Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Amend its Rule 4.20 Regarding Anti-Money Laundering, 66006-66008 [E7-22894]

Download as PDF 66006 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices provision unnecessary and that its elimination should facilitate a more efficient operation of the options markets. The Commission also finds good cause, consistent with section 19(b)(2) of the Act 12 for approving the proposal prior to the thirtieth day after the date of publication of the notice of the filing thereof in the Federal Register. Granting accelerated approval would facilitate the implementation of these changes in conjunction with Joint Amendment No. 24 to the Linkage Plan.13 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule changes (SR–Amex– 2007–117; SR–BSE–2007–44; SR– CBOE–2007–121; SR–ISE–2007–92; NYSEArca–2007–109; and SR–Phlx– 2007–86), as amended, are hereby approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22916 Filed 11–23–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56816; File No. SR–CBOE– 2007–130] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Amend its Rule 4.20 Regarding Anti-Money Laundering mstockstill on PROD1PC66 with NOTICES 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 November 2, 2007, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the CBOE. On November 9, 2007, CBOE filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the 12 15 U.S.C. 78s(b)(2). note 6, supra. 14 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 13 See 22:03 Nov 23, 2007 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend CBOE Rule 4.20, codifying the Anti-Money Laundering Compliance Program (the ‘‘AML Program’’), to: (1) Establish independent testing for compliance be conducted at least annually by members with a public business, or every two years if no public business is conducted; and (2) clarify the persons designated to implement and monitor the Anti-Money Laundering Compliance Rule. The text of the proposed rule change is provided below. The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.org/Legal), at the Exchange’s Office of the Secretary and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE 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. CBOE 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose November 19, 2007. VerDate Aug<31>2005 proposed rule change, as amended, from interested persons. Financial institutions, including broker-dealers, must develop and implement AML Programs pursuant to the Bank Secrecy Act,3 as amended by Section 352 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001 (‘‘PATRIOT Act’’).4 Consistent with the Department of Treasury’s (‘‘Treasury’’) regulation 31 CFR 103.120 under the Bank Secrecy Act, CBOE Rule 4.20 requires that each member organization and each member not associated with a member organization develop and implement a written AML program and specifies the minimum requirements for these programs. 3 31 U.S.C. 5311 et seq. L. 107–56, 115 Stat. 272 (2001). 4 Pub. Jkt 214001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 The AML program must include the development of internal policies, procedures and controls; the designation of a person to implement and monitor the day-to-day operations and internal controls of the program (commonly referred to as an ‘‘AML Officer’’); ongoing training for appropriate persons; and an independent testing function for overall compliance. In order to provide interpretive clarity to the requirements under CBOE Rule 4.20 with respect to independent testing and AML Officers, as well as to clarify references to the Bank Secrecy Act, CBOE proposes the following amendments to CBOE Rule 4.20. References to Bank Secrecy Act The proposed rule change would delete references to certain sections of the Bank Secrecy Act and a reference to USA PATRIOT Act to more clearly reflect the requirements under CBOE Rule 4.20. Timeframes for Independent Testing The proposed rule change would require that independent testing of AML programs be conducted, at a minimum, on an annual (calendar-year) basis by members or member organizations, unless the member or member organization does not execute transactions for customers or otherwise hold customer accounts or act as an introducing broker with respect to customer accounts (e.g., engages solely in proprietary trading, or conducts business only with other brokerdealers), in which case such independent testing is required every two years (on a calendar-year basis). CBOE believes these timeframes are reasonable in that they require more frequent testing of AML programs designed to monitor a business with customers from the general public, which may be more susceptible to money laundering schemes than a strictly proprietary business involving transactions with other broker-dealers. Further, the one-year time frame for testing is consistent with standard industry practice in that it is similar to generally accepted guidelines for conducting tests in the context of, for instance, general audits and branch office visits. However, the proposed rule change establishes only a minimum requirement and makes clear that members should undertake more frequent testing when circumstances warrant (e.g. should the business mix of the member or member organization materially change; in the event of a merger or acquisition; in light of systemic weaknesses uncovered via E:\FR\FM\26NON1.SGM 26NON1 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices testing of the AML Program; or in response to any other ‘‘red flags’’). Qualification and Independence Standards for Testing mstockstill on PROD1PC66 with NOTICES The proposed rule change would further require that testing be conducted by a designated person with a working knowledge of applicable requirements under the Bank Secrecy Act and its implementing regulations. Such person need not be an employee of the member or member organization since the responsibility being delegated is essentially an auditing function and, as such, it would not be unusual or ineffective for it to be performed by an independent outside party. The proposed rule change does not preclude an employee of the member or member organization from conducting the required independent testing of the AML Program; however, the proposed ‘‘independence’’ standard would prohibit testing from being conducted by a person who performs the functions being tested, by the designated AML Officer or by a person who reports to either. The proposed rule change would be generally consistent with the approach taken by the NYSE and NASD, n/k/a the Financial Industry Regulatory Authority, Inc., (‘‘FINRA’’),5 regarding independent testing of AML Programs, with variations where necessary to account for the differences in CBOE membership—in particular, differences in firm size, types of business conducted, and overall business models. It should be noted that CBOE’s membership is comprised of an overwhelming majority of members who are broker-dealers that are not members of either NYSE or FINRA and who conduct business only with other broker-dealers. It should be further noted that CBOE conducts routine examinations of all capital computing members to test the adequacy of AML compliance programs with the objective of determining whether member firms’ AML compliance programs are reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act and applicable Treasury, Commission, and CBOE rules. Additionally, for all non-capital computing CBOE members, CBOE requires that each broker-dealer member 5 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD’s Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. See Securities Exchange Act Release No. 56146 (July 26, 2007); 72 FR 42190 (Aug. 1, 2007). VerDate Aug<31>2005 22:03 Nov 23, 2007 Jkt 214001 file an annual attestation that identifies: (1) The designated AML Compliance Officer; (2) the broker-dealer annual training, including a list of attendees and date conducted; (3) the independent review, including date and identification of the reviewer. The attestation also includes a statement regarding broker-dealer members maintaining written documentation of the independent review conducted. AML Officer The proposed rule change would also clarify that the AML Officer(s) must be an associated person of the member. This would not prohibit a member that is part of a diversified financial institution from designating an AML Officer that is employed by the member’s parent company, sister company, or other affiliate. However, if such a person is designated as a member’s AML Officer, CBOE would consider that person to be an associated person of the member with respect to those activities performed on behalf of the member. 2. Statutory Basis CBOE 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 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. CBOE believes that the proposed rule change is designed to accomplish these ends by requiring members to conduct periodic tests of their AML compliance programs, preserve the independence of their testing personnel, and ensure the accuracy of their AML compliance person information. 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. 6 15 7 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00071 Fmt 4703 Sfmt 4703 66007 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 the self-regulatory organization 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, as amended, 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–CBOE–2007–130 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-CBOE–2007–130. 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 (https://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 E:\FR\FM\26NON1.SGM 26NON1 66008 Federal Register / Vol. 72, No. 226 / Monday, November 26, 2007 / Notices 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 Section, 100 F Street, NE., Washington, DC 20549–1090, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. 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–2007–130 and should be submitted on or before December 17, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22894 Filed 11–23–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56814; File No. SR–CBOE– 2007–87] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change, and Amendment No. 1 Thereto, To Amend the Quoting Requirements Applicable to the Hybrid Opening System mstockstill on PROD1PC66 with NOTICES November 19, 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 July 25, 2007, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ 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 the Exchange. On November 19, 2007, CBOE filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 22:03 Nov 23, 2007 Jkt 214001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its rule pertaining to the Hybrid Opening System (‘‘HOSS’’) as well as related rules pertaining to the obligations of designated primary market-makers (‘‘DPMs’’), electronic designated primary market-makers (‘‘e–DPMs’’) and lead market-makers (‘‘LMMs’’) during opening rotations. The text of the proposed rule change is available at the Exchange, on the Exchange’s Web site (https://www.cboe.org), and at the Commission’s Public Reference Room. 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 Exchange 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. The Exchange 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 The Exchange proposes to amend its HOSS procedures contained in CBOE Rule 6.2B. HOSS is the Exchange’s automated system for initiating trading at the beginning of each trading day. Previously, for each option class approved for trading, HOSS had been programmed to open an option series only if the DPM or LMM, as applicable, for the particular option class submitted a quote that complies with the legal quote width requirements of paragraph (b)(iv) to CBOE Rule 8.7, Obligations of Market-Makers. The HOSS procedures were revised in 2005 and, currently, HOSS is programmed to open an option series as long as any market maker,3 not just the DPM or LMM, has submitted an opening quote that complies with the legal width quote requirements of CBOE Rule 8.7(b)(iv).4 However, even though 3 This could include a quote from a DPM, e–DPM, LMM, Market-Maker or Remote Market-Maker. 4 See Securities Exchange Act Release No. 52234 (August 10, 2005), 70 FR 48214 (August 16, 2005) (SR–CBOE–2005–40). Other factors must also be satisfied for HOSS to open an options series. For example, the opening price for the series must be within an acceptable range and the opening trade PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 the procedures were changed to permit HOSS to automatically open a series without a DPM’s or LMM’s quote, DPMs (as well as e–DPMs) or LMMs still remain obligated under CBOE rules to timely submit opening quotes.5 The proposed rule change is designed to give some relief to DPMs, e–DPMs and LMMs from this opening quote requirement. Because HOSS is programmed to automatically open based on any market-maker’s quote, the Exchange does not believe that DPMs, e–DPMs and LMMs should be viewed as violating the opening quote requirement when they inadvertently miss the opening simply because another marketmaker entered a quote before the DPM, e–DPM or LMM. In an effort to provide more flexibility to ensure that all options series are opening in a fair and orderly manner, the Exchange is proposing to modify the HOSS procedures and related opening quote obligations of DPMs, e–DPMs and LMMs to allow the parameters to be configured so that an option series will open: (i) If at least one market maker has submitted an opening quote (which is how HOSS currently operates) or (ii) only if a DPM or LMM, as applicable, has submitted an opening quote (which is how HOSS previously operated). Determinations on the particular configuration would be made on a classby-class basis by the appropriate Exchange Procedure Committee and announced to the membership via Regulatory Circular. There will be no set factors for making the determinations; it will simply be the method the appropriate Exchange Procedure Committee thinks would work best to achieve a competitive, efficient and orderly opening in the particular class. The appropriate Exchange Procedure Committee might consider such things as trading in the underlying or related products, trading in the option on competing exchanges, how effectively opens have occurred in the past, liquidity and/or other factors. For example, if the Exchange desires to increase liquidity in a particular class on the open, the appropriate Exchange cannot create a market order imbalance. See, e.g., CBOE Rule 6.2B(e)(ii)–(iii). 5 Currently, DPMs, e–DPMs and LMMs are required to enter opening quotes in accordance with CBOE Rule 6.2B in 100% of the series of each appointed class; whereas, other Market-Makers and Remote Market-Makers are permitted, but not obligated, to enter opening quotes in accordance with CBOE Rule 6.2B. See existing CBOE Rules 6.2B, 8.15A, Lead Market-Makers in Hybrid Classes (subparagraph (b)(iv) of this rule has been interpreted by the Exchange to require an LMM to enter opening quotes in 100% of the series of each appointed class), 8.85, DPM Obligations, 8.93, e–DPM Obligations. E:\FR\FM\26NON1.SGM 26NON1

Agencies

[Federal Register Volume 72, Number 226 (Monday, November 26, 2007)]
[Notices]
[Pages 66006-66008]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-22894]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56816; File No. SR-CBOE-2007-130]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of a Proposed Rule Change To Amend its 
Rule 4.20 Regarding Anti-Money Laundering

November 19, 2007.
    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 November 2, 2007, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the ``Commission'') the proposed rule change 
as described in Items I, II, and III below, which Items have been 
substantially prepared by the CBOE. On November 9, 2007, CBOE filed 
Amendment No. 1 to the proposed rule change. 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

    CBOE proposes to amend CBOE Rule 4.20, codifying the Anti-Money 
Laundering Compliance Program (the ``AML Program''), to: (1) Establish 
independent testing for compliance be conducted at least annually by 
members with a public business, or every two years if no public 
business is conducted; and (2) clarify the persons designated to 
implement and monitor the Anti-Money Laundering Compliance Rule. The 
text of the proposed rule change is provided below. The text of the 
proposed rule change is available on the Exchange's Web site (https://
www.cboe.org/Legal), at the Exchange's Office of the Secretary and at 
the Commission's Public Reference Room.

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

    In its filing with the Commission, CBOE 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. CBOE 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Financial institutions, including broker-dealers, must develop and 
implement AML Programs pursuant to the Bank Secrecy Act,\3\ as amended 
by Section 352 of the Uniting and Strengthening America by Providing 
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA 
PATRIOT Act) Act of 2001 (``PATRIOT Act'').\4\ Consistent with the 
Department of Treasury's (``Treasury'') regulation 31 CFR 103.120 under 
the Bank Secrecy Act, CBOE Rule 4.20 requires that each member 
organization and each member not associated with a member organization 
develop and implement a written AML program and specifies the minimum 
requirements for these programs.
    The AML program must include the development of internal policies, 
procedures and controls; the designation of a person to implement and 
monitor the day-to-day operations and internal controls of the program 
(commonly referred to as an ``AML Officer''); ongoing training for 
appropriate persons; and an independent testing function for overall 
compliance.
    In order to provide interpretive clarity to the requirements under 
CBOE Rule 4.20 with respect to independent testing and AML Officers, as 
well as to clarify references to the Bank Secrecy Act, CBOE proposes 
the following amendments to CBOE Rule 4.20.
References to Bank Secrecy Act
    The proposed rule change would delete references to certain 
sections of the Bank Secrecy Act and a reference to USA PATRIOT Act to 
more clearly reflect the requirements under CBOE Rule 4.20.
Timeframes for Independent Testing
    The proposed rule change would require that independent testing of 
AML programs be conducted, at a minimum, on an annual (calendar-year) 
basis by members or member organizations, unless the member or member 
organization does not execute transactions for customers or otherwise 
hold customer accounts or act as an introducing broker with respect to 
customer accounts (e.g., engages solely in proprietary trading, or 
conducts business only with other broker-dealers), in which case such 
independent testing is required every two years (on a calendar-year 
basis). CBOE believes these timeframes are reasonable in that they 
require more frequent testing of AML programs designed to monitor a 
business with customers from the general public, which may be more 
susceptible to money laundering schemes than a strictly proprietary 
business involving transactions with other broker-dealers. Further, the 
one-year time frame for testing is consistent with standard industry 
practice in that it is similar to generally accepted guidelines for 
conducting tests in the context of, for instance, general audits and 
branch office visits. However, the proposed rule change establishes 
only a minimum requirement and makes clear that members should 
undertake more frequent testing when circumstances warrant (e.g. should 
the business mix of the member or member organization materially 
change; in the event of a merger or acquisition; in light of systemic 
weaknesses uncovered via

[[Page 66007]]

testing of the AML Program; or in response to any other ``red flags'').
Qualification and Independence Standards for Testing
    The proposed rule change would further require that testing be 
conducted by a designated person with a working knowledge of applicable 
requirements under the Bank Secrecy Act and its implementing 
regulations. Such person need not be an employee of the member or 
member organization since the responsibility being delegated is 
essentially an auditing function and, as such, it would not be unusual 
or ineffective for it to be performed by an independent outside party.
    The proposed rule change does not preclude an employee of the 
member or member organization from conducting the required independent 
testing of the AML Program; however, the proposed ``independence'' 
standard would prohibit testing from being conducted by a person who 
performs the functions being tested, by the designated AML Officer or 
by a person who reports to either.
    The proposed rule change would be generally consistent with the 
approach taken by the NYSE and NASD, n/k/a the Financial Industry 
Regulatory Authority, Inc., (``FINRA''),\5\ regarding independent 
testing of AML Programs, with variations where necessary to account for 
the differences in CBOE membership--in particular, differences in firm 
size, types of business conducted, and overall business models. It 
should be noted that CBOE's membership is comprised of an over-whelming 
majority of members who are broker-dealers that are not members of 
either NYSE or FINRA and who conduct business only with other broker-
dealers. It should be further noted that CBOE conducts routine 
examinations of all capital computing members to test the adequacy of 
AML compliance programs with the objective of determining whether 
member firms' AML compliance programs are reasonably designed to 
achieve and monitor compliance with the requirements of the Bank 
Secrecy Act and applicable Treasury, Commission, and CBOE rules. 
Additionally, for all non-capital computing CBOE members, CBOE requires 
that each broker-dealer member file an annual attestation that 
identifies: (1) The designated AML Compliance Officer; (2) the broker-
dealer annual training, including a list of attendees and date 
conducted; (3) the independent review, including date and 
identification of the reviewer. The attestation also includes a 
statement regarding broker-dealer members maintaining written 
documentation of the independent review conducted.
AML Officer
    The proposed rule change would also clarify that the AML Officer(s) 
must be an associated person of the member. This would not prohibit a 
member that is part of a diversified financial institution from 
designating an AML Officer that is employed by the member's parent 
company, sister company, or other affiliate. However, if such a person 
is designated as a member's AML Officer, CBOE would consider that 
person to be an associated person of the member with respect to those 
activities performed on behalf of the member.
2. Statutory Basis
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 31 U.S.C. 5311 et seq.
    \4\ Pub. L. 107-56, 115 Stat. 272 (2001).
    \5\ On July 26, 2007, the Commission approved a proposed rule 
change filed by NASD to amend NASD's Certificate of Incorporation to 
reflect its name change to Financial Industry Regulatory Authority 
Inc., or FINRA, in connection with the consolidation of the member 
firm regulatory functions of NASD and NYSE Regulation, Inc. See 
Securities Exchange Act Release No. 56146 (July 26, 2007); 72 FR 
42190 (Aug. 1, 2007).
---------------------------------------------------------------------------

    CBOE 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 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. CBOE 
believes that the proposed rule change is designed to accomplish these 
ends by requiring members to conduct periodic tests of their AML 
compliance programs, preserve the independence of their testing 
personnel, and ensure the accuracy of their AML compliance person 
information.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    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 self-regulatory organization 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, as amended, 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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2007-130 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-CBOE-2007-130. 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 (https://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

[[Page 66008]]

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 Section, 100 F Street, 
NE., Washington, DC 20549-1090, on official business days between the 
hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
CBOE. 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-2007-130 and should be submitted on or before December 17, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-22894 Filed 11-23-07; 8:45 am]
BILLING CODE 8011-01-P
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