Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among the American Stock Exchange LLC, Boston Stock Exchange, Inc., Chicago Board Options Exchange, Incorporated, International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc., The NASDAQ Stock Market LLC, NYSE Arca, Inc., and NASDAQ OMX PHLX, Inc., Relating to Options Market Surveillance, 62344-62350 [E8-24740]

Download as PDF 62344 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices The proposed action is necessary to allow the licensee to implement the ITS. The ITS are based on standard Babcock and Wilcox TSs. They are considered an improvement over the CTS. Environmental Impacts of the Proposed Action The NRC has completed its safety evaluation of the proposed action and concludes that the proposed TS conversion would not increase the probability or consequences of accidents previously analyzed and would not affect facility radiation levels or facility radiological effluents due to the fact that no physical facility is being affected. The details of the staff’s safety evaluation will be provided in the license amendment. Specifically, the proposed TS changes will not increase the probability or consequences of accidents. No changes are being made in the types or amounts of any effluent that may be released offsite, and there is no significant increase in the allowable individual or cumulative occupational radiation exposure. Therefore, there are no significant radiological environmental impacts associated with the proposed action. With regard to potential nonradiological impacts, the proposed action does not have a potential to affect any historic sites because no previously undisturbed area will be affected by the proposed TS changes. It does not affect nonradiological plant effluents and has no other environmental impact. No physical facility is being affected by this change. Therefore, there are no significant nonradiological environmental impacts associated with the proposed action. Accordingly, the NRC concludes that there are no significant environmental impacts associated with the proposed action and, thus, the proposed action will not have any significant impact to the human environment. mstockstill on PROD1PC66 with NOTICES Environmental Impacts of the Alternatives to the Proposed Action As an alternative to the proposed action, the staff considered denial of the proposed action (i.e., the ‘‘no-action’’ alternative). Denial of the application would result in no change in current environmental impacts. The environmental impacts of the proposed action and the alternative action are similar. Alternative Use of Resources The action does not involve the use of any different resources than those previously considered in the Final Environmental Statement for the DBNPS, dated October 31, 1975. VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 Agencies and Persons Consulted On July 14, 2008, the NRC staff consulted with the Ohio State official, Carol O’Claire of the Department of Public Safety, regarding the environmental impact of the proposed action. The State official had no comments. Finding of No Significant Impact On the basis of the environmental assessment, the NRC concludes that the proposed action will not have a significant effect on the quality of the human environment. Accordingly the NRC has determined not to prepare an environmental impact statement for the proposed action. For further details with respect to the proposed action, see the licensee’s letter dated August 3, 2007 (ADAMS Accession No. ML072200448), as supplemented by letters dated May 16, 2008 (2 letters) (ADAMS Accession Nos. ML081480464 and ML081430105), July 23, 2008 (ADAMS Accession No. ML082070079), August 7, 2008 (ADAMS Accession No. ML082270658), August 26, 2008 (ADAMS Accession No. ML082600594), and September 3, 2008 (ADAMS Accession No. ML082490154). The information provided to the Nuclear Regulatory Commission (NRC) staff through the joint NRC-FirstEnergy Nuclear Operating Company improved technical specifications (ITS) conversion web page hosted by Excel Services Corporation can be found in these supplements. Documents may be examined, and/or copied for a fee, at the NRC’s Public Document Room (PDR), located at One White Flint North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the ADAMS Public Electronic Reading Room on the Internet at the NRC Web site, http://www.nrc.gov/reading-rm/ adams.html. Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS should contact the NRC PDR Reference staff by telephone at 1–800–397–4209 or 301–415–4737, or send an e-mail to pdr@nrc.gov. Dated at Rockville, Maryland, this 8th day of October 2008. For the Nuclear Regulatory Commission. Cameron S. Goodwin, Project Manager, Plant Licensing Branch III– 2, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. E8–24899 Filed 10–17–08; 8:45 am] BILLING CODE 7590–01–P PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58765; File No. 4–551] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among the American Stock Exchange LLC, Boston Stock Exchange, Inc., Chicago Board Options Exchange, Incorporated, International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc., The NASDAQ Stock Market LLC, NYSE Arca, Inc., and NASDAQ OMX PHLX, Inc., Relating to Options Market Surveillance October 9, 2008. Notice is hereby given that the Securities and Exchange Commission (‘‘Commission’’) has issued an Order, pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 approving and declaring effective an amendment to the plan for allocating regulatory responsibility (‘‘Plan’’) filed pursuant to Rule 17d–2 of the Act,2 by the American Stock Exchange LLC (‘‘Amex’’), Boston Stock Exchange, Inc. (‘‘BSE’’), Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), International Securities Exchange, LLC (‘‘ISE’’), Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), The NASDAQ Stock Market LLC (‘‘NASDAQ’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), and NASDAQ OMX PHLX, Inc. (‘‘Phlx’’) (collectively, ‘‘SRO Participants’’) concerning optionsrelated market surveillance. I. Introduction Section 19(g)(1) of the Act,3 among other things, requires every selfregulatory organization (‘‘SRO’’) registered as either a national securities exchange or national 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) 4 or Section 19(g)(2) 5 of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that 1 15 U.S.C. 78q(d). CFR 240.17d–2. 3 15 U.S.C. 78s(g)(1). 4 15 U.S.C. 78q(d). 5 15 U.S.C. 78s(g)(2). 2 17 E:\FR\FM\20OCN1.SGM 20OCN1 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices maintain memberships in more than one SRO (‘‘common members’’). Such regulatory duplication would add unnecessary expenses for common members and their SROs. Section 17(d)(1) of the Act 6 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.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–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.9 When an SRO has been named as a common member’s DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d–1 deals only with an SRO’s obligations to enforce member compliance with financial responsibility requirements. Rule 17d–1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. To address regulatory duplication in these and other areas, the Commission adopted Rule 17d–2 under the Act.10 Rule 17d–2 permits SROs to propose joint plans for the allocation of regulatory responsibilities 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 6 15 U.S.C. 78q(d)(1). 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. 9 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 10 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). mstockstill on PROD1PC66 with NOTICES 7 See VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 investors, to foster cooperation and coordination among the SROs, to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system, and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d–2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. II. The Plan On December 11, 2007, the Commission declared effective the SRO Participants’ Plan for allocating regulatory responsibilities pursuant to Rule 17d–2.11 On April 11, 2008, the Commission approved an amendment to the Plan to include NASDAQ as a participant.12 The Plan is designed to reduce regulatory duplication for common members by allocating regulatory responsibility for certain options-related market surveillance matters among the SRO Participants.13 Generally, under the current Plan, an SRO Participant will serve as the Designated Options Surveillance Regulator (‘‘DOSR’’) for each common member assigned to it and will assume regulatory responsibility with respect to that common member’s compliance with applicable common rules for certain accounts. When an SRO has been named as a common member’s DOSR, all other SROs to which the common member belongs will be relieved of regulatory responsibility for that common member, pursuant to the terms of the Plan, with respect to the applicable common rules specified in Exhibit A to the Plan. III. Proposed Amendment to the Plan On October 1, 2008, the SRO Participants submitted a proposed amendment to the Plan. The purpose of the amendment is to clarify that the term Regulatory Responsibility for options position limits includes examination responsibilities for the delta hedging exemption. Specifically, 11 See Securities Exchange Act Release No. 56941 (December 11, 2007), 72 FR 71723 (December 18, 2007) (File No. 4–551). 12 See Securities Exchange Act Release No. 57649 (April 11, 2008), 73 FR 20976 (April 17, 2008) (File No. 4–551). 13 The Plan is wholly separate from the multiparty options agreement made pursuant to Rule 17d–2 by and among Amex, BSE, CBOE, ISE, FINRA, New York Stock Exchange LLC, NASDAQ, NYSE Arca, and Phlx involving the allocation of regulatory responsibilities with respect to common members for options-related sales practice matters relating to the conduct of broker-dealers of accounts for listed options or index warrants. See Securities Exchange Act Release Nos. 57987 (June 18, 2008), 73 FR 36156 (June 25, 2008) (File No. S7–966). PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 62345 the SRO Participants intend that FINRA will conduct examinations for the delta hedging exemption for all common members that are members of FINRA notwithstanding the fact that FINRA’s position limit rule is, in some cases, limited to only firms that are not members of an options exchange (i.e., access members). In such cases, FINRA’s examinations for the delta hedging exemption will be for the position limit rule(s) of the other SRO Participant(s). Examinations for the delta hedging exemption for common members that are non-FINRA members will be conducted by the same SRO Participant conducting position limit surveillance as provided in Exhibit B to the Plan. In addition, Exhibit A to the Plan has been updated to reflect the addition of options position limit rules as common rules. Accordingly, regulatory responsibility for a common member’s compliance with the options position limit rules included in Exhibit A to the Plan will be allocated to the applicable DOSR as provided by the amended Plan. The amended agreement replaces the previous agreement in its entirety. The text of the proposed amended 17d–2 Plan is as follows (additions are italicized; deletions are [bracketed]): * * * * * Agreement by and Among the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, the International Securities Exchange LLC, Financial Industry Regulatory Authority, Inc., Nyse Arca, Inc., The Nasdaq Stock Market LLC, and [the Philadelphia Stock Exchange] NASDAQ OMX PHLX, Inc., Pursuant to Rule 17d–2 Under the Securities Exchange Act of 1934 This agreement (this ‘‘Agreement’’), by and among the American Stock Exchange LLC (‘‘Amex’’), the Boston Stock Exchange, Inc. (‘‘BSE’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), the International Securities Exchange LLC (‘‘ISE’’), Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), NYSE Arca, Inc. (‘‘Arca’’), The NASDAQ Stock Market LLC (‘‘Nasdaq’’), and the [Philadelphia Stock Exchange] NASDAQ OMX PHLX, Inc. (‘‘PHLX’’), is made this 10th day of October, 2007, and as amended [this] the 31st day of March, 2008, and this 1st day of October, 2008, pursuant to Section 17(d) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), and Rule 17d–2 thereunder (‘‘Rule 17d–2’’), E:\FR\FM\20OCN1.SGM 20OCN1 mstockstill on PROD1PC66 with NOTICES 62346 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices which allows for a joint plan among self-regulatory organizations (‘‘SROs’’) to allocate regulatory obligations with respect to brokers or dealers that are members of two or more of the parties to this Agreement (‘‘Common Members’’). The Amex, BSE, CBOE, ISE, FINRA, Arca, Nasdaq, and PHLX are collectively referred to herein as the ‘‘Participants’’ and individually, each a ‘‘Participant.’’ This Agreement shall be administered by a committee known as the Options Surveillance Group (the ‘‘OSG’’ or ‘‘Group’’), as described in Section V hereof. Unless defined in this Agreement or the context otherwise requires, the terms used herein shall have the meanings assigned thereto by the Exchange Act and the rules and regulations thereunder. Whereas, the Participants desire to eliminate regulatory duplication with respect to SRO market surveillance of Common Member 11 activities with regard to certain common rules relating to listed options (‘‘Options’’); and Whereas, for this purpose, the Participants desire to execute and file this Agreement with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’) pursuant to Rule 17d–2. Now, Therefore, in consideration of the mutual covenants contained in this Agreement, the Participants agree as follows: I. Except as otherwise provided in this Agreement, each Participant shall assume Regulatory Responsibility (as defined below) for the Common Members that are allocated or assigned to such Participant in accordance with the terms of this Agreement and shall be relieved of its Regulatory Responsibility as to the remaining Common Members. For purposes of this Agreement, a Participant shall be considered to be the Designated Options Surveillance Regulator (‘‘DOSR’’) for each Common Member that is allocated to it in accordance with Section VII. II. As used in this Agreement, the term ‘‘Regulatory Responsibility’’ shall mean surveillance, investigation and enforcement responsibilities relating to compliance by the Common Members with such Options rules of the Participants as the Participants shall determine are substantially similar and shall approve from time to time, insofar as such rules relate to market surveillance (collectively, the ‘‘Common Rules’’). For the purposes of this Agreement the list of Common Rules is attached as Exhibit A hereto, which may only be amended upon unanimous 11 In the case of the BSE, members are those persons who are Options Participants (as defined in the Boston Options Exchange LLC Rules). VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 written agreement by the Participants. The DOSR assigned to each Common Member shall assume Regulatory Responsibility with regard to that Common Member’s compliance with the applicable Common Rules for certain accounts.12 A DOSR may perform its Regulatory Responsibility or enter an agreement to transfer or assign such responsibilities to a national securities exchange registered with the SEC under Section 6(a) of the Exchange Act or a national securities association registered with the SEC under Section 15A of the Exchange Act. A DOSR may not transfer or assign its Regulatory Responsibility to an association registered for the limited purpose of regulating the activities of members who are registered as brokers or dealers in security futures products. The term ‘‘Regulatory Responsibility’’ does not include, and each Participant shall retain full responsibility with respect to: (a) surveillance, investigative and enforcement responsibilities other than those included in the definition of Regulatory Responsibility; (b) any aspects of the rules of a Participant that are not substantially similar to the Common Rules or that are allocated for a separate surveillance purpose under any other agreement made pursuant to Rule 17d–2. Any such aspects of a Common Rule will be noted as excluded on Exhibit A. With respect to options position limits, the term Regulatory Responsibility shall include examination responsibilities for the delta hedging exemption. Specifically, the Participants intend that FINRA will conduct examinations for delta hedging for all Common Members that are members of FINRA notwithstanding the fact that FINRA’s position limit rule is, in some cases, limited to only firms that are not members of an options exchange (i.e., access members). In such cases, FINRA’s examinations for delta hedging options position limit violations will be for the identical or substantively similar position limit rule(s) of the other Participant(s). Examinations for delta hedging for Common Members that are non-FINRA members will be conducted by the same Participant conducting position limit surveillance. The allocation of Common Members to DOSRs for surveillance of compliance with options position limits and other agreed to Common Rules is provided in 12 Certain accounts shall include customer (‘‘C’’ as classified by the Options Clearing Corporation (‘‘OCC’’)) and firm (‘‘F’’ as classified by OCC) accounts, as well as other accounts, such as market maker accounts as the Participants shall, from time to time, identify as appropriate to review. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 Exhibit B. The allocation of Common Members to DOSRs for examinations of the delta hedging exemption under the options position limits rules is provided in Exhibit C. III. Each year within 30 days of the anniversary date of the commencement of operation of this Agreement, or more frequently if required by changes in the rules of a Participant, each Participant shall submit to the other Participants, through the Chair of the OSG, an updated list of Common Rules for review. This updated list may add Common Rules to Exhibit A, shall delete from Exhibit A rules of that Participant that are no longer identical or substantially similar to the Common Rules, and shall confirm that the remaining rules of the Participant included on Exhibit A continue to be identically or substantially similar to the Common Rules. Within 30 days from the date that each Participant has received revisions to Exhibit A from the Chair of the OSG, each Participant shall confirm in writing to the Chair of the OSG whether that Participant’s rules listed in Exhibit A are Common Rules. IV. Apparent violation of another Participant’s rules discovered by a DOSR, but which rules are not within the scope of the discovering DOSR’s Regulatory Responsibility, shall be referred to the relevant Participant for such action as is deemed appropriate by that Participant. Notwithstanding the foregoing, nothing contained herein shall preclude a DOSR in its discretion from requesting that another Participant conduct an investigative or enforcement proceeding (‘‘Proceeding’’) on a matter for which the requesting DOSR has Regulatory Responsibility. If such other Participant agrees, the Regulatory Responsibility in such case shall be deemed transferred to the accepting Participant and confirmed in writing by the Participants involved. Additionally, nothing in this Agreement shall prevent another Participant on whose market potential violative activity took place from conducting its own Proceeding on a matter. The Participant conducting the Proceeding shall advise the assigned DOSR. Each Participant agrees, upon request, to make available promptly all relevant files, records and/or witnesses necessary to assist another Participant in a Proceeding. V. The OSG shall be composed of one representative designated by each of the Participants (a ‘‘Representative’’). Each Participant shall also designate one or more persons as its alternate representative(s) (an ‘‘Alternate Representative’’). In the absence of the Representative, the Alternate E:\FR\FM\20OCN1.SGM 20OCN1 mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices Representative shall assume the powers, duties and responsibilities of the Representative. Each Participant may at any time replace its Representative and/ or its Alternate Representative to the Group.13 A majority of the OSG shall constitute a quorum and, unless otherwise required, the affirmative vote of a majority of the Representatives present (in person, by telephone or by written consent) shall be necessary to constitute action by the Group. The Group will have a Chair, Vice Chair and Secretary. A different Participant will assume each position on a rotating basis for a one-year term. In the event that a Participant replaces a Representative who is acting as Chair, Vice Chair or Secretary, the newly appointed Representative shall assume the position of Chair, Vice Chair, or Secretary (as applicable) vacated by the Participant’s former Representative. In the event a Participant cannot fulfill its duties as Chair, the Participant serving as Vice Chair shall substitute for the Chair and complete the subject unfulfilled term. All notices and other communications for the OSG are to be sent in care of the Chair and, as appropriate, to each Representative. VI. The OSG shall determine the times and locations of Group meetings, provided that the Chair, acting alone, may also call a meeting of the Group in the event the Chair determines that there is good cause to do so. To the extent reasonably possible, notice of any meeting shall be given at least ten business days prior to the meeting date. Representatives shall always be given the option of participating in any meeting telephonically at their own expense rather than in person. VII. No less frequently than every two years, in such manner as the Group deems appropriate, the OSG shall allocate Common Members that conduct an Options business among the Participants (‘‘Allocation’’), and the Participant to which a Common Member is allocated will serve as the DOSR for that Common Member. Any Allocation shall be based on the following principles, except to the extent all affected Participants consent to one or more different principles: (a) The OSG may not allocate a Common Member to a Participant unless the Common Member is a member of that Participant. (b) To the extent practicable, Common Members that conduct an Options business shall be allocated among the Participants of which they are members in such manner as to equalize as nearly 13 A Participant must give notice to the Chair of the Group of such a change. VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 as possible the allocation among such Participants, provided that no Common Members shall be allocated to FINRA. For example, if sixteen Common Members that conduct an Options business are members only of three Participants, none of which is FINRA, those Common Members shall be allocated among the three Participants such that no Participant is allocated more than six such members and no Participant is allocated less than five such members. If, in the previous example, one of the three Participants is FINRA, the sixteen Common Members would be allocated evenly between the remaining Participants, so that the two non-FINRA Participants would be allocated eight Common Members each. (c) To the extent practicable, Allocation shall take into account the amount of Options activity conducted by each Common Member in order to most evenly divide the Common Members with the largest amount of activity among the Participants of which they are members. Allocation will also take into account similar allocations pursuant to other plans or agreements to which the Common Members are party to maintain consistency in oversight of the Common Members.14 (d) To the extent practicable, Allocation of Common Members to Participants will be rotated among the applicable Participants such that a Common Member shall not be allocated to a Participant to which that Common Member was allocated within the previous two years. The assignment of DOSRs pursuant to the Allocation is attached as Exhibit B hereto, and will be updated from time to time to reflect Common Member Allocation changes. (e) The Group may reallocate Common Members from time-to-time, as it deems appropriate. (f) Whenever a Common Member ceases to be a member of its DOSR, the DOSR shall promptly inform the Group, which shall review the matter and allocate the Common Member to another Participant. (g) A DOSR may request that a Common Member to which it is assigned be reallocated to another Participant by giving 30 days written notice to the Chair of the OSG. The Group, in its discretion, may approve such request and reallocate the Common Member to another Participant. (h) All determinations by the Group with respect to Allocation shall be made by the affirmative vote of a majority of 14 For example, if one Participant was allocated a Common Member by another regulatory group that Participant would be assigned to be the DOSR of that Common Member, unless there is good cause not to make that assignment. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 62347 the Participants that, at the time of such determination, share the applicable Common Member being allocated; a Participant shall not be entitled to vote on any Allocation relating to a Common Member unless the Common Member is a member of such Participant. VIII. Each DOSR shall conduct routine surveillance reviews to detect violations of the applicable Common Rules by each Common Member allocated to it with a frequency (daily, weekly, monthly, quarterly, semi-annually or annually as noted on Exhibit A) not less than that determined by the Group. The other Participants agree that, upon request, relevant information in their respective files relative to a Common Member will be made available to the applicable DOSR. In addition, each Participant shall provide, to the extent not otherwise already provided, information pertaining to its surveillance program that would be relevant to FINRA or the Participant(s) conducting routine examinations for the delta hedging exemption. At each meeting of the OSG, each Participant shall be prepared to report on the status of its surveillance program for the previous quarter and any period prior thereto that has not previously been reported to the Group. In the event a DOSR believes it will not be able to complete its Regulatory Responsibility for its allocated Common Members, it will so advise the Group in writing promptly. The Group will undertake to remedy this situation by reallocating the subject Common Members among the remaining Participants. In such instance, the Group may determine to impose a regulatory fee for services provided to the DOSR that was unable to fulfill its Regulatory Responsibility. IX. Each Participant will, upon request, promptly furnish a copy of the report or applicable portions thereof relating to any investigation made pursuant to the provisions of this Agreement to each other Participant of which the Common Member under investigation is a member. X. Each Participant will routinely populate a common database, to be accessed by the Group relating to any formal regulatory action taken during the course of a Proceeding with respect to the Common Rules concerning a Common Member. XI. Any written notice required or permitted to be given under this Agreement shall be deemed given if sent by certified mail, return receipt requested, to any Participant to the attention of that Participant’s Representative, to the Participant’s principal place of business or by e-mail at such address as the Representative E:\FR\FM\20OCN1.SGM 20OCN1 62348 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices shall have filed in writing with the Chair. XII. The costs incurred by each Participant in discharging its Regulatory Responsibility under this Agreement are not reimbursable. However, any of the Participants may agree that one or more will compensate the other(s) for costs incurred. XIII. The Participants shall notify the Common Members of this Agreement by means of a uniform joint notice approved by the Group. Each Participant will notify the Common Members that have been allocated to it that such Participant will serve as DOSR for that Common Member. XIV. This Agreement shall be effective upon approval of the Commission. This Agreement may only be amended in writing duly approved by each Participant. All amendments to this Agreement, excluding changes to Exhibits A, B and [B]C, must be filed with and approved by the Commission. XV. Any Participant may manifest its intention to cancel its participation in this Agreement at any time upon providing written notice to (i) the Group six months prior to the date of such cancellation, or such other period as all the Participants may agree, and (ii) the Commission. Upon receipt of the notice the Group shall allocate, in accordance with the provisions of this Agreement, those Common Members for which the canceling Participant was the DOSR. The canceling Participant shall retain its Regulatory Responsibility and other rights, privileges and duties pursuant to this Agreement until the Group has completed the reallocation as described above, and the Commission has approved the cancellation. XVI. The cancellation of its participation in this Agreement by any Participant shall not terminate this Agreement as to the remaining Participants. This Agreement will only terminate following notice to the Commission, in writing, by the then Participants that they intend to terminate the Agreement and the expiration of the applicable notice period. Such notice shall be given at least six months prior to the intended date of termination, or such other period as all the Participants may agree. Such termination will become effective upon Commission approval. XVII. Participation in the Group shall be strictly limited to the Participants and no other party shall have any right to attend or otherwise participate in the Group except with the unanimous approval of all Participants. Notwithstanding the foregoing, any national securities exchange registered with the SEC under Section 6(a) of the Act or any national securities association registered with the SEC under section 15A of the Act may become a Participant to this Agreement provided that: (i) Such applicant has adopted rules substantially similar to the Common Rules, and received approval thereof from the SEC; (ii) such applicant has provided each Participant with a signed statement whereby the applicant agrees to be bound by the terms of this Agreement to the same effect as though it had originally signed this Agreement and (iii) an amended agreement reflecting the addition of such applicant as a Participant has been filed with and approved by the Commission. XVIII. This Agreement is wholly separate from the multiparty Agreement made pursuant to Rule 17d-2 by and among the Amex, BSE, CBOE, ISE, NASD, the New York Stock Exchange, LLC, Arca and PHLX involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct by broker-dealers of accounts for listed options or index warrants entered into on December 1, 2006, and as may be amended from time to time. Limitation of Liability No Participant nor the Group nor any of their respective directors, governors, officers, employees or representatives shall be liable to any other Participant in this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibility as provided hereby or for the failure to provide any such Regulatory Responsibility, except with respect to such liability, loss or damages as shall have been suffered by one or more of the Participants and caused by the willful misconduct of one or more of the other Participants or its respective directors, governors, officers, employees or representatives. No warranties, express or implied, are made by the Participants, individually or as a group, or by the OSG with respect to any Regulatory Responsibility to be performed hereunder. Relief From Responsibility Pursuant to Section 17(d)(1)(A) of the Exchange Act and Rule 17d-2, the Participants join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve the Participants that are party to this Agreement and are not the DOSR as to a Common Member of any and all Regulatory Responsibility with respect to the matters allocated to the DOSR. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. In Witness Whereof, the Participants hereto have executed this Agreement as of the date and year first above written. * * * * * OPTIONS SURVEILLANCE GROUP 17d–2 Exhibit A COMMON RULES SRO Description of rule Exchange rule number Frequency of review mstockstill on PROD1PC66 with NOTICES Violation I: Expiring Exercise Declarations (EED)—For Listed Equity Options Expiring: the Third Saturday Following the Third Friday of a Month, Quarterly, AND for Listed FLEX Options Amex ................... BOX ..................... CBOE .................. FINRA .................. ISE ....................... Nasdaq ................ NYSEArca ........... PHLX ................... Exercise Exercise Exercise Exercise Exercise Exercise Exercise Exercise of of of of of of of of Options Contracts ...................................................... Options Contracts ...................................................... Options Contracts ...................................................... Options Contracts ...................................................... Options Contracts ...................................................... Options Contracts ...................................................... Options Contracts ...................................................... Equity Options Contracts ........................................... [Amex] Rule 980 ....................... [BOX] Rule 7.1 .......................... [CBOE] Rule 11.1 ..................... NASD Rule 2860 ....................... [ISE] Rule 1100 ......................... Nasdaq Chapter VIII, Sec.1 ...... [NYSEArca] Rule 6.24 .............. [PHLX] Rule 1042 ..................... At At At At At At At At Expiration. Expiration. Expiration. Expiration. Expiration. Expiration. Expiration. Expiration. Violation II: Position Limits. (PL)—For Listed Equity Options Expiring: The Third Saturday Following The Third Friday of a Month, Quarterly VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\20OCN1.SGM 20OCN1 62349 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices COMMON RULES—Continued SRO Description of rule Exchange rule number Amex ................... Position Limits. .............................................................................. Liquidating Positions. .................................................................... Position Limits. .............................................................................. Exemptions from Position ............................................................. Liquidation Positions. .................................................................... Position Limits. .............................................................................. Liquidation of Positions. ................................................................ Position Limits. .............................................................................. Liquidation of Positions. and Restrictions on Access ................... Position Limits. .............................................................................. Exemptions from Position Limits. .................................................. Liquidating Positions. .................................................................... Position Limits. .............................................................................. Rule 904 .................................... Rule 907 .................................... Chapter III, Section 7 ................ Chapter III, Section 8 ................ Chapter III, Section 11 .............. Rule 4.11 ................................... Rule 4.14 ................................... NASD Rule 2860(b)(3) .............. NASD Rule 2860(b)(6) .............. Rule 412 .................................... Rule 413 .................................... Rule 416 .................................... Nasdaq Rule Chapter III Section 7. Nasdaq Rule Chapter III Section 8. Nasdaq Rule Chapter III Section 11. Rule 6.8 ..................................... Rule 6.7 ..................................... Rule 1001 .................................. Rule 1004 .................................. BOX ..................... CBOE .................. FINRA .................. ISE ....................... Nasdaq ................ Exemptions from Position Limits. .................................................. Liquidating Positions. .................................................................... NYSEArca ........... Position Limits. .............................................................................. Liquidation of Position ................................................................... Position Limits. .............................................................................. Liquidation of Positions. ................................................................ PHLX ................... * * * * * IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing. Comments may be submitted by any of the following methods: mstockstill on PROD1PC66 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/other.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number 4–551 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number 4–551. 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 (http://www.sec.gov/rules/ other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed plan that are filed with the Commission, and all written communications relating to the proposed plan 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 VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 Room, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the plan also will be available for inspection and copying at the principal offices of Amex, BSE, CBOE, ISE, FINRA, NASDAQ, NYSE Arca, and Phlx. 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 4–551 and should be submitted on or before November 10, 2008. V. Discussion The Commission continues to believe that the Plan, as proposed to be amended, is an achievement in cooperation among the SRO Participants, and will reduce unnecessary regulatory duplication by allocating to the designated SRO the responsibility for certain options-related market surveillance matters that would otherwise be performed by multiple SROs. The Plan promotes efficiency by reducing costs to firms that are members of more than one of the SRO Participants. In addition, because the SRO Participants coordinate their regulatory functions in accordance with the Plan, the Plan promotes, and will continue to promote, investor protection. Under paragraph (c) of Rule 17d–2, the Commission may, after appropriate notice and comment, declare a plan, or any part of a plan, effective. In this instance, the Commission believes that appropriate notice and comment can PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 Frequency of review Daily. As Needed. Daily. As Needed. As Needed. Daily. As Needed. Daily. As Needed. Daily. As Needed. As Needed. Daily. As Needed. As Needed. Daily. As Needed. Daily. As Needed. take place after the proposed amendment is effective. The Commission notes that the SRO Participants have separately determined to add options position limit rules to the list of common rules included in Exhibit A to the Plan.14 To cover the full scope of regulatory responsibilities associated with these new position limit common rules, the SRO Participants have proposed to add language to the Plan to clarify the allocation of examination responsibilities with respect to the delta hedging exemption from options position limits. The amended Plan allocates to FINRA the examination responsibilities with respect to the delta hedging exemption for all common members that are members of FINRA, and allocates to the applicable DOSR the examination responsibilities with respect to the delta hedging exemption for common members that are not members of FINRA. In addition, to facilitate the ability of FINRA or a DOSR to perform examination responsibilities with regard to the position limit rules, the amended Plan states that each SRO Participant shall provide information pertaining to its surveillance program that would be relevant to FINRA or the applicable DOSR conducting routine examinations for the delta hedging exemption. By declaring it effective today, the amended Plan can become effective and be implemented without undue delay. 14 See Section XIV of the Plan (regarding amendments to the Plan). E:\FR\FM\20OCN1.SGM 20OCN1 62350 Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Notices VI. Conclusion This order gives effect to the amended Plan submitted to the Commission that is contained in File No. 4–551. It is therefore ordered, pursuant to Section 17(d) of the Act,15 that the Plan, as amended, made by and between Amex, BSE, CBOE, ISE, FINRA, NASDAQ, NYSE Arca, and Phlx filed with the Commission pursuant to Rule 17d–2 on October 1, 2008 is hereby approved and declared effective. It is further ordered that those SRO Participants that are not the DOSR as to a particular common member are relieved of those regulatory responsibilities allocated to the common member’s DOSR under the amended Plan to the extent of such allocation. It is further ordered that the SRO Participants are relieved of the examination responsibilities with respect to the delta hedging exemption from options position limits for all common members allocated to FINRA under the amended Plan to the extent of such allocation. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Acting Secretary. [FR Doc. E8–24740 Filed 10–17–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58771; File No. SR–CBOE– 2008–101] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Delete Chapter XXX and References to Chapter XXX Throughout the CBOE Rulebook mstockstill on PROD1PC66 with NOTICES October 10, 2008. 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 October 6, 2008, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a ‘‘non-controversial’’ 15 15 U.S.C. 78q(d). CFR 200.30–3(a)(34). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 16 17 VerDate Aug<31>2005 16:42 Oct 17, 2008 Jkt 217001 proposed rule change pursuant to 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to delete Chapter XXX (Trading in Stocks, Warrants and Other Securities) from the CBOE Rulebook. In addition, CBOE proposes to delete references to Chapter XXX rules throughout the CBOE Rulebook. The text of the rule proposal is available on the Exchange’s Web site (http:// www.cboe.org/legal), at the Exchange’s Office of the Secretary and at the 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 self-regulatory organization 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. The Exchange 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to delete Chapter XXX (Trading in Stocks, Warrants and Other Securities) from the CBOE Rulebook.5 In addition, CBOE proposes to delete references to Chapter XXX rules throughout the CBOE Rulebook. Chapter XXX governed the trading of non-option securities traded on CBOE’s stand-alone stock platform in an open-outcry environment. All non-option securities that previously traded under Chapter XXX now trade pursuant to Chapters L through LIV.6 Consequently, it is no longer necessary to include Chapter XXX in the CBOE Rulebook, and the 3 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b-4(f)(6). 5 Chapter XXX was adopted in 1990. See Securities Exchange Act Release No. 28556 (October 19, 1990), 55 FR 43233 (October 26, 1990) (SR– CBOE–90–08). 6 Chapters L through LIV govern the trading of non-option securities on the CBOE Stock Exchange (CBSX), a screen-based facility of CBOE. 4 17 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 chapter will be deleted in its entirety, along with all references to Chapter XXX rules throughout the CBOE Rulebook.7 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements provided under Section 6(b)(5) 8 of the Act, that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. 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 Because the foregoing proposed rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b4(f)(6) thereunder.10 At any time within 7 The Exchange is also proposing to amend the Introduction paragraph to Chapter L, which references Chapter XXX. In addition, the Exchange is replacing references to Chapter 55 with Chapter 54 in the Introduction paragraph for Chapter L and in the Appendix A to Chapters 50 to 54, since Chapter 55 was previously deleted. See Securities Exchange Act Release No. 55034 (December 29, 2006), 72 FR 1350 (January 11, 2007) (notice for SR– CBOE–2006–112) (filing, among other things, deleted all rules (Chapter LV) regarding the Intermarket Trading Systems); see also Securities Exchange Act Release No. 55392 (March 2, 2007), 73 FR 10572 (March 8, 2007) (approval order for SR–CBOE–2006–112). 8 15 U.S.C. 78s(b)(5). 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(6). In addition, when filing a proposed rule change pursuant to Rule 19b– 4(f)(6) under the Act, an 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 E:\FR\FM\20OCN1.SGM 20OCN1

Agencies

[Federal Register Volume 73, Number 203 (Monday, October 20, 2008)]
[Notices]
[Pages 62344-62350]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24740]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58765; File No. 4-551]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amendment to the Plan for the Allocation of Regulatory 
Responsibilities Among the American Stock Exchange LLC, Boston Stock 
Exchange, Inc., Chicago Board Options Exchange, Incorporated, 
International Securities Exchange, LLC, Financial Industry Regulatory 
Authority, Inc., The NASDAQ Stock Market LLC, NYSE Arca, Inc., and 
NASDAQ OMX PHLX, Inc., Relating to Options Market Surveillance

October 9, 2008.
    Notice is hereby given that the Securities and Exchange Commission 
(``Commission'') has issued an Order, pursuant to Section 17(d) of the 
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring 
effective an amendment to the plan for allocating regulatory 
responsibility (``Plan'') filed pursuant to Rule 17d-2 of the Act,\2\ 
by the American Stock Exchange LLC (``Amex''), Boston Stock Exchange, 
Inc. (``BSE''), Chicago Board Options Exchange, Incorporated 
(``CBOE''), International Securities Exchange, LLC (``ISE''), Financial 
Industry Regulatory Authority, Inc. (``FINRA''), The NASDAQ Stock 
Market LLC (``NASDAQ''), NYSE Arca, Inc. (``NYSE Arca''), and NASDAQ 
OMX PHLX, Inc. (``Phlx'') (collectively, ``SRO Participants'') 
concerning options-related market surveillance.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national 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) \4\ or Section 19(g)(2) \5\ of the Act. 
Without this relief, the statutory obligation of each individual SRO 
could result in a pattern of multiple examinations of broker-dealers 
that

[[Page 62345]]

maintain memberships in more than one SRO (``common members''). Such 
regulatory duplication would add unnecessary expenses for common 
members and their SROs.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------

    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\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.
---------------------------------------------------------------------------

    \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).
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    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\8\ 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.\9\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits 
SROs to propose joint plans for the allocation of regulatory 
responsibilities 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 
system and a national clearance and settlement system, and is in 
conformity with the factors set forth in Section 17(d) of the Act. 
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an 
SRO of those regulatory responsibilities allocated by the plan to 
another SRO.
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    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. The Plan

    On December 11, 2007, the Commission declared effective the SRO 
Participants' Plan for allocating regulatory responsibilities pursuant 
to Rule 17d-2.\11\ On April 11, 2008, the Commission approved an 
amendment to the Plan to include NASDAQ as a participant.\12\ The Plan 
is designed to reduce regulatory duplication for common members by 
allocating regulatory responsibility for certain options-related market 
surveillance matters among the SRO Participants.\13\ Generally, under 
the current Plan, an SRO Participant will serve as the Designated 
Options Surveillance Regulator (``DOSR'') for each common member 
assigned to it and will assume regulatory responsibility with respect 
to that common member's compliance with applicable common rules for 
certain accounts. When an SRO has been named as a common member's DOSR, 
all other SROs to which the common member belongs will be relieved of 
regulatory responsibility for that common member, pursuant to the terms 
of the Plan, with respect to the applicable common rules specified in 
Exhibit A to the Plan.
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    \11\ See Securities Exchange Act Release No. 56941 (December 11, 
2007), 72 FR 71723 (December 18, 2007) (File No. 4-551).
    \12\ See Securities Exchange Act Release No. 57649 (April 11, 
2008), 73 FR 20976 (April 17, 2008) (File No. 4-551).
    \13\ The Plan is wholly separate from the multiparty options 
agreement made pursuant to Rule 17d-2 by and among Amex, BSE, CBOE, 
ISE, FINRA, New York Stock Exchange LLC, NASDAQ, NYSE Arca, and Phlx 
involving the allocation of regulatory responsibilities with respect 
to common members for options-related sales practice matters 
relating to the conduct of broker-dealers of accounts for listed 
options or index warrants. See Securities Exchange Act Release Nos. 
57987 (June 18, 2008), 73 FR 36156 (June 25, 2008) (File No. S7-
966).
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III. Proposed Amendment to the Plan

    On October 1, 2008, the SRO Participants submitted a proposed 
amendment to the Plan. The purpose of the amendment is to clarify that 
the term Regulatory Responsibility for options position limits includes 
examination responsibilities for the delta hedging exemption. 
Specifically, the SRO Participants intend that FINRA will conduct 
examinations for the delta hedging exemption for all common members 
that are members of FINRA notwithstanding the fact that FINRA's 
position limit rule is, in some cases, limited to only firms that are 
not members of an options exchange (i.e., access members). In such 
cases, FINRA's examinations for the delta hedging exemption will be for 
the position limit rule(s) of the other SRO Participant(s). 
Examinations for the delta hedging exemption for common members that 
are non-FINRA members will be conducted by the same SRO Participant 
conducting position limit surveillance as provided in Exhibit B to the 
Plan. In addition, Exhibit A to the Plan has been updated to reflect 
the addition of options position limit rules as common rules. 
Accordingly, regulatory responsibility for a common member's compliance 
with the options position limit rules included in Exhibit A to the Plan 
will be allocated to the applicable DOSR as provided by the amended 
Plan. The amended agreement replaces the previous agreement in its 
entirety. The text of the proposed amended 17d-2 Plan is as follows 
(additions are italicized; deletions are [bracketed]):
* * * * *

Agreement by and Among the American Stock Exchange LLC, the Boston 
Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, 
the International Securities Exchange LLC, Financial Industry 
Regulatory Authority, Inc., Nyse Arca, Inc., The Nasdaq Stock Market 
LLC, and [the Philadelphia Stock Exchange] NASDAQ OMX PHLX, Inc., 
Pursuant to Rule 17d-2 Under the Securities Exchange Act of 1934

    This agreement (this ``Agreement''), by and among the American 
Stock Exchange LLC (``Amex''), the Boston Stock Exchange, Inc. 
(``BSE''), the Chicago Board Options Exchange, Incorporated (``CBOE''), 
the International Securities Exchange LLC (``ISE''), Financial Industry 
Regulatory Authority, Inc. (``FINRA''), NYSE Arca, Inc. (``Arca''), The 
NASDAQ Stock Market LLC (``Nasdaq''), and the [Philadelphia Stock 
Exchange] NASDAQ OMX PHLX, Inc. (``PHLX''), is made this 10th day of 
October, 2007, and as amended [this] the 31st day of March, 2008, and 
this 1st day of October, 2008, pursuant to Section 17(d) of the 
Securities Exchange Act of 1934, as amended (the ``Exchange Act''), and 
Rule 17d-2 thereunder (``Rule 17d-2''),

[[Page 62346]]

which allows for a joint plan among self-regulatory organizations 
(``SROs'') to allocate regulatory obligations with respect to brokers 
or dealers that are members of two or more of the parties to this 
Agreement (``Common Members''). The Amex, BSE, CBOE, ISE, FINRA, Arca, 
Nasdaq, and PHLX are collectively referred to herein as the 
``Participants'' and individually, each a ``Participant.'' This 
Agreement shall be administered by a committee known as the Options 
Surveillance Group (the ``OSG'' or ``Group''), as described in Section 
V hereof. Unless defined in this Agreement or the context otherwise 
requires, the terms used herein shall have the meanings assigned 
thereto by the Exchange Act and the rules and regulations thereunder.
    Whereas, the Participants desire to eliminate regulatory 
duplication with respect to SRO market surveillance of Common Member 
\11\ activities with regard to certain common rules relating to listed 
options (``Options''); and
---------------------------------------------------------------------------

    \11\ In the case of the BSE, members are those persons who are 
Options Participants (as defined in the Boston Options Exchange LLC 
Rules).
---------------------------------------------------------------------------

    Whereas, for this purpose, the Participants desire to execute and 
file this Agreement with the Securities and Exchange Commission (the 
``SEC'' or ``Commission'') pursuant to Rule 17d-2.
    Now, Therefore, in consideration of the mutual covenants contained 
in this Agreement, the Participants agree as follows:
    I. Except as otherwise provided in this Agreement, each Participant 
shall assume Regulatory Responsibility (as defined below) for the 
Common Members that are allocated or assigned to such Participant in 
accordance with the terms of this Agreement and shall be relieved of 
its Regulatory Responsibility as to the remaining Common Members. For 
purposes of this Agreement, a Participant shall be considered to be the 
Designated Options Surveillance Regulator (``DOSR'') for each Common 
Member that is allocated to it in accordance with Section VII.
    II. As used in this Agreement, the term ``Regulatory 
Responsibility'' shall mean surveillance, investigation and enforcement 
responsibilities relating to compliance by the Common Members with such 
Options rules of the Participants as the Participants shall determine 
are substantially similar and shall approve from time to time, insofar 
as such rules relate to market surveillance (collectively, the ``Common 
Rules''). For the purposes of this Agreement the list of Common Rules 
is attached as Exhibit A hereto, which may only be amended upon 
unanimous written agreement by the Participants. The DOSR assigned to 
each Common Member shall assume Regulatory Responsibility with regard 
to that Common Member's compliance with the applicable Common Rules for 
certain accounts.\12\ A DOSR may perform its Regulatory Responsibility 
or enter an agreement to transfer or assign such responsibilities to a 
national securities exchange registered with the SEC under Section 6(a) 
of the Exchange Act or a national securities association registered 
with the SEC under Section 15A of the Exchange Act. A DOSR may not 
transfer or assign its Regulatory Responsibility to an association 
registered for the limited purpose of regulating the activities of 
members who are registered as brokers or dealers in security futures 
products.
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    \12\ Certain accounts shall include customer (``C'' as 
classified by the Options Clearing Corporation (``OCC'')) and firm 
(``F'' as classified by OCC) accounts, as well as other accounts, 
such as market maker accounts as the Participants shall, from time 
to time, identify as appropriate to review.
---------------------------------------------------------------------------

    The term ``Regulatory Responsibility'' does not include, and each 
Participant shall retain full responsibility with respect to:
    (a) surveillance, investigative and enforcement responsibilities 
other than those included in the definition of Regulatory 
Responsibility;
    (b) any aspects of the rules of a Participant that are not 
substantially similar to the Common Rules or that are allocated for a 
separate surveillance purpose under any other agreement made pursuant 
to Rule 17d-2. Any such aspects of a Common Rule will be noted as 
excluded on Exhibit A.
    With respect to options position limits, the term Regulatory 
Responsibility shall include examination responsibilities for the delta 
hedging exemption. Specifically, the Participants intend that FINRA 
will conduct examinations for delta hedging for all Common Members that 
are members of FINRA notwithstanding the fact that FINRA's position 
limit rule is, in some cases, limited to only firms that are not 
members of an options exchange (i.e., access members). In such cases, 
FINRA's examinations for delta hedging options position limit 
violations will be for the identical or substantively similar position 
limit rule(s) of the other Participant(s). Examinations for delta 
hedging for Common Members that are non-FINRA members will be conducted 
by the same Participant conducting position limit surveillance. The 
allocation of Common Members to DOSRs for surveillance of compliance 
with options position limits and other agreed to Common Rules is 
provided in Exhibit B. The allocation of Common Members to DOSRs for 
examinations of the delta hedging exemption under the options position 
limits rules is provided in Exhibit C.
    III. Each year within 30 days of the anniversary date of the 
commencement of operation of this Agreement, or more frequently if 
required by changes in the rules of a Participant, each Participant 
shall submit to the other Participants, through the Chair of the OSG, 
an updated list of Common Rules for review. This updated list may add 
Common Rules to Exhibit A, shall delete from Exhibit A rules of that 
Participant that are no longer identical or substantially similar to 
the Common Rules, and shall confirm that the remaining rules of the 
Participant included on Exhibit A continue to be identically or 
substantially similar to the Common Rules. Within 30 days from the date 
that each Participant has received revisions to Exhibit A from the 
Chair of the OSG, each Participant shall confirm in writing to the 
Chair of the OSG whether that Participant's rules listed in Exhibit A 
are Common Rules.
    IV. Apparent violation of another Participant's rules discovered by 
a DOSR, but which rules are not within the scope of the discovering 
DOSR's Regulatory Responsibility, shall be referred to the relevant 
Participant for such action as is deemed appropriate by that 
Participant.
    Notwithstanding the foregoing, nothing contained herein shall 
preclude a DOSR in its discretion from requesting that another 
Participant conduct an investigative or enforcement proceeding 
(``Proceeding'') on a matter for which the requesting DOSR has 
Regulatory Responsibility. If such other Participant agrees, the 
Regulatory Responsibility in such case shall be deemed transferred to 
the accepting Participant and confirmed in writing by the Participants 
involved. Additionally, nothing in this Agreement shall prevent another 
Participant on whose market potential violative activity took place 
from conducting its own Proceeding on a matter. The Participant 
conducting the Proceeding shall advise the assigned DOSR. Each 
Participant agrees, upon request, to make available promptly all 
relevant files, records and/or witnesses necessary to assist another 
Participant in a Proceeding.
    V. The OSG shall be composed of one representative designated by 
each of the Participants (a ``Representative''). Each Participant shall 
also designate one or more persons as its alternate representative(s) 
(an ``Alternate Representative''). In the absence of the 
Representative, the Alternate

[[Page 62347]]

Representative shall assume the powers, duties and responsibilities of 
the Representative. Each Participant may at any time replace its 
Representative and/or its Alternate Representative to the Group.\13\ A 
majority of the OSG shall constitute a quorum and, unless otherwise 
required, the affirmative vote of a majority of the Representatives 
present (in person, by telephone or by written consent) shall be 
necessary to constitute action by the Group. The Group will have a 
Chair, Vice Chair and Secretary. A different Participant will assume 
each position on a rotating basis for a one-year term. In the event 
that a Participant replaces a Representative who is acting as Chair, 
Vice Chair or Secretary, the newly appointed Representative shall 
assume the position of Chair, Vice Chair, or Secretary (as applicable) 
vacated by the Participant's former Representative. In the event a 
Participant cannot fulfill its duties as Chair, the Participant serving 
as Vice Chair shall substitute for the Chair and complete the subject 
unfulfilled term. All notices and other communications for the OSG are 
to be sent in care of the Chair and, as appropriate, to each 
Representative.
---------------------------------------------------------------------------

    \13\ A Participant must give notice to the Chair of the Group of 
such a change.
---------------------------------------------------------------------------

    VI. The OSG shall determine the times and locations of Group 
meetings, provided that the Chair, acting alone, may also call a 
meeting of the Group in the event the Chair determines that there is 
good cause to do so. To the extent reasonably possible, notice of any 
meeting shall be given at least ten business days prior to the meeting 
date. Representatives shall always be given the option of participating 
in any meeting telephonically at their own expense rather than in 
person.
    VII. No less frequently than every two years, in such manner as the 
Group deems appropriate, the OSG shall allocate Common Members that 
conduct an Options business among the Participants (``Allocation''), 
and the Participant to which a Common Member is allocated will serve as 
the DOSR for that Common Member. Any Allocation shall be based on the 
following principles, except to the extent all affected Participants 
consent to one or more different principles:
    (a) The OSG may not allocate a Common Member to a Participant 
unless the Common Member is a member of that Participant.
    (b) To the extent practicable, Common Members that conduct an 
Options business shall be allocated among the Participants of which 
they are members in such manner as to equalize as nearly as possible 
the allocation among such Participants, provided that no Common Members 
shall be allocated to FINRA. For example, if sixteen Common Members 
that conduct an Options business are members only of three 
Participants, none of which is FINRA, those Common Members shall be 
allocated among the three Participants such that no Participant is 
allocated more than six such members and no Participant is allocated 
less than five such members. If, in the previous example, one of the 
three Participants is FINRA, the sixteen Common Members would be 
allocated evenly between the remaining Participants, so that the two 
non-FINRA Participants would be allocated eight Common Members each.
    (c) To the extent practicable, Allocation shall take into account 
the amount of Options activity conducted by each Common Member in order 
to most evenly divide the Common Members with the largest amount of 
activity among the Participants of which they are members. Allocation 
will also take into account similar allocations pursuant to other plans 
or agreements to which the Common Members are party to maintain 
consistency in oversight of the Common Members.\14\
---------------------------------------------------------------------------

    \14\ For example, if one Participant was allocated a Common 
Member by another regulatory group that Participant would be 
assigned to be the DOSR of that Common Member, unless there is good 
cause not to make that assignment.
---------------------------------------------------------------------------

    (d) To the extent practicable, Allocation of Common Members to 
Participants will be rotated among the applicable Participants such 
that a Common Member shall not be allocated to a Participant to which 
that Common Member was allocated within the previous two years. The 
assignment of DOSRs pursuant to the Allocation is attached as Exhibit B 
hereto, and will be updated from time to time to reflect Common Member 
Allocation changes.
    (e) The Group may reallocate Common Members from time-to-time, as 
it deems appropriate.
    (f) Whenever a Common Member ceases to be a member of its DOSR, the 
DOSR shall promptly inform the Group, which shall review the matter and 
allocate the Common Member to another Participant.
    (g) A DOSR may request that a Common Member to which it is assigned 
be reallocated to another Participant by giving 30 days written notice 
to the Chair of the OSG. The Group, in its discretion, may approve such 
request and reallocate the Common Member to another Participant.
    (h) All determinations by the Group with respect to Allocation 
shall be made by the affirmative vote of a majority of the Participants 
that, at the time of such determination, share the applicable Common 
Member being allocated; a Participant shall not be entitled to vote on 
any Allocation relating to a Common Member unless the Common Member is 
a member of such Participant.
    VIII. Each DOSR shall conduct routine surveillance reviews to 
detect violations of the applicable Common Rules by each Common Member 
allocated to it with a frequency (daily, weekly, monthly, quarterly, 
semi-annually or annually as noted on Exhibit A) not less than that 
determined by the Group. The other Participants agree that, upon 
request, relevant information in their respective files relative to a 
Common Member will be made available to the applicable DOSR. In 
addition, each Participant shall provide, to the extent not otherwise 
already provided, information pertaining to its surveillance program 
that would be relevant to FINRA or the Participant(s) conducting 
routine examinations for the delta hedging exemption.
    At each meeting of the OSG, each Participant shall be prepared to 
report on the status of its surveillance program for the previous 
quarter and any period prior thereto that has not previously been 
reported to the Group. In the event a DOSR believes it will not be able 
to complete its Regulatory Responsibility for its allocated Common 
Members, it will so advise the Group in writing promptly. The Group 
will undertake to remedy this situation by reallocating the subject 
Common Members among the remaining Participants. In such instance, the 
Group may determine to impose a regulatory fee for services provided to 
the DOSR that was unable to fulfill its Regulatory Responsibility.
    IX. Each Participant will, upon request, promptly furnish a copy of 
the report or applicable portions thereof relating to any investigation 
made pursuant to the provisions of this Agreement to each other 
Participant of which the Common Member under investigation is a member.
    X. Each Participant will routinely populate a common database, to 
be accessed by the Group relating to any formal regulatory action taken 
during the course of a Proceeding with respect to the Common Rules 
concerning a Common Member.
    XI. Any written notice required or permitted to be given under this 
Agreement shall be deemed given if sent by certified mail, return 
receipt requested, to any Participant to the attention of that 
Participant's Representative, to the Participant's principal place of 
business or by e-mail at such address as the Representative

[[Page 62348]]

shall have filed in writing with the Chair.
    XII. The costs incurred by each Participant in discharging its 
Regulatory Responsibility under this Agreement are not reimbursable. 
However, any of the Participants may agree that one or more will 
compensate the other(s) for costs incurred.
    XIII. The Participants shall notify the Common Members of this 
Agreement by means of a uniform joint notice approved by the Group. 
Each Participant will notify the Common Members that have been 
allocated to it that such Participant will serve as DOSR for that 
Common Member.
    XIV. This Agreement shall be effective upon approval of the 
Commission. This Agreement may only be amended in writing duly approved 
by each Participant. All amendments to this Agreement, excluding 
changes to Exhibits A, B and [B]C, must be filed with and approved by 
the Commission.
    XV. Any Participant may manifest its intention to cancel its 
participation in this Agreement at any time upon providing written 
notice to (i) the Group six months prior to the date of such 
cancellation, or such other period as all the Participants may agree, 
and (ii) the Commission. Upon receipt of the notice the Group shall 
allocate, in accordance with the provisions of this Agreement, those 
Common Members for which the canceling Participant was the DOSR. The 
canceling Participant shall retain its Regulatory Responsibility and 
other rights, privileges and duties pursuant to this Agreement until 
the Group has completed the reallocation as described above, and the 
Commission has approved the cancellation.
    XVI. The cancellation of its participation in this Agreement by any 
Participant shall not terminate this Agreement as to the remaining 
Participants. This Agreement will only terminate following notice to 
the Commission, in writing, by the then Participants that they intend 
to terminate the Agreement and the expiration of the applicable notice 
period. Such notice shall be given at least six months prior to the 
intended date of termination, or such other period as all the 
Participants may agree. Such termination will become effective upon 
Commission approval.
    XVII. Participation in the Group shall be strictly limited to the 
Participants and no other party shall have any right to attend or 
otherwise participate in the Group except with the unanimous approval 
of all Participants. Notwithstanding the foregoing, any national 
securities exchange registered with the SEC under Section 6(a) of the 
Act or any national securities association registered with the SEC 
under section 15A of the Act may become a Participant to this Agreement 
provided that: (i) Such applicant has adopted rules substantially 
similar to the Common Rules, and received approval thereof from the 
SEC; (ii) such applicant has provided each Participant with a signed 
statement whereby the applicant agrees to be bound by the terms of this 
Agreement to the same effect as though it had originally signed this 
Agreement and (iii) an amended agreement reflecting the addition of 
such applicant as a Participant has been filed with and approved by the 
Commission.
    XVIII. This Agreement is wholly separate from the multiparty 
Agreement made pursuant to Rule 17d-2 by and among the Amex, BSE, CBOE, 
ISE, NASD, the New York Stock Exchange, LLC, Arca and PHLX involving 
the allocation of regulatory responsibilities with respect to common 
members for compliance with common rules relating to the conduct by 
broker-dealers of accounts for listed options or index warrants entered 
into on December 1, 2006, and as may be amended from time to time.
Limitation of Liability
    No Participant nor the Group nor any of their respective directors, 
governors, officers, employees or representatives shall be liable to 
any other Participant in this Agreement for any liability, loss or 
damage resulting from or claimed to have resulted from any delays, 
inaccuracies, errors or omissions with respect to the provision of 
Regulatory Responsibility as provided hereby or for the failure to 
provide any such Regulatory Responsibility, except with respect to such 
liability, loss or damages as shall have been suffered by one or more 
of the Participants and caused by the willful misconduct of one or more 
of the other Participants or its respective directors, governors, 
officers, employees or representatives. No warranties, express or 
implied, are made by the Participants, individually or as a group, or 
by the OSG with respect to any Regulatory Responsibility to be 
performed hereunder.
Relief From Responsibility
    Pursuant to Section 17(d)(1)(A) of the Exchange Act and Rule 17d-2, 
the Participants join in requesting the Commission, upon its approval 
of this Agreement or any part thereof, to relieve the Participants that 
are party to this Agreement and are not the DOSR as to a Common Member 
of any and all Regulatory Responsibility with respect to the matters 
allocated to the DOSR.
    This Agreement may be executed in any number of counterparts, each 
of which shall be deemed to be an original, but all such counterparts 
shall together constitute one and the same Agreement.
    In Witness Whereof, the Participants hereto have executed this 
Agreement as of the date and year first above written.
* * * * *
OPTIONS SURVEILLANCE GROUP 17d-2
Exhibit A

                                                  Common Rules
----------------------------------------------------------------------------------------------------------------
                                                                    Exchange rule
              SRO                      Description of rule             number            Frequency of review
----------------------------------------------------------------------------------------------------------------
Violation I: Expiring Exercise Declarations (EED)--For Listed Equity Options Expiring: the Third Saturday
 Following the Third Friday of a Month, Quarterly, AND for Listed FLEX Options
----------------------------------------------------------------------------------------------------------------
Amex..........................  Exercise of Options Contracts...  [Amex] Rule 980.  At Expiration.
BOX...........................  Exercise of Options Contracts...  [BOX] Rule 7.1..  At Expiration.
CBOE..........................  Exercise of Options Contracts...  [CBOE] Rule 11.1  At Expiration.
FINRA.........................  Exercise of Options Contracts...  NASD Rule 2860..  At Expiration.
ISE...........................  Exercise of Options Contracts...  [ISE] Rule 1100.  At Expiration.
Nasdaq........................  Exercise of Options Contracts...  Nasdaq Chapter    At Expiration.
                                                                   VIII, Sec.1.
NYSEArca......................  Exercise of Options Contracts...  [NYSEArca] Rule   At Expiration.
                                                                   6.24.
PHLX..........................  Exercise of Equity Options        [PHLX] Rule 1042  At Expiration.
                                 Contracts.
----------------------------------------------------------------------------------------------------------------
Violation II: Position Limits. (PL)--For Listed Equity Options Expiring: The Third Saturday Following The Third
 Friday of a Month, Quarterly
----------------------------------------------------------------------------------------------------------------

[[Page 62349]]

 
Amex..........................  Position Limits.................  Rule 904........  Daily.
                                Liquidating Positions...........  Rule 907........  As Needed.
BOX...........................  Position Limits.................  Chapter III,      Daily.
                                                                   Section 7.
                                Exemptions from Position........  Chapter III,      As Needed.
                                                                   Section 8.
                                Liquidation Positions...........  Chapter III,      As Needed.
                                                                   Section 11.
CBOE..........................  Position Limits.................  Rule 4.11.......  Daily.
                                Liquidation of Positions........  Rule 4.14.......  As Needed.
FINRA.........................  Position Limits.................  NASD Rule         Daily.
                                                                   2860(b)(3).
                                Liquidation of Positions. and     NASD Rule         As Needed.
                                 Restrictions on Access.           2860(b)(6).
ISE...........................  Position Limits.................  Rule 412........  Daily.
                                Exemptions from Position Limits.  Rule 413........  As Needed.
                                Liquidating Positions...........  Rule 416........  As Needed.
Nasdaq........................  Position Limits.................  Nasdaq Rule       Daily.
                                                                   Chapter III
                                                                   Section 7.
                                Exemptions from Position Limits.  Nasdaq Rule       As Needed.
                                                                   Chapter III
                                                                   Section 8.
                                Liquidating Positions...........  Nasdaq Rule       As Needed.
                                                                   Chapter III
                                                                   Section 11.
NYSEArca......................  Position Limits.................  Rule 6.8........  Daily.
                                Liquidation of Position.........  Rule 6.7........  As Needed.
PHLX..........................  Position Limits.................  Rule 1001.......  Daily.
                                Liquidation of Positions........  Rule 1004.......  As Needed.
----------------------------------------------------------------------------------------------------------------

* * * * *

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-551 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number 4-551. 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 (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan 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 plan also will be 
available for inspection and copying at the principal offices of Amex, 
BSE, CBOE, ISE, FINRA, NASDAQ, NYSE Arca, and Phlx. 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 4-551 and should be submitted 
on or before November 10, 2008.

V. Discussion

    The Commission continues to believe that the Plan, as proposed to 
be amended, is an achievement in cooperation among the SRO 
Participants, and will reduce unnecessary regulatory duplication by 
allocating to the designated SRO the responsibility for certain 
options-related market surveillance matters that would otherwise be 
performed by multiple SROs. The Plan promotes efficiency by reducing 
costs to firms that are members of more than one of the SRO 
Participants. In addition, because the SRO Participants coordinate 
their regulatory functions in accordance with the Plan, the Plan 
promotes, and will continue to promote, investor protection.
    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that appropriate 
notice and comment can take place after the proposed amendment is 
effective. The Commission notes that the SRO Participants have 
separately determined to add options position limit rules to the list 
of common rules included in Exhibit A to the Plan.\14\ To cover the 
full scope of regulatory responsibilities associated with these new 
position limit common rules, the SRO Participants have proposed to add 
language to the Plan to clarify the allocation of examination 
responsibilities with respect to the delta hedging exemption from 
options position limits. The amended Plan allocates to FINRA the 
examination responsibilities with respect to the delta hedging 
exemption for all common members that are members of FINRA, and 
allocates to the applicable DOSR the examination responsibilities with 
respect to the delta hedging exemption for common members that are not 
members of FINRA. In addition, to facilitate the ability of FINRA or a 
DOSR to perform examination responsibilities with regard to the 
position limit rules, the amended Plan states that each SRO Participant 
shall provide information pertaining to its surveillance program that 
would be relevant to FINRA or the applicable DOSR conducting routine 
examinations for the delta hedging exemption. By declaring it effective 
today, the amended Plan can become effective and be implemented without 
undue delay.
---------------------------------------------------------------------------

    \14\ See Section XIV of the Plan (regarding amendments to the 
Plan).

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

[[Page 62350]]

VI. Conclusion

    This order gives effect to the amended Plan submitted to the 
Commission that is contained in File No. 4-551.
    It is therefore ordered, pursuant to Section 17(d) of the Act,\15\ 
that the Plan, as amended, made by and between Amex, BSE, CBOE, ISE, 
FINRA, NASDAQ, NYSE Arca, and Phlx filed with the Commission pursuant 
to Rule 17d-2 on October 1, 2008 is hereby approved and declared 
effective.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78q(d).
---------------------------------------------------------------------------

    It is further ordered that those SRO Participants that are not the 
DOSR as to a particular common member are relieved of those regulatory 
responsibilities allocated to the common member's DOSR under the 
amended Plan to the extent of such allocation.
    It is further ordered that the SRO Participants are relieved of the 
examination responsibilities with respect to the delta hedging 
exemption from options position limits for all common members allocated 
to FINRA under the amended Plan to the extent of such allocation.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-24740 Filed 10-17-08; 8:45 am]
BILLING CODE 8011-01-P