Document ID: SEC-2014-0215-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2014-02-04T05:00Z

[Federal Register Volume 79, Number 23 (Tuesday, February 4, 2014)]
[Notices]
[Pages 6662-6664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-02243]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71436; File No. SR-CBOE-2014-009]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Exchange Bulletin

January 29, 2014.
    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 January 23, 2014, Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') 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 the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to eliminate the requirement to publish 
certain information in the Exchange Bulletin. The text of the proposed 
rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 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 currently publishes a weekly bulletin (``Exchange 
Bulletin'') as a means of providing certain administrative and 
regulatory information to Trading Permit Holders (``TPHs''). The 
Exchange Bulletin is currently delivered by email or by hard copy free 
of charge to all effective TPHs on a weekly basis. Certain information 
included in the Exchange Bulletin is required to be published by 
Exchange rules (i.e., CBOE Rules 3.9, 3.11, 3.89 (sic), 16.3, and 
17.9). The Exchange seeks to amend its rules to eliminate the 
requirement to publish this information in the Exchange Bulletin.
    First, the Exchange proposes to amend Rule 3.9 (Application 
Procedures and Approval or Disapproval). Rule 3.9(e) currently provides 
that following receipt of an application to change Clearing Trading 
Permit Holders or an application to become a TPH,\5\ the name of the 
applicant and the application request must be published in the Exchange 
Bulletin. The Exchange proposes to eliminate this requirement and 
subparagraph (e) of Rule 3.9 in its entirety. The Exchange notes that 
prior to its demutualization, Rule 3.9 provided that, in addition to 
being published in the Exchange Bulletin, this information had to be 
posted on the Exchange Bulletin Board for a prescribed period of time 
(``posting period'') so that members were aware of pending applications 
and could submit comments during this period to the Membership 
Department regarding an applicant's fitness for membership. The 
Exchange has since eliminated the requirement to post notice on its 
Bulletin Board and the posting period \6\ and consequently the Exchange 
no longer accepts such comments from TPHs. The Exchange notes that 
decisions regarding these applications are based upon objective 
criteria set forth in Exchange rules. Accordingly, the dissemination of 
this information is no longer necessary or relevant. Additionally, it 
is time-consuming for Exchange staff to prepare this information for 
publication on an ongoing basis and this process has become a strain on 
current resources. As such, the Exchange proposes to amend its rules to 
account for a shift in the availability of resources and the relevance 
of this information.
---------------------------------------------------------------------------

    \5\ The Exchange is not required to publish receipt of an 
application submitted by a TPH that has been a TPH within 9 months 
prior to the date of receipt of the application.
    \6\ See Securities Exchange Act Release No. 62158 (May 24, 
2010), 75 FR 30082 (May 28, 2010) (SR-CBOE-2008-088).
---------------------------------------------------------------------------

    The Exchange next seeks to eliminate Rule 3.11 (Notice of 
Effectiveness of Trading Permit Holder and Trading Function Statuses) 
in its entirety. Rule 3.11 requires the Exchange to publish notice of 
effectiveness of a TPH status or approval of a trading function \7\ in 
the Exchange Bulletin. The Exchange proposes to eliminate this 
requirement because the Exchange does not believe it is necessary to 
provide such information on an ongoing basis and the process of 
providing this information in the form of a bulletin is a strain on 
current resources. The Exchange notes that it will make a list of all 
effective TPHs available upon request.
---------------------------------------------------------------------------

    \7\ The Exchange notes that historically, it has only published 
general categories of trading functions (e.g., Market-Maker or Floor 
Broker).
---------------------------------------------------------------------------

    Next, the Exchange proposes to amend Rule 8.89 (Transfer of DPM 
Appointments). Rule 8.89(d) provides that the Exchange shall publish in 
the Exchange Bulletin notice of a proposed transfer of a DPM 
appointment. The Exchange seeks to eliminate the requirement to publish 
notice of a proposed transfer of a DPM appointment in the Exchange 
Bulletin and provide instead that such notice be published on the CBOE 
Web site. The Exchange notes that it currently posts all proposed DPM 
appointment transfers on the CBOE Web site. The Exchange wishes to 
amend Rule 8.89(d) to reflect this practice. Additionally, as the 
Exchange already publishes such notice on at the CBOE Web site, 
publication of proposed DPM appointment transfers in the Exchange 
Bulletin is unnecessary and redundant.
    The Exchange also seeks to amend Rule 16.3 (Reinstatement). Rule 
16.3(a) currently provides that a TPH, person associated with a TPH or 
other person suspended or limited or prohibited with respect to access 
to services offered by the Exchange under the provisions of CBOE 
Chapter 16 (Summary Suspension), may apply for reinstatement within 
certain prescribed time periods. Rule 16.3(a) also requires that notice 
of any such application for reinstatement must be published in the 
Exchange Bulletin. The Exchange notes that it is a rare occurrence for 
a TPH,

[[Page 6663]]

associated person of a TPH, or other person suspended or limited or 
prohibited with respect to access to services offered by the Exchange 
under the provisions of CBOE Chapter 16 to apply for reinstatement 
within the prescribed time periods. To the extent it would occur 
however, the Exchange proposes to eliminate this publication 
requirement. The Exchange does not currently accept comments submitted 
by TPHs regarding an applicant's fitness for membership (or re-
instatement for that matter) and accordingly, the Exchange does not 
believe it is necessary or required to put TPHs on notice and provide 
information regarding an application for reinstatement on an ongoing 
basis.
    Finally, the Exchange seeks to amend Rule 17.9 (Decision). By way 
of background, CBOE Chapter XVII governs the Exchange's disciplinary 
process. Rule 17.1 (Disciplinary Jurisdiction) provides that a TPH or 
associated person of a TPH who is alleged to have violated or aided and 
abetted a violation of, among other things, any provision of the 
Securities Exchange Act of 1934, as amended (the ``Act''), Bylaw or 
rule of the Exchange may be appropriately disciplined after notice and 
opportunity for hearing. Rule 17.6 (Hearing), provides that, subject to 
Rule 17.7 concerning summary proceedings, a hearing on the charges must 
held before one or more members of the Business Conduct Committee (the 
``BBC''). Rule 17.9 provides that following a hearing, the Panel must 
issue a decision in writing and that the Exchange must publish a 
summary of such decision in the Exchange Bulletin upon the decision 
becoming final. The Exchange seeks to amend Rule 17.9 to eliminate the 
requirement to publish summaries of BCC hearing decisions in the 
Exchange Bulletin and provide instead that the Exchange will post 
complete BCC hearing decisions on the CBOE Web site. The Exchange notes 
that it currently posts all decisions issued by the BCC on the CBOE Web 
site. The Exchange will continue this practice as it believes 
publication of such decisions is important, in part, to ensure 
consistent decision making. The Exchange also notes that in addition to 
posting full BCC decisions online, it intends to periodically issue a 
Regulatory Circular which will include summaries of any BCC decisions 
that have recently become final. Accordingly, publication of summaries 
of those decisions in the Exchange Bulletin is unnecessary and 
redundant, as well as a strain on current resources.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, 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 of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change is 
needed as publication of the information provided for in Rules 3.9(e), 
3.11, 8.89(d), 16.3(a) and 17.9 in the Exchange Bulletin is a time-
consuming process and the Exchange believes its resources could be more 
efficiently used if directed elsewhere. More specifically, by 
alleviating an unnecessary strain on its resources, the Exchange will 
be enabled to better protect investors and the public interest.
    Additionally, the Exchange notes that, as to the publication 
requirements set forth in Rules 3.9(e), and 16.3(a), the rationale for 
publishing this information was to, prior to demutualization, put 
members on notice of certain applications and provide them an 
opportunity to submit comments to the Exchange regarding the 
applicants. The Exchange however, no longer accepts such comments from 
TPHs. Determinations made regarding these applications are made by 
Exchange staff alone based upon objective criteria set forth in 
Exchange rules. Accordingly, the dissemination of this information is 
no longer necessary or relevant. As to the publication requirements set 
forth in Rule 3.11, the Exchange also believes it is not necessary to 
provide ongoing notice of effectiveness of a TPH status or approval of 
a trading function in the Exchange Bulletin, especially as these 
notices relate simply to statuses that have already been approved 
(unlike notices of pending membership applications which, as discussed, 
were historically posted so that members could submit comments 
regarding an applicant's fitness for membership).
    As it relates to the requirements set forth in Rule 8.89(d) and 
17.9, the Exchange notes that this information will continue to be 
disseminated, but through a different, more efficient means (i.e., post 
to CBOE Web site).
    Finally, the proposed rule change is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers, in that 
all such investors would no longer receive an Exchange Bulletin that 
publishes: (i) The name of applicants and application requests to 
change Clearing Trading Permit Holders or to become a TPH; (ii) notice 
of effectiveness of a TPH status or approval of a TPH trading function; 
(iii) notice of proposed transfers of DPM appointments; (iv) notice of 
applications for reinstatement; and (v) summaries of any BCC decisions.

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 that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
the proposed rule changes impose any burden on intramarket competition 
because it applies to all TPHs. Additionally, the Exchange does not 
believe the proposed rule change will impose any burden on intermarket 
competition as it is merely attempting to eliminate the dissemination 
of information that it believes is no longer necessary or relevant via 
the Exchange Bulletin.

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 
proposed rule change.

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

[[Page 6664]]

public interest, provided that the self-regulatory 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\ At any time within 60 days of the filing of such 
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.
---------------------------------------------------------------------------

    \11\ The Exchange has fulfilled this requirement.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2014-009 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-2014-009. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 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-2014-009 and should be 
submitted on or before February 25, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02243 Filed 2-3-14; 8:45 am]
BILLING CODE 8011-01-P