Document ID: SEC-2010-1453-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-09-23T04:00Z

[Federal Register: September 23, 2010 (Volume 75, Number 184)]
[Notices]               
[Page 58006-58007]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se10-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62933; File No. SR-CBOE-2010-082]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated: Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Withdraw Regulatory Circular RG01-61

September 17, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ noitce is hereby given that 
on September 9, 2010, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``Exchange'') 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 CBOE. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE is proposing to withdraw Regulator Circular RG01-61 regarding 
transactions between related entities. The text of the proposed rule 
change is available on the Exchange's Web site (http://www.cboe.org/
legal), at the Exchange's Office of the Secretary and at the 
Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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. CBOE 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, Proposed Rule Change

1. Purpose
    In 2001, the Securities and Exchange Commission (the 
``Commission'') approved SR-CBOE-2000-13 regarding transactions between 
related entities.\3\ In connection with the approval of that filing, 
the Exchange promulgated CBOE Regulatory Circular RG01-61 (``RG01-61'') 
to act as guidance for such trading. At the time the Exchange adopted 
SR-CBOE-2000-13 and RG01-61, CBOE's restrictions on transactions 
between related entities were more restrictive than the rules in place 
at other national securities exchanges and under the Securities 
Exchange Act of 1934, as amended (the ``Act'').\4\
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    \3\ Securities Exchange Act Release No. 34-44152 (April 5, 
2001), 66 FR 19262 (April 13, 2001) (SR-CBOE-2000-13).
    \4\ Securities Exchange Act Release No. 34-43984 (February 20, 
2001), 66 FR 12574 (February 27, 2001) (SR-CBOE-2000-13).
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    CBOE is proposing to eliminate RG01-61 and defer to the 
requirements set forth in Section 9(a)(1) of the Act,\5\ which 
provides, in relevant part:
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    \5\ 15 U.S.C. 78i.

    It shall be unlawful for any person, directly or indirectly * * 
* for the purpose of creating a false or misleading appearance of 
active trading in any security registered on a national securities 
exchange, or a false or misleading appearance with respect to the 
market for any such security, (A) to effect any transaction in such 
security which involves no change in the beneficial ownership 
thereof, or (B) to enter an order or orders for the purchase of such 
security with the knowledge that an order or orders of substantially 
the same size, at substantially the same time, and at substantially 
the same price, for the sale of any such security, has been or will 
be entered by or for the same or different parties, or (C) to enter 
any order or orders for the sale of any such security with the 
knowledge that an order or orders of substantially the same size, at 
substantially the same time, and at substantially the same price, 
for the purchase of such security, has been or will be entered by or 
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for the same or different parties.

    This is consistent with the requirements in place at other national 
securities exchanges and this proposal eliminates distinctions between 
the Exchange's rules regarding transactions between related entities 
and similar requirements in place at other national securities 
exchanges, as well as the Commission. Notwithstanding the withdrawal of 
Regulatory Circular RG01-61, CBOE will continue to conduct surveillance 
for pre-arranged trading between related entities that violates Section 
9(a) of the Exchange Act.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Section 6(b) of the Act,\6\ in general, and furthers the objectives 
of Section 6(b)(5) of the Act,\7\ which requires, among other things, 
that the Exchange's rules be designed to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and protect investors and the public interest. The Exchange 
believes that the proposed rule change is designed to promote just and 
equitable principles of trade and to protect investors and the public 
interest by eliminating differences between the Exchange's rules 
regarding transactions between related entities and similar 
requirements in place at other national securities exchanges, as well 
as the Commission.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).

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[[Page 58007]]

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 purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others.

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing rule does not (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file 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,\8\ the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \8\ The Exchange fulfilled this requirement.
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6) of the Act,\11\ a proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay of this filing. The 
Exchange believes that the proposed rule change does not present any 
novel or unique issues because the elimination of RG01-61 merely brings 
the Exchange's rules regarding transactions between related entities in 
line with the requirements in place at other national securities 
exchanges and the Commission. The Exchange also believes that 
acceleration of the operative date will allow market participants to 
realize the benefits of the rule change sooner. The benefits include 
providing a policy that is consistent with other exchanges' and 
Commission requirements, which will reduce unnecessary complexity and 
confusion. The Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Based on the above, the Commission designates the proposal as 
operative upon filing.\12\
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    \11\ Id.
    \12\ For purposes only of waiving the operative delay of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f). See also 17 CFR 200.30-3(a)(59).
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    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 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-CBOE-2010-082 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.

All submissions should refer to File Number SR-CBOE-2010-082. 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 website 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 such filing also will be available for 
inspection and copying at the principal office of CBOE. 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-2010-082 and should be 
submitted on or before October 14, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-23775 Filed 9-22-10; 8:45 am]
BILLING CODE 8010-01-P