exchange Act Release No. 50699 (Nov. 18, 2004), 

69 FR 71126 (Dec. 8, 2004). 

28See proposed Article Sixth(b) of the CBOE 

Holdings Certificate of Incorporation. 

29See proposed Article Sixth(b) of the CBOE 

Holdings Certificate of Incorporation. If and to the 

extent that shares of CBOE Holdings stock 

beneficially owned by any person or its Related 

Persons are held of record by any other person, this 

provision will be enforced against such record 

owner by requiring the redemption of shares of 

CBOE Holdings stock held by such record owner in 

a manner that will accomplish the ownership 

limitation applicable to such person and its Related 

Persons. 

30See proposed Article Sixth(a) of the CBOE 

Holdings Certificate of Incorporation. The voting 

limitation does not apply to a solicitation of a 

revocable proxy by any CBOE Holdings stockholder 

on behalf of CBOE Holdings or by directors or 

officers of CBOE Holdings on behalf of CBOE 

Holdings or to a solicitation of a revocable proxy 

by a stockholder in accordance with Regulation 14A 

under the Exchange Act. 17 CFR 240.14A. This 

exception, however, would not apply to a 

solicitation by a stockholder pursuant to Rule 14a– 

2(b)(2) under the Exchange Act, which permits a 

solicitation made otherwise than on behalf of CBOE 

Holdings where the total number of persons 

solicited is not more than 10. 

31See proposed Article Sixth(a) of the CBOE 

Holdings Certificate of Incorporation. If and to the 

extent that shares of CBOE Holdings stock 

beneficially owned by any person or its Related 

Persons are held of record by any other person, this 

provision will be enforced against such record 

owner by limiting the votes entitled to be cast by 

such record owner in a manner that will 

accomplish the voting limitation applicable to such 

person and its Related Persons. 

dissolution.21 The Audit, 

Compensation, and Nominating and 

Governance Committees will have such 

duties and may exercise such authority 

as may be prescribed by the CBOE 

Holdings Board and their respective 

Charters as adopted by resolution of the 

CBOE Holdings Board.22

(C) Officers of CBOE Holdings 

The officers of CBOE Holdings will be 

the Chief Executive Officer, a Chief 

Financial Officer, a President, one or 

more Vice-Presidents (the number 

thereof to be determined by the CBOE 

Holdings Board), a Secretary, a 

Treasurer, and such other officers as the 

CBOE Holdings Board may determine, 

including an Assistant Secretary or 

Assistant Treasurer.23 The CBOE 

Holdings Board by an affirmative vote of 

the majority of the board will appoint 

the Chief Executive Officer of CBOE 

Holdings, who will have general charge 

and supervision of the business of the 

CBOE Holdings.24 In general, the other 

officers of CBOE Holdings will have the 

duties or powers or both set out in the 

CBOE Holdings Bylaws, as well as such 

other duties or powers or both as the 

CBOE Holdings Board or the Chief 

Executive Officer may from time to time 

prescribe.25

(D) Shareholder Restrictions 

In addition to the restrictions on the 

ability of certain CBOE Holdings 

stockholders to transfer their shares 

prior to and after an initial public 

offering if such an offering were to 

occur, the Certificate of Incorporation of 

CBOE Holdings places certain 

ownership and voting limits on the 

holders of CBOE Holdings stock and 

their Related Persons.26 These 

restrictions are intended to address the 

possibility that a person holding a 

controlling interest in an SRO could use 

that interest to affect the SRO’s 

regulatory responsibilities under the 

Exchange Act.27 In particular, these 

restrictions provide that: 

Ownership 

• No person (either alone or together 

with its Related Persons) may 

beneficially own directly or indirectly 

shares of stock representing in the 

aggregate more than 10% of the total 

outstanding shares of CBOE Holdings 

stock; provided, that, in the event a 

public offering of common stock is 

completed, the ownership percentage 

that a person is permitted to beneficially 

own will increase from 10% to 20% of 

the total outstanding shares of CBOE 

Holdings stock; 28 and 

• In the event that a person, either 

alone or together with its Related 

Persons, beneficially owns shares of 

stock representing more than 10% of the 

outstanding shares of stock (or, in the 

event that a public offering of common 

stock has been completed, 20% of the 

outstanding shares of stock), CBOE 

Holdings will be obligated to redeem 

promptly, at a price equal to the par 

value of such shares of stock and to the 

extent that funds are legally available 

for such redemption, that number of 

shares of stock necessary so that such 

person, together with its Related 

Persons, will beneficially own directly 

or indirectly shares of stock 

representing in the aggregate no more 

than 10% of the outstanding shares of 

stock (or, in the event that a public 

offering of common stock has been 

completed, 20% of the outstanding 

shares of stock), after taking into 

account that such repurchased shares 

will become treasury shares and will no 

longer be deemed to be outstanding.29

Voting 

• No person (either alone or together 

with its Related Persons) will be entitled 

to vote or cause the voting of shares of 

stock beneficially owned directly or 

indirectly by that person or those 

Related Persons to the extent that those 

shares would represent in the aggregate 

more than 10% of the total number of 

votes entitled to be cast on any matter, 

and no person (either alone or together 

with its Related Persons) will be entitled 

to vote more than 10% of the total 

number of votes entitled to be cast on 

any matter by virtue of agreements 

entered into by that person or those 

Related Persons with other persons not 

to vote shares of outstanding stock; 

provided, that, in the event a public 

offering of common stock is completed, 

the voting percentage that any person is 

permitted to control, whether through 

beneficial ownership or other 

agreement, will increase from 10% to 

20% of the total number of votes 

entitled to be cast on any matter; 30 and 

• In the event that a person, either 

alone or together with its Related 

Persons, is entitled to vote or cause the 

voting of shares representing in the 

aggregate more than 10% (or, in the 

event that a public offering of common 

stock has been completed, 20%) of the 

total number of votes entitled to be cast 

on any matter (including if it and its 

Related Persons possess this voting 

power by virtue of agreements entered 

into with other persons not to vote 

shares of stock), then such person, 

either alone or together with its Related 

Persons, will not be entitled to vote or 

cause the voting of these shares of stock 

to the extent that such shares represent 

in the aggregate more than 10% (or, in 

the event that a public offering of 

common stock has been completed, 

20%) of the total number of votes 

entitled to be cast on any matter, and 

any such votes purported to be cast in 

excess of this percentage will be 

disregarded.31

The CBOE Holdings Board of 

Directors may waive the provisions 

regarding ownership and voting limits 

by a resolution expressly permitting 

ownership or voting rights in excess of 

such limits (which resolution must be 

filed with and approved by the SEC 


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32See proposed Articles Sixth(a) and (b) of the 

CBOE Holdings Certificate of Incorporation. 

33 15 U.S.C. 78c(a)(39). 

34See proposed Articles Sixth(a) and (b) of the 

CBOE Holdings Certificate of Incorporation. 

35See proposed Article Sixth(d) of the CBOE 

Holdings Certificate of Incorporation. 

36See proposed Article Sixteenth(c) of the CBOE 

Holdings Certificate of Incorporation. 

37 Id. 

38Notwithstanding this restriction, nothing in the 

CBOE Holdings Certificate of Incorporation will be 

interpreted so as to limit or impede the rights of the 

SEC or any Regulated Securities Exchange 

Subsidiary to access and examine such confidential 

information pursuant to the Federal securities laws 

and the rules and regulations thereunder, or to limit 

or impede the ability of any officers, directors, 

employees or agents of CBOE Holdings to disclose 

such confidential information to the SEC or any 

Regulated Securities Exchange Subsidiary. See 

proposed Article Fifteenth of the CBOE Holdings 

Certificate of Incorporation. 

39The books and records related to the exchange 

business of a Regulated Securities Exchange 

Subsidiary will be subject at all times to inspection 

and copying by the SEC and the Regulated 

Securities Exchange Subsidiary. Id. In addition, the 

CBOE Holdings Bylaws provide that the books of 

CBOE Holdings must be kept within the United 

States. See proposed Section 1.3 of the CBOE 

Holdings Bylaws. 

40See proposed Article Sixteenth(b) of the CBOE 

Holdings Certificate of Incorporation. 

prior to being effective), subject to a 

determination of the Board that: 32

• The acquisition of beneficial 

ownership in excess of the ownership 

limits or the exercise of voting rights in 

excess of the voting limits will not 

impair the ability of CBOE Holdings and 

any Regulated Securities Exchange 

Subsidiary to discharge their 

responsibilities under the Exchange Act 

and the rules and regulations under the 

Exchange Act and is otherwise in the 

best interests of CBOE Holdings and its 

stockholders and the Regulated 

Securities Exchange Subsidiaries; 

• The acquisition of beneficial 

ownership in excess of the ownership 

limits or the exercise of voting rights in 

excess of the voting limits will not 

impair the SEC’s ability to enforce the 

Exchange Act; 

• Neither the person obtaining the 

waiver nor any of its Related Persons is 

subject to any statutory disqualification 

(as defined in Section 3(a)(39) of the 

Exchange Act) if such person is seeking 

to obtain a waiver above the applicable 

ownership or voting percentage level; 33

and 

• For so long as CBOE Holdings 

directly or indirectly controls any 

Regulated Securities Exchange 

Subsidiary, neither the person obtaining 

the waiver nor any of its Related 

Persons is a Trading Permit Holder in 

any Regulated Securities Exchange 

Subsidiary if such person is seeking to 

obtain a waiver above the applicable 

ownership or voting percentage level. 

In making these determinations, the 

CBOE Holdings Board may impose 

conditions and restrictions on the 

relevant stockholder and its Related 

Persons that it deems necessary, 

appropriate or desirable in furtherance 

of the objectives of the Exchange Act 

and the governance of CBOE 

Holdings.34

The CBOE Holdings Certificate of 

Incorporation also provides that the 

CBOE Holdings Board has the right to 

require any person and its Related 

Persons that the Board reasonably 

believes (i) to be subject to the 

ownership or voting restrictions 

summarized above, or (ii) to beneficially 

own an aggregate of 5% or more of the 

then outstanding shares of CBOE 

Holdings stock entitled to vote on any 

matter, which ownership has not been 

reported to CBOE Holdings, to provide 

to CBOE Holdings complete information 

as to all shares of the stock that such 

stockholder beneficially owns, as well 

as any other information relating to the 

applicability to such stockholder of the 

voting and ownership requirements 

outlined above as may reasonably be 

requested.35

CBOE has received a legal opinion 

that the foregoing ownership and voting 

rights limitations, as well as the 

provisions providing for the redemption 

of shares held by a person (either alone 

or together with its Related Persons) in 

excess of the ownership limitation, are 

valid under Delaware law. 

(E) Self-Regulatory Function and 

Oversight 

The CBOE Holdings Certificate of 

Incorporation contains various 

provisions designed to protect the 

independence of the self-regulatory 

function of any Regulated Securities 

Exchange Subsidiary (currently, C2 and 

CBOE) and to make clear the 

Commission’s and each Regulated 

Securities Exchange Subsidiary’s 

jurisdiction with respect to CBOE 

Holdings. For example, pursuant to the 

CBOE Holdings Certificate of 

Incorporation, for so long as CBOE 

Holdings controls any Regulated 

Securities Exchange Subsidiary, each 

officer, director and employee of CBOE 

Holdings must give due regard to the 

preservation of the independence of the 

self-regulatory function of the Regulated 

Securities Exchange Subsidiaries and to 

their obligations under the Exchange 

Act.36 In addition, such officers, 

directors and employees are specifically 

prohibited from taking any actions that 

they reasonably should have known 

would interfere with the effectuation of 

any decisions by the Board of Directors 

of any Regulated Securities Exchange 

Subsidiary relating to such Regulated 

Securities Exchange Subsidiary’s 

regulatory functions, including 

disciplinary matters, or would adversely 

affect the Regulated Securities Exchange 

Subsidiary’s ability to carry out its 

responsibilities under the Exchange 

Act.37

The CBOE Holdings Certificate of 

Incorporation also contains a specific 

requirement that to the fullest extent 

permitted by applicable law, all 

confidential information pertaining to 

the self-regulatory function of Regulated 

Securities Exchange Subsidiaries 

(including but not limited to 

disciplinary matters, trading data, 

trading practices and audit information) 

contained in the books and records of 

any Regulated Securities Exchange 

Subsidiary that comes into the 

possession of CBOE Holdings will: (1) 

Not be made available to any persons 

other than to those officers, directors, 

employees and agents of CBOE Holdings 

that have a reasonable need to know the 

contents thereof; (2) be retained in 

confidence by CBOE Holdings and the 

officers, directors, employees and agents 

of CBOE Holdings; and (3) not be used 

for any commercial purposes.38 The 

CBOE Holdings Certificate of 

Incorporation also provides that for so 

long as CBOE Holdings controls any 

Regulated Securities Exchange 

Subsidiary, the books, records, 

premises, officers, directors and 

employees of CBOE Holdings will be 

deemed to be the books, records, 

premises, officers, directors and 

employees of the Regulated Securities 

Exchange Subsidiary for purposes of 

and subject to oversight pursuant to the 

Act, but only to the extent that such 

books, records, premises, officers, 

directors and employees of CBOE 

Holdings relate to the exchange business 

of such Regulated Securities Exchange 

Subsidiary.39

Further, the CBOE Holdings 

Certificate of Incorporation provides 

that CBOE Holdings will take reasonable 

steps necessary to cause its directors, 

officers and employees, prior to 

accepting such a position with CBOE 

Holdings, to consent in writing to the 

applicability to them of Article 

Fourteenth, Article Fifteenth and 

Sections (c) and (d) of Article Sixteenth 

of the CBOE Holdings Certificate of 

Incorporation, as applicable, with 

respect to their activities related to any 

of the Regulated Securities Exchange 

Subsidiaries.40 In addition, CBOE 

Holdings will take reasonable steps 

necessary to cause its agents, prior to 


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41See proposed Article Fourteenth of the CBOE 

Holdings Certificate of Incorporation. 42 Id. 43See proposed Article Eleventh of the CBOE 

Holdings Certificate of Incorporation and proposed 

Article 10.2 of the CBOE Holdings Bylaws. 

44See proposed Article Sixteenth(d) of the CBOE 

Holdings Certificate of Incorporation. 

45See supra note 5. 

46C2 also is changing the reference to the ‘‘Board 

of the Corporation’’ in that sentence to the ‘‘Board.’’ 

47C2 also is proposing to amend this paragraph 

to clarify that C2 directors can be replaced if they 

become disqualified (e.g., a ‘‘Non-Industry Director’’ 

becomes an ‘‘Industry Director’’). Similarly, C2 is 

proposing to amend paragraph (a) of Section 3.5 of 

the C2 Bylaws to clarify that a director elected to 

fill a vacancy will not serve until the next annual 

meeting of stockholders if he or she becomes 

disqualified. In addition, C2 is proposing to move 

a reference to ‘‘Representative Directors’’ (described 

below) in the first sentence of the seventh 

paragraph of Section 3.1 of the C2 Bylaws to clarify 

the intent of that sentence. 

48At least 20% of the directors on the Board will 

be nominated (or otherwise selected by a petition 

of C2 Permit Holders) by the Industry-Director 

Subcommittee of the Nominating and Governance 

Committee (such directors are referred to 

collectively as the ‘‘Representative Directors’’). See 

Section 3.2 of the C2 Bylaws. 

accepting such a position with CBOE 

Holdings, to be subject to the provisions 

of Article Fourteenth, Article Fifteenth 

and Sections (c) and (d) of Article 

Sixteenth of the CBOE Holdings 

Certificate of Incorporation, as 

applicable, with respect to their 

activities related to any of the Regulated 

Securities Exchange Subsidiaries. 

The CBOE Holdings Certificate of 

Incorporation also provides that CBOE 

Holdings, its directors, officers, agents 

and employees, irrevocably submit to 

the jurisdiction of the U.S. Federal 

courts, the SEC, and the Regulated 

Securities Exchange Subsidiaries, for 

the purposes of any suit, action or 

proceeding pursuant to U.S. Federal 

securities laws or the rules or 

regulations thereunder, commenced or 

initiated by the SEC arising out of, or 

relating to, the Regulated Securities 

Exchange Subsidiaries’ activities.41

Further, the Certificate of Incorporation 

provides that CBOE Holdings, its 

directors, officers, agents and 

employees, waive, and agree not to 

assert by way of motion, as a defense or 

otherwise in any such suit, action or 

proceeding, any claims that they are not 

personally subject to the jurisdiction of 

the U.S. Federal courts, the SEC, and the 

Regulated Securities Exchange 

Subsidiaries, that the suit, action or 

proceeding is an inconvenient forum or 

that the venue of the suit, action or 

proceeding is improper, or that the 

subject matter thereof may not be 

enforced in or by such courts or 

agency.42

In addition, the CBOE Holdings 

Certificate of Incorporation (and 

Bylaws) provide that, before any 

amendment or repeal of any provision 

of the Certificate of Incorporation and 

Bylaws of CBOE Holdings becomes 

effective, such amendment or repeal 

will be submitted to the Board of 

Directors of each Regulated Securities 

Exchange Subsidiary, and if such 

amendment or repeal must be filed with 

or filed with and approved by the 

Commission, then such amendment or 

repeal will not become effective until 

filed with or filed with and approved by 

the Commission, as the case may be.43

The CBOE Holdings Certificate of 

Incorporation also contains a provision 

that requires each director of the Board 

of CBOE Holdings to take into 

consideration the effect that CBOE 

Holdings’ actions would have on each 

Regulated Securities Exchange 

Subsidiary’s ability to carry out its 

responsibilities under the Exchange 

Act.44

(3) C2 

CBOE Holdings will become the 

parent company and sole shareholder of 

C2 (and CBOE) in connection the 

demutualization of CBOE. C2 (and 

CBOE), and not CBOE Holdings, will 

continue to be the entities registered as 

national securities exchanges under 

Section 6 of the Exchange Act. 

(A) C2 Certificate of Incorporation and 

Bylaws 

The Commission recently approved 

C2’s Certificate of Incorporation and 

Bylaws, which are modeled after the 

proposed Certificate of Incorporation 

and Bylaws for CBOE after it 

demutualizes and becomes a whollyowned subsidiary of CBOE Holdings.45

Accordingly, C2 is not proposing any 

significant changes to its Certificate of 

Incorporation and Bylaws. Rather, C2 is 

proposing to make certain changes to 

C2’s Certificate of Incorporation to effect 

the change of ownership of C2 from 

CBOE to CBOE Holdings, to clarify 

certain aspects of C2’s Bylaws as a result 

of this transfer of ownership, and to 

make certain ministerial changes to C2’s 

Certificate of Incorporation and Bylaws. 

With respect to C2’s Certificate of 

Incorporation, C2 is proposing to amend 

Article Fourth of the certificate to 

transfer the ownership of all of the 

common stock of C2 from CBOE to 

CBOE Holdings. As required in Article 

Fourth, C2 is seeking in this proposed 

rule change Commission approval for 

this transfer of ownership of C2 from 

CBOE to CBOE Holdings. C2 also is 

amending Article Fourth to require 

Commission approval if CBOE Holdings 

sells, transfers or assigns any shares of 

C2 common stock. In addition, C2 is 

proposing to delete Article Twelfth of 

the C2 Certificate of Incorporation 

because it is no longer necessary. This 

provision lists the incorporator of C2 

and provides that once C2’s Certificate 

of Incorporation is filed in Delaware, C2 

is required to appoint its initial Board 

of Directors, which is required to be 

compromised of the same individuals 

then-serving as the Board of Directors of 

CBOE. These actions have already been 

taken, and accordingly, Article Twelfth 

is no longer necessary. 

With respect to C2’s Bylaws, C2 is 

making several clarifying and 

ministerial changes to them. In 

particular, C2 is proposing to delete the 

second sentence of the first paragraph of 

Section 3.1 of the C2 Bylaws, which 

provides that ‘‘[t]he Board shall initially 

consist of 23 directors, including the 

Chief Executive Officer, twelve NonIndustry Directors and ten Industry 

Directors,’’ because the initial Board of 

Directors of C2 (‘‘C2 Board’’) has already 

been appointed.46 Similarly, C2 is 

proposing to delete a reference in the 

last sentence of the first paragraph 

regarding the initial C2 Board because 

that Board has already been appointed. 

C2 is proposing to amend the sixth 

paragraph of Section 3.1 of the C2 

Bylaws to provide that all directors of 

the C2 Board will serve one-year 

terms.47 Previously, the C2 directors 

were divided into two classes, with each 

class serving staggered two-year terms. 

C2 is proposing to make this change 

because CBOE has decided to convert 

all of the terms of the directors of CBOE 

Holdings and CBOE to one-year terms 

after the demutualization. Similarly, C2 

is proposing to amend the fifth 

paragraph of Section 3.2 of the C2 

Bylaws to remove a reference to electing 

a class of directors because C2 will no 

longer have different classes of 

directors. 

C2 is proposing to amend paragraph 

(c) of Section 3.4 of the C2 Bylaws to 

clarify that Representative Directors (as 

opposed to any Director) can be 

removed for cause, which will include, 

but not be limited to (i) a breach of a 

Representative Director’s duty of loyalty 

to C2 or its stockholders, (ii) acts or 

omissions not in good faith or which 

involve intentional misconduct or a 

knowing violation of law, (iii) 

transactions from which a 

Representative Director derived an 

improper personal benefit, or (iv) a 

failure of a Representative Director to be 

free from a statutory disqualification (as 

defined in Section 3(a)(39) of the Act).48

C2 is further amending this paragraph to 

provide that any Representative Director 


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29380 Federal Register / Vol. 75, No. 100 / Tuesday, May 25, 2010 / Notices 

49C2 is amending paragraph (b) of Section 3.4 of 

the Bylaws to replace a reference to ‘‘SEC’’ with 

‘‘Securities and Exchange Commission (‘‘SEC’’).’’ 

50See, e.g., proposed C2 Rule 3.1(a) and Chapter 

4 of the C2 Rules. 

51See, e.g., proposed C2 Rule 3.1(c) and Chapter 

16 of the C2 Rules. 

52See, e.g., proposed Chapter 11 of the C2 Rules. 

53See, e.g., proposed C2 Rules 6.55. 

54 15 U.S.C. 78f(b). 

55 15 U.S.C. 78f(b)(1). 

56 15 U.S.C. 78f(b)(5). 

may be removed for cause by the 

holders of a majority of the shares of 

stock then entitled to be voted at an 

election of directors.49 C2 is making 

these changes since it is no longer 

proposed that C2 have a classified Board 

(this change also will make C2’s Bylaws 

consistent in this regard with CBOE’s 

post-demutualization Bylaws). 

C2 is proposing to amend Section 4.6 

of the C2 Bylaws to provide that the C2 

Regulatory Oversight Committee will 

consist of at least three directors instead 

of at least four directors. C2 believes 

that the Regulatory Oversight 

Committee will be able to function just 

as effectively with three or more 

members as it would with four or more 

members and is proposing this change 

to provide for greater flexibility in the 

designation of C2 Board committees. 

C2 is proposing to amend Section 5.8 

of the C2 Bylaws to modify the 

responsibilities of the Treasurer of C2. 

Specifically, C2 is proposing to delete 

the second sentence in this section, 

which reads ‘‘[i]n addition, the 

Treasurer shall perform such duties and 

have such powers that are incident to 

the office of Treasurer, including 

without limitation the duty to keep and 

be responsible for all funds of the 

Corporation,’’ to make this section 

consistent with the Treasurer provision 

in CBOE’s proposed postdemutualization Bylaws. 

(B) C2 Rules 

Because the C2 Rules use terms from 

and incorporate by reference CBOE 

Rules, C2 is proposing to make certain 

minor, non-substantive changes to its 

Rules to reflect the changes that CBOE 

will make to its Rules in connection 

with the demutualization. In this regard, 

CBOE is proposing to replace the term 

‘‘member’’ (or variations of it) with the 

term ‘‘Trading Permit Holder’’ (or 

variations of it) throughout its Rules in 

connection with the demutualization. 

Accordingly, C2 is proposing to adopt 

in C2 Rule 1.1 the term ‘‘CBOE Trading 

Permit,’’ which is defined as a ‘‘Trading 

Permit’’ as such term is defined in 

CBOE’s Bylaws and Rules, and the term 

‘‘CBOE Trading Permit Holder,’’ which 

is defined as a ‘‘Trading Permit Holder’’ 

as such term is defined in CBOE’s 

Bylaws and Rules. C2 proposes to 

replace references in its Rules to (1) a 

CBOE ‘‘member’’ with the term ‘‘CBOE 

Trading Permit Holder’’ (or ‘‘Trading 

Permit Holder’’ in certain instances 

where there is a direct cross-reference to 

CBOE Rules),50 (2) a CBOE 

‘‘membership’’ with the term ‘‘CBOE 

Trading Permit’’ (or ‘‘Trading Permit’’ in 

certain instances where there is a direct 

cross-reference to CBOE Rules),51 and 

(3) a CBOE ‘‘Clearing Member’’ (or 

variations of it) with the term ‘‘Clearing 

Trading Permit Holder.’’ 52 C2 is making 

these changes to reflect in the C2 Rules 

certain changes that will be made to 

CBOE Rules in connection with the 

demutualization. 

C2 also is making a few minor, nonsubstantive fixes to its Rules. For 

example, C2 is replacing references to a 

C2 ‘‘member’’ in its Rules with the term 

‘‘Permit Holder’’ or ‘‘Participant’’ (which 

both have the same meaning under C2 

Rules).53 C2 also is deleting a reference 

in C2 Rule 3.3(b) regarding member 

organizations not registered as brokerdealers because C2 does not have such 

organizations (i.e., all Permit Holders of 

C2 are required to be registered as 

broker-dealers). In addition, C2 is fixing 

some of some of the cross-references in 

its Rules to CBOE Rules. For instance, 

C2 is amending Chapter 15 of its Rules, 

which cross-references Chapter XV of 

CBOE’s Rules, to provide that references 

to ‘‘Trading Permit Holder’’ (i.e., CBOE 

Trading Permit Holder) in Chapter XV 

of CBOE’s Rules mean ‘‘Participant’’ or 

‘‘Permit Holder’’ for purposes of Chapter 

15 of C2’s Rules. 

(C) C2 Voting Agreement With CBOE 

C2 currently has in place a Voting 

Agreement with CBOE in which CBOE 

agrees to vote in favor of those 

individuals nominated by C2’s 

Nominating and Governance Committee 

for election as C2 Representative 

Directors. After the demutualization, 

CBOE Holdings, and not CBOE, will be 

the sole stockholder of C2. Accordingly, 

C2 is proposing to enter into a new 

Voting Agreement with CBOE Holdings 

that similarly will require CBOE 

Holding to vote in favor of those 

individuals nominated by C2’s 

Nominating and Governance Committee 

for election as C2 Representative 

Directors. This new agreement will be 

modeled after and virtually identical the 

current CBOE agreement. Accordingly, 

C2 proposes to change the references in 

the current CBOE agreement from 

‘‘CBOE’’ to ‘‘Holdings.’’ This will have 

the effect of requiring CBOE Holdings to 

vote in favor of those individuals 

nominated by C2’s Nominating and 

Governance Committee for election as 

C2 Representative Directors. 

In addition, C2 is adding a provision 

in the Voting Agreement to reflect the 

‘‘for cause’’ removal standard for 

Representative Directors in C2’s Bylaws, 

which is discussed above. This 

provision will provide that CBOE 

Holdings agrees that it will not take 

action to remove any Representative 

Director of C2 from office at any time 

unless CBOE Holdings believes there is 

cause to remove such director. For 

purposes of this section ‘‘cause’’ will 

include, but not be limited to, (i) a 

breach of a Representative Director’s 

duty of loyalty to C2 or its stockholders, 

(ii) acts or omissions not in good faith 

or which involve intentional 

misconduct or a knowing violation of 

law, (iii) transactions from which a 

Representative Director derived an 

improper personal benefit, or (iv) a 

failure of a Representative Director to be 

free from a statutory disqualification (as 

defined in Section 3(a)(39) of the Act). 

2. Statutory Basis 

For the reasons set forth above, C2 

believes that this filing is consistent 

with Section 6(b) of the Exchange Act,54

in general, and furthers the objectives of 

Section 6(b)(1) of the Exchange Act,55 in 

particular, in that it enables C2 to be so 

organized as to have the capacity to be 

able to carry out the purposes of the 

Exchange Act and to comply, and to 

enforce compliance by its members and 

persons associated with its members, 

with the provisions of the Exchange Act, 

the rules and regulations thereunder, 

and the rules of C2. C2 also believes that 

this filing furthers the objectives of 

Section 6(b)(5) of the Exchange Act 

because the rules summarized herein 

would create a governance and 

regulatory structure that 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, in general, to protect investors and 

the public interest.56 Among other 

things, the Certificate of Incorporation 

and Bylaws of CBOE Holdings and C2 

are designed to protect and maintain the 

integrity of the SRO functions of C2, and 

to allow it to carry out it regulatory 

responsibilities under the Exchange Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

C2 does not believe that the proposed 

rule change will impose any burden on 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 100 / Tuesday, May 25, 2010 / Notices 29381 

57 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

competition that is 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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The Commission is considering 

granting accelerated approval of the 

proposed rule change at the end of a 15- 

day comment period. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–C2–2010–002 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–C2–2010–002. 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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the C2. 

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–C2–2010–002 and should 

be submitted on or before June 9, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.57

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–12507 Filed 5–24–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62117; File No. SR–ISE– 

2010–34] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Proposed Rule 

Change Relating to Fees for the ISE 

Order Feed 

May 18, 2010. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 11, 

2010, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) filed with the Securities and 

Exchange Commission the proposed 

rule change as described in Items I, II, 

and III below, which items have been 

prepared by the self-regulatory 

organization. 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 ISE is proposing to amend its 

Schedule of Fees to adopt subscription 

fees for the sale of a new market data 

offering called the ISE Order Feed. The 

text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.ise.com), at the principal 

office of the Exchange, 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 

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 

ISE proposes to amend its Schedule of 

Fees to adopt subscription fees for the 

sale of the ISE Order Feed. These 

proposed fee changes will be operative 

on July 1, 2010, pending regulatory 

approval. 

The ISE Order Feed provides realtime updates every time a new limit 

order that is not immediately executable 

at the best bid/offer (BBO) is placed on 

the ISE order book. This feed does not 

include market orders, immediate or 

cancel (IOC) orders, quotes or any nondisplayed interest. 

While the Options Price Reporting 

Authority (OPRA) feed provides 

aggregated ISE BBO order information, 

the ISE Order Feed provides each 

individual order. The information 

included on the ISE Order Feed 

includes the order type (buy/sell), the 

order price, the order size, and customer 

indicator (which reflects whether the 

order is a customer order), as well as 

details for each instrument series, 

including the symbols (series and 

underlying security), put or call 

indicator, the expiration and the strike 

price of the series. 

The ISE BBO on the OPRA feed 

includes all quotes provided by ISE 

market makers and all orders provided 

by members which are then aggregated 


srobinson on DSKHWCL6B1PROD with NOTICES