Document ID: SEC-2009-1770-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2009-12-18T05:00Z

[Federal Register: December 18, 2009 (Volume 74, Number 242)]
[Notices]               
[Page 67294-67295]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18de09-114]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61140; File No. SR-CBOE-2009-048]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving a Proposed Rule Change Regarding 
Authority Over C2 Options Exchange, Incorporated

December 10, 2009.

I. Introduction

    On July 2, 2009, the Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to CBOE's authority over 
C2 Options Exchange, Incorporated (``C2''), a wholly-owned subsidiary 
of CBOE that has filed with the Commission to register as a self-
regulatory organization (``SRO'') under Section 6 of the Exchange 
Act.\3\ The proposed rule change was published for comment in the 
Federal Register on July 22, 2009.\4\ The Commission received no 
comment letters on the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities and Exchange Act Release No. 59441 (February 
24, 2009), 74 FR 9322 (March 3, 2009) (File No. 10-191) (``C2 
Notice'').
    \4\ See Securities Exchange Act Release No. 60307 (July 15, 
2009), 74 FR 36289 (``Notice'').
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II. Description

    On January 21, 2009, CBOE filed an application with the Commission 
seeking registration of a second national securities exchange, referred 
to as C2.\5\ In connection with that application, CBOE proposed to 
adopt a policy to codify the fact that CBOE, upon any Commission 
approval of the Form 1 application seeking to establish C2 as a 
registered options exchange, will be responsible for ensuring that C2 
fulfills its self-regulatory obligations and will have the resources 
necessary for it to do so.\6\ The proposed policy sets forth

[[Page 67295]]

certain principles that will guide CBOE in fulfilling its 
responsibilities as the parent company of C2 should the Commission 
grant C2's application for registration.\7\
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    \5\ See C2 Notice, supra note 3.
    \6\ The first paragraph of proposed Rule 2.50 reads, in relevant 
part:
     C2 Options Exchange, Incorporated (``C2'') will be and remain a 
self-regulatory organization registered under Section 6 of the 
Exchange Act and as such will have statutory authority and 
responsibility concerning, among other things, the operation of its 
market and regulation of its members. As the parent company with 
100% controlling interest in C2, the Exchange will be responsible 
for ensuring that C2 meets its obligations as a self-regulatory 
organization.
    \7\ The proposed principles set forth in proposed Rule 2.50 are 
as follows:
     1. The Exchange will exercise its powers and its managerial 
influence to ensure that C2 fulfills its self-regulatory obligations 
by:
     Directing C2 to take action necessary to effectuate its 
purposes and functions as a national securities exchange operating 
pursuant to the Exchange Act; and ensuring that C2 has and 
appropriately allocates such financial, technological, technical, 
and personnel resources as may be necessary or appropriate to meet 
its obligations under the Exchange Act.
     2. The Exchange will refrain from taking any action with 
respect to C2 that, to the best of its knowledge, would impede, 
delay, obstruct, or conflict with efforts by C2 to carry out its 
self-regulatory obligations under the Exchange Act and the rules and 
regulations thereunder.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\9\ which requires, among 
other things, that that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest, and not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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    \8\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposal addresses the role of 
CBOE in the operation of C2 and sets forth certain important governing 
principles relating to this responsibility.\10\ The proposed policy 
reflects CBOE's commitment and responsibility to ensure that C2 meets 
its obligations as an SRO. Specifically, CBOE's proposed policy 
represents that it will bear ultimate responsibility for ensuring that 
C2 meets its statutory obligations. Further, CBOE will ensure that C2 
has and appropriately allocates the necessary resources so that C2 can 
meet those obligations. The Commission believes it is consistent with 
the Act for CBOE, as parent company and controlling owner of C2, to 
make these commitments. Further, the Commission notes that the proposed 
policy is similar to a policy that was formerly adopted by the National 
Association of Securities Dealers, Inc. in connection with its 
combination with the American Stock Exchange, Inc.\11\
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    \10\ See note 7, supra (setting forth the proposed principles).
    \11\ See Securities and Exchange Act Release No. 40622 (October 
30, 1998), 63 FR 59819 at 59827 (November 5, 1998) (SR-Amex-98-32; 
SR-NASD-98-56; SR-NASD-98-67).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CBOE-2009-048) be, and 
hereby is, approved.
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30077 Filed 12-17-09; 8:45 am]