Document ID: SEC-2006-0720-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.
Posted Date: 2006-06-02T04:00Z

[Federal Register: June 2, 2006 (Volume 71, Number 106)]
[Notices]               
[Page 32156-32158]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn06-134]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34-53872; File No. SR-CBOE-2006-45]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change Regarding Its 
Board Review Authority

May 25, 2006.
    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 5, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``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 CBOE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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 Exchange proposes to amend its rules to clarify the authority 
of its Board of Directors (``Board'') with respect to actions or 
inactions of committees of CBOE and CBOE staff. The text of the 
proposed rule change is below. Proposed new language is in italics; 
proposed deletions are in [brackets].
* * * * *

Chicago Board Options Exchange, Incorporated

Rules
* * * * *

Chapter II Organization and Administration (Rules 2.1-2.40)

Part A--Committees (Rule 2.1)
Rule 2.1. Committees of the Exchange
    (a)-(c) No change.
    (d) General Duties and Powers of Committees. Each committee shall 
administer the provisions of the Constitution and the rules of the 
Exchange pertaining to matters within its jurisdiction. In addition to 
any powers and duties specifically granted in the Constitution or 
Rules, e[E]ach committee shall have only such other powers and duties 
as may be delegated to it by the Board of Directors. Each committee is 
subject to the control and supervision of the Board of Directors.
Part B--Board Review (Rule 2.2)
Rule 2.2. Power of the Board to Review Exchange Decisions
    In connection with any delegation to a committee or committees 
pursuant to Article EIGHTH of the Certificate of Incorporation, the 
Board retains the power and authority to review, affirm, modify, 
suspend or overrule any and all actions or inactions of committees and 
of all officers, representatives or designees of the Exchange; 
provided, however, that such power and authority shall not apply to (a) 
actions taken (or inactions) pursuant to Chapters XVII, XVIII and XIX 
of the Rules, unless specifically provided for in those Rules, or (b) 
actions taken by (or inactions of) the Nominating Committee or 
Executive Committee pursuant to Article IV of the Constitution.
Part [B]C--Departments (Rule 2.15)
    No change.
Part [C]D--Dues, Fees and Other Charges (Rules 2.20-2.40)
* * * * *

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

    In its filing with the Commission, CBOE included statements 
concerning

[[Page 32157]]

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. 
CBOE 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
    CBOE's Certificate of Incorporation provides that the Board shall 
manage the business and affairs of the Exchange except to the extent 
that the authority, powers, and duties of such management shall be 
delegated to a committee or committees of the Exchange that are 
established pursuant to the Exchange's Constitution. The Certificate of 
Incorporation and Constitution of CBOE also provide that the Board may 
establish one or more committees, each of which shall have the 
authority, power, and duties as may be prescribed in the Exchange's 
Constitution or Rules, or by resolution of the Board.\3\
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    \3\ See Article EIGHTH of the CBOE Certificate of Incorporation 
and Section 7.6 of the CBOE Constitution.
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    Over time the Board has established various committees, several of 
which have specific authorities described in the Exchange's 
Constitution or Rules. Though CBOE Rule 2.1, Committees of the 
Exchange, currently provides that each committee ``is subject to the 
control and supervision of the Board,'' this supervisory power alone 
does not make explicit the power of the Board to directly modify or 
overrule the action (or inaction) of a committee when the 
decisionmaking authority with respect to the action has been delegated 
to the committee in the Exchange's Rules. The proposed rule change will 
address this by explicitly reserving the Board's review authority over 
all actions taken by (or inactions of) committees of CBOE, as well as 
CBOE staff. Specifically, this proposed rule change seeks to adopt CBOE 
Rule 2.2, Power of the Board to Review Exchange Decisions, which 
clarifies that the Board retains the power and authority to review, 
affirm, modify, suspend, or overrule any and all actions or inactions 
of committees of CBOE and of CBOE officers, representatives, or 
designees. Proposed CBOE Rule 2.2 would not apply to actions taken (or 
inactions) pursuant to Chapters XVII (Discipline), XVIII (Arbitration), 
and XIX (Hearings and Review) of the Exchange's Rules, unless 
specifically provided for in those Rules, or to actions taken by (or 
inactions of) the Nominating Committee or Executive Committee relating 
to the nominating process pursuant to Article IV of the Exchange's 
Constitution. The proposed rule change also seeks to amend CBOE Rule 
2.1 to make clear that committees will only have such powers and duties 
as are specifically granted in the Exchange's Constitution or Rules and 
only such other powers and duties as may be delegated to them by the 
Board.
2. Statutory Basis
    The Exchange believes that, because it clarifies the Board's 
authority, the proposed rule change is consistent with the requirements 
of Section 6(b)(5) of the Act \4\ which requires, among other things, 
that the rules of the Exchange be designed 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, and in general, to protect investors and the public 
interest. The Exchange also believes that the proposed rule change is 
consistent with the requirements of Section 6(b)(1) of the Act,\5\ 
which requires that an exchange be so organized so as to have the 
capacity to be able to carry out the purposes of the Act and to comply, 
and (subject to any rule or order of the Commission pursuant to Section 
17(d)\6\ or 19(g)(2)\7\ of the Act) to enforce compliance by its 
members and persons associated with its members, with the provisions of 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange.
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    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78f(b)(1).
    \6\ 15 U.S.C. 78q(d).
    \7\ 15 U.S.C. 78s(g)(2).
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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 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

    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 Exchange consents, the Commission shall:
    (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 No. SR-CBOE-2006-45 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2006-45. 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. Copies of such filing also will be 
available for inspection and copying at the principal office of CBOE. 
All

[[Page 32158]]

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-2006-45 and should be 
submitted on or before June 23, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
J. Lynn Taylor,
Assistant Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E6-8552 Filed 6-1-06; 8:45 am]

BILLING CODE 8010-01-P