Federal Register / Vol. 74, No. 104 / Tuesday, June 2, 2009 / Notices 26445 

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). 

5Capitalized terms not otherwise defined herein 

shall have the meanings prescribed within the BOX 

Rules. 

6See Securities Exchange Act Release No. 53516 

(March 20, 2006), 71 FR 15232 (March 27, 2006) 

(SR–BSE–2006–14). 

7See Securities Exchange Act Release No. 53357 

(February 23, 2006), 71 FR 10730 (March 2, 2006) 

(SR–BSE–2005–52). 

8See Securities Exchange Act Release No. 54082 

(June 30, 2006), 71 FR 38913 (July 10, 2006) (SR– 

BSE–2006–29). 

9See Securities Exchange Act Release No. 54469 

(September 19, 2006), 71 FR 56201 (September 26, 

2006) (SR–BSE–2006–38). 

10See Securities Exchange Act Release No. 55139 

(January 19, 2007), 72 FR 3448 (January 25, 2007) 

(SR–BSE–2007–01). 

11See Securities Exchange Act Release No. 56014 

(July 5, 2007), 72 FR 38104 (July 12, 2007) (SR– 

BSE–2007–31). 

12See Securities Exchange Act Release No. 57195 

(January 24, 2008), 73 FR 5610 (January 30, 2008) 

(SR–BSE–2008–04). 

on foreign inspections more generally, 

which they indicated they also had 

expressed to the PCAOB in response to 

a Board request for comment issued 

concurrently with the issuance of the 

proposed amendment. We are mindful 

of these and other views regarding the 

implications of foreign inspections. We 

will continue to work with the PCAOB 

on these issues and encourage the 

PCAOB to consider these comments in 

connection with any future action the 

Board considers, including the impact 

of a further delay of the inspections 

affected by this proposed amendment. 

The proposed amendment itself does 

not limit the PCAOB’s authority to 

conduct inspections at any time and 

does not affect registered firms’ 

obligations under the Act. Nor does it, 

nor could it, resolve the broader views 

expressed by the commenters. However, 

as the Board explained, the adjustment 

would provide additional time to 

continue discussions on outstanding 

matters and work towards cooperation 

and coordination with authorities in all 

relevant jurisdictions. The adjustment 

will accomplish this while delaying a 

relatively small number of inspections. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

amendment to the Board’s rules 

governing inspections of registered 

public accounting firms are consistent 

with the requirements of the Act and the 

securities laws and are necessary or 

appropriate in the public interest or for 

the protection of investors. 

It is therefore ordered, pursuant to 

Section 107 of the Act and Section 

19(b)(2) of the Exchange Act, that the 

proposed rule amendment (File No. 

PCAOB–2008–06) be and hereby is 

approved. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–12744 Filed 6–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59983; File No. SR–BX– 

2009–027] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Effective Date of the Rule Governing 

Exchange’s Directed Order Process on 

the Boston Options Exchange 

May 27, 2009. 

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 May 21, 

2009, 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 Exchange. The Exchange has 

designated the proposed rule change as 

a ‘‘non-controversial’’ 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 extend the 

effective date of the amended rule 

governing the Exchange’s Directed 

Order Process on the Boston Options 

Exchange (‘‘BOX’’) from May 29, 2009 to 

November 30, 2009. 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 

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 

On March 14, 2006, the Exchange 

proposed an amendment to the BOX 

Rules governing the Directed Order 5

process on BOX.6 The Rules were 

amended to clearly state that the BOX 

Trading Host identifies to an Executing 

Participant (‘‘EP’’) the identity of the 

firm entering a Directed Order. The 

amended rule was to be effective until 

June 30, 2006, (‘‘Pilot Program’’) while 

the Securities and Exchange 

Commission (‘‘Commission’’) 

considered a corresponding Exchange 

proposal 7 to amend its rules to permit 

EPs to choose the firms from whom they 

will accept Directed Orders, while 

providing complete anonymity of the 

firm entering a Directed Order. 

On June 20, 2006, the Exchange 

proposed extending the effective date of 

the rule governing its Directed Order 

process on BOX from June 30, 2006 to 

September 30, 2006,8 while the 

Commission continued to consider the 

corresponding Exchange proposal. 

On September 11, 2006, January 16, 

2007, July 2, 2007, January 18, 2008 and 

January 26, 2009 the Exchange proposed 

extending the effective date of the 

amended rule governing the Directed 

Order process on BOX from September 

30, 2006 until January 31, 2007,9 from 

January 31, 2007 until July 31, 2007,10

from July 31, 2007 until January 31, 

2008,11 from January 31, 2008 until 

January 31, 2009,12 and from January 

26446 Federal Register / Vol. 74, No. 104 / Tuesday, June 2, 2009 / Notices 

13See Securities Exchange Act Release No. 59311 

(January 28, 2009), 74 FR 6071 (February 4, 2009) 

(SR–BX–2009–007). 

14 In the event that the issue of anonymity in the 

Directed Order process is not resolved by November 

30, 2009 the Exchange will consider whether to 

submit another filing under Rule 19b–4(f)(6) 

extending this rule and system process. 

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

16 15 U.S.C. 78f(b)(5). 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(6). 

19 17 CFR 240.19b–4(f)(6)(iii). 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22 Id. 

23For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

31, 2009 until May 29, 2009,13

respectively, while the Commission 

considered the corresponding Exchange 

proposal to amend the BOX Rules to 

permit EPs to choose the firms from 

whom they will accept Directed Orders, 

while providing complete anonymity of 

the firm entering a Directed Order. 

This filing from the Exchange again 

proposes extending the effective date of 

the amended rule governing its Directed 

Order process on BOX, from May 29, 

2009 to November 30, 2009.14 In the 

event the Commission reaches a 

decision with respect to the 

corresponding Exchange proposal to 

amend the BOX Rules before November 

30, 2009, the amended rule governing 

the Directed Order process on the BOX 

will cease to be effective at the time of 

that decision. 

2. Statutory Basis 

The amended rule is designed to 

clarify the information contained in a 

Directed Order. This proposed rule 

filing seeks to extend the amended 

rule’s effectiveness from May 29, 2009 

to November 30, 2009. This extension 

will afford the Commission the 

necessary time to consider the 

Exchange’s corresponding proposal to 

amend the BOX rule to permit EPs to 

choose the firms from whom they will 

accept Directed Orders while providing 

complete anonymity of the firm entering 

a Directed Order. Accordingly, the 

Exchange believes that the proposal is 

consistent with the requirements of 

Section 6(b) of the Act,15 in general, and 

Section 6(b)(5) of the Act,16 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

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 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) by its terms does not become 

operative for 30 days after the date of 

this filing, 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) 17 of the Act and 

Rule 19b–4(f)(6) thereunder.18 As 

required under Rule 19b–4(f)(6)(iii),19

the Exchange provided the Commission 

with written notice of its intent to file 

the proposed rule change, along with a 

brief description and text of the 

proposed rule change, at least five 

business days prior to the date of the 

filing of the proposed rule change. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 20 normally may not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b– 

4(f)(6)(iii) 21 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange requests that the Commission 

waive the 30-day operative delay, as 

specified in Rule 19b–4(f)(6)(iii),22

which would make the rule change 

effective and operative upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because such waiver 

would continue to conform the BOX 

rules to BOX’s current practice and 

clarify that Directed Orders on BOX are 

not anonymous without interruption.23

Accordingly, the Commission 

designates the proposed rule change 

operative upon filing with the 

Commission. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission may summarily abrogate 

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–BX–2009–027 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–BX–2009–027. 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 inspection and copying 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 Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

Federal Register / Vol. 74, No. 104 / Tuesday, June 2, 2009 / Notices 26447 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 59793 

(April 20, 2009), 74 FR 18762. 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–BX–2009–027 and should 

be submitted on or before June 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–12718 Filed 6–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59981; File No. SR–CBOE– 

2009–024] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Granting Approval 

of a Proposed Rule Change Related to 

Its Obvious Error Rules 

May 27, 2009. 

I. Introduction 

On April 8, 2009, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or ‘‘Exchange’’) 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 Rules 6.25 and 24.16 

(collectively, the ‘‘Obvious Error Rules’’) 

pertaining to the nullification and 

adjustment of options transactions. The 

proposed rule change was published for 

comment in the Federal Register on 

April 24, 2009.3 The Commission 

received no comment letters on the 

proposal. This order approves the 

proposed rule change. 

II. Discussion 

A. Merging Rules 

The Exchange proposes to merge Rule 

24.16 (which currently relates to only 

index, ETF and HOLDRS options) into 

Rule 6.25 (which currently relates to 

only equity options) to form a single 

obvious error rule. 

B. Obvious Pricing Errors 

1. Definition of Theoretical Price 

The Exchange proposes to amend 

Rule 6.25’s definition of ‘‘Theoretical 

Price’’ to base it on the national best bid 

or offer (‘‘NBBO’’) instead of the market 

with the most liquidity. Using the 

NBBO to define Theoretical Price is 

similar to how ‘‘fair market value’’ is 

currently defined for obvious pricing 

errors under Rule 24.16. The Exchange 

also proposes to permit Trading 

Officials to establish the Theoretical 

Price when the NBBO for the affected 

series, just prior to the erroneous 

transaction, is at least two times the 

permitted bid/ask differential under 

subparagraph (b)(iv)(A) of Rule 8.7. 

2. Non-CBOE Market Makers 

The Exchange proposes to provide for 

the adjustment of Obvious Pricing Error 

transactions involving non-CBOE 

Market-Makers, provided the adjusted 

price does not violate the non-CBOE 

Market-Maker’s limit price. 

3. ROS and HOSS Rotations 

The Exchange proposes to revise the 

Obvious Pricing Error provision as it 

pertains to transactions occurring as 

part of the Rule 6.2A, Rapid Opening 

System (‘‘ROS’’), or Rule 6.2B, Hybrid 

Opening System (‘‘HOSS’’), rotations. 

With respect to regular ROS and HOSS 

rotations, the Exchange is proposing to 

add a condition that the option contract 

quantity subject to nullification or 

adjustment would not exceed the size of 

the first quote after the transaction(s) in 

question that does not reflect the 

erroneous transaction(s). Any 

nullifications or adjustments would 

occur on a pro rata basis considering the 

overall size of the ROS or HOSS 

opening trade. With respect to HOSS 

rotations in index options series being 

used to calculate the final settlement 

price of a volatility index, the Exchange 

proposes to carryover a condition from 

Rule 24.16 that the first quote after the 

transaction(s) in question that does not 

reflect the erroneous transaction(s) must 

be for at least the size of the HOSS 

opening transaction(s). If the size of the 

quote is less than the size of the opening 

transaction(s), then the Obvious Pricing 

Error provision shall not apply. 

4. Non-Broker-Dealer Customer Orders 

Entered Before the Opening Rotation 

The Exchange proposes to extend the 

expanded notification period applicable 

to transactions during opening rotations 

involving non-broker-dealer Customers 

to include certain orders entered before 

the opening that are executed 

immediately following the opening 

rotation. Specifically, Rule 6.25 

currently requires that members notify 

CBOE Trading Officials or designated 

personnel in the control room within a 

short time period following the 

execution of a trade (generally 15 

minutes) if they believe the trade 

qualifies as an Obvious Pricing Error. 

However, an expanded notification 

period is available for transactions 

during option rotation occurring as part 

of ROS or HOSS where at least one 

party to the transaction is a non-brokerdealer Customer. The Exchange 

proposes to make the expanded 

notification period applicable to 

transactions involving non-brokerdealer Customers’ marketable orders 

that are entered before the opening 

rotation and that are executed as part of 

the Hybrid Agency Liaison (‘‘HAL’’) on 

the opening process and certain 

transactions involving non-brokerdealer Customers’ complex orders that 

are entered before the opening rotation 

and that are executed immediately 

following the opening rotation through 

the Exchange’s electronic Complex 

Order Book. 

5. Binary Options 

The Exchange proposes to provide 

that any price adjustment for a binary 

option series (including any adjustment 

penalty that may be applicable to 

transactions between CBOE MarketMakers) shall not exceed the applicable 

exercise settlement amount for the 

binary option. 

C. Catastrophic Pricing Errors 

The Exchange proposes to amend 

Rule 6.25 to add criteria for identifying 

‘‘Catastrophic Errors’’ and making 

adjustments when Catastrophic Errors 

occur, as well as a streamlined 

procedure for reviewing actions taken in 

these extreme circumstances. Under 

Rule 6.25, trades that result from an 

Obvious Pricing Error may be adjusted 

or busted according to objective 

standards. Under the Rule, whether an 

Obvious Pricing error has occurred is 

determined by comparing the execution 

price to the Theoretical Price of the 

option. The rule requires that members 

notify CBOE Trading Officials or 

designated personnel in the control 

room within a short time period 

following the execution of a trade 

(generally 15 minutes) if they believe 

the trade qualifies as an Obvious Pricing 

Error. Trades that qualify for adjustment 

or are nullified under the Rule are 

compared to a price that matches the 

theoretical price plus or minus an 

adjustment value for transactions 

between CBOE Market Makers, which is 

$0.15 if the Theoretical Value is under 

$3 and $0.30 if the Theoretical Value is 

at or above $3. By adjusting trades above 

or below the Theoretical Price, the rule 

assesses a ‘‘penalty’’ in that the 

adjustment price is not as favorable as 

the amount the party making the error