Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Order Approving and Declaring Effective a Plan for the Allocation of Regulatory Responsibilities Between the Chicago Board Options Exchange, Incorporated and the National Association of Securities Dealers, Inc., 28087-28089 [E7-9569]
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Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Notices
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an
e-mail to: PRA_Mailbox@sec.gov.
Dated: May 11, 2007.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7–9573 Filed 5–17–07; 8:45 am]
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to R. Corey Booth, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an
e-mail to: PRA_Mailbox@sec.gov.
Dated: May 11, 2007.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7–9574 Filed 5–17–07; 8:45 am]
BILLING CODE 8010–01–P
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
pwalker on PROD1PC71 with NOTICES
Proposed Collection; Comment
Request
[Release No. 34–55755; File No. 4–536]
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Filings and
Information Services, Washington, DC
20549.
Extension:
Form 15; OMB Control No. 3235–
0167; SEC File No. 270–170.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form 15 (17 CFR 249.232) is a
certification of termination of a class of
security under Section 12(g) or notice of
suspension of duty to file reports
pursuant to Sections 13 and 15(d) of the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). We estimate that
approximately 3,000 issuers file Form
15 annually and it takes approximately
1.5 hours per response to prepare for a
total of 4,500 annual burden hours.
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
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17:06 May 17, 2007
Jkt 211001
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule
17d–2; Order Approving and Declaring
Effective a Plan for the Allocation of
Regulatory Responsibilities Between
the Chicago Board Options Exchange,
Incorporated and the National
Association of Securities Dealers, Inc.
May 14, 2007.
Notice is hereby given that the
Securities and Exchange Commission
(‘‘Commission’’) has issued an Order,
pursuant to Sections 17(d) and
11A(a)(3)(B) of the Securities Exchange
Act of 1934 (‘‘Act’’),1 granting approval
and declaring effective an amended and
restated plan for the allocation of
regulatory responsibilities (‘‘Plan’’) that
was filed pursuant to Rule 17d–2 under
the Act 2 by the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’) and
the National Association of Securities
Dealers, Inc. (‘‘NASD’’) (together with
CBOE, the ‘‘Parties’’) with respect to the
CBOE Stock Exchange, LLC (‘‘CBSX’’),
which is a facility of CBOE featuring a
fully-automated marketplace for trading
of non-option securities by CBOE
members.3
1 15 U.S.C. 78q(d) and 15 U.S.C. 78k–1(a)(3)(B),
respectively.
2 17 CFR 240.17d–2.
3 See Securities Exchange Act Release No. 55612
(April 10, 2007), 72 FR 19556 (April 18, 2007)
(‘‘Notice’’). CBOE serves as the self-regulatory
authority for CBSX.
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28087
Accordingly, NASD shall assume, in
addition to the regulatory responsibility
it has under the Act, the regulatory
responsibilities allocated to it under the
Plan as they relate to the CBSX. At the
same time, CBOE is relieved of those
regulatory responsibilities allocated to
NASD under the Plan.
I. Introduction
Section 19(g)(1) of the Act,4 among
other things, requires every selfregulatory organization (‘‘SRO’’) that is
either a national securities exchange or
registered 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 19(g)(2) of the Act.5
Section 17(d)(1) of the Act 6 was
intended, among other things, to
eliminate unnecessary multiple
examinations and regulatory
duplication for those broker-dealers that
maintain memberships in more than one
SRO (‘‘common members’’).7 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.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.8
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities, other than
financial responsibility rules, 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 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
4 15
U.S.C. 78s(g)(1).
U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
6 15 U.S.C. 78q(d)(1).
7 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).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively. 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.
5 15
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Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Notices
system and a national clearance and
settlement system; and is in conformity
with the factors set forth in Section
17(d) of the Act. Upon effectiveness of
a plan filed pursuant to Rule 17d–2, an
SRO is relieved of those regulatory
responsibilities for common members
that are allocated by the plan to another
SRO.
On April 10, 2007, the Commission
issued notice of the Plan filed by CBOE
and NASD.9 The Commission received
no comments on the Plan. The Plan is
intended to reduce regulatory
duplication in the examination of Dual
Members 10 and in the filing and
processing of certain registration and
membership records as it relates to the
CBSX by allocating to NASD certain
examination and enforcement
responsibilities with respect to CBSX.
Included in the Plan is an attachment
(the ‘‘CBOE Certification of Common
Rules,’’ referred to herein as the
‘‘Certification’’) that lists every CBOE
rule applicable to CBSX,11 and any
federal securities law, rule, or regulation
for which, under the Plan, NASD would
bear responsibility for examining, and
enforcing compliance by, common
members.
II. Discussion
The Commission finds that the
proposed Plan is consistent with the
factors set forth in Section 17(d) of the
Act 12 and Rule 17d–2(c) thereunder 13
in that the proposed Plan is necessary
or appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Plan should reduce unnecessary
regulatory duplication by allocating to
NASD certain responsibilities for
common members that would otherwise
be performed by both CBOE and NASD.
Accordingly, the proposed Plan
promotes efficiency by reducing costs to
common members. Furthermore,
because CBOE and NASD will
coordinate their regulatory functions in
accordance with the Plan, the Plan
should promote investor protection.
9 See
Notice, supra note 3.
Section 1(c) of the Plan (defining Dual
Member as ‘‘those CBOE members that are also
members of NASD and the persons associated
therewith’’).
11 As noted in the Certification, to the extent that
any CBOE rule listed on the Certification makes
reference to options, such rule shall be read to
apply to equity securities as provided by CBOE
Rule 53.6.
12 15 U.S.C. 78q(d).
13 17 CFR 240.17d–2(c).
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10 See
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17:06 May 17, 2007
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The Commission notes that, under the
Plan, CBOE and NASD have allocated
regulatory responsibility for those CBOE
governing the operation of CBSX that
are substantially similar to NASD rules
in that examination for compliance with
each applicable CBOE rule would not
require NASD to develop one or more
new examination standards, modules,
procedures, or criteria to analyze the
application of the rule, or a Dual
Member’s activity, conduct, or output in
relation to such rule (‘‘Common Rules’’).
The Common Rules covered by the Plan
are specifically listed in the
Certification, as may be amended by the
Parties from time to time.14 In addition,
under the Plan, NASD would assume
regulatory responsibility for any
provisions of the federal securities laws
and the rules and regulations
thereunder that are set forth in the
Certification.
The Plan further provides that NASD
shall not assume regulatory
responsibility, and CBOE will retain full
responsibility, for: (1) 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;
(2) registration pursuant to CBOE’s
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules); (3) CBOE’s duties as a
DEA under Rule 17d–1 of the Act;15 and
(4) any rules of CBOE that do not qualify
as Common Rules.
According to the Plan, CBOE will
review the Certification, at least
annually, or more frequently if required
by changes in either the rules of CBOE
or NASD, and, if necessary, submit to
NASD an updated list of Common Rules
to add CBOE rules not included on the
then-current list of Common Rules that
are substantially similar to NASD rules;
delete CBOE rules included in the thencurrent list of Common Rules that are no
longer substantially similar to NASD
rules; and confirm that the remaining
rules on the list of Common Rules
continue to be CBOE rules that are
substantially similar to NASD rules.16
NASD will then confirm in writing
whether the rules listed in any updated
list are Common Rules as defined in the
Plan. Under the Plan, CBOE will also
provide NASD with a current list of
dual members and shall update the list
no less frequently than once each
quarter.17
The Commission is hereby declaring
effective and approving a plan that,
among other things, allocates regulatory
responsibility to NASD for the oversight
and enforcement of all CBOE rules
applicable to CBSX that are
substantially similar to the rules of
NASD for Dual Members of CBOE and
NASD. Therefore, modifications to the
Certification need not be filed with the
Commission as an amendment to the
Plan, provided that the Parties are only
adding to, deleting from, or confirming
changes to CBOE rules in the
Certification in conformance with the
definition of Common Rules provided in
the Plan. However, should the Parties
decide to add a CBOE rule to the
Certification that is not substantially
similar to an NASD rule; delete a CBOE
rule from the Certification that is
substantially similar to an NASD rule;
or leave on the Certification a CBOE rule
that is no longer substantially similar to
an NASD rule, then such a change
would constitute an amendment to the
Plan, which must be filed with the
Commission pursuant to Rule 17d–2
under the Act and noticed for public
comment.18
The Plan also permits CBOE and
NASD to terminate the Plan, subject to
notice. The Commission notes, however,
that while the Plan permits the Parties
to terminate the Plan, the Parties cannot
by themselves reallocate the regulatory
responsibilities set forth in the Plan,
since Rule 17d–2 under the Act requires
that any allocation or re-allocation of
regulatory responsibilities be filed with
the Commission.19
III. Conclusion
This Order gives effect to the Plan
filed with the Commission in File No.
4–536. The Parties shall notify all
members affected by the Plan of their
rights and obligations under the Plan.
It is therefore ordered, pursuant to
Sections 17(d) and 11A(a)(3)(B) of the
Act, that the Plan in File No. 4–536,
between CBOE and NASD, filed
pursuant to Rule 17d–2 under the Act,
is approved and declared effective.
17 See
14 CBOE
has represented that, with respect to
CBSX, there are no CBOE rules that are
substantially similar to NASD rules that are within
the scope of the Plan but not included in the
Certification. See Telephone call between Richard
Holley III, Special Counsel, Division of Market
Regulation, Commission, and Lawrence J.
Bresnahan, Vice President, Member Firm
Regulation, CBOE, on May 11, 2007.
15 17 CFR 240.17d–1.
16 See Section 2 of the Plan.
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Frm 00070
Fmt 4703
Sfmt 4703
Section 3 of the Plan.
Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
NASD would bear responsibility under the Plan for
examining, and enforcing compliance by, Dual
Members, also would constitute an amendment to
the Plan.
19 The Commission notes that paragraph 13 of the
Plan reflects the fact that NASD’s responsibilities
under the Plan will continue in effect until the
Commission approves the termination of the Plan.
18 The
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Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Notices
It is therefore ordered that CBOE is
relieved of those responsibilities
allocated to the NASD under the Plan in
File No. 4–536.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.20
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7–9569 Filed 5–17–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55756; File No. SR–Amex2007–42]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Proposed Rule Change as
Modified by Amendment No. 1
Amending the Required Number of
Letters of Reference an Applicant Must
Provide
May 14, 2007.
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 April 26,
2007, the American Stock Exchange LLC
(‘‘Amex’’ or ‘‘Exchange’’), 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
substantially prepared by Amex. On
May 3, 2007, Amex submitted
Amendment No. 1 to the proposed rule
change.3 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Amex Rule 353 to require member
applicants to provide two, instead of
five, letters of reference. The text of the
proposed rule change is available at the
Amex’s Office of the Secretary, at the
Commission’s Public Reference Room,
and on the Amex’s Web site at https://
www.amex.com.
pwalker on PROD1PC71 with NOTICES
20 17
CFR 200.30–3(a)(34).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange clarified
that pursuant to Article IV, Section 1(d) of the
Amex Constitution, applicants for associate
membership are also currently required to provide
five letters of reference.
1 15
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17:06 May 17, 2007
Jkt 211001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Amex 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 these statements
may be examined at the places specified
in Item IV below. Amex 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
Amex Rule 353 currently requires a
member applicant to provide five letters
of reference from any person seeking
status as a regular, options principal
member or LTP holder.4 The Exchange
proposes to amend Rule 353 to require
member applicants to provide two, as
opposed to five, letters of reference from
responsible persons.5 Requiring five
letters of reference has proven
burdensome and time-consuming for
member applicants and often delays the
application process. Furthermore, the
content of such references is of little
consequence in an applicant’s ultimate
approval. Finally, with the availability
of more objective background
information provided through other
resources, such as WEBCRD, FBI
fingerprints, and credit reports, Amex
believes that the need for these letters of
reference has largely been diminished.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6 of the Act 6 in general and
furthers the objectives of Section
6(b)(5) 7 in particular in that it is
designed to prevent fraudulent and
4 Article
IV, Section 1(d) of the Amex
Constitution provides that applications for associate
membership shall be in a form and manner
prescribed by the Exchange. The Exchange also
currently requires associate member applicants to
provide five letters of reference, as is set forth in
Rule 353.
5 The Exchange stated that it intends to reduce
the requirement for associate membership
applicants from five to two letters of reference to
correspond with the proposed change effecting
regular, options principal members or LTP holders.
Telephone conversation among Nyieri Nazarian,
Associate General Counsel, Amex; Jennifer Colihan,
Special Counsel, Commission, Division of Market
Regulation (‘‘Division’’); and Kristie Diemer,
Special Counsel, Commission, Division on May 2,
2007.
6 15 U.S.C. 78f.
7 15 U.S.C. 78f(b)(5).
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28089
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
This proposed rule change does not
impose 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
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
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 Amex 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.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Amex–2007–42 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–Amex–2007–42. This file
E:\FR\FM\18MYN1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 96 (Friday, May 18, 2007)]
[Notices]
[Pages 28087-28089]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-9569]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55755; File No. 4-536]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Order Approving and Declaring Effective a Plan for the
Allocation of Regulatory Responsibilities Between the Chicago Board
Options Exchange, Incorporated and the National Association of
Securities Dealers, Inc.
May 14, 2007.
Notice is hereby given that the Securities and Exchange Commission
(``Commission'') has issued an Order, pursuant to Sections 17(d) and
11A(a)(3)(B) of the Securities Exchange Act of 1934 (``Act''),\1\
granting approval and declaring effective an amended and restated plan
for the allocation of regulatory responsibilities (``Plan'') that was
filed pursuant to Rule 17d-2 under the Act \2\ by the Chicago Board
Options Exchange, Incorporated (``CBOE'') and the National Association
of Securities Dealers, Inc. (``NASD'') (together with CBOE, the
``Parties'') with respect to the CBOE Stock Exchange, LLC (``CBSX''),
which is a facility of CBOE featuring a fully-automated marketplace for
trading of non-option securities by CBOE members.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d) and 15 U.S.C. 78k-1(a)(3)(B), respectively.
\2\ 17 CFR 240.17d-2.
\3\ See Securities Exchange Act Release No. 55612 (April 10,
2007), 72 FR 19556 (April 18, 2007) (``Notice''). CBOE serves as the
self-regulatory authority for CBSX.
---------------------------------------------------------------------------
Accordingly, NASD shall assume, in addition to the regulatory
responsibility it has under the Act, the regulatory responsibilities
allocated to it under the Plan as they relate to the CBSX. At the same
time, CBOE is relieved of those regulatory responsibilities allocated
to NASD under the Plan.
I. Introduction
Section 19(g)(1) of the Act,\4\ among other things, requires every
self-regulatory organization (``SRO'') that is either a national
securities exchange or registered 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 19(g)(2) of the Act.\5\ Section 17(d)(1)
of the Act \6\ was intended, among other things, to eliminate
unnecessary multiple examinations and regulatory duplication for those
broker-dealers that maintain memberships in more than one SRO (``common
members'').\7\ 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(g)(1).
\5\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
\6\ 15 U.S.C. 78q(d)(1).
\7\ 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.\8\ Rule 17d-2 permits SROs to
propose joint plans for the allocation of regulatory responsibilities,
other than financial responsibility rules, 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 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
[[Page 28088]]
system and a national clearance and settlement system; and is in
conformity with the factors set forth in Section 17(d) of the Act. Upon
effectiveness of a plan filed pursuant to Rule 17d-2, an SRO is
relieved of those regulatory responsibilities for common members that
are allocated by the plan to another SRO.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively. 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.
---------------------------------------------------------------------------
On April 10, 2007, the Commission issued notice of the Plan filed
by CBOE and NASD.\9\ The Commission received no comments on the Plan.
The Plan is intended to reduce regulatory duplication in the
examination of Dual Members \10\ and in the filing and processing of
certain registration and membership records as it relates to the CBSX
by allocating to NASD certain examination and enforcement
responsibilities with respect to CBSX. Included in the Plan is an
attachment (the ``CBOE Certification of Common Rules,'' referred to
herein as the ``Certification'') that lists every CBOE rule applicable
to CBSX,\11\ and any federal securities law, rule, or regulation for
which, under the Plan, NASD would bear responsibility for examining,
and enforcing compliance by, common members.
---------------------------------------------------------------------------
\9\ See Notice, supra note 3.
\10\ See Section 1(c) of the Plan (defining Dual Member as
``those CBOE members that are also members of NASD and the persons
associated therewith'').
\11\ As noted in the Certification, to the extent that any CBOE
rule listed on the Certification makes reference to options, such
rule shall be read to apply to equity securities as provided by CBOE
Rule 53.6.
---------------------------------------------------------------------------
II. Discussion
The Commission finds that the proposed Plan is consistent with the
factors set forth in Section 17(d) of the Act \12\ and Rule 17d-2(c)
thereunder \13\ in that the proposed Plan is necessary or appropriate
in the public interest and for the protection of investors, fosters
cooperation and coordination among SROs, and removes impediments to and
fosters the development of the national market system. In particular,
the Commission believes that the proposed Plan should reduce
unnecessary regulatory duplication by allocating to NASD certain
responsibilities for common members that would otherwise be performed
by both CBOE and NASD. Accordingly, the proposed Plan promotes
efficiency by reducing costs to common members. Furthermore, because
CBOE and NASD will coordinate their regulatory functions in accordance
with the Plan, the Plan should promote investor protection.
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\12\ 15 U.S.C. 78q(d).
\13\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Plan, CBOE and NASD have
allocated regulatory responsibility for those CBOE governing the
operation of CBSX that are substantially similar to NASD rules in that
examination for compliance with each applicable CBOE rule would not
require NASD to develop one or more new examination standards, modules,
procedures, or criteria to analyze the application of the rule, or a
Dual Member's activity, conduct, or output in relation to such rule
(``Common Rules''). The Common Rules covered by the Plan are
specifically listed in the Certification, as may be amended by the
Parties from time to time.\14\ In addition, under the Plan, NASD would
assume regulatory responsibility for any provisions of the federal
securities laws and the rules and regulations thereunder that are set
forth in the Certification.
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\14\ CBOE has represented that, with respect to CBSX, there are
no CBOE rules that are substantially similar to NASD rules that are
within the scope of the Plan but not included in the Certification.
See Telephone call between Richard Holley III, Special Counsel,
Division of Market Regulation, Commission, and Lawrence J.
Bresnahan, Vice President, Member Firm Regulation, CBOE, on May 11,
2007.
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The Plan further provides that NASD shall not assume regulatory
responsibility, and CBOE will retain full responsibility, for: (1)
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; (2) registration pursuant to CBOE's applicable rules of
associated persons (i.e., registration rules that are not Common
Rules); (3) CBOE's duties as a DEA under Rule 17d-1 of the Act;\15\ and
(4) any rules of CBOE that do not qualify as Common Rules.
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\15\ 17 CFR 240.17d-1.
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According to the Plan, CBOE will review the Certification, at least
annually, or more frequently if required by changes in either the rules
of CBOE or NASD, and, if necessary, submit to NASD an updated list of
Common Rules to add CBOE rules not included on the then-current list of
Common Rules that are substantially similar to NASD rules; delete CBOE
rules included in the then-current list of Common Rules that are no
longer substantially similar to NASD rules; and confirm that the
remaining rules on the list of Common Rules continue to be CBOE rules
that are substantially similar to NASD rules.\16\ NASD will then
confirm in writing whether the rules listed in any updated list are
Common Rules as defined in the Plan. Under the Plan, CBOE will also
provide NASD with a current list of dual members and shall update the
list no less frequently than once each quarter.\17\
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\16\ See Section 2 of the Plan.
\17\ See Section 3 of the Plan.
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The Commission is hereby declaring effective and approving a plan
that, among other things, allocates regulatory responsibility to NASD
for the oversight and enforcement of all CBOE rules applicable to CBSX
that are substantially similar to the rules of NASD for Dual Members of
CBOE and NASD. Therefore, modifications to the Certification need not
be filed with the Commission as an amendment to the Plan, provided that
the Parties are only adding to, deleting from, or confirming changes to
CBOE rules in the Certification in conformance with the definition of
Common Rules provided in the Plan. However, should the Parties decide
to add a CBOE rule to the Certification that is not substantially
similar to an NASD rule; delete a CBOE rule from the Certification that
is substantially similar to an NASD rule; or leave on the Certification
a CBOE rule that is no longer substantially similar to an NASD rule,
then such a change would constitute an amendment to the Plan, which
must be filed with the Commission pursuant to Rule 17d-2 under the Act
and noticed for public comment.\18\
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\18\ The Commission also notes that the addition to or deletion
from the Certification of any federal securities laws, rules, and
regulations for which NASD would bear responsibility under the Plan
for examining, and enforcing compliance by, Dual Members, also would
constitute an amendment to the Plan.
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The Plan also permits CBOE and NASD to terminate the Plan, subject
to notice. The Commission notes, however, that while the Plan permits
the Parties to terminate the Plan, the Parties cannot by themselves
reallocate the regulatory responsibilities set forth in the Plan, since
Rule 17d-2 under the Act requires that any allocation or re-allocation
of regulatory responsibilities be filed with the Commission.\19\
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\19\ The Commission notes that paragraph 13 of the Plan reflects
the fact that NASD's responsibilities under the Plan will continue
in effect until the Commission approves the termination of the Plan.
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III. Conclusion
This Order gives effect to the Plan filed with the Commission in
File No. 4-536. The Parties shall notify all members affected by the
Plan of their rights and obligations under the Plan.
It is therefore ordered, pursuant to Sections 17(d) and
11A(a)(3)(B) of the Act, that the Plan in File No. 4-536, between CBOE
and NASD, filed pursuant to Rule 17d-2 under the Act, is approved and
declared effective.
[[Page 28089]]
It is therefore ordered that CBOE is relieved of those
responsibilities allocated to the NASD under the Plan in File No. 4-
536.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(34).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7-9569 Filed 5-17-07; 8:45 am]
BILLING CODE 8010-01-P
