Document ID: SEC-2006-1227-0001
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 55540-55542]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22se06-165]                         

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

SECURITIES AND EXCHANGE COMMISISON

[Release No. 34-54452; File No. SR-OC-2006-01]

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

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 policy regarding block trades. 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.

[[Page 55541]]

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

1. Purpose
    OneChicago proposes to amend its current Policies: Block Trades, 
Pre-Execution Discussions and Cross Trades (``Block Trade Policy'') to 
change the minimum contracts needed to enter into a block trade from 
500 to 100; to clarify that block trades must be executed no earlier 
than one-half hour before the opening and no later than one-half after 
the close of the trading session; to incorporate language from 
OneChicago Rule 417; to permit members to report their block trades in 
a form and method approved by the Exchange; to clarify that a 
combination of trades may be necessary to achieve a specific price 
differential for an overall trade event and, for these trades, that 
information must be provided to link the related legs of the block 
trade event; and other non-substantive changes.
    Currently, the minimum contract size for a block trade on 
OneChicago is 500 contracts. The proposed rule change would lower the 
minimum quantity needed for block trades to 100. The Exchange believes 
the proposed minimum contract size is consistent with similar 
requirements in the securities markets.\4\ Since an OneChicago futures 
contract on a single stock represents 100 shares of the underlying 
stock, the Exchange represents that the proposed block trade minimum 
contract size of 100 contracts is equivalent to 10,000 shares of the 
underlying stock.\5\
---------------------------------------------------------------------------

    \4\ The New York Stock Exchange (``NYSE'') requires a minimum of 
10,000 contracts for a block trade. See NYSE ITS Block Trade Policy. 
See also Regulation NMS definition of block trade. 17 CFR 
242.600(b).
    \5\ See OneChicago Rule 905.
---------------------------------------------------------------------------

    OneChicago also proposes to amend the Block Trade Policy to clarify 
the time in which block trades may be executed. Under the proposed rule 
change, all block trades must be executed no earlier than one-half hour 
before trading in the contract begins on OneChicago and no later than 
one-half hour after trading in the contract ends on OneChicago. The 
proposed rule change would also add language from OneChicago Rule 417, 
which requires that all block trades be reported to the Exchange 
without delay after the trades are executed, and the specific terms 
related to the block trades that must be reported. The Exchange 
believes that adding this portion of OneChicago Rule 417 into the Block 
Trade Policy will assist OneChicago members and others reviewing it.
    In order to accommodate its members and provide flexibility in 
reporting, OneChicago proposes to add language to the Block Trade 
Policy to permit reporting of block trades in a form and method 
approved by the Exchange. This would permit a variety of methods for 
reporting block trades, such as electronic reporting, reporting by fax, 
as well as the current practice of reporting by telephone. Consistent 
with this change, the proposed rule change would add language to 
clarify that those reporting requirements related to calling the 
OneChicago Help Desk would only apply to phoned-in reports.
    The proposed rule change would also add a new footnote to the Block 
Trade Policy related to price. The footnote would acknowledge that in 
some block transactions a combination of trades may be necessary to 
achieve a specific price differential for the overall trade event. The 
proposed rule change would also add language requiring the parties to 
such a block trade to submit sufficient information to link related 
legs to the block trade event. The Exchange believes that this 
information will be useful for its regulatory oversight of these 
transactions.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and Section 6(b)(5) of the 
Act,\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 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.\8\ 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.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(7).
    \9\ 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-2006-01 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-2006-01. 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

[[Page 55542]]

submissions should refer to File Number SR-OC-2006-01 and should be 
submitted on or before October 13, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(73).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-8003 Filed 9-21-06; 8:45 am]

BILLING CODE 8010-01-P