Document ID: SEC-2012-1298-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-08-08T04:00Z

[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47474-47476]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19361]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67581; File No. SR-CBOE-2012-074]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Establish a Rule Regarding Records of Written 
Complaints for the CBOE Stock Exchange

August 2, 2012.
    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 July 31, 2012, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the

[[Page 47475]]

proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to establish a rule regarding records of 
written complaints that is specific to the CBOE Stock Exchange 
(``CBSX''). The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, 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
    The Exchange proposes to establish Rule 53.7--CBSX Record of 
Written Complaints to formally establish a record keeping procedure for 
complaints specific to CBSX. CBOE has the options-specific Rule 9.23--
Customer Complaints. However, to date there has been no equities-
specific customer complaint rule for CBSX. Historically, the majority 
of CBSX trading activity was proprietary. In recent months, CBSX has 
seen an increase in customer trading. As such, CBSX desires to adopt a 
rule regarding records of customer complaints that is specific to CBSX 
to assist the Exchange's Regulatory Services Division in investigations 
regarding CBSX-specific customer complaints. Therefore, CBSX proposes 
to establish Rule 53.7--CBSX Record of Written Complaints. This 
proposed rule is substantively identical to BATS Exchange, Inc. 
(``BATS'') Rule 4.3--Record of Written Complaints,\3\ with one 
exception (discussed below). The substance of proposed Rule 53.7 is 
nearly identical to that of BATS Rule 4.3 (which is very similar to 
record of written complaints rules on other exchanges) so that market 
participants trading on multiple stock exchanges can follow as uniform 
as possible a set of rules regarding records of written complaints.
---------------------------------------------------------------------------

    \3\ See BATS Rule 4.3.
---------------------------------------------------------------------------

    Paragraph (a) of Rule 53.7 will establish that each CBSX Trader 
shall keep and preserve for a period of not less than five years a file 
of all written complaints of customers and action taken by the CBSX 
Trader in respect thereof, if any. Further, for the first two years of 
the five-year period, the CBSX Trader shall keep such file in a place 
readily accessible to examination or spot checks. This paragraph (a) of 
CBOE Rule 53.7 is substantively identical to BATS Rule 4.3(a).
    Paragraph (b) of Rule 53.7 will establish that upon request by 
CBSX, a CBSX Trader shall forward promptly to CBSX any written 
complaints requested and a report of the action taken thereon. BATS 
Rule 4.3 has no provision requiring BATS members to forward written 
complaints to BATS upon request. However, CBSX desires to include such 
a stipulation in order to ensure CBSX has access to such complaints for 
regulatory purposes.
    Paragraph (c) of Rule 53.7 will establish that a ``complaint'' 
shall mean any written statement of a customer or any person acting on 
behalf of a customer alleging a grievance involving the activities of a 
CBSX Trader or persons under the control of the CBSX Trader in 
connection with either the solicitation or execution of any transaction 
conducted or contemplated to be conducted through the facilities of the 
CBSX, or the disposition of securities or funds of that customer which 
activities are related to such a transaction. This paragraph (c) of 
CBOE Rule 53.7 is substantively identical to BATS Rule 4.3(b).
    The proposed Rule 53.7 encompasses electronically submitted 
complaints (including email). CBSX will issue a Regulatory Circular 
providing instructions on how to forward formal written complaints 
specific to CBSX.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\4\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \5\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, establishing a CBSX-specific rule regarding records 
of written complaints will assist CBSX's regulatory processes by 
ensuring that customer complaints are kept by CBSX Traders and are 
available to be forwarded to CBSX for regulatory purposes. This helps 
ensure that customer complaints are adequately addressed, thereby 
removing impediments to, and perfecting the mechanism for a free and 
open market and a national market system and, in general, protecting 
investors and the public interest.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not become operative for 30 days from the date on which it was filed, 
or such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Exchange believes that the

[[Page 47476]]

proposed rule change is consistent with the protection of investors and 
the public interest because it would permit the Exchange to immediately 
implement the proposed rule change that would allow CBSX to begin 
ensuring that customer complaints are adequately kept and addressed by 
CBSX Traders.\8\ The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Such waiver would allow the Exchange, without delay, 
to require CBSX Traders to establish a process to maintain, and make 
available to CBSX upon request, certain customer complaints. The 
Commission notes that the proposed rule change is based on and similar 
to BATS Rule 4.3.\9\ Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\10\
---------------------------------------------------------------------------

    \8\ See SR-CBOE-2012-074, Item 7.
    \9\ See supra note 3.
    \10\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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 Exchange 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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2012-074 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2012-074. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-CBOE-2012-074 and should be 
submitted on or before August 29, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19361 Filed 8-7-12; 8:45 am]
BILLING CODE 8011-01-P