Document ID: SEC-2009-0152-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc
Posted Date: 2009-02-02T05:00Z

[Federal Register: February 2, 2009 (Volume 74, Number 20)]
[Notices]               
[Page 5874]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02fe09-84]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59300; File No. SR-CBOE-2008-117]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change To Amend Exchange 
Rule 4.21 Relating to Third Party Deposits

January 27, 2009.

I. Introduction

    On December 2, 2008, the Chicago Board Options Exchange, 
Incorporated (``CBOE'' or the ``Exchange'') filed with the Securities 
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange Rule 4.21 
relating to third party deposits. The proposed rule change was 
published for comment in the Federal Register on December 23, 2008.\3\ 
The Commission received no comments on the proposal. This order 
approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59104 (December 15, 
2008), 73 FR 78862 (the ``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    Under current CBOE Rule 4.21, member organizations engaged in the 
business of clearing and carrying the accounts of options market makers 
(``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., is from a ``third 
party'') from the name on the account cleared or carried by the 
Clearing Firm.
    CBOE proposes to amend the rule to permit Clearing Firms to accept 
for deposit to a broker-dealer account checks and funds transfers that: 
(i) 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) 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.\4\ The Exchange also proposes to 
clarify that documents evidencing that a deposit qualifies for 
acceptance under Rule 4.21, as well as documents authorizing transfers 
between two accounts under Rule 4.21, must be retained by the Clearing 
Firm. The Exchange believes that the proposed exceptions do not present 
any of the concerns or business risks to the Clearing Firm that the 
rule was originally intended to address.\5\
---------------------------------------------------------------------------

    \4\ The Exchange also notes that Clearing Firms, as a matter of 
business judgment, may still refuse to accept checks and/or funds 
transfers from third parties. See id. at 78863.
    \5\ See id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\6\ 
In particular, the Commission finds that the proposal is consistent 
with Section 6(b)(5) of the Act,\7\ which requires that an exchange 
have rules designed to promote just and equitable principles of trade, 
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.
---------------------------------------------------------------------------

    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that permitting Clearing Firms to accept 
for deposit these specific types of checks and fund transfers should 
streamline inter-member dealings without exposing Clearing Firms to the 
types of risks that the rule was designed to mitigate. Further, the 
proposed amendments to Interpretation and Policy .06 to Rule 4.21 are 
designed to ensure that Clearing Firms retain supporting documentation 
to evidence compliance with the rule. Accordingly, the Commission finds 
the proposed amendments to Rule 4.21 to be consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-CBOE-2008-117) be, and hereby 
is, approved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2160 Filed 1-30-09; 8:45 am]

BILLING CODE 8011-01-P