Document ID: SEC-2007-0568-0001
Agency: sec
Document Type: Notice
Title: Joint industry plan: Chicago Board Options Exchange, Inc., et al.
Posted Date: 2007-04-18T04:00Z

[Federal Register: April 18, 2007 (Volume 72, Number 74)]
[Notices]               
[Page 19556-19560]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ap07-100]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55612; File No. 4-536]

 
Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of 
Regulatory Responsibilities Between the Chicago Board Options Exchange, 
Incorporated and the National Association of Securities Dealers, Inc.

April 10, 2007.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on April 5, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'') and the National Association of Securities Dealers, Inc. 
(``NASD'') (together with the CBOE, the ``Parties'') filed with the 
Securities and Exchange Commission (``Commission'' or ``SEC'') a plan 
for the allocation of regulatory responsibilities with respect to the 
CBOE Stock Exchange, LLC (``CBSX''), dated April 4, 2007 (``17d-2 
Plan''). The Commission is publishing this notice to solicit comments 
on the 17d-2 Plan from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) or Section 19(g)(2) of the Act.\4\ Without 
this relief, the statutory obligation of each individual SRO could 
result in a pattern of multiple examinations of broker-dealers that 
maintain memberships in more than one SRO (``common members''). Such 
regulatory duplication would add unnecessary expenses for common 
members and their SROs.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------

    Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\6\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q(d)(1).
    \6\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------

    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\8\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \8\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------

    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs 
to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for appropriate notice and comment, it determines that 
the plan is necessary or appropriate in the public interest and for the 
protection of investors; to foster cooperation and coordination among 
the SROs; to remove impediments to, and foster the development of, a 
national market system and a national clearance and settlement system; 
and is in conformity with the factors set forth in Section 17(d) of the 
Act. Commission approval of a plan filed pursuant to Rule 17d-2 
relieves an SRO of those regulatory responsibilities allocated by the 
plan to another SRO.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. Proposed Plan

    The Commission recently approved proposed rule changes submitted by 
CBOE to establish the CBSX as a facility of CBOE.\10\ CBSX is a fully 
automated marketplace for trading of non-option securities by CBOE 
members.
---------------------------------------------------------------------------

    \10\ Accordingly, CBOE serves as CBSX's self-regulatory 
organization and has regulatory responsibility for the activities of 
CBSX. See Securities Exchange Act Release Nos. 55326 (February 21, 
2007), 72 FR 8816 (February 27, 2007) (SR-CBOE-2006-106) (relating 
to a permit program for CBSX); 55389 (March 2, 2007), 72 FR 10575 
(March 8, 2007) (SR-CBOE-2006-110) (relating to governance structure 
of CBSX); and 55392 (March 2, 2007), 72 FR 10572 (March 8, 2007) 
(SR-CBOE-2006-112) (relating to trading rules for CBSX).
---------------------------------------------------------------------------

    Pursuant to the proposed 17d-2 Plan, NASD would assume certain 
examination and enforcement responsibilities for common members with 
respect to certain applicable laws, rules, and regulations. The 
proposed 17d-2 Plan is intended to reduce regulatory duplication, with 
respect to CBSX, for firms that are common members of both CBOE and 
NASD.\11\
---------------------------------------------------------------------------

    \11\ The proposed 17d-2 Plan refers to these common members as 
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------

    The text of the plan delineates regulatory responsibilities with 
respect to the Parties, including responsibility for CBOE rules 
applicable to the CBSX. Included in the proposed plan is an exhibit 
(the ``CBOE Certification of Common Rules,'' referred to herein as the 
``Certification'') that lists every CBOE rule, and the federal 
securities laws, rules, and regulations thereunder, for which NASD 
would bear responsibility under the plan for overseeing and enforcing 
with respect to common members.
    In particular, under the 17d-2 Plan, NASD would assume examination 
and enforcement responsibility relating to compliance by dual members 
and persons associated therewith with the rules of CBOE that are 
substantially similar to the applicable rules of NASD

[[Page 19557]]

(``Common Rules''),\12\ as well as any provisions of the federal 
securities laws and the rules and regulations thereunder delineated in 
the Certification.\13\ Under the plan, CBOE would retain full 
responsibility for surveillance and enforcement with respect to trading 
activities or practices involving CBOE's own marketplace, including, 
without limitation, CBOE's rules relating to the rights and obligations 
of market makers; registration pursuant to its unique rules (i.e., non-
Common Rules); its duties as a DEA pursuant to Rule 17d-1 under the 
Act; and any rules that are not Common Rules.
---------------------------------------------------------------------------

    \12\ See paragraph 1(b) of the proposed 17d-2 plan (defining 
Common Rules).
    \13\ See paragraph 1(f) of the proposed 17d-2 plan.
---------------------------------------------------------------------------

    The text of the 17d-2 Plan is as follows:

Agreement Between NASD and Chicago Board Options Exchange, Incorporated 
Pursuant to Rule 17d-2 Under the Securities Exchange Act of 1934

    This Agreement, by and between the National Association of 
Securities Dealers, Inc. (``NASD'') and the Chicago Board Options 
Exchange, Incorporated (``CBOE''), is made this 4th day of April, 2007 
(the ``Agreement''), pursuant to section 17(d) of the Securities 
Exchange Act of 1934 (the ``Exchange Act'') and rule 17d-2 thereunder 
which permits agreements between self-regulatory organizations to 
allocate regulatory responsibility to eliminate regulatory duplication. 
NASD and CBOE may be referred to individually as a ``party'' and 
together as the ``parties.''
    Whereas, NASD and CBOE desire to reduce duplication in the 
examination of their Dual Members (as defined herein) and in the filing 
and processing of certain registration and membership records as it 
relates to the CBOE Stock Exchange, LLC; and
    Whereas, NASD and CBOE desire to execute an agreement covering such 
subjects pursuant to the provisions of Rule 17d-2 under the Exchange 
Act and to file such agreement with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission'') for its approval.
    Now, therefore, in consideration of the mutual covenants contained 
hereinafter, NASD and CBOE hereby agree as follows:
    1. Definitions. Unless otherwise defined in this Agreement or the 
context otherwise requires, the terms used in this Agreement shall have 
the same meaning as they have under the Exchange Act and the rules and 
regulations thereunder. As used in this Agreement, the following terms 
shall have the following meanings:
    (a) ``CBOE Rules'' or ``NASD Rules'' shall mean the rules of the 
CBOE or NASD, respectively, as the rules of an exchange or association 
are defined in Exchange Act section 3(a)(27).
    (b) ``Common Rules'' shall mean the CBOE Rules that are 
substantially similar to the applicable NASD Rules in that examination 
for compliance with such rules would not require NASD to develop one or 
more new examination standards, modules, procedures, or criteria in 
order to analyze the application of the rule, or a Dual Member's 
activity, conduct, or output in relation to such rule.
    (c) ``Dual Members'' shall mean those CBOE members that are also 
members of NASD and the associated persons therewith.
    (d) ``Effective Date'' shall have the meaning set forth in 
paragraph 14.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with the NASD Code of Procedure 
(the Rule 9000 Series) and other applicable NASD procedural rules, to 
determine whether violations of pertinent laws, rules or regulations 
have occurred, and if such violations are deemed to have occurred, the 
imposition of appropriate sanctions as specified under the NASD's Code 
of Procedure and sanctions guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities and Enforcement Responsibilities relating to 
compliance by the Dual Members with the Common Rules and the provisions 
of the Exchange Act and the rules and regulations thereunder, and other 
applicable laws, rules and regulations, each as set forth on Exhibit 1 
attached hereto.
    2. Regulatory and Enforcement Responsibilities. NASD shall assume 
Regulatory Responsibilities and Enforcement Responsibilities for Dual 
Members. Attached as Exhibit 1 to this Agreement and made part hereof, 
CBOE furnished NASD with a current list of Common Rules and certified 
to NASD that such rules are substantially similar to the corresponding 
NASD rule (the ``Certification''). NASD hereby agrees that the rules 
listed in the Certification are Common Rules as defined in this 
Agreement. Each year following the Effective Date of this Agreement, or 
more frequently if required by changes in either the rules of CBOE or 
NASD, CBOE shall submit an updated list of Common Rules to NASD for 
review which shall add CBOE rules not included in the current list of 
Common Rules that qualify as Common Rules as defined in this Agreement; 
delete CBOE rules included in the current list of Common Rules that no 
longer qualify as Common Rules as defined in this Agreement; and 
confirm that the remaining rules on the current list of Common Rules 
continue to be CBOE rules that qualify as Common Rules as defined in 
this Agreement. Within 30 days of receipt of such updated list, NASD 
shall confirm in writing whether the rules listed in any updated list 
are Common Rules as defined in this Agreement. Notwithstanding anything 
herein to the contrary, it is explicitly understood that the term 
``Regulatory Responsibilities'' does not include, and CBOE shall retain 
full responsibility for (unless otherwise addressed by separate 
agreement or rule) the following:
    (a) surveillance and enforcement with respect to trading activities 
or practices involving CBOE's own marketplace, including without 
limitation CBOE's rules relating to the rights and obligations of 
market makers;
    (b) registration pursuant to its applicable rules of associated 
persons (i.e., registration rules that are not Common Rules);
    (c) discharge of its duties and obligations as a Designated 
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
    (d) any CBOE Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, CBOE shall furnish 
NASD with a current list of Dual Members, which shall be updated no 
less frequently than once each quarter.
    4. No Charge. There shall be no charge to CBOE by NASD for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
NASD shall provide CBOE with ninety (90) days advance written notice in 
the event NASD decides to impose any charges to CBOE for performing the 
Regulatory Responsibilities under this Agreement. If NASD determines to 
impose a charge, CBOE shall have the right at the time of the 
imposition of such charge to terminate this Agreement; provided, 
however, that NASD's Regulatory Responsibilities under this Agreement 
shall continue until the Commission approves the termination of this 
Agreement.
    5. Reassignment of Regulatory Responsibilities. Notwithstanding any 
provision hereof, this Agreement shall be subject to any statute, or 
any rule or order of the Commission, or industry agreement, 
restructuring the regulatory framework of the securities industry or 
reassigning Regulatory Responsibilities between self-regulatory 
organizations.

[[Page 19558]]

To the extent such action is inconsistent with this Agreement, such 
action shall supersede the provisions hereof to the extent necessary 
for them to be properly effectuated and the provisions hereof in that 
respect shall be null and void.
    6. Notification of Violations. In the event that NASD becomes aware 
of apparent violations of any CBOE Rules, which are not listed as 
Common Rules, discovered pursuant to the performance of the Regulatory 
Responsibilities assumed hereunder, NASD shall notify CBOE of those 
apparent violations for such response as CBOE deems appropriate. 
Apparent violations of all other applicable rules, including violations 
of the Common Rules, various securities acts, and rules and regulations 
thereunder, shall be processed by, and enforcement proceedings in 
respect thereto shall be conducted by NASD as provided hereinbefore; 
provided, however, that in the event a Dual Member is the subject of an 
investigation relating to a transaction on the CBOE, CBOE may in its 
discretion assume concurrent jurisdiction and responsibility. Each 
party agrees to make available promptly all files, records and 
witnesses necessary to assist the other in its investigation or 
proceedings.
    7. Continued Assistance. NASD shall make available to CBOE all 
information obtained by NASD in the performance by it of the Regulatory 
Responsibilities hereunder in respect to the Dual Members subject to 
this Agreement. In particular, and not in limitation of the foregoing, 
NASD shall furnish CBOE any information it obtains about Dual Members 
which reflects adversely on their financial condition. It is understood 
that such information is of an extremely sensitive nature and, 
accordingly, CBOE acknowledges and agrees to take all reasonable steps 
to maintain its confidentiality. CBOE shall make available to NASD any 
information coming to its attention that reflects adversely on the 
financial condition of Dual Members or indicates possible violations of 
applicable laws, rules or regulations by such firms.
    8. Dual Member Applications.
    (a) Dual Members subject to this Agreement shall be required to 
submit, and NASD shall be responsible for processing and acting upon 
all applications submitted on behalf of allied persons, partners, 
officers, registered personnel and any other person required to be 
approved by the rules of both CBOE and NASD or associated with Dual 
Members thereof. Upon request, NASD shall advise CBOE of any changes of 
allied members, partners, officers, registered personnel and other 
persons required to be approved by the rules of both CBOE and NASD.
    (b) Dual Members shall be required to send to NASD all letters, 
termination notices or other material respecting the individuals listed 
in paragraph 8(a).
    (c) When as a result of processing such submissions NASD becomes 
aware of a statutory disqualification as defined in the Exchange Act 
with respect to a Dual Member, NASD shall determine pursuant to 
Sections 15A(g) and/or Section 6(c) of the Exchange Act the 
acceptability or continued applicability of the person to whom such 
disqualification applies and keep CBOE advised of its actions in this 
regard for such subsequent proceedings as CBOE may initiate.
    (d) Notwithstanding the foregoing, NASD shall not review the 
membership application, reports, filings, fingerprint cards, notices, 
or other writings filed to determine if such documentation submitted by 
a broker or dealer, or a person associated therewith or other persons 
required to register or qualify by examination meets the CBOE 
requirements for general membership or for specified categories of 
membership or participation in the CBOE. NASD shall not review 
applications or other documentation filed to request a change in the 
rights or status described in this paragraph 8(d), including 
termination or limitation on activities, of a member or a participant 
of the CBOE, or a person associated with, or requesting association 
with, a member or participant of the CBOE.
    9. Branch Office Information. NASD shall also be responsible for 
processing and, if required, acting upon all requests for the opening, 
address changes, and terminations of branch offices by Dual Members and 
any other applications required of Dual Members with respect to the 
Common Rules as they may be amended from time to time. Upon request, 
NASD shall advise CBOE of the opening, address change and termination 
of branch and main offices of Dual Members and the names of such branch 
office managers.
    10. Customer Complaints. CBOE shall forward to NASD copies of all 
customer complaints involving Dual Members received by CBOE relating to 
NASD's Regulatory Responsibilities under this Agreement. It shall be 
NASD's responsibility to review and take appropriate action in respect 
to such complaints.
    11. Advertising. NASD shall assume responsibility to review the 
advertising of Dual Members subject to the Agreement, provided that 
such material is filed with NASD in accordance with NASD's filing 
procedures and is accompanied with any applicable filing fees set forth 
in NASD Rules. Such review shall be made in accordance with then 
applicable NASD rules and interpretations. The advertising of Dual 
Members shall be subject only to compliance with appropriate NASD rules 
and interpretations.
    12. No Restrictions on Regulatory Action. Nothing contained in this 
Agreement shall restrict or in any way encumber the right of either 
party to conduct its own independent or concurrent investigation, 
examination or enforcement proceeding of or against Dual Members, as 
either party, in its sole discretion, shall deem appropriate or 
necessary.
    13. Termination. This Agreement may be terminated by CBOE or NASD 
at any time upon the approval of the Commission after one (1) year's 
written notice to the other party, except as provided in paragraph 4.
    14. Effective Date. This Agreement shall be effective upon approval 
of the Commission.
    15. Arbitration. In the event of a dispute between the parties as 
to the operation of this Agreement, CBOE and NASD hereby agree that any 
such dispute shall be settled by arbitration in Washington, D.C. in 
accordance with the rules of the American Arbitration Association then 
in effect, or such other procedures as the parties may mutually agree 
upon. Judgment on the award rendered by the arbitrator(s) may be 
entered in any court having jurisdiction.
    16. Separate Agreement. This Agreement is wholly separate from the 
multiparty Agreement made pursuant to Rule 17d-2 of the Exchange Act 
between the American Stock Exchange LLC, the Boston Stock Exchange, 
Inc., the Chicago Board Options Exchange, Incorporated, the 
International Securities Exchange LLC, the National Association of 
Securities Dealers, Inc., the New York Stock Exchange, LLC, the NYSE 
Arca, Inc., and the Philadelphia Stock Exchange, Inc. involving the 
allocation of regulatory responsibilities with respect to common 
members for compliance with common rules relating to the conduct by 
broker-dealers of accounts for listed options or index warrants entered 
into on December 1, 2006, and as may be amended from time to time.
    17. Notification of Members. CBOE and NASD shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    18. Amendment. This Agreement may be amended in writing duly 
approved by each party. All such amendments must be filed with and 
approved by the

[[Page 19559]]

Commission before they become effective.
    19. Limitation of Liability. Neither NASD nor CBOE nor any of their 
respective directors, governors, officers or employees shall be liable 
to the other party to this Agreement for any liability, loss or damage 
resulting from or claimed to have resulted from any delays, 
inaccuracies, errors or omissions with respect to the provision of 
Regulatory Responsibilities as provided hereby or for the failure to 
provide any such responsibility, except with respect to such liability, 
loss or damages as shall have been suffered by one or the other of NASD 
or CBOE and caused by the willful misconduct of the other party or 
their respective directors, governors, officers or employees. No 
warranties, express or implied, are made by NASD or CBOE with respect 
to any of the responsibilities to be performed by each of them 
hereunder.
    20. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, NASD and CBOE 
join in requesting the Commission, upon its approval of this Agreement 
or any part thereof, to relieve CBOE of any and all responsibilities 
with respect to matters allocated to NASD pursuant to this Agreement; 
provided, however, that this Agreement shall not be effective until the 
Effective Date.
    In witness whereof, each party has executed or caused this 
Agreement to be executed on its behalf by a duly authorized officer as 
of the date first written above.

National Association Of Securities Dealers, Inc.

By---------------------------------------------------------------------
Name:
Title:

Chicago Board Options Exchange, Incorporated

By---------------------------------------------------------------------
Name:
Title:

Exhibit 1

CBOE Certification of Common Rules

    CBOE hereby certifies that the requirements contained in the CBOE 
Rules listed below are identical to, or substantially similar to, the 
NASD or SEC Rules identified.[dagger]

------------------------------------------------------------------------
                                                   NASD or SEC
             CBOE rule(s)                    rule(s)[dagger][dagger]
------------------------------------------------------------------------
4.18 Prevention of the Misuse of        Section 15(f) of the Securities
 Material, Nonpublic Information.        Exchange Act of 1934 (Exchange
                                         Act).[dagger][dagger][dagger]
4.20 Anti-Money Laundering Compliance   3011 Anti-Money Laundering
 Program.                                Compliance Program.
9.3 Registration and Termination of     1031(a), (b) Registration
 Representatives.                        Requirements 1140(a), (d)
                                         Electronic Filing Rules, and
                                         NASD By-Laws, Art. V, Sections
                                         2 and 3 Registered
                                         Representatives and Associated
                                         Persons.
9.3A Continuing Education For           1120 Continuing Education
 Registered Persons.                     Requirements.
9.4(a) Other Affiliations of            3030 Outside Business Activities
 Registered Associated Persons.          of an Associated Person.
9.12 Statements of Accounts to          2340 Customer Account
 Customers[dagger][dagger][dagger][dag   Statements.
 ger].
9.13 Statement of Financial Condition   Exchange Act Rule 17a-5.
 to Customers.
9.16 Restrictions on Pledge and         2330(a)-(d) Customers'
 Lending of Customers' Securities.       Securities or Funds.
9.18 Guarantees and Profit Sharing....  2330(e) & (f) Customers'
                                         Securities or
                                         Funds.[dagger][dagger][dagger][
                                         dagger][dagger]
9.20 Transfer of Accounts.............  11870 Customer Account Transfer
                                         Contracts.
9.23 Customer                           3110(d) Books and Records.
 Complaints[dagger][dagger][dagger][da
 gger][dagger][dagger].
9.24 Telephone Solicitation...........  2212 Telemarketing and 3110(g)
                                         Books and Records.
9.25 Borrowing From or Lending to       2370 Borrowing From or Lending
 Customers.                              to Customers.
53.6(c) Duty to Know and Approve        2310 Recommendations to
 Customers.                              Customers (Suitability) and
                                         3110(c) Books and Records.
53.6(d) Branch Offices of Member        1021(a) Registration
 Organizations.                          Requirements and IM-1000-4
                                         Branch Offices and Offices of
                                         Supervisory Jurisdiction.
53.6(e) Discretionary Accounts........  2510 Discretionary Accounts.
53.6(f) Confirmation to Customers.....  2230 Confirmations and Exchange
                                         Act Rule 10b-
                                         10.[dagger][dagger][dagger][dag
                                         ger][dagger][dagger][dagger]
53.6(g) Communications to Customers...  2210(b) and(d) Communications
                                         with the Public and IM-2210-
                                         1(6) Guidelines to Ensure That
                                         Communications With the Public
                                         Are Not Misleading.
53.6(h) Supervision of Accounts.......  3010(a), (b) Supervision and
                                         3110(c) Books and Records.
------------------------------------------------------------------------
[dagger] To the extent that any CBOE Rule listed herein makes reference
  to options, such rule shall be read to apply to equity securities as
  provided in CBOE Rule 53.6.
[dagger][dagger] CBOE will be responsible for any significant
  differences between its rules and the comparable NASD rule identified.

[dagger][dagger][dagger] NASD shall not have any Regulatory
  Responsibilities regarding the CBOE requirement to have Form X-17A-5
  filed with CBOE; responsibility for such requirement remains with
  CBOE.
[dagger][dagger][dagger][dagger] NASD shall not have any Regulatory
  Responsibilities regarding the CBOE requirement that the statement
  have a legend requesting the customer to advise the member of any
  material change in the customer's investment objectives or financial
  situation; responsibility for such requirement remains with CBOE.
[dagger][dagger][dagger][dagger][dagger] The NASD Rule requires, among
  other things, prior written approval of the member employing the
  associated person in order for such associated person to share in
  accounts of a customer, whereas the CBOE rule requires consent of the
  member carrying the account. To the extent that the employing member
  and carrying member are different firms, the NASD's and CBOE's rule
  differ, and NASD's Regulatory Responsibility will not cover CBOE's
  rule; responsibility for such requirement remains with CBOE.
[dagger][dagger][dagger][dagger][dagger][dagger] NASD shall not have any
  Regulatory Responsibilities regarding the CBOE requirement of what
  must be contained in the complaint file or the timing during which the
  complaint must be sent to the central file by the branch office;
  responsibility for such requirement remains with CBOE.
[dagger][dagger][dagger][dagger][dagger][dagger][dagger]NASD shall not
  have any Regulatory Responsibilities regarding the CBOE requirement to
  disclose on a confirmation whether a transaction was executed on the
  CBOE; responsibility for such requirement remains with CBOE.

[[Page 19560]]

* * * * *

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

    Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2 
thereunder,\15\ after May 9, 2007, the Commission may, by written 
notice, declare the plan submitted by CBOE and NASD, File No. 4-536, to 
be effective if the Commission finds that the plan is necessary or 
appropriate in the public interest and for the protection of investors, 
to foster cooperation and coordination among self-regulatory 
organizations, or to remove impediments to and foster the development 
of the national market system and a national system for the clearance 
and settlement of securities transactions and in conformity with the 
factors set forth in Section 17(d) of the Act.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q(d)(1).
    \15\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

IV. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
proposed 17d-2 Plan and to relieve CBOE of the responsibilities which 
would be assigned to NASD, interested persons are invited to submit 
written data, views, and arguments concerning the foregoing. Comments 
may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number 4-536 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number 4-536. 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/other.shtml). 

Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan 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 the plan also will be 
available for inspection and copying at the principal offices of the 
CBOE and NASD. 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 4-536 
and should be submitted on or before May 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-7321 Filed 4-17-07; 8:45 am]

BILLING CODE 8010-01-P