Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices 28739 

4Securities Exchange Act Release No. 57118 (Jan. 

9, 2008), 73 FR 2970 (Jan. 16, 2008) [File No. SR– 

OCC–2007–19]. 

5Amendment No. 2 to the XM Agreement is 

attached as Exhibit 5A to OCC’s filing with the 

Commission. 

6 15 U.S.C. 78q-1. 

7 15 U.S.C. 78a(b)(3)(A)(i). 

8 17 CFR 240.19b–4(f)(1). 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 proposed rule change will change 

the definition of the term ‘‘Eligible 

Contracts’’ as used in the crossmargining agreement (‘‘XM Agreement’’) 

between OCC and the Chicago 

Mercantile Exchange Inc. (‘‘CME’’) and 

delete Exhibit A to the Agreement. 

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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Pursuant to an OCC rule change 

approved by the Commission in 2008, 

OCC no longer must notify the 

Commission when OCC wishes to add 

new options classes to a cross-margining 

program.4 With this requirement no 

longer in effect, OCC and CME have 

executed Amendment No. 2 to the XM 

Agreement to accomplish two purposes. 

First, the term ‘‘Eligible Contracts’’ as 

used in the XM Agreement will be 

redefined. Second, Exhibit A of the XM 

Agreement, which contains the list of 

Eligible Contracts included in the XM 

Agreement, will be deleted in its 

entirety.5

OCC states that it believes that the 

proposed change is consistent with 

Section 17A of the Act 6 because it 

conforms the terms of the XM 

Agreement to the prior determination of 

the Commission that notice of the 

addition of new contracts to crossmargining programs was no longer 

needed or required. OCC further states 

that the proposed rule change is not 

inconsistent with the existing rules of 

OCC including any other rules proposed 

to be amended. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

OCC does not believe that the 

proposed rule change would impose any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

OCC has not solicited or received 

written comments with respect to the 

proposed rule change. OCC will notify 

the Commission of any written 

comments it receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

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

4(f)(1) 8 thereunder because the 

proposed rule change constitutes a 

stated policy, practice, or interpretation 

with respect to the meaning, 

administration, or enforcement of an 

existing rule. At any time within 60 

days of the filing of the proposed rule 

change, the Commission may summarily 

abrogated 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 rulecomment@sec.gov. Please include File 

No. SR–OCC–2009–10 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 No. 

SR–OCC–2009–10. 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. to 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

OCC’s principal office and on OCC’s 

Web site at http://www.theocc.com/ 

publications/rules/proposed_changes/

proposed_changes.jsp. 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–OCC–2009– 

10 and should be submitted on or before 

July 8, 2009. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–14143 Filed 6–16–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60083; File No. SR–CHX– 

2009–02] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing of Proposed Rule Change 

Relating to the Rejection of 

Undisplayed Odd-Lot Orders From the 

Exchange’s Matching System 

June 10, 2009. 

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

Securities Exchange Act of 1934 

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


dwashington3 on PROD1PC60 with NOTICES
28740 Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices 

3The Exchange notes that while this rule is 

currently being added to clarify how undisplayed 

odd-lots that are rejected from the Matching System 

will be routed, the rule will apply to any orders that 

are rejected from the Matching System and routed 

according to Participant instructions. 

4The Exchange notes that odd-lot orders are 

aggregated with other odd-lot and mixed lot orders 

where possible to form round lots. Additionally, 

odd-lot orders are considered displayed when there 

are other round-lot orders at the same price point 

which are being displayed. 

5This system functionality already exists and can 

be put into production once the necessary rule 

change is approved. 

6The Exchange notes that orders rejected in 

accordance with this rule will be routed in the same 

manner as those rejected under the NMS tradethrough validation rule (Exchange Article 20, Rule 

5, Interpretations and Policies .03), which has 

already been approved by the Commission. 

7This also assumes that there are no other oddlots at the same price with which the odd-lot could 

aggregate to form a round lot. See footnote 4, supra. 

8Under Regulation NMS, Rule 600(b)(8) defines 

‘‘bid’’ or ‘‘offer’’ as the bid price or offer price for 

one or more round lots of an NMS security. This 

definition is embedded in the definition of 

‘‘quotation’’ in Rule 600(b)(62), as well as the 

definition of ‘‘protected bid’’ or ‘‘protected offer’’ in 

Rule 600(b)(57). 17 CFR 242.600(b). 

9See Response No. 7.03 in ‘‘Responses to 

Frequently Asked Questions Concerning Rule 611 

and Rule 610 of Regulation NMS,’’ Division of 

Trading and Markets, dated June 8, 2007. 

10For example, if the Exchange routes a 

participant’s buy order to the participant’s chosen 

destination (Router ABC) and Router ABC gets an 

execution of that order in another market against 

market maker XYZ, the first leg of the transaction 

(ABC buying from XYZ) will be reported to clearing 

notice is hereby given that on June 2, 

2009, the Chicago Stock Exchange, Inc. 

(‘‘CHX’’ 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 CHX. 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 CHX proposes to amend its rules 

to allow Exchange customers to specify 

whether odd-lot orders and unexecuted 

odd-lot remainders, that are not able to 

be immediately displayed, should 

remain in, or be rejected from, the 

Exchange’s Matching System. 

Additionally, the Exchange proposes to 

add a generic routing rule to clarify how 

any orders that are rejected from the 

Exchange’s Matching System, and 

routed away according to Participant 

instructions, will be handled.3 The text 

of this proposed rule change is available 

on the Exchange’s Web site at 

(www.chx.com) and in 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 

CHX 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 CHX 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 proposes to amend 

CHX Article 20, Rule 8 to allow 

Exchange Participants to specify 

whether odd-lot orders and unexecuted 

odd-lot remainders, that are not able to 

be immediately displayed, should 

remain in, or be rejected from, the 

Exchange’s Matching System. 

Additionally, the Exchange proposes to 

add a generic routing rule to clarify how 

any orders that are rejected from the 

Exchange’s Matching System, and 

routed away according to Participant 

instructions, will be handled. 

Currently, odd-lot orders and 

unexecuted odd-lot remainders that are 

not able to be immediately displayed, 

because they are at a better price than 

the current CHX quote and have no 

other orders with which to aggregate, 

remain in the Exchange’s Matching 

System until they are executed, are 

aggregated with another order and 

displayed 4 or are cancelled. The 

proposed rule change would allow 

Exchange Participants to specify 

whether such orders should remain in, 

or be rejected from, the Exchange’s 

Matching System. This preference could 

be set by the Participant on both a 

default and order by order basis.5

Orders remaining in the Matching 

System will continue to be ranked at the 

price and time at which they were 

originally received. Orders that are 

rejected from the Matching System shall 

either be sent back to the order sender 

or be routed to another destination 

according to each Participant’s 

instructions 6 or, if designated ‘‘do not 

route,’’ automatically cancelled. The 

Exchange also proposes that 

Participants that elect to have orders 

routed to another destination pursuant 

to this rule, or pursuant to Article 20, 

Rule 5 (‘‘Prevention of Tradethroughs’’), agree to be bound by such 

transactions. 

Exchange Participants have requested 

this functionality to improve the 

certainty of order execution. For 

example, if a Participant enters a limit 

order to buy four hundred (400) shares 

into the Matching System and that order 

matches with an order to sell three 

hundred fifty (350) shares at the same 

price, the system would execute three 

hundred fifty shares leaving fifty (50) 

shares as an unexecuted odd-lot 

remainder. Currently, if there were no 

other round-lot orders at the same price, 

these shares would remain undisplayed 

in the Matching System; reducing the 

likelihood that the Participant would 

receive a timely execution on the 

remaining shares.7 Under the proposed 

rule change, the Participant would be 

able to specify that such orders be 

rejected from the Matching System and 

either cancelled or routed to another 

destination with which they have an 

agreement. 

This proposed rule change is 

consistent with Regulation NMS 

because it applies only to odd-lot orders 

and unexecuted odd-lot remainders. 

Only round-lot orders are subject to the 

requirements of Regulation NMS in that 

only round-lot orders must be included 

in the Exchange’s automated quote.8 In 

contrast, odd-lot orders are not 

displayed, and the prohibitions against 

both locked and crossed markets and 

trade-throughs do not apply to odd-lots. 

Exchanges are permitted to establish 

their own rules for handling odd-lot 

orders and the odd-lot portions of 

mixed-lot orders.9

The Exchange also proposes to add a 

generic routing rule to clarify how any 

orders that are rejected from the 

Exchange’s Matching System, and 

routed away according to Participant 

instructions, will be handled. The use of 

routing services is optional and is 

available only to exchange Participants. 

In such cases, the Participant will be 

responsible for ensuring that it has a 

relationship with its chosen 

destinations to permit the requested 

access. The Exchange shall not have 

responsibility for the handling of the 

order by the other destination, but will 

report any execution or cancellation of 

the order by the other destination to the 

Participant that submitted the order, 

will notify the other venue of any 

cancellations or changes to the order 

submitted by the order-sending 

Participant and, if requested by the 

Participant and its chosen destination, 

will flip any executions into the 

Participants account, as necessary, and 

report that second leg of the awaymarket transaction to clearing.10


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 115 / Wednesday, June 17, 2009 / Notices 28741 

by the other market. The Router ABC would send 

an execution report back to the Exchange (for 

routing to the original order-sending participant). 

Under this proposal, if the participant and Router 

ABC had requested, the Exchange would take the 

execution report and create a clearing-only record, 

flipping the execution from Router ABC’s account 

to the account of the order-sending participant 

(ABC selling to the order-sending participant). 

11 15 U.S.C. 78f(b)(4). 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

The Exchange will provide its Routing 

Services pursuant to the proposed rule 

and three separate agreements, to the 

extent that they are applicable to a 

specific routing decision and deemed 

necessary by the Exchange and/or a 

third-party broker-dealer providing 

connectivity to other markets: (a) An 

agreement between the Exchange and 

each Participant on whose behalf orders 

will be routed (‘‘Participant-Exchange 

Agreement’’); (b) an agreement between 

each Participant and a specified thirdparty broker-dealer that will use its 

routing connectivity to other markets 

and, if necessary, serve as a ‘‘give-up’’ 

in those markets (‘‘Give-Up 

Agreement’’); and (c) an agreement 

between the Exchange and the specified 

third-party broker-dealer (‘‘Routing 

Connectivity Agreement’’) pursuant to 

which the third-party broker-dealer 

agrees to provide routing connectivity to 

other markets and serve as a ‘‘give-up’’ 

for the Exchange’s Participants in other 

markets. The Routing Connectivity 

Agreement will include terms and 

conditions that enable the Exchange to 

comply with this rule. 

The Exchange will provide such 

Routing Services in compliance with its 

rules and with the provisions of the Act 

and the rules thereunder, including, but 

not limited to, the requirements of 

Sections 6(b)(4) 11 and (5) 12 of the Act 

that the rules of a national securities 

exchange provide for the equitable 

allocation of dues, fees and other 

charges among its members and issues 

and other persons using its facilities, 

and not be designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act in general,13 and 

furthers the objectives of Section 6(b)(5) 

in particular,14 in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transaction in securities, to 

remove impediments and perfect the 

mechanisms of a free and open market, 

and, in general, to protect investors and 

the public interest. In this case, 

providing Participants the ability to 

have their undisplayed orders rejected 

from the Exchange’s Matching System, 

to be cancelled or routed elsewhere for 

execution, protects investors and 

removes an impediment to a free and 

open market in that it improves the 

certainty of order execution. 

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 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 such proposed 

rule change, or 

(b) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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–CHX–2009–02 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–CHX–2009–02. 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, 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–CHX– 

2009–02 and should be submitted on or 

before July 8, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–14146 Filed 6–16–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60085; File No. SR–FINRA– 

2009–030] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Amend Rule 

6440 To Require Members To Create a 

Contemporaneous Record of Certain 

Customer and Order Information 

June 10, 2009. 

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

Securities Exchange Act of 1934 (‘‘SEA’’ 

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

notice is hereby given that on May 22, 

2009 Financial Industry Regulatory 


dwashington3 on PROD1PC60 with NOTICES