Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change Relating to the Membership Rules for Foreign Member Organizations, 10732-10734 [E6-2930]
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10732
Federal Register / Vol. 71, No. 41 / Thursday, March 2, 2006 / Notices
declined Directed Order only when no
one else wishes to interact with the
order.
The BSE’s original proposal addressed
this unfair competitive situation by
enabling EPs to limit Directed Orders
from hostile competitors and to provide
price improvement to the customers for
whom the Directed Order process was
intended. Without this protection, the
BSE believes that EPs will have to
modify their risk assessment and
therefore give less price improvement to
everyone—or perhaps stop giving price
improvement at all. This would
significantly harm the retail investors
who have benefited from the BOX price
improvement system since its
inception.13
The BSE’s amended proposal seeks to
maintain these very significant investor
benefits of the original proposal by
allowing EPs to provide the Exchange a
list of firms to which the EP will
provide Directed Order services. At the
same time the BSE also believes that it
is appropriate to modify the original
proposal to prohibit Directed Orders
delivered to EPs from identifying the
firm from which the order comes. This
would protect the anonymity of
individual orders of Options
Participants and their Directed Orders
entered into the Trading Host. An EP
has no need to know the identity of the
Options Participant sending a Directed
Order on an order-by-order basis once
the threat from competitors has been
mitigated. The BSE believes that the
decision to price improve, or not, an
anonymous Directed Order would be
based only on objective factors.
2. Statutory Basis
The Exchange believes that the
proposal, as amended, is consistent with
the requirements of section 6(b) of the
Act,14 in general, and section 6(b)(5) of
the Act,15 in particular, in that it is
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
protect investors and the public interest.
wwhite on PROD1PC61 with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
13 Over half of marketable public customer orders
sent to BOX in 2005 received price improvement—
slightly under 3,000 public customer orders each
day, with an average price improvement per
contract of over $2.50. Price improvement
particularly benefited small customer orders, as
over 85% of all price improvement was for orders
of 20 contracts or fewer.
14 15 U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
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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 neither solicited
nor received comments on the proposed
rule change, as amended.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the Exchange consents,
the Commission will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 the BSE. 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–BSE–2005–52 and should
be submitted on or before March 23,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Nancy M. Morris,
Secretary.
[FR Doc. E6–2929 Filed 3–1–06; 8:45 am]
BILLING CODE 8010–01–P
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 4 is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–BSE–2005–52 on the subject
line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53355; File No. SR–CBOE–
2005–105]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Approving
Proposed Rule Change Relating to the
Membership Rules for Foreign Member
Organizations
February 23, 2006.
I. Introduction
On December 7, 2005, the Chicago
Board Options Exchange, Incorporated
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Paper Comments
Securities and Exchange Commission
• Send paper comments in triplicate
(‘‘Commission’’), pursuant to section
to Nancy M. Morris, Secretary,
19(b)(1) of the Securities Exchange Act
Securities and Exchange Commission,
of 1934 (‘‘Act’’) 1 and Rule 19b–4
Station Place, 100 F Street, NE.,
thereunder,2 a proposed rule change to
Washington, DC 20549–1090.
amend CBOE Rule 3.4, ‘‘Qualifications
All submissions should refer to File
of Foreign Member Organizations,’’ to
Number SR–BSE–2005–52. This file
provide that a member organization that
number should be included on the
is not organized under the laws of one
subject line if e-mail is used. To help the of the states of the United States (a
Commission process and review your
‘‘foreign member organization’’), and
comments more efficiently, please use
that is approved by the Exchange to act
only one method. The Commission will solely as a lessor, need not register as a
post all comments on the Commission’s broker or dealer pursuant to section 15
Internet Web site (https://www.sec.gov/
of the Act.3 The proposed rule change
rules/sro.shtml). Copies of the
was published for comment in the
submission, all subsequent
amendments, all written statements
16 17 CFR 200.30–3(a)(12).
with respect to the proposed rule
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
change that are filed with the
3 15 U.S.C. 78o.
Commission, and all written
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Federal Register / Vol. 71, No. 41 / Thursday, March 2, 2006 / Notices
Federal Register on January 18, 2006.4
The Commission received no comments
regarding the proposal. This order
approves the proposed rule change.
wwhite on PROD1PC61 with NOTICES
II. Description of the Proposal
An organization that is not organized
under the laws of one of the states of the
United States (‘‘foreign member
organization’’), among other things,
must satisfy the requirements in CBOE
Rule 3.4 in order to become a CBOE
member. Under CBOE Rule 3.4, a
foreign member organization that is
approved by the Exchange to act solely
as a lessor must be registered as a
broker-dealer pursuant to section 15 of
the Act 5 and must maintain in English
at a location in the United States any
books and records that an organization
registered as a broker-dealer is required
to maintain at a location in the United
States.6 In contrast, CBOE Rule 3.3(a)(ii)
exempts a U.S. member organization, if
it is approved to act solely as a lessor,
from the requirement in CBOE Rule 3.3
that such an organization be registered
as a broker-dealer under section 15 of
the Act.
The Exchange proposes to amend
CBOE Rule 3.4 to exempt a foreign
member organization that is approved
by the Exchange to act solely as a lessor
from certain requirements set forth in
the rule. In particular, the Exchange
proposes to exempt such a foreign
member organization from: (i) CBOE
Rule 3.4(a)(xii), which requires a foreign
member organization to be registered as
a broker or dealer pursuant to section 15
of the Act; and (ii) CBOE Rule
3.4(a)(iii)(B), which requires a foreign
member organization to maintain, in
English and at a location in the United
States, any books and records of the
foreign member organization that an
organization registered as a broker or
dealer pursuant to section 15 of the Act
is required to maintain.
According to CBOE, a member
organization approved to act solely as a
lessor has no trading functions on the
Exchange, and the sole business
function of such a member is to lease its
CBOE membership to another CBOE
member. CBOE represents that, since a
foreign member organization approved
to act solely as a lessor conducts no
activities on the Exchange that
otherwise would require it to register as
4 Securities Exchange Act Release No. 53092
(January 10, 2006), 71 FR 2963 (‘‘Notice’’). The
Commission published an amended Notice to
indicate that the correct date of the Notice is
January 10, 2006, rather than January 10, 2005. See
Securities Exchange Act Release No. 53092A
(January 19, 2006), 71 FR 4391 (January 26, 2006).
5 See CBOE Rule 3.4(a)(xii).
6 See CBOE Rule 3.4(a)(iii)(B).
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a broker-dealer, it is appropriate not to
require such registration. The Exchange
also asserts that, if the only activities
conducted by the foreign member
organization on the Exchange relate to
its lease activities, the provisions set
forth in Rule 3.4(a)(iii)(A), which
require the foreign member organization
to maintain in English and at a location
in the United States the books and
records of the organization that relate to
its business on the Exchange, should
ensure that the Exchange will have the
ability to have access to adequate
information with respect to the foreign
member organization.
The Exchange notes that a foreign
member organization approved to act
solely as a lessor would remain subject
to CBOE qualification and application
rules for member organizations. In this
regard, CBOE notes the additional
application requirements set forth in
CBOE Rule 3.4 for foreign member
organizations would provide it with
both access to the information it would
need to review the foreign member
organization’s application for
membership and, if necessary, the
requisite jurisdiction to litigate matters
related to the foreign member
organization’s business on the
Exchange. In addition, CBOE states that
it would investigate a foreign
organization applying for membership
in a lessor-only capacity in accordance
with the requirements of CBOE Rule 3.9,
‘‘Application Procedures and Approval
or Disapproval.’’ CBOE further notes
that, through the associated person
application process set forth in CBOE
Rule 3.6, ‘‘Persons Associated with
Member Organizations,’’ the Exchange
would have the ability to examine the
direct owners and executive officers of
a foreign member organization to ensure
that those persons who are not qualified
under CBOE rules and the Act to be
associated with a CBOE member are not
associated with the foreign member
organization.7
III. Discussion
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
7 For an entity not required to register as a brokerdealer, CBOE Rule 3.6(b) provides that each
associated person of the organization that would be
required to be disclosed on Form BD as a direct
owner or executive officer must submit to CBOE’s
Membership Department, pursuant to CBOE Rule
3.9, an application for approval to become
associated with the member organization in that
capacity. Under CBOE Rule 3.6(b), no person may
become associated with a member organization in
the capacity of a direct owner or executive officer
that would be required to be disclosed on Form BD
unless and until CBOE’s Membership Committee
approves that association.
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10733
Act and the rules and regulations
thereunder applicable to a national
securities exchange and, in particular,
with section 6(b)(5) of the Act,8 which
requires, among other things, that the
rules of a national securities exchange
be designed to prevent fraudulent and
manipulative acts and practices, 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.9
Under CBOE Rule 3.3(a)(ii), a CBOE
member organization organized under
the laws of one of the states of the
United States and approved by CBOE to
act solely as a lessor need not register
as a broker or dealer pursuant to section
15 of the Act. The proposal amends
CBOE Rule 3.4 to provide the same
treatment under the Exchange’s rules for
foreign member organizations that are
approved by the Exchange to act solely
as lessors. The Commission believes
that it is reasonable for the Exchange to
extend the same treatment to a foreign
member organization approved to act
solely as a lessor that is accorded to
such lessor U.S. member organizations
with respect to the broker-dealer
registration requirement.
Further, under the proposal, although
foreign member organizations approved
to act solely as lessors no longer would
be required to maintain the books and
records that an organization registered
as a broker or dealer pursuant to section
15 of the Act would be required to keep,
such foreign member organizations
would continue to be required to
comply with CBOE Rule 3.4(a)(iii)(A),
which requires foreign member
organizations to maintain in English and
at a location in the United States the
books and records of the organization
that relate to its business on the
Exchange. The Commission believes
that the recordkeeping requirement of
CBOE Rule 3.4(a)(iii)(A) should help to
ensure that the Exchange will have
access to adequate information with
respect to a foreign member
organization approved to act solely as a
lessor. The Commission notes that the
proposal does not alter the remaining
provisions of CBOE Rule 3.4 or any
other CBOE application, qualification
and membership rules that a foreign
member organization that intends to act
solely as a lessor must satisfy to be
8 15
U.S.C. 78f(b)(5).
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
9 In
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Federal Register / Vol. 71, No. 41 / Thursday, March 2, 2006 / Notices
approved as a CBOE member
organization.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,10 that the
proposed rule change (SR–CBOE–2005–
105) is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–2930 Filed 3–1–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53362; File No. SR–NASD–
2006–028]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change To Allow
Nasdaq To Take Certain Actions on
Behalf of Its Issuers in Connection
With Nasdaq’s Transition to a National
Securities Exchange
February 24, 2006.
wwhite on PROD1PC61 with NOTICES
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
23, 2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by Nasdaq. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to adopt NASD Rule
4130 to allow Nasdaq to file an
application with the Commission or
another appropriate regulator on behalf
of its issuers to register their listed
securities under Section 12(b) of the
Act, or seek a temporary exemption
from Section 12, in connection with
Nasdaq’s transition to one of its
subsidiaries operating as a national
securities exchange. Nasdaq will
implement the proposed rule upon
10 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
11 17
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17:54 Mar 01, 2006
Jkt 208001
approval. The text of the proposed rule
change is below. Proposed new
language is in italics.3
4130. Permission to Act on Behalf of
Issuer
In connection with The NASDAQ
Stock Market LLC (the ‘‘Nasdaq
Exchange’’) commencing operations as
a national securities exchange, each
issuer authorizes Nasdaq and the
Nasdaq Exchange to file an application
to register under Section 12(b) of the Act
any class of the issuer’s securities that
is listed on Nasdaq on the day
immediately preceding the day the
Nasdaq Exchange commences such
operations; provided, however, that this
provision shall not be applicable to any
security that the issuer informs Nasdaq,
pursuant to procedures set forth by
Nasdaq, should not be so registered. The
application to register under Section
12(b) of the Act will be filed with the
Commission or, for those securities
subject to Section 12(i) of the Act, with
the appropriate banking regulator
specified in Section 12(i). The
authorization in this paragraph includes
allowing Nasdaq and the Nasdaq
Exchange to request any appropriate
regulatory relief from the provisions of
Section 12.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it had received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below.
Nasdaq has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On January 13, 2006, the Commission
approved Nasdaq’s application to
register one of its subsidiaries, The
Nasdaq Stock Market LLC (‘‘Nasdaq
3 Changes are marked to the rule text that appears
in the electronic NASD Manual found at https://
www.nasd.com. No pending rule filings would
affect the text of this rule. Because of the nature of
this rule, no conforming change will be made to the
rules of The NASDAQ Stock Market LLC. See
Securities Exchange Act Release No. 53128 (January
13, 2006), 71 FR 3550 (January 23, 2006).
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Frm 00101
Fmt 4703
Sfmt 4703
Exchange’’), as a national securities
exchange.4 Once the Nasdaq Exchange
begins operation, securities listed on
Nasdaq will need to have been
registered under Section 12(b) of the Act
so that brokers and dealers may effect
transactions in these securities on the
Nasdaq Exchange consistent with
Section 12(a) of the Act.5 Accordingly,
absent relief from the Commission and
other regulators, Nasdaq’s transition to
the Nasdaq Exchange beginning
operations as a national securities
exchange would require approximately
3,200 Nasdaq National Market and
Capital Market issuers to register their
Nasdaq-listed securities under Section
12(b) of the Act. This process would
require each issuer to file a registration
statement with the Commission or other
appropriate regulator.6 The Nasdaq
Exchange would then be required to
certify to the Commission and the
Banking Regulators that each issuer’s
securities are approved for listing and
registration.
Nasdaq believes that this registration
process would be confusing and would
place an unnecessary cost and
administrative burden on issuers, on the
Commission and Banking Regulators,
and on Nasdaq, and would not be in the
public interest. For the great majority of
issuers whose securities are currently
listed on Nasdaq, this additional
registration process would not result in
any significant benefit to the
marketplace or investors because they
would not receive any additional
information regarding the security.
Nasdaq issuers whose securities are
registered under Sections 12(b) or 12(g)
of the Act would have already filed a
registration statement pursuant to the
Act to register those securities.
Similarly, issuers registered under the
Investment Company Act of 1940 (the
‘‘1940 Act’’) will have filed detailed
information with the Commission.7
There are also no material differences in
4 Securities Exchange Act Release No. 53128
(January 13, 2006), 71 FR 3550 (January 23, 2006).
5 Section 12(a) of the Act, 15 U.S.C. 78l(a). As
discussed in footnote 10, Nasdaq anticipates that it
will seek relief from the Section 12(b) registration
requirement during a limited transition period for
certain securities that are currently exempt from
registration under Section 12(g).
6 Section 12(i) of the Act requires filings relating
to certain financial institutions to be made with the
Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, or the
Office of Thrift Supervision (collectively, the
‘‘Banking Regulators’’). 15 U.S.C. 78l(i).
7 In particular, each registered investment
company has filed a registration statement with the
Commission under the 1940 Act and has made
periodic filings under the 1940 Act identical in
form to those required of investment companies
that have registered their securities under Section
12(b) of the Act.
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]]>Agencies
[Federal Register Volume 71, Number 41 (Thursday, March 2, 2006)]
[Notices]
[Pages 10732-10734]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2930]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53355; File No. SR-CBOE-2005-105]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving Proposed Rule Change Relating to the
Membership Rules for Foreign Member Organizations
February 23, 2006.
I. Introduction
On December 7, 2005, the Chicago Board Options Exchange,
Incorporated (``CBOE'' or ``Exchange'') 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 to amend CBOE Rule 3.4,
``Qualifications of Foreign Member Organizations,'' to provide that a
member organization that is not organized under the laws of one of the
states of the United States (a ``foreign member organization''), and
that is approved by the Exchange to act solely as a lessor, need not
register as a broker or dealer pursuant to section 15 of the Act.\3\
The proposed rule change was published for comment in the
[[Page 10733]]
Federal Register on January 18, 2006.\4\ The Commission received no
comments regarding the proposal. This order approves the proposed rule
change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78o.
\4\ Securities Exchange Act Release No. 53092 (January 10,
2006), 71 FR 2963 (``Notice''). The Commission published an amended
Notice to indicate that the correct date of the Notice is January
10, 2006, rather than January 10, 2005. See Securities Exchange Act
Release No. 53092A (January 19, 2006), 71 FR 4391 (January 26,
2006).
---------------------------------------------------------------------------
II. Description of the Proposal
An organization that is not organized under the laws of one of the
states of the United States (``foreign member organization''), among
other things, must satisfy the requirements in CBOE Rule 3.4 in order
to become a CBOE member. Under CBOE Rule 3.4, a foreign member
organization that is approved by the Exchange to act solely as a lessor
must be registered as a broker-dealer pursuant to section 15 of the Act
\5\ and must maintain in English at a location in the United States any
books and records that an organization registered as a broker-dealer is
required to maintain at a location in the United States.\6\ In
contrast, CBOE Rule 3.3(a)(ii) exempts a U.S. member organization, if
it is approved to act solely as a lessor, from the requirement in CBOE
Rule 3.3 that such an organization be registered as a broker-dealer
under section 15 of the Act.
---------------------------------------------------------------------------
\5\ See CBOE Rule 3.4(a)(xii).
\6\ See CBOE Rule 3.4(a)(iii)(B).
---------------------------------------------------------------------------
The Exchange proposes to amend CBOE Rule 3.4 to exempt a foreign
member organization that is approved by the Exchange to act solely as a
lessor from certain requirements set forth in the rule. In particular,
the Exchange proposes to exempt such a foreign member organization
from: (i) CBOE Rule 3.4(a)(xii), which requires a foreign member
organization to be registered as a broker or dealer pursuant to section
15 of the Act; and (ii) CBOE Rule 3.4(a)(iii)(B), which requires a
foreign member organization to maintain, in English and at a location
in the United States, any books and records of the foreign member
organization that an organization registered as a broker or dealer
pursuant to section 15 of the Act is required to maintain.
According to CBOE, a member organization approved to act solely as
a lessor has no trading functions on the Exchange, and the sole
business function of such a member is to lease its CBOE membership to
another CBOE member. CBOE represents that, since a foreign member
organization approved to act solely as a lessor conducts no activities
on the Exchange that otherwise would require it to register as a
broker-dealer, it is appropriate not to require such registration. The
Exchange also asserts that, if the only activities conducted by the
foreign member organization on the Exchange relate to its lease
activities, the provisions set forth in Rule 3.4(a)(iii)(A), which
require the foreign member organization to maintain in English and at a
location in the United States the books and records of the organization
that relate to its business on the Exchange, should ensure that the
Exchange will have the ability to have access to adequate information
with respect to the foreign member organization.
The Exchange notes that a foreign member organization approved to
act solely as a lessor would remain subject to CBOE qualification and
application rules for member organizations. In this regard, CBOE notes
the additional application requirements set forth in CBOE Rule 3.4 for
foreign member organizations would provide it with both access to the
information it would need to review the foreign member organization's
application for membership and, if necessary, the requisite
jurisdiction to litigate matters related to the foreign member
organization's business on the Exchange. In addition, CBOE states that
it would investigate a foreign organization applying for membership in
a lessor-only capacity in accordance with the requirements of CBOE Rule
3.9, ``Application Procedures and Approval or Disapproval.'' CBOE
further notes that, through the associated person application process
set forth in CBOE Rule 3.6, ``Persons Associated with Member
Organizations,'' the Exchange would have the ability to examine the
direct owners and executive officers of a foreign member organization
to ensure that those persons who are not qualified under CBOE rules and
the Act to be associated with a CBOE member are not associated with the
foreign member organization.\7\
---------------------------------------------------------------------------
\7\ For an entity not required to register as a broker-dealer,
CBOE Rule 3.6(b) provides that each associated person of the
organization that would be required to be disclosed on Form BD as a
direct owner or executive officer must submit to CBOE's Membership
Department, pursuant to CBOE Rule 3.9, an application for approval
to become associated with the member organization in that capacity.
Under CBOE Rule 3.6(b), no person may become associated with a
member organization in the capacity of a direct owner or executive
officer that would be required to be disclosed on Form BD unless and
until CBOE's Membership Committee approves that association.
---------------------------------------------------------------------------
III. Discussion
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
and, in particular, with section 6(b)(5) of the Act,\8\ which requires,
among other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, 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.\9\
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\8\ 15 U.S.C. 78f(b)(5).
\9\ In approving this proposed rule change, 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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Under CBOE Rule 3.3(a)(ii), a CBOE member organization organized
under the laws of one of the states of the United States and approved
by CBOE to act solely as a lessor need not register as a broker or
dealer pursuant to section 15 of the Act. The proposal amends CBOE Rule
3.4 to provide the same treatment under the Exchange's rules for
foreign member organizations that are approved by the Exchange to act
solely as lessors. The Commission believes that it is reasonable for
the Exchange to extend the same treatment to a foreign member
organization approved to act solely as a lessor that is accorded to
such lessor U.S. member organizations with respect to the broker-dealer
registration requirement.
Further, under the proposal, although foreign member organizations
approved to act solely as lessors no longer would be required to
maintain the books and records that an organization registered as a
broker or dealer pursuant to section 15 of the Act would be required to
keep, such foreign member organizations would continue to be required
to comply with CBOE Rule 3.4(a)(iii)(A), which requires foreign member
organizations to maintain in English and at a location in the United
States the books and records of the organization that relate to its
business on the Exchange. The Commission believes that the
recordkeeping requirement of CBOE Rule 3.4(a)(iii)(A) should help to
ensure that the Exchange will have access to adequate information with
respect to a foreign member organization approved to act solely as a
lessor. The Commission notes that the proposal does not alter the
remaining provisions of CBOE Rule 3.4 or any other CBOE application,
qualification and membership rules that a foreign member organization
that intends to act solely as a lessor must satisfy to be
[[Page 10734]]
approved as a CBOE member organization.
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-CBOE-2005-105) is approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-2930 Filed 3-1-06; 8:45 am]
BILLING CODE 8010-01-P
