54408 Federal Register / Vol. 75, No. 172 / Tuesday, September 7, 2010 / Notices 

4As noted above, the SLP program is a pilot 

program currently set to expire on September 30, 

2010. The Exchange intends to file to make the 

program permanent or extend the pilot program so 

that it can continue past September 30, 2010. 

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

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

7 15 U.S.C. 78s(b)(3)(A)(iii). 

8 17 CFR 240.19b–4(f)(6). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied the pre-filing requirement. 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

securities in which it is registered as a 

DMM. The Exchange does not need to 

spell out the term ‘‘designated market 

maker’’ as it, and the term DMM unit, 

are defined terms in Rule 2. 

The Exchange proposes to implement 

these changes on October 1, 2010.4

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Securities Exchange Act of 1934 

(the ‘‘Act’’),5 in general, and furthers the 

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

in particular, in that it 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 a national market system and, in 

general, to protect investors and the 

public interest. The Exchange believes 

the proposed Rule is consistent with 

these principles in that it seeks to 

increase the trading performance of 

SLPs, which will benefit all market 

participants. 

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 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 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 7 and Rule 

19b–4(f)(6) thereunder.8 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 9 and Rule 

19b–4(f)(6)(iii) thereunder.10

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

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 

• 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–NYSEAmex–2010–85 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–NYSEAmex–2010–85. 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 the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. 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– 

NYSEAmex–2010–85 and should be 

submitted on or before September 28, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22206 Filed 9–3–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62793; File No. SR–CBOE– 

2010–076] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Its Fees 

Schedule 

August 30, 2010. 

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 August 

17, 2010, Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or 

‘‘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 Exchange. 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 its 

Fees Schedule relating to routing 

charges. The text of the proposed rule 

change is available on the Exchange’s 

Web site (http://www.cboe.org/legal), at 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 172 / Tuesday, September 7, 2010 / Notices 54409 

3We note that, pursuant to Rule 6.14A(a)(i), if one 

or more orders are resting at the Exchange’s BBO 

and there is insufficient Market-Maker interest at 

the BBO price to satisfy the entire marketable order, 

the Exchange will immediately route away without 

processing for step-up. 

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

5 15 U.S.C. 78f(b)(4). 

6 15 U.S.C. 78s(b)(3)(A)(ii). 

7 17 C.F.R. 240.19b–4(f)(2). 

the Exchange’s Office of the Secretary, 

and at the Commission. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to modify 

its fee schedule related to routing large 

orders to other exchanges for execution 

in connection with the Options Order 

Protection and Locked/Crossed Market 

Plan referenced in CBOE Rule 6.80. 

Currently, when the Exchange receives 

a marketable order for the account of a 

non-broker dealer when CBOE is not at 

the national best bid or offer (‘‘NBBO’’), 

CBOE transmits a message to market 

participants in accordance with Rule 

6.14A to see in an attempt to achieve an 

execution at the NBBO price or better 

for the order (i.e., step-up) so that CBOE 

can avoid routing order flow to a 

competing exchange. If step-up is not 

achieved, CBOE will route a ‘‘linkage’’ 

order to the NBBO market(s) up to the 

size of the displayed interest at the 

NBBO or the size of the order 

(whichever is smaller).3 If the linkage 

order is executed (which is typically the 

case), CBOE absorbs all transaction costs 

associated with the execution at the 

away market. CBOE also routes the 

order for free. When CBOE receives a 

similar marketable order for the account 

of a broker dealer, however, CBOE 

charges $0.50 per contract for the 

routing and away execution costs, in 

addition to the customary CBOE 

execution charges. This is because the 

service is geared more toward retail 

customer orders. 

CBOE is now seeking to refine the 

cost structure of the program as it relates 

to large non-broker dealer customer 

orders. Specifically, when CBOE 

receives a qualifying customer order 

that has an original size of 1,000 or more 

contracts that is routed, in whole or in 

part, to one or more exchanges, CBOE 

will charge $ 0.35 per contract executed 

on another exchange, in addition to the 

customary CBOE execution charges 

(when applicable). The changes will 

take effect on August 23, 2010. 

These larger non-broker dealer 

customer orders are more akin to broker 

dealer orders and CBOE believes it is 

appropriate and consistent to pass 

through some of these costs. We note 

that the step-up service should still be 

a very attractive offering for these larger 

non-broker dealer orders since, when 

step-up is achieved, they will continue 

to receive considerable cost savings. As 

is the case today, order senders can 

request that orders be cancelled if stepup is not achieved without routing to an 

away market, thereby avoiding this new 

charge. The program will remain 

unchanged for orders that fall under the 

1,000 contract threshold. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),4 in general, and furthers the 

objectives of Section 6(b)(4) 5 of the Act 

in particular, in that it is designed to 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among CBOE trading permit holders. 

Because non-broker dealer customer 

orders with an original size of 1,000 

contracts or more are more akin to 

broker dealer orders, CBOE believes it is 

appropriate to pass through some costs 

associated with this routing service. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE 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 

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 

The proposed rule change is 

designated by the Exchange as 

establishing or changing a due, fee, or 

other charge, thereby qualifying for 

effectiveness on filing pursuant to 

Section 19(b)(3)(A)(ii) 6 of the Act and 

subparagraph (f)(2) of Rule 19b–4 7

thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

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 

• 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–CBOE–2010–076 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–CBOE–2010–076. 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 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
54410 Federal Register / Vol. 75, No. 172 / Tuesday, September 7, 2010 / Notices 

8 17 CFR 200.30–3(a)(12). 

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

2The Commission has modified the text of the 

summaries prepared by OCC. 

3The standard method for adjusting futures 

contracts in response to cash distributions is to 

decrease the prior day’s settlement price by the 

amount of the dividend. This adjustment is 

effective at the opening of business on the exdistribution date and parallels the adjustment made 

to the price of the underlying stock by the securities 

exchanges on the ex-distribution date. It is intended 

to ensure that no futures mark-to-the-market 

attributable to the adjustment made to the stock 

price for the dividend will occur. 

4OCC also proposes to add Interpretation and 

Policy .10 to Article XII, Section 3 that provides 

that officially reported settlement prices will not be 

adjusted (other than as provided for in the By-Laws 

and Rules) except in extraordinary circumstances. 

The Interpretation further provides that in no event 

will a completed settlement be adjusted due to 

errors discovered thereafter. This latter provision is 

intended to preserve the finality of money 

settlements should it be later determined that an 

officially reported settlement price was erroneous 

and is based on existing provisions of OCC’s ByLaws. See, e.g., Article XIV, Section 6, 

Interpretation and Policy .01; Article XVI, Section 

4, Interpretation and Policy .01; and Article XVII, 

Section 4, Interpretation and Policy .01. 

5Amendment No. 1, which will be executed after 

the effectiveness of this filing, would amend and 

restate Section 5 of the Clearing Agreement. 

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 

will also be available for inspection and 

copying at the principal office of the 

Exchange. 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 No. SR–CBOE– 

2010–076 and should be submitted on 

or before September 28, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22207 Filed 9–3–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62801; File No. SR–OCC– 

2010–13] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of a Proposed Rule Change 

To Allow for Adjustments to the 

Settlement Price of ExchangeDesignated Security Futures for All 

Cash Dividends or Distributions Paid 

by the Issuer of the Underlying 

Security 

August 31, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

August 19, 2010, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) and on August 25, 2010, 

amended the proposed rule change as 

described in Items I and II below, which 

items have been prepared primarily by 

OCC. The Commission is publishing 

this notice to solicit comments from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The purpose of the proposed rule 

change is to revise OCC’s By-Laws to 

allow OCC to make adjustments to the 

settlement price of exchange-designated 

security futures for all cash dividends or 

distributions paid by the issuer of the 

underlying security. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of such statements.2

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The primary purpose of this proposed 

rule change is to revise OCC’s By-Laws 

to allow OCC to make adjustments to 

the settlement price of exchangedesignated security futures for all cash 

dividends or distributions paid by the 

issuer of the underlying security. Under 

its current rules, OCC makes such 

adjustments only for ‘‘non-ordinary’’ 

dividends. However, OneChicago, LLC 

(‘‘OneChicago’’) has informed OCC that 

it believes there is a demand for security 

futures that would be adjusted in 

response to all cash dividends or 

distributions. Accordingly, OCC is 

proposing to amend Section 3 of Article 

XII of its By-Laws to permit exchanges 

to designate certain security futures that 

would be adjusted for ordinary as well 

as ‘‘non-ordinary’’ dividends. Exchanges 

could continue to trade security futures 

that would be adjusted only in the event 

of a ‘‘non-ordinary’’ dividend. 

For security futures subject to 

adjustment for all cash dividends or 

distributions, it would be the exchange’s 

responsibility to inform OCC of the 

issuance of a cash dividend or 

distribution and the appropriate 

adjustment amount. Provided that such 

information (including any corrections 

thereto) is reported to OCC before a 

designated cut-off time prior to the exdate, OCC would then make the 

appropriate adjustment to the settlement 

price of the security futures contract. 

Such adjustments would be effective 

before the opening of business on the 

ex-date.3 If the exchange failed to report 

dividend or distribution information to 

OCC on a timely basis or reported 

incorrect dividend or distribution 

information to OCC, then the exchange 

would be able to report such 

information or corrected information to 

OCC on the ex-date, and OCC would 

effect the adjustment as soon as 

practicable thereafter.4 In the event the 

exchange already opened trading in the 

security futures contracts affected 

thereby, the exchange would provide 

OCC with direction on whether such 

trades should be cleared or disregarded 

as provided for in Article VI, Section 7 

of OCC’s By-Laws. Pursuant thereto, 

disregarded transactions would be 

deemed null and void and given no 

effect. These procedures are intended to 

preserve OCC’s ability to initiate and 

conduct nightly processing on a timely 

basis, but they also provide the 

exchange with the opportunity to report 

to OCC dividend or distribution 

information that was not available to it 

before OCC’s processing cut-offs or to 

correct erroneously reported 

information to ensure an appropriate 

adjustment to the settlement price for 

the affected contracts. 

In connection with OneChicago’s 

proposal, OneChicago and OCC also 

have agreed to amend the Security 

Futures Agreement for Clearing and 

Settlement Services, dated April 1, 2002 

(the ‘‘Clearing Agreement’’), by entering 

into Amendment No. 1 thereto.5

Amendment No. 1 would amend 

Section 5 of the Clearing Agreement to 

permit OneChicago to designate those 

security futures contracts for which 

adjustments will be made in response to 

all cash dividends or distributions and 

to set forth for OneChicago’s obligation 

to furnish OCC with notice of all 

relevant information regarding such 

dividends or distributions in order for 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1