Federal Register / Vol. 73, No. 155 / Monday, August 11, 2008 / Notices 46653 

22 In considering the operation of automated 

execution systems operated by an exchange, the 

Commission noted that while there is not an 

independent executing exchange member, the 

execution of an order is automatic once it has been 

transmitted into the systems. Because the design of 

these systems ensures that members do not possess 

any special or unique trading advantages in 

handling their orders after transmitting them to the 

exchange, the Commission has stated that 

executions obtained through these systems satisfy 

the independent execution requirement of Rule 

11a2–2(T). See 1979 Release, supra note 20. 23 17 CFR 240.11a2–2(T)(a)(2)(iv). In addition, 

Rule 11a2–2(T)(d) requires a member or associated 

person authorized by written contract to retain 

compensation, in connection with effecting 

transactions for covered accounts over which such 

member or associated persons thereof exercises 

investment discretion, to furnish at least annually 

to the person authorized to transact business for the 

account a statement setting forth the total amount 

of compensation retained by the member in 

connection with effecting transactions for the 

account during the period covered by the statement. 

See 17 CFR 240.11a2–2(T)(d). See also 1978 

Release, supra note 20 (stating ‘‘[t]he contractual 

and disclosure requirements are designed to assure 

that accounts electing to permit transaction-related 

compensation do so only after deciding that such 

arrangements are suitable to their interests’’). 24See e-mail from Jennifer Lamie, Assistant 

General Counsel, CBOE, to Sara Gillis, Special 

Counsel, Division of Trading and Markets, 

Commission, dated July 31, 2008. 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57996 

(June 20, 2008), 73 FR 36937. 

4See Securities Exchange Act Release No. 57615 

(April 3, 2008), 73 FR 19537 (April 10, 2008) (SR–

CBOE–2007–120). 

5CBOE Rule 8.7.03B applies to both Hybrid 3.0 

and non-Hybrid option classes. Currently, there are 

three Hybrid 3.0 classes and no non-Hybrid classes. 

6 In approving this rule, the Commission notes 

that it has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

7 15 U.S.C. 78f(b)(5). 

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

9 17 CFR 200.30–3(a)(12). 

member initiating the order. The 

Commission has stated that this 

requirement is satisfied when 

automated exchange facilities are used, 

as long as the design of these systems 

ensures that members do not possess 

any special or unique trading 

advantages in handling their orders after 

transmitting them to the exchange.22

CBOE has represented that the design of 

HOSS, including the new HAL exposure 

period, ensures that no member has any 

special or unique trading advantage in 

the handling of its orders after 

transmitting its orders to the Exchange 

and is designed to prevent any 

Exchange members from gaining any 

time or place advantages. Based on 

CBOE’s representation, the Commission 

believes that HOSS, as amended herein, 

satisfies this requirement. 

Fourth, in the case of a transaction 

effected for an account with respect to 

which the initiating member or an 

associated person thereof exercises 

investment discretion, neither the 

initiating member nor any associated 

person thereof may retain any 

compensation in connection with 

effecting the transaction, unless the 

person authorized to transact business 

for the account has expressly provided 

otherwise by written contract referring 

to section 11(a) of the Act and Rule 

11a2–2(T).23 CBOE represents that 

members trading for covered accounts 

over which they exercise investment 

discretion must comply with this 

condition in order to rely on the rule’s 

exemption.24

Accordingly, for the reasons stated 

above, the Commission finds that the 

proposed rule change is consistent with 

the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–CBOE–2008–

30) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18368 Filed 8–8–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58281; File No. SR–CBOE–

2008–59] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Granting Approval 

of Proposed Rule Change to Amend 

CBOE Rule 8.7 Related to the 

Obligations of Market-Makers 

August 1, 2008. 

On June 11, 2008, Chicago Board 

Options Exchange, Incorporated (the 

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

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

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

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend CBOE Rule 8.7 (Obligations of 

Market-Makers). The proposed rule 

change was published for comment in 

the Federal Register on June 30, 2008.3

The Commission received no comments 

on the proposed rule change. This order 

approves the proposed rule change. 

The Exchange recently amended 

CBOE Rule 8.1 (Market-Maker Defined) 

to expand the definition of marketmaker by including member 

organizations.4 In view of this change, 

the proposed rule change adds an 

interpretation to CBOE Rule 8.7 to 

clarify that the in-person requirements 

set forth in CBOE Rule 8.7.03B may be 

satisfied by market-makers either 

individually or collectively with 

market-makers of the same member 

organization.5

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder that 

are applicable to a national securities 

exchange.6 In particular, the 

Commission believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,7 in that it is designed 

to promote just and equitable principles 

of trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. The 

Commission notes that under the 

proposal the total amount of 

transactions that the rule would require 

to be executed in-person would not 

change, because a member organization 

that is registered as a market-maker 

would have to take into account the 

transactions of all its individual 

associated market-makers when 

determining the total transactions for 

which it would have to meet the inperson requirements. Further, the 

proposed rule change helps to ensure a 

more consistent application of the 

definition of market-maker within CBOE 

rules. 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–CBOE–2008–

59) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18373 Filed 8–8–08; 8:45 am] 

BILLING CODE 8010–01–P 


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