27220 Federal Register / Vol. 74, No. 108 / Monday, June 8, 2009 / Notices 

33The Exchange is a member of the Intermarket 

Surveillance Group (‘‘ISG’’) under the Intermarket 

Surveillance Group Agreement, dated June 20, 

1994, and may obtain trading information via the 

ISG from other exchanges who are members or 

affiliates of the ISG. The members of the ISG 

include all of the U.S. registered stock and options 

markets. The ISG members work together to 

coordinate surveillance and investigative 

information sharing in the stock and options 

markets. In addition, the major futures exchanges 

are affiliated members of the ISG, which allows for 

the sharing of surveillance information for potential 

intermarket trading abuses. 

34See, e.g., Rules 1000 Sections 14, 15, 21, 38, 

and 40; 1001, 1002, 1009, 1034 and 1069 (cross-rate 

foreign currency options); 1012, 1014, 1016, 1034, 

1044 and 1063 (physical delivery foreign currency 

options); 1001, 1009, 1033, 1034, 1063, 1069 and 

1079 (customized foreign currency options); 1049, 

1070 and 1089 (currency warrants); and 1079 

(Regulatory Services Post). See also OFPAs B–7, F– 

17 and F–18 (physical delivery foreign currency 

options); and C–2 and F–20 (customized foreign 

currency options). See also Rule 1014 correcting 

typographical errors. 

35 15 U.S.C. 78f(b). 

36 15 U.S.C. 78f(b)(5). 

37 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Systems Capacity and Surveillance 

The Exchange represents that it has 

the necessary systems capacity to 

support new options series that will 

result from the introduction of options 

on the New Currencies. The Exchange 

represents that it has an adequate 

surveillance program in place for 

trading U.S. dollar-settled FCOs. The 

Exchange will apply the same 

surveillance program to the New 

Currencies.33

Housekeeping Changes 

Finally, the Exchange proposes 

technical, housekeeping rule changes to 

delete obsolete and out of use 

references, rules and Advices regarding 

foreign currency products and 

processes. These include references to 

cross-rate, physical delivery, and 

customized foreign currency options; 

currency and currency index warrants; 

currency products that are no longer 

traded; and Regulatory Services Post, 

which no longer exist.34

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 35 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 36

in particular, 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, by 

offering investors the ability to invest in 

options on the New Currencies and by 

clarifying and simplifying existing rules 

relating to the pricing of currency 

options including expression of strike, 

bid and ask, spot, and settlement prices. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were either 

solicited or received. 

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 the proposed 

rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The Exchange has requested 

accelerated approval of this proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. 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–Phlx–2009–40 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–Phlx–2009–40. 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 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File No. 

SR–Phlx–2009–40 and should be 

submitted on or before June 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13210 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60020; File No. SR–CBOE– 

2009–034] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Trades for 

Less Than $1 

June 1, 2009. 

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 27, 

2009, the Chicago Board Options 


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

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release Nos. 59188 

(December 30, 2008), 74 FR 480 (January 6, 

2009)(SR–CBOE–2008–133)(adopting the amended 

procedures on a temporary basis through January 

30, 2009) and 59331 (January 30, 2009), 74 FR 6333 

(February 6, 2009)(extending the amended 

procedures on a temporary basis through May 29, 

2009). 

6Currently the $1 cabinet trading procedures are 

limited to options classes traded in $0.05 or $0.10 

standard increment. The $1 cabinet trading 

procedures are not available in Penny Pilot Program 

classes because in those classes an option series can 

trade in a standard increment as low as $0.01 per 

share (or $1.00 per option contract with a 100 share 

multiplier). Because the temporary procedures 

allow trading below $0.01 per share (or $1.00 per 

option contract with a 100 share multiplier), the 

procedures are available for all classes, including 

those classes participating in the Penny Pilot 

Program. 

7As with other accommodation liquidations 

under Rule 6.54, transactions that occur for less 

than $1 are not to be disseminated to the public on 

the consolidated tape. In addition, as with other 

accommodation liquidations under Rule 6.54, the 

transactions are exempt from the Consolidated 

Options Audit Trail (‘‘COATS’’) requirements of 

Exchange Rule 6.24, Required Order Information. 

However, the Exchange maintains quotation, order 

and transaction information for the transactions in 

the same format as the COATS data is maintained. 

In this regard, all transactions for less than $1 must 

be reported to the Exchange following the close of 

each business day. The rule also provides that 

transactions for less than $1 will be reported for 

clearing utilizing forms, formats and procedures 

established by the Exchange from time to time. In 

this regard, the Exchange initially intends to have 

clearing firms directly report the transactions to The 

Options Clearing Corporation (‘‘OCC’’) using OCC’s 

position adjustment/transfer procedures. This 

manner of reporting transactions for clearing is 

similar to the procedure that CBOE currently 

employs for on-floor position transfer packages 

executed pursuant to Exchange Rule 6.49A, 

Transfer of Positions. 

8 15 U.S.C. 78s(b)(1). 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

which Items have been prepared by the 

Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 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 is proposing to extend 

its program that allows transactions to 

take place at a price that is below $1 per 

option contract until June 1, 2010. The 

text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.org/Legal), at the 

Exchange’s Office of the Secretary 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

An ‘‘accommodation’’ or ‘‘cabinet’’ 

trade refers to trades in listed options on 

the Exchange that are worthless or not 

actively traded. Cabinet trading is 

generally conducted in accordance with 

the Exchange Rules, except as provided 

in Exchange Rule 6.54, Accommodation 

Liquidations (Cabinet Trades), which 

sets forth specific procedures for 

engaging in cabinet trades. Rule 6.54 

currently provides for cabinet 

transactions to occur via open outcry at 

a cabinet price of $1 per option contract 

in any options series open for trading in 

the Exchange, except that the Rule is not 

applicable to trading in option classes 

participating in the Penny Pilot 

Program. Under the procedures, bids 

and offers (whether opening or closing 

a position) at a price of $1 per option 

contract may be represented in the 

trading crowd by a Floor Broker or by 

a Market-Maker or provided in response 

to a request by a PAR Official/OBO, a 

Floor Broker or a Market-Maker, but 

must yield priority to all resting orders 

in the PAR Official/OBO cabinet book 

(which resting cabinet book orders may 

be closing only). So long as both the 

buyer and the seller yield to orders 

resting in the cabinet book, opening 

cabinet bids can trade with opening 

cabinet offers at $1 per option contract. 

The Exchange has temporarily 

amended the procedures through May 

29, 2009 to allow transactions to take 

place in open outcry at a price of at least 

$0 but less than $1 per option contract.5

These lower priced transactions are 

traded pursuant to the same procedures 

applicable to $1 cabinet trades, except 

that (i) bids and offers for opening 

transactions are only permitted to 

accommodate closing transactions in 

order to limit use of the procedure to 

liquidations of existing positions, and 

(ii) the procedures are also available for 

trading in option classes participating in 

the Penny Pilot Program.6 The Exchange 

believes that allowing a price of at least 

$0 but less than $1 better accommodates 

the closing of options positions in series 

that are worthless or not actively traded, 

particularly due to recent market 

conditions which have resulted in a 

significant number of series being outof-the-money. For example, a market 

participant might have a long position 

in a call series with a strike price of 

$100 and the underlying stock might 

now be trading at $30. In such an 

instance, there might not otherwise be a 

market for that person to close-out the 

position even at the $1 cabinet price 

(e.g., the series might be quoted no 

bid).7

The purpose of the instant rule 

change is to extend the operation of 

these temporary procedures through 

June 1, 2010, so that the procedures can 

continue without interruption while 

CBOE considers whether to seek 

permanent approval of the temporary 

procedures. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 8

and the rules and regulations 

thereunder and, in particular, the 

requirements of Section 6(b) of the Act.9

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 10 requirements that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts, to remove 

impediments to and to perfect the 

mechanism for a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The Exchange believes 

that allowing for liquidations at a price 

less than $1 per option contract better 

facilitates the closing of options 

positions that are worthless or not 

actively trading. 

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. 


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11The Exchange has fulfilled this requirement. 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). 

14 Id. 

15 For purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). See also 17 CFR 200.30–3(a)(59). 

16 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)(3)(A). 

4 17 CFR 240.19b–4(f)(6)(iii). 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule does not (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

for 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, provided that the selfregulatory organization has given the 

Commission written notice of its intent 

to file 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,11 the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 12 and 

Rule 19b–4(f)(6) thereunder.13

Under Rule 19b–4(f)(6) of the Act,14 a 

proposal does not become operative for 

30 days after the date of its filing, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest. The Exchange has requested 

that the Commission waive the 30-day 

operative date so that the pilot may 

continue without interruption while the 

Exchange considers whether to seek 

permanent approval of the temporary 

procedures. The Exchange believes that 

acceleration of the operative date will 

continue to allow for the orderly closing 

of option positions that are worthless or 

not actively traded. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest, and thus designates the 

proposal as operative upon filing.15

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–CBOE–2009–034 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–2009–034. 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 CBOE. 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–CBOE–2009–034 and 

should be submitted on or before June 

29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13209 Filed 6–5–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60019; File No. SR–BATS– 

2009–018] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Change the Criteria 

for Becoming a Member of the 

Nominating Committee 

June 1, 2009. 

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 28, 

2009, BATS Exchange, Inc. (‘‘BATS’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

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

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Article VI, Section 2 of the Amended 

and Restated By-Laws of BATS 

Exchange, Inc. (the ‘‘By-Laws’’). 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.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 

Exchange included statements 


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