Document ID: SEC-2007-1083-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: One Chicago, LLC
Posted Date: 2007-08-08T04:00Z

[Federal Register: August 8, 2007 (Volume 72, Number 152)]
[Notices]               
[Page 44603-44605]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08au07-119]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56178; File No. SR-OC-2007-03]

 
Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating To Block 
Trade and EFP Transaction Reporting Procedures

August 1, 2007.
    Pursuant to section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-7 thereunder,\2\ notice is hereby given that 
on July 20, 2007, OneChicago, LLC (``OneChicago'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change described in Items I, II and 
III below, which Items have been substantially prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons. The Exchange has 
also filed the proposed rule change with the Commodity Futures Trading 
Commission (``CFTC''), together with a written certification under 
Section 5c(c) of the Commodity Exchange Act (``CEA''),\3\ on July 19, 
2007.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
    \3\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    OneChicago is proposing to amend its policies and procedures 
relating to the reporting of block trades and Exchange of Futures for 
Physical (``EFP'') transactions. The text of the proposed rule change 
is available on OneChicago's Web site (http://onechicago.com), at 

OneChicago's principal office, 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

    The Exchange has prepared statements concerning the purpose of, and 
basis for, the proposed rule change, burdens on competition, and 
comments received from its members, participants, and others. 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, Proposed Rule Change

1. Purpose
    OneChicago proposes to amend its Block Trade Reporting Procedures 
(``Block Reporting Procedures'') and its EFP Transactions: Guidelines 
and Reporting Procedures (``EFP Reporting Procedures'') to permit 
reporting of block trades and EFP transactions through the OneChicago 
Block & EFP Trading System (``OneChicago BETS''). In addition, 
OneChicago proposes to make conforming changes to OneChicago Policies: 
Block Trades, Pre-Execution Discussions and Cross Trades (``Block Trade 
Policy'').
    OneChicago BETS permits authorized traders to trade and report 
block trades, as well as match and report EFP transactions 
electronically.\4\ The proposed rule change would add language to the 
Block Reporting Procedures that would permit those

[[Page 44604]]

authorized to report block trades to do so through OneChicago BETS, 
telephonically as permitted by the Exchange, or in a form and method 
approved by OneChicago. In addition, the proposed rule change would 
amend the provision of the Block Reporting Procedures that requires the 
selling firm to call the OneChicago Operations Management (``OOM'') 
Help Desk for block trades reported telephonically by allowing the 
counterparty to agree to a different reporting arrangement. A similar 
change to the Block Reporting Procedures is proposed for the reporting 
of blocks that are spreads or combinations. The proposed rule change 
would also amend the footnote to the Block Reporting Procedures to 
delete ``500,'' currently the stated minimum contract size, and add a 
cross-reference to the minimum contract size specified in the Block 
Trade Policy. Under the proposed rule change, the total quantity of the 
legs of a spread or combination must continue to meet the minimum 
contract size requirement as stated in the Block Trade Policy.
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    \4\ OneChicago BETS also permits electronic trading and 
reporting of Block Roll trades, a block trade where a trader enters 
into a calendar spread.
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    The amendments to the EFP Reporting Procedures would add language 
to make it clear that entering into an EFP via OneChicago BETS would 
fulfill the requirement to complete an EFP Transaction Report in a form 
and manner approved by the Exchange. Under the proposed rule change, if 
a transaction is matched by OneChicago BETS, then the party that traded 
against the resting bid or offer (the ``Aggressor'') would be obligated 
to enter the base price into OneChicago BETS from which a futures price 
would be generated by adding the matched differential.\5\ If the 
transaction is an EFP that is only reported on OneChicago BETS (i.e., a 
Bi-lateral transaction), then either party to the transaction may enter 
the information into OneChicago BETS, and the counter-party trader must 
confirm the transaction on OneChicago BETS.
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    \5\ EFPs on BETS are quoted in spreads. The futures price is 
calculated by adding the quoted spread to the base price negotiated 
by the parties.
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    The proposed rule change would also eliminate the requirement in 
the EFP Reporting Procedures that the parties to the transaction 
exchange their respective Trade Reporter IDs and agree upon a unique 
trade ID to be used when recording the terms of their trade. Since the 
Exchange has the Trade Reporter IDs and provides a unique trade ID for 
each trade, it is no longer necessary to have the Trade Reporters 
exchange and create such IDs. Conforming language was also added to 
clarify that the OOM Help Desk will only compare the details on trades 
that are not reported through OneChicago BETS.
    Conforming changes are also proposed for the Block Trade Policy. 
Thus, under the proposal, the buyer of a block trade could agree that 
the seller is not obligated to report a block trade; language requiring 
the OOM Help Desk to provide a trade identification and requiring 
traders to provide the OOM Help Desk trade identification when 
reporting a block trade would be deleted; and new language would be 
added to make clear that OOM Help Desk would only report block trades 
reported to them telephonically to the OneChicago trade engine.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\6\ in general and section 6(b)(5) of the 
Act,\7\ in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. The proposed rule change would permit electronic 
reporting of block trades and EFP transactions, which would promote 
just and equitable principles of trade and protect investors and the 
public interest by providing more efficient reporting of block trades 
and EFPs and by providing a strong audit trail.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    OneChicago 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Pursuant to section 19(b)(7)(B) of the Act,\8\ the proposed rule 
change became effective on July 20, 2007. Within 60 days of the date of 
effectiveness of the proposed rule change, the Commission, after 
consultation with the CFTC, may summarily abrogate the proposed rule 
change and require that the proposed rule change be re-filed in 
accordance with the provisions of section 19(b)(1) of the Act.\9\
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    \8\ 15 U.S.C. 78s(b)(7)(B).
    \9\ 15 U.S.C. 78s(b)(1).
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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 No. SR-OC-2007-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OC-2007-03. 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 Commissions 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 Number SR-OC-2007-03 and should be submitted on or 
before August 29, 2007.

[[Page 44605]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(73).
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Florence E. Harmon.
Deputy Secretary.
 [FR Doc. E7-15384 Filed 8-7-07; 8:45 am]

BILLING CODE 8010-01-P