Document ID: SEC-2010-0231-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-02-10T05:00Z

[Federal Register: February 10, 2010 (Volume 75, Number 27)]
[Notices]               
[Page 6779-6781]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe10-152]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61494; File No. SR-CBOE-2010-012]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Rule 8.85 and Rule 8.92 Regarding the 
Requirement To Own an Exchange Membership

February 4, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 2, 2010, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission

[[Page 6780]]

(``Commission'') the proposed rule change as 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.
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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 proposes to amend proposes to amend proposes to amend [sic] 
Rule 8.85 and Rule 8.92 regarding the requirement to own an Exchange 
membership. The text of the rule proposal 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, 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. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    CBOE proposes to amend Rule 8.85 and Rule 8.92 to eliminate the 
requirement that a DPM organization and an e-DPM organization are 
required to own at least one Exchange membership. Instead, each DPM 
organization and each e-DPM organization will be required to own or 
lease such number of Exchange memberships as may be necessary based on 
the aggregate ``appointment cost'' for the classes allocated to the DPM 
organization or e-DPM organization. CBOE established this ownership 
requirement with respect to DPMs in 2000 and, at the time, believed 
that it was appropriate and would encourage DPMs to have a long-term 
commitment to CBOE.\3\ CBOE later included this requirement when its e-
DPM program was adopted.
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    \3\ See Exchange Act Release No. 43186 (August 21, 2000), 65 FR 
51880 (August 25, 2000) (SR-CBOE-99-37).
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    CBOE no longer believes that this requirement is necessary 
particularly as its proposed restructuring approaches, and eliminating 
it may attract new DPM organizations to CBOE who otherwise may not be 
willing to apply to be a DPM due to this membership ownership 
requirement. CBOE notes that in connection with its plan to restructure 
from a Delaware non-stock corporation owned by its members to a 
Delaware stock corporation that will be a wholly-owned subsidiary of 
CBOE Holdings, this requirement will be eliminated. Specifically, as 
part of CBOE's restructuring, the owners of membership interests will 
become stockholders of CBOE Holdings through the conversion of their 
memberships into shares of common stock of CBOE Holdings. Additionally, 
Trading Permits will provide trading access to the Exchange, and not 
Exchange memberships as is currently the case. A Trading Permit will 
not convey any ownership interest in the Exchange, and will only be 
available through the Exchange.\4\ As part of this proposed rule 
change, CBOE proposes conforming changes to Rule 3.27, and proposes to 
delete Interpretation .04 of Rule 8.85 and Interpretation .01 of Rule 
8.92 which are no longer necessary in light of the elimination of the 
membership ownership requirement.\5\
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    \4\ See Exchange Act Release No. 58425 (August 26, 2008), 73 FR 
51652 (September 4, 2008) (noticing for comment SR-CBOE-2008-088). 
CBOE has consented to an extension of time for Commission action on 
this proposed rule change pending a membership vote.
    \5\ CBOE notes that Temporary Members under Rule 3.19.02 will 
not be adversely impacted by this proposed rule change.
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    In connection with this proposed rule change, CBOE proposes to 
delete Interpretation .03 of Rule 8.85, which was adopted in 2003 for 
the purpose of allowing a senior principal's ownership of a membership 
to satisfy the requirement on behalf of the DPM organization, but only 
if the senior principal meets certain criteria. In light of the fact 
that CBOE is eliminating the membership ownership requirement, 
Interpretation .03 no longer is applicable or necessary.
2. Statutory Basis
    The Exchange believes the rule proposal is consistent with the 
Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations under the Act applicable to a national securities exchange 
and, in particular, the requirements of Section 6(b) of the Act.\6\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with the Section 6(b)(5) Act \7\ requirements that the rules 
of an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts and, in general, to 
protect investors and the public interest. The DPM and e-DPM membership 
ownership requirement is no longer necessary and eliminating it may 
attract new organizations to act in the capacity of a DPM (or e-DPM). 
Additionally, this requirement will be eliminated in connection with 
CBOE's restructuring.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    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 proposed 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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\ 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).

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[[Page 6781]]

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-2010-012 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-2010-012. 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-2010-012 and should be submitted on or before March 
3, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2959 Filed 2-9-10; 8:45 am]
BILLING CODE 8011-01-P