Document ID: SEC-2007-0426-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: OneChicago, LLC
Posted Date: 2007-03-21T04:00Z

[Federal Register: March 21, 2007 (Volume 72, Number 54)]
[Notices]               
[Page 13337-13338]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr07-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55475; File No. SR-OC-2007-02]

 
Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to Block 
Trades

March 15, 2007.
    Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-7 under the Act,\2\ notice is hereby given 
that on February 5, 2007, OneChicago, LLC (``OneChicago'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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. OneChicago has 
also filed the proposed rule change with the Commodity Futures Trading 
Commission (``CFTC'').
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
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    OneChicago filed a written certification with the CFTC under 
Section 5c(c) of the Commodity Exchange Act \3\ on February 2, 2007.
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    \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 policy regarding block trades, 
the text of which is available at the Exchange and 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
    OneChicago is proposing to amend its Policies: Block Trades, Pre-
Execution Discussions and Cross Trades (``Block Trade Policy'') 
relating to the block trade minimum contracts size. In addition to the 
current minimum contract size of 100 contracts for block trades, the 
proposed rule change would permit a minimum block trade contract size 
that is the equivalent to 10,000 shares of the underlying security for 
futures on single security (or combined securities if a relevant 
corporate event has occurred).
    Based on its experience, the Exchange believes the proposed rule 
change would permit an appropriate minimum contract size for block 
trades. The proposed rule change would set a minimum contract size for 
block trades that is equivalent to the customary size of large 
transactions in relevant markets, i.e., the securities market. The 
proposed rule change would also permit a block trade size based on 
combined securities if a relevant corporate event has occurred. 
Combined securities would be relevant with certain corporate events, 
such as spin offs or three for two splits.

[[Page 13338]]

For example, the Exchange has a March 2007 ABCD futures contract, which 
has a trading unit of 100 shares of ABCD. ABCD announces a spin-off in 
which an entity PQRS has been created and the spin-off ratio is one 
share of PQRS for every 10 shares of ABCD. The spin-off will occur 
(``the Ex date'') before the expiration of the March 2007 ABCD futures 
contract. After the Ex date, the trading unit or deliverable shares for 
the March 2007 ABCD futures contracts would be 100 shares of ABCD and 
10 shares of PQRS. The minimum block trade size for the March 2007 ABCD 
futures contract after the Ex date would be 91. Another example would 
be when a corporate event results in a three for two split of shares. 
In that case, the trading unit or deliverable shares would be 150 
(provided the trading unit for the futures contract was 100 shares), 
making the minimum block trade size 67 contracts.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \4\ in general and Section 6(b)(5) of the 
Act \5\ 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    Comments on the proposed rule change have not been solicited and 
none have been received.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(7) of the Act.\6\ 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 refiled in 
accordance with the provisions of Section 19(b)(1) of the Act.\7\
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    \6\ 15 U.S.C. 78s(b)(7).
    \7\ 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 Number SR-OC-2007-02 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-2007-02. 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 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 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 OneChicago. 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-2007-02 and should be submitted on or before April 
11, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(73).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-5114 Filed 3-20-07; 8:45 am]

BILLING CODE 8010-01-P