Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Change the Composition of its Regulatory Oversight Committee, 25068-25070 [E8-9866]

Download as PDF 25068 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices 4(f)(6) thereunder.11 At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. Under Rule 19b–4(f)(6) of the Act,12 the proposal does not become operative for 30 days after the date of its filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative date. The Exchange states that the proposed rule change provides the same flexibility to DPMs and LMMs that e-DPMs have in terms of allowing affiliated Market-Makers to hold an appointment and to submit electronic quotations in the same class. Moreover, CBOE believes that it would be unfair to DPMs and LMMs to have to wait 30 days for this rule change to take effect, given that such restriction is not in place for e-DPMs, and that DPMs have expressed an interest in having this rule change take effect immediately. Thus, waiving the 30-day operative period will allow the rule change to be implemented immediately and place these types of market participants on equal footing with e-DPMs. Based on these reasons, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, and thus designates the proposal effective upon filing.13 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 Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. Deputy Secretary. [FR Doc. E8–9908 Filed 5–5–08; 8:45 am] BILLING CODE 8010–01–P rwilkins on PROD1PC63 with NOTICES CFR 240.19b–4(f)(6). 12 Id. 13 For purposes only of waiving the operative date of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 [Release No. 34–57734; File No. SR–CHX– 2008–05] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness All submissions should refer to File of a Proposed Rule Change to Change Number SR–CBOE–2008–50. This file the Composition of its Regulatory number should be included on the subject line if e-mail is used. To help the Oversight Committee Commission process and review your April 29, 2008. comments more efficiently, please use Pursuant to Section 19(b)(1) of the only one method. The Commission will Securities Exchange Act of 1934 post all comments on the Commission’s (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Internet Web site (https://www.sec.gov/ notice is hereby given that on April 21, rules/sro.shtml). Copies of the 2008, the Chicago Stock Exchange, Inc. submission, all subsequent (‘‘CHX’’ or ‘‘Exchange’’) filed with the amendments, all written statements Securities and Exchange Commission (‘‘Commission’’) the proposed rule with respect to the proposed rule change as described in Items I and II change that are filed with the below, which Items have been Commission, and all written substantially prepared by the Exchange. communications relating to the The Exchange has designated this proposed rule change between the Commission and any person, other than proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and those that may be withheld from the Rule 19b–4(f)(6) thereunder.4 The public in accordance with the Commission is publishing this notice to provisions of 5 U.S.C. 552, will be solicit comments on the proposed rule available for inspection and copying in change from interested persons. the Commission’s Public Reference Room, on official business days between I. Self-Regulatory Organization’s the hours of 10 a.m. and 3 p.m. Copies Statement of the Terms of Substance of the Proposed Rule Change of such filing also will be available for inspection and copying at the principal The Exchange proposes to amend its office of the CBOE. All comments rules to change the composition of the received will be posted without change; Regulatory Oversight Committee the Commission does not edit personal (‘‘ROC’’ or ‘‘Committee’’) so that this identifying information from group consists of at least five Public submissions. You should submit only Directors and to allow the Exchange’s information that you wish to make Vice Chairman to appoint, and the Public Directors on the Exchange’s available publicly. All submissions Board of Directors to approve, up to two should refer to File Number SR–CBOE– 2008–50 and should be submitted on or Participant Directors to serve as nonvoting advisors to the Committee. The before May 27, 2008. text of this proposed rule change is For the Commission, by the Division of available at the CHX, on the Exchange’s Trading and Markets, pursuant to delegated Web site at https://www.chx.com/rules/ 14 authority. proposed_rules.html, and in the Florence E. Harmon, Commission’s Public Reference Room. • 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–2008–50 on the subject line. 11 17 SECURITIES AND EXCHANGE COMMISSION II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CHX included statements concerning the purpose of, and basis for, 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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 2 17 14 17 PO 00000 CFR 200.30–3(a)(12). Frm 00131 Fmt 4703 Sfmt 4703 E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices 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 rwilkins on PROD1PC63 with NOTICES 1. Purpose Under its existing rules, the Exchange’s ROC consists of seven persons—five Public Directors and two Participant Directors.5 One of the Participant Directors must be associated with a firm that is primarily engaged in business on the Exchange’s trading floor.6 The other Participant Director must be associated with a participant firm that is not primarily engaged in business on the Exchange’s trading floor.7 Through this proposal, the Exchange would modify the composition of the ROC so that it would consist of at least five Public Directors. The Exchange would also amend its rules to allow the Exchange’s Vice Chairman to appoint, and the Public Directors on the Exchange’s Board of Directors to approve, up to two Participant Directors to serve as non-voting advisors to the Committee. These proposed changes serve several purposes. First, the changes would eliminate references to the Exchange’s trading floor when describing the Participant Directors who can serve on the ROC. In the Exchange’s new trading model, the Exchange no longer operates a physical trading floor, so these distinctions are no longer particularly useful in distinguishing between Participant Directors.8 As an additional matter, the changes would modify the role that Participant 5 See CHX Rules, Article 2, Rule 4. Under the Exchange’s bylaws, a Public Director is a director who (i) Is not a participant, or an officer, managing member, partner or employee of a participant firm; (ii) is not an employee of the CHX or any of its affiliates; (iii) is not a broker or dealer that is registered under the Act, or an officer or employee of a broker or dealer that is registered under the Act; or (iv) does not have any other material business relationship with (a) CHX, CHX Holdings or any of their affiliates or (b) any broker or dealer that is registered under the Act. A Participant Director is a participant or an officer, managing member or partner of a participant firm. See CHX Bylaws, Article II, Section 2(b). The Commission recently approved a proposed rule change by CHX to amend the definition of Public Director in its bylaws to refer to brokers or dealers registered under the Act. See Securities Exchange Act Release No. 57699 (April 23, 2008), 73 FR 23287 (April 29, 2008) (SR– 2008–CHX–02). 6 This director is called an ‘‘On-Floor Participant Director’’ in the current rule. See CHX Rules, Article 2, Rule 4. 7 This director is called ‘‘Off-Floor Participant Director’’ in the current rule. See CHX Rules, Article 2, Rule 4. 8 The Exchange fully transitioned to its new trading model on January 26, 2007. VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 Directors play on the ROC—instead of being voting members of the ROC, the Participant Directors would serve as non-voting advisors. This status would allow the Participant Directors to share insights that might prove helpful to the ROC in its oversight of the Exchange’s regulatory programs, but would not allow the Participant Directors to vote on issues that may arise.9 Finally, the changes would provide some flexibility in the number of persons who must serve on the ROC to better allow the Exchange to respond to changes over time. By allowing the ROC to be composed of ‘‘at least’’ five Public Directors, the Exchange’s Vice Chairman would be able to appoint, and the Public Directors on the Exchange’s Board would be able to approve, some or even all of its Public Directors to the ROC, as the Board believes is appropriate. Similarly, by allowing the Exchange’s Vice Chairman to appoint, and the Public Directors on the Exchange’s Board to approve, ‘‘up to’’ two Participant Directors to serve as advisors to the ROC, the Exchange’s Board would be able to determine how many nonvoting advisors are appropriate at a particular time. This flexibility would also allow the Board to be sensitive, within reasonable bounds, to the availability of its Board members to serve on committees—the proposal would allow the Exchange’s Vice Chairman to appoint, and the Public Directors on the Exchange’s Board to approve, five, six or seven Public Directors to the ROC, for example, depending upon each director’s ability to dedicate time to the ROC’s activities. The ROC’s composition is not described solely in the Exchange’s rules; it is also set out in the 2003 settlement agreement that the Exchange entered into with the Commission.10 The Exchange asked the Commission to amend the Order to incorporate this new composition for the ROC; this rule filing is designed to effectuate the 9 The Exchange believes that a non-voting, advisory role for Participant Directors is more consistent with the Commission’s proposed selfregulatory organization (‘‘SRO’’) governance rules, which, if approved, would require that each SRO’s ROC be composed entirely of independent (or public) directors, but that would not, at least on its face, prohibit an SRO from appointing an advisory group of members to work with the ROC. See Securities Exchange Act Release No. 50699 (November 18, 2004), 69 FR 71126 (December 8, 2004) (S7–39–04). Although these proposals have not been approved as final rules, the Exchange believes that they provide strong guidelines for SROs to consider as they review their internal governance structures. 10 See Securities Exchange Act Release No. 48566 (September 30, 2003) (Administrative Proceeding File No. 3–11282) (‘‘Order’’). PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 25069 changes to the Order approved by the Commission.11 2. Statutory Basis The CHX believes that the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b).12 The proposed rule change is consistent with Section 6(b)(5) of the Act 13 because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest by permitting the Exchange to make reasonable modifications to the required composition of its ROC. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition. 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b– 4(f)(6) thereunder.15 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the 11 See Securities Exchange Act Release No. 57605 (April 2, 2008) (Administrative Proceeding File No. 3–11282). 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 14 U.S.C. 78s(b)(3)(A). 15 17 CFR 240.19b–4(f)(6). Pursuant to Rule 19b– 4(f)(6)(iii) under the Act, the Exchange is required to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied the five-day pre-filing requirement. E:\FR\FM\06MYN1.SGM 06MYN1 25070 Federal Register / Vol. 73, No. 88 / Tuesday, May 6, 2008 / Notices Act 16 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 17 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The CHX has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow the Exchange to implement the changes to the ROC without delay.18 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the proposed rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the CHX. 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–CHX– 2008–05 and should be submitted on or before May 27, 2008. 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–9866 Filed 5–5–08; 8:45 am] 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–CHX–2008–05 on the subject line. SECURITIES AND EXCHANGE COMMISSION rwilkins on PROD1PC63 with NOTICES 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–CHX–2008–05. 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 16 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 18 For purposes only of waiving the 30-day operative delay, the Commission has considered the impact of the proposed rule on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 17 17 VerDate Aug<31>2005 17:11 May 05, 2008 Jkt 214001 BILLING CODE 8010–01–P [Release No. 34–57736; File No. SR–ISE– 2008–35] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Position and Exercise Limits for Options on the DIAMONDS Trust April 29, 2008. 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 17, 2008, the International Securities Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposed rule change 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 effective upon filing with the Commission. 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 The Exchange proposes to amend its rules to increase the position and exercise limits applicable to options on the DIAMONDS Trust, Series 1 (‘‘DIA’’). The text of the proposed rule change is available on the Exchange’s Web site (https://www.ise.com), at the offices of the Exchange, 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 is proposing to amend its rules pertaining to position and exercise limits for options on DIA. The Exchange proposes to increase position and exercise limits for options on DIA to 300,000 contracts on the same side of the market. The Commission previously approved a similar proposal of the Chicago Board Options Exchange (‘‘CBOE’’).5 5 See Securities Exchange Act Release No. 47346 (February 11, 2003), 68 FR 8316 (February 20, 2003) (SR–CBOE–2002–26) (approving an increase in the position limits and exercise limits to 300,000 for DIA options). The Commission stated that ‘‘given the surveillance capabilities of the [CBOE] and the depth and liquidity in both the DIA options and the underlying cash market in DIAs, the Commission believes it is permissible to significantly raise position and exercise limits for DIA options without risk of disruption to the options or underlying cash markets.’’ The Commission also stated that ‘‘financial and reporting requirements . . . should allow [CBOE] to detect and deter trading abuses arising from the increased position and exercise limits, and will also allow [CBOE] to monitor large positions in order to identify instances of potential risk and to assess additional margin and/or capital charges, if deemed necessary.’’ E:\FR\FM\06MYN1.SGM 06MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 88 (Tuesday, May 6, 2008)]
[Notices]
[Pages 25068-25070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-9866]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57734; File No. SR-CHX-2008-05]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
to Change the Composition of its Regulatory Oversight Committee

April 29, 2008.
    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 21, 2008, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
The Exchange has designated this proposal as non-controversial under 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to change the composition 
of the Regulatory Oversight Committee (``ROC'' or ``Committee'') so 
that this group consists of at least five Public Directors and to allow 
the Exchange's Vice Chairman to appoint, and the Public Directors on 
the Exchange's Board of Directors to approve, up to two Participant 
Directors to serve as non-voting advisors to the Committee. The text of 
this proposed rule change is available at the CHX, on the Exchange's 
Web site at https://www.chx.com/rules/proposed_rules.html, and in 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 CHX included statements 
concerning the purpose of, and basis for, 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

[[Page 25069]]

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
    Under its existing rules, the Exchange's ROC consists of seven 
persons--five Public Directors and two Participant Directors.\5\ One of 
the Participant Directors must be associated with a firm that is 
primarily engaged in business on the Exchange's trading floor.\6\ The 
other Participant Director must be associated with a participant firm 
that is not primarily engaged in business on the Exchange's trading 
floor.\7\
---------------------------------------------------------------------------

    \5\ See CHX Rules, Article 2, Rule 4. Under the Exchange's 
bylaws, a Public Director is a director who (i) Is not a 
participant, or an officer, managing member, partner or employee of 
a participant firm; (ii) is not an employee of the CHX or any of its 
affiliates; (iii) is not a broker or dealer that is registered under 
the Act, or an officer or employee of a broker or dealer that is 
registered under the Act; or (iv) does not have any other material 
business relationship with (a) CHX, CHX Holdings or any of their 
affiliates or (b) any broker or dealer that is registered under the 
Act. A Participant Director is a participant or an officer, managing 
member or partner of a participant firm. See CHX Bylaws, Article II, 
Section 2(b). The Commission recently approved a proposed rule 
change by CHX to amend the definition of Public Director in its 
bylaws to refer to brokers or dealers registered under the Act. See 
Securities Exchange Act Release No. 57699 (April 23, 2008), 73 FR 
23287 (April 29, 2008) (SR-2008-CHX-02).
    \6\ This director is called an ``On-Floor Participant Director'' 
in the current rule. See CHX Rules, Article 2, Rule 4.
    \7\ This director is called ``Off-Floor Participant Director'' 
in the current rule. See CHX Rules, Article 2, Rule 4.
---------------------------------------------------------------------------

    Through this proposal, the Exchange would modify the composition of 
the ROC so that it would consist of at least five Public Directors. The 
Exchange would also amend its rules to allow the Exchange's Vice 
Chairman to appoint, and the Public Directors on the Exchange's Board 
of Directors to approve, up to two Participant Directors to serve as 
non-voting advisors to the Committee.
    These proposed changes serve several purposes. First, the changes 
would eliminate references to the Exchange's trading floor when 
describing the Participant Directors who can serve on the ROC. In the 
Exchange's new trading model, the Exchange no longer operates a 
physical trading floor, so these distinctions are no longer 
particularly useful in distinguishing between Participant Directors.\8\
---------------------------------------------------------------------------

    \8\ The Exchange fully transitioned to its new trading model on 
January 26, 2007.
---------------------------------------------------------------------------

    As an additional matter, the changes would modify the role that 
Participant Directors play on the ROC--instead of being voting members 
of the ROC, the Participant Directors would serve as non-voting 
advisors. This status would allow the Participant Directors to share 
insights that might prove helpful to the ROC in its oversight of the 
Exchange's regulatory programs, but would not allow the Participant 
Directors to vote on issues that may arise.\9\
---------------------------------------------------------------------------

    \9\ The Exchange believes that a non-voting, advisory role for 
Participant Directors is more consistent with the Commission's 
proposed self-regulatory organization (``SRO'') governance rules, 
which, if approved, would require that each SRO's ROC be composed 
entirely of independent (or public) directors, but that would not, 
at least on its face, prohibit an SRO from appointing an advisory 
group of members to work with the ROC. See Securities Exchange Act 
Release No. 50699 (November 18, 2004), 69 FR 71126 (December 8, 
2004) (S7-39-04). Although these proposals have not been approved as 
final rules, the Exchange believes that they provide strong 
guidelines for SROs to consider as they review their internal 
governance structures.
---------------------------------------------------------------------------

    Finally, the changes would provide some flexibility in the number 
of persons who must serve on the ROC to better allow the Exchange to 
respond to changes over time. By allowing the ROC to be composed of 
``at least'' five Public Directors, the Exchange's Vice Chairman would 
be able to appoint, and the Public Directors on the Exchange's Board 
would be able to approve, some or even all of its Public Directors to 
the ROC, as the Board believes is appropriate. Similarly, by allowing 
the Exchange's Vice Chairman to appoint, and the Public Directors on 
the Exchange's Board to approve, ``up to'' two Participant Directors to 
serve as advisors to the ROC, the Exchange's Board would be able to 
determine how many non-voting advisors are appropriate at a particular 
time. This flexibility would also allow the Board to be sensitive, 
within reasonable bounds, to the availability of its Board members to 
serve on committees--the proposal would allow the Exchange's Vice 
Chairman to appoint, and the Public Directors on the Exchange's Board 
to approve, five, six or seven Public Directors to the ROC, for 
example, depending upon each director's ability to dedicate time to the 
ROC's activities.
    The ROC's composition is not described solely in the Exchange's 
rules; it is also set out in the 2003 settlement agreement that the 
Exchange entered into with the Commission.\10\ The Exchange asked the 
Commission to amend the Order to incorporate this new composition for 
the ROC; this rule filing is designed to effectuate the changes to the 
Order approved by the Commission.\11\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 48566 (September 
30, 2003) (Administrative Proceeding File No. 3-11282) (``Order'').
    \11\ See Securities Exchange Act Release No. 57605 (April 2, 
2008) (Administrative Proceeding File No. 3-11282).
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 2. Statutory Basis
    The CHX believes that the proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b).\12\ The proposed rule change is 
consistent with Section 6(b)(5) of the Act \13\ because it would 
promote just and equitable principles of trade, remove impediments to, 
and perfect the mechanism of, a free and open market and a national 
market system, and, in general, protect investors and the public 
interest by permitting the Exchange to make reasonable modifications to 
the required composition of its ROC.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition.

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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\
---------------------------------------------------------------------------

    \14\ U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied the five-day pre-filing requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the

[[Page 25070]]

Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The CHX has 
requested that the Commission waive the 30-day operative delay. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to implement the changes to the ROC 
without delay.\18\
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the impact of the proposed rule on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the proposed rule change 
if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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 rule-comments@sec.gov. Please include 
File Number SR-CHX-2008-05 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-CHX-2008-05. 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 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, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of the filing also 
will be available for inspection and copying at the principal office of 
the CHX. 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-CHX-
2008-05 and should be submitted on or before May 27, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-9866 Filed 5-5-08; 8:45 am]
BILLING CODE 8010-01-P

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