Document ID: SEC-2008-1716-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2008-12-23T05:00Z

[Federal Register: December 23, 2008 (Volume 73, Number 247)]
[Notices]               
[Page 78862-78864]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23de08-124]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59104; File No. SR-CBOE-2008-117]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change to Amend 
Exchange Rule 4.21 Relating to Third Party Deposits

December 15, 2008.
    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 December 2, 2008, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III 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 parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'') proposes to amend CBOE Rule 4.21--Third Party Deposits 
Prohibited, to add an interpretation that includes certain permissive 
deposits. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.com/Legal), at the Exchange's 
Office of the Secretary, and at the Commission.

[[Page 78863]]

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 and is set forth in sections (A), 
(B), and (C) below.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed amendment to Exchange Rule 4.21 would expand the 
permissive deposits to checks or funds transfers for deposit to a 
broker-dealer's account (i) that constitute an award or settlement paid 
as the result of the resolution of litigation or arbitration which 
arose in connection with the broker-dealer's securities or futures 
business; (ii) that are drawn on an account of the government of the 
United States; or (iii) are drawn on the account of another broker-
dealer for satisfaction of the resolution of transaction disputes. This 
rule filing has been undertaken as a result of recommendations by the 
Exchange's Member Firm community.
    The rule was intended to prohibit member organizations that are 
engaged in the business of clearing and carrying the accounts of 
options market-makers (``Clearing Firm'') from accepting for deposit 
into an account cleared or carried by the Clearing Firm a check or 
funds transfer drawn on the account of a third party. Pursuant to 
Exchange Rule 4.21, Clearing Firms are prohibited (with certain 
exceptions) from accepting a check or funds transfer if the name on the 
account from which the funds are drawn is different (i.e., ``third 
party'') from the name on the account cleared or carried by the 
Clearing Firm. In addition to checks or funds transfers from third 
parties, the rule also prohibits (with certain exceptions) Clearing 
Firms from accepting deposits or transfers of securities in the name of 
third parties.
    The Exchange believes that the proposed exceptions do not present 
any concerns or business risks to the clearing firm that the original 
rule was intended to address. While Clearing Firms make a reasonable 
effort to confirm that funds deposited via a third party's check are 
the property of the market-maker or market-making entity, and the 
transaction exhibits no obvious improprieties, repercussions can arise 
later. However, the exceptions set forth in the proposed Interpretation 
and Policy .03, are such that demonstrate a legal entitlement to a 
broker-dealer to receive the check or fund transfer. For example, a 
floor broker that is registered as a broker-dealer may be required to 
reimburse another broker-dealer as a result of a trading error. This 
proposed rule amendment would enable a broker-dealer to deposit these 
funds directly into the broker-dealer's account at the clearing firm.
    Finally, while each Clearing Firm could make a business decision to 
refuse to accept third party checks, funds transfers and securities, 
the Exchange continues to believe that this rule establishes a uniform, 
safe practice.
2. Statutory Basis
    Exchange Rule 4.21 is intended to promote a greater level of 
financial safety and soundness across Clearing Firms. The proposed 
amendment will allow clearing firms some flexibility in complying with 
these requirements to facilitate routine business transactions. The 
Exchange believes that the proposed rule changes will strengthen its 
ability to carry out its oversight responsibilities as a self-
regulatory organization and reinforce its surveillance and enforcement 
functions. The Exchange believes that the proposed rule change is 
consistent with Section 6(b) of the Act,\3\ in general, and furthers 
the objectives of Section 6(b)(5) of the Act,\4\ in particular, in that 
it would promote just and equitable principles of trade, facilitate 
transactions in securities, remove impediments to and perfect the 
mechanisms of a free and open market and a national market system, and 
protect investors and the public interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(6).
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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

    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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2008-117 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2008-117. 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.

[[Page 78864]]

Copies of the filing will also be available for inspection and copying 
at the principal office of the self-regulatory organization. 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-2008-117 and should be 
submitted on or January 13, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30408 Filed 12-22-08; 8:45 am]

BILLING CODE 8011-01-P