Document ID: SEC-2006-1234-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: OneChicago, LLC
Posted Date: 2006-09-22T04:00Z

[Federal Register: September 22, 2006 (Volume 71, Number 184)]
[Notices]               
[Page 55539-55540]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22se06-164]                         

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

SECURITIES AND EXCHANGE COMMISISON

[Release No. 34-54454; File No. SR-OC-2006-02]

 
Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to 
Listing Standards of Security Futures Products

September 15, 2006.
    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 September 6, 2006, 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 prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
---------------------------------------------------------------------------

    OneChicago has also filed the proposed rule change with the 
Commodity Futures Trading Commission (``CFTC''). OneChicago filed a 
written certification with the CFTC under Section 5c(c) of the 
Commodity Exchange Act \3\ on September 5, 2006.
---------------------------------------------------------------------------

    \3\ 7 U.S.C. 7a-2(c).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    OneChicago proposes to amend its listing standards for a security 
futures product. The text of the proposed rule change is available at 
the principal office of the Exchange 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

    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
    Currently, under OneChicago Rule 906(b)(2), the Exchange will not 
open a new delivery month for trading in a security future unless the 
issuer of the underlying security satisfies applicable reporting 
requirements of the Act or corrects any failure within 30 days after 
the date the report was due to be filed, and the underlying security is 
listed on a national securities exchange or is principally traded 
through the facilities of a national securities association and is 
designated as an NMS security. The Exchange proposes to delete 
OneChicago Rule 906(b)(2)(A), which requires that the issuer of a 
security underlying a single stock futures (``SSF'') satisfy applicable 
reporting requirements of the Act or correct any failure within 30 days 
after the date the report was due to be filed. OneChicago believes that 
the proposed rule change is consistent with listing standards in the 
options market and in the best interest of market participants.
    The Exchange believes that the current OneChicago Rule 906(b)(2)(A) 
limits an investor's ability to hedge her underlying stock positions at 
a time when she may be most in need to protect her investment. The 
failure of a public company to comply with its reporting requirements 
under the Act could cause a significant movement in the price of that 
company's stock. The Exchange believes restricting the Exchange from 
opening new contract months may leave investors without the means to 
hedge their positions with SSFs.
    The Exchange believes that the proposed rule change is consistent 
with options listing standards. In December 2005, the Commission 
approved a rule change for the Chicago Board Options Exchange, 
Incorporated (``CBOE'') that deleted Interpretation and Policy .01(e) 
to CBOE Rule 5.4, which contained language similar to that in 
OneChicago Rule 906(b)(2)(A).\4\ The Pacific Exchange, Inc. (n/k/a NYSE 
Arca, Inc.) (``PCX'') also filed a similar rule change with the 
Commission, which was effective immediately.\5\ Under Section 
6(h)(3)(C) of the Act, listing standards for security futures are to be 
no less restrictive than comparable option listing standards.\6\ Since 
a similar rule change was made to the options listing standards of CBOE 
and PCX, OneChicago believes that the proposed rule change is 
comparable to, and no less restrictive than, option listing standards.
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 52779 (November 16, 
2005), 70 FR 70902 (November 23, 2005).
    \5\ Securities Exchange Act Release No. 52911 (December 7, 
2005), 70 FR 74078 (December 14, 2005).
    \6\ 15 U.S.C. 78f(h)(3)(C).
---------------------------------------------------------------------------

    The Exchange will monitor the listing status of the security 
underlying a SSF and, pursuant to OneChicago Rule 906(b), not open a 
new delivery month for trading in a SSF when the underlying security is 
delisted from trading.

[[Page 55540]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and Section 6(b)(5) of the 
Act,\8\ 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 Exchange believes that the proposed changes is 
designed to protect investors and the public interest by permitting 
investors to use SSFs based on NMS securities trading on national 
securities exchanges and a national securities association for hedging 
purposes.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange has not solicited nor received comments on the 
proposed rule change.

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.\9\ 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.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(7).
    \10\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

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-2006-02 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-2006-02. 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-2006-02 and should be submitted on or before October 
13, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(73).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-8002 Filed 9-21-06; 8:45 am]

BILLING CODE 8010-01-P