Document ID: SEC-2012-1857-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-11-14T05:00Z

[Federal Register Volume 77, Number 220 (Wednesday, November 14, 2012)]
[Notices]
[Pages 67844-67845]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27574]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68171; File No. SR-CBOE-2012-087]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval of Proposed Rule Change to Amend 
Rule 17.2 Regarding Requests for Data Related to Exchange Reviews

November 6, 2012.

I. Introduction

    On September 4, 2012, the Chicago Board Options Exchange, 
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange Rule 17.2 
(Complaint and Investigation) regarding the furnishing of data 
requested with respect to any review conducted by the Exchange pursuant 
to that Rule. The proposed rule change was published for comment in the 
Federal Register on September 24, 2012.\3\ The Commission received no 
comment letters on the proposed rule change. This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 67879 (September 18, 
2012), 77 FR 58897 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to amend Rule 17.2 (Complaint and 
Investigation) to address the furnishing of data to the Exchange by a 
Trading Permit Holder (``TPH'') in connection with a regulatory review 
conducted by the Exchange. Specifically, the Exchange proposes to add 
Interpretations and Policies .04, which provides that ``[i]n addition 
to the existing obligation under Exchange rules regarding the 
production of books and records, each TPH or TPH organization shall 
furnish upon request, in the manner and standard electronic format 
prescribed by the Exchange, data concerning orders, transactions, and 
positions, including related hedges and offsets, in relation to a 
regulatory review conducted by the Exchange.''
    In the Notice, the Exchange stated that it currently requests and 
receives certain trade data from TPHs and TPH organizations on an ad 
hoc basis in connection with its regulatory responsibilities as a 
registered exchange. TPHs and TPH organizations provide such data to 
the Exchange in a variety of different manners and formats, and 
sometimes in a piecemeal manner.\4\ Because the form of the submitted 
information can be highly variable and the manner of submission is not 
standard, the Exchange represented that the Exchange's Regulatory 
Division expends considerable resources in re-organizing and 
systematizing the information in order to be able to perform its review 
and analysis. In order to address this inefficiency, the Exchange now 
proposes to require TPHs to furnish, upon request, data in a standard 
manner and format as prescribed by the Exchange.
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    \4\ According to the Exchange, the data which the Exchange 
currently receives is provided in a comma-separated values format, 
and includes, when applicable, separate data fields for trade date, 
order entry time (milliseconds), cancel time (milliseconds), 
execution time (milliseconds), unique ticker symbol, side, execution 
price, event type, unique account identification, user ID, order ID, 
broker location, quantity, locate source for short sale, number of 
shares remaining after a partial execution, and the code of the 
exchange to which an order was routed.
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    In the Notice, the Exchange represented that this change would 
allow the Exchange to develop uniform procedures and forms for the 
submission of data concerning orders, transactions, and positions, 
including related hedges and offsets.\5\ The Exchange stated that the 
existence of a standard format for the submission of the data would 
allow the TPHs to better prepare for regulatory responses and would 
allow the Exchange regulatory staff to review and analyze the requested 
data in a more efficient and organized manner which in turn will 
expedite such review and analysis.\6\ Pursuant to the new rule 
provision, the Exchange will publish by Regulatory Circular the 
required layout for the data that would be submitted to the 
Exchange.\7\
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    \5\ See Notice, supra note 3, at 58898.
    \6\ Id.
    \7\ Id. The Exchange represented that it will not enforce 
compliance with Interpretations and Policies .04 until the Exchange 
has announced an implementation plan, including a subsequent 
compliance date, to its members, and that the Exchange expects to 
announce such implementation plan via a Regulatory Circular during 
the fourth calendar quarter of 2012. Id. The Exchange believes that 
the intervening period between the announcement of the 
implementation plan and the compliance date will allow TPHs time to 
prepare to comply. Id.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6 of the Act \8\ 
and the rules and regulations thereunder applicable to a

[[Page 67845]]

national securities exchange.\9\ In particular, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\10\ which requires, among other things, that the Exchange's rules 
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 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.
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    \8\ 15 U.S.C. 78f.
    \9\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that CBOE's proposed rule change is 
designed to facilitate the production of uniform data by TPHs, which 
will permit the Exchange's regulatory staff to make use of the data 
more readily than is currently the case. In particular, Exchange staff 
will no longer have to take time to reconcile data that is submitted in 
disparate formats. In turn, this should benefit the Exchange's 
regulatory reviews by permitting more efficient use of Exchange 
resources. To this extent, the rule change is designed to help prevent 
fraudulent and manipulative practices, consistent with the Act, because 
obtaining data from TPHs in a uniform format will aid the Exchange's 
regulatory staff in the exercise of its regulatory authority. New 
Interpretations and Policies .04 should help facilitate the Exchange's 
decision making regarding determining causes of action and considering 
the appropriate regulatory response to a complaint or investigation, 
which will further the Act's goal of promoting just and equitable 
principles of trade.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-CBOE-2012-087) be, and 
hereby is, approved.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27574 Filed 11-13-12; 8:45 am]
BILLING CODE 8011-01-P