Document ID: SEC-2010-1197-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-08-06T04:00Z

[Federal Register: August 6, 2010 (Volume 75, Number 151)]
[Notices]               
[Page 47672-47674]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au10-149]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62602; File No. SR-CBOE-2010-069]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend Its Minor Rule Violation Plan

July 24, 2010.
    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 20, 2010, the Chicago Board Options Exchange, 
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and 
Exchange Commission (the ``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend CBOE Rule 17.50--Imposition of Fines 
for Minor Rule Violations. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.cboe.com/Legal), at 
the Exchange's principal office, and at the Commission's Public 
Reference Room.

[[Page 47673]]

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 self-regulatory organization 
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 those statements may be examined at 
the places specified in Item IV below and is set forth in sections (A), 
(B), and (C) below.

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

1. Purpose
    In August 2009, the U.S. Securities and Exchange Commission 
(``Commission'') approved a CBOE rule filing amending Rule 17.50--
Imposition of Fines for Minor Rule Violations.\5\ Among other things, 
the rule filing incorporated a number of additional violations into 
CBOE's Minor Rule Violation Plan.\6\ However, that filing did not add 
references to those additional violations to Rule 17.50(c)(1), which 
sets forth the procedures for the appeal of certain fines imposed under 
the Minor Rule Violation Plan. The Exchange is proposing to add the 
subsections that were added to the Minor Rule Violation Plan in August 
2009 to Rule 17.50(c)(1) to allow for the same appeal process for these 
additional violations.
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    \5\ See Securities Exchange Act Release No. 34-60488 (August 12, 
2009), 74 FR 42139 (August 20, 2009) (SR-CBOE-2009-037).
    \6\ See CBOE Rule 17.50(g)(11)-(g)(18).
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    In addition, CBOE proposes to revise Rule 17.50(g)(2) to 
incorporate violations relating to the late filing of monthly and 
quarterly FOCUS reports into the Minor Rule Violation Plan. Rule 
17.50(g)(2) currently sets forth the fine schedule for the failure to 
file annual FOCUS reports on Form X-17A-5 in accordance with Rule 17a-
10 \7\ under the Securities and Exchange Act of 1934 (``Exchange 
Act''). CBOE proposes to expand this provision to include violations 
for failure to file FOCUS reports on Form X-17A-5 in accordance with 
Rule 17a-5 \8\ under the Exchange Act. Thus, a Trading Permit Holder 
that submits a late monthly or quarterly FOCUS filing shall be assessed 
a fine between $200 and $800 pursuant to the minor rule violation plan 
depending on the number of days the FOCUS filing is late. If a Trading 
Permit Holder submits a FOCUS filing more than ninety days late, the 
Exchange will refer the matter to the Business Conduct Committee. CBOE 
notes that the minor rule violation plan in place at the NYSE AMEX LLC 
(``AMEX'') currently includes fines for similar violations under 
Exchange Act Rules 17a-5 and 17a-10.\9\
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    \7\ 17 CFR 240.17a-10.
    \8\ 17 CFR 240.17a-5.
    \9\ See Parts 3(a) and 3(g)(A) of AMEX Rule 590.
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    The Exchange also recently revised its order handling rules in 
connection with a new options industry linkage structure.\10\ Prior to 
that rule change, Rule 6.83 governed Order Protection and Rule 6.84 
governed Locked or Crossed Markets. However, this amendment revised the 
rule numbers such that Rule 6.81 now governs Order Protection and Rule 
6.82 governs Locked or Crossed Markets. However, the Exchange 
inadvertently failed to update references to those Rules in CBOE Rule 
17.50(g)(12) and 17.50(g)(13), which set forth the fines for Order 
Protection Violations and Locked or Crossed Market Violations, 
respectively, under the Exchange's Minor Rule Violation Plan. The 
Exchange is proposing to modify these rule references such that Rule 
17.50(g)(12) refers to Rule 6.81 and Rule 17.50(g)(13) refers to Rule 
6.82.
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    \10\ See Securities Exchange Act Release No. 34-60551 (August 
20, 2009), 74 FR 43196 (August 26, 2009) (SR-CBOE-2009-040).
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 2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act \11\ and the rules and regulations thereunder and, in 
particular, the requirements of Section 6(b) of the Act.\12\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \13\ 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. The Exchange believes that the proposed rule 
changes will strengthen its ability to carry out its oversight 
responsibilities as a self-regulatory organization and reinforce its 
surveillance and enforcement functions.
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    \11\ 15 U.S.C. 78a et seq.
    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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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 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 
proposal.

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

    Because the proposed rule change 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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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 the five-day pre-filing requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest, 
because the proposed change makes technical changes to the rule, 
clarifies minor omissions from the rule based on recent rule changes, 
and is generally consistent with the rules of another exchange.\16\ 
Therefore, the Commission designates the proposed rule change as 
operative upon filing.\17\
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    \16\ See Parts 3(a) and 3(g)(A) of AMEX Rule 590.
    \17\ 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).
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    At any time within 60 days of the filing of such proposed rule 
change the Commission may summarily abrogate 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.

[[Page 47674]]

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-2010-069 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-2010-069. 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 Web site viewing and 
printing in the Commission's Public Reference Room, 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-2010-069 and should be submitted on or before 
August 27, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12) and 200.30-3(a)(44).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19332 Filed 8-5-10; 8:45 am]
BILLING CODE 8010-01-P