Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Affiliations With Broker-Dealers, 1264-1266 [E9-350]
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Federal Register / Vol. 74, No. 7 / Monday, January 12, 2009 / Notices
should be protected in accordance with
industry standards. Id.
sroberts on PROD1PC70 with NOTICES
II. Notice of Filings
The Commission establishes Docket
Nos. MC2009–14 and CP2009–20 for
consideration of the Request pertaining
to the proposed International Business
Reply Service Contract 1 product and
the related contract, respectively. In
keeping with practice, these dockets are
addressed on a consolidated basis for
purposes of this Order; however, future
filings should be made in the specific
docket in which issues being addressed
pertain.
The Commission appoints Michael J.
Ravnitzky to serve as Public
Representative in these dockets.
Comments. Interested persons may
submit comments on whether the Postal
Service’s filings in the captioned
dockets are consistent with the policies
of 39 U.S.C. 3632, 3633, or 3642 and 39
CFR part 3015 and 39 CFR 3020 subpart
B. Comments are due no later than
January 16, 2009. The public portions of
these filings can be accessed via the
Commission’s Web site (https://
www.prc.gov).
Pursuant to 39 CFR 1315.6, the
Commission requests that the Postal
Service address the following issues by
January 12, 2009:
1. Ms. Miller’s statement describing
the product and why it should be
classified as competitive, at least
preliminarily, seems as though it could
also apply to the domestic Merchandise
Return Service product which is
currently classified as market dominant.
See Request, Attachment 1, section (d).
Should this proposed product category
be called ‘‘International Merchandise
Return Service’’ to better align it with its
domestic counterpart (Merchandise
Return Service) and to avoid confusion
with the market dominant product of
the same name ‘‘International Business
Reply Service’’? See Order No. 43, Order
Establishing Ratemaking Regulations for
Market Dominant and Competitive
Products, October 29, 2007 at Appendix
A, sections 1540 and 1505.10.
2. For the reasons set forth in
Attachment 1, section (d), should a
proceeding be initiated to consider
moving the domestic Merchandise
Return Service product to the
competitive rate category? If not, please
explain the processing and market
characteristic differences between the
proposed new product and Merchandise
Return Service.
Other interested persons also may
find it appropriate to address these
issues in their comments.
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20:34 Jan 09, 2009
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III. Ordering Paragraphs
It is Ordered:
1. The Commission establishes Docket
Nos. MC2009–14 and CP2009–20 for
consideration of the matters raised in
each docket.
2. Pursuant to 39 U.S.C. 505, Michael
J. Ravnitzky is appointed to serve as
officer of the Commission (Public
Representative) to represent the
interests of the general public in these
proceedings.
3. Comments by interested persons in
these proceedings, including those
addressing questions (1) and (2) of
section II above, are due no later than
January 16, 2009.
4. The Postal Service shall address
questions (1) and (2) of section II above
no later than January 12, 2009.
5. The Postal Service shall provide
any and all IBRS contingency
arrangements currently in effect no later
than January 12, 2009.
6. The Postal Service shall explain
why no portions of this contract can be
filed publicly no later than January 12,
2009.
7. The Secretary shall arrange for
publication of this Order in the Federal
Register.
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E9–290 Filed 1–9–09; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59200; File No. SR–CBOE–
2008–125]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to Affiliations
With Broker-Dealers
January 6, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
15, 2008, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the CBOE. The Exchange
has designated this proposal as one
constituting a stated policy, practice, or
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00098
Fmt 4703
Sfmt 4703
interpretation with respect to the
meaning, administration, or
enforcement of an existing rule under
Section 19(b)(3)(A)(i) of the Act,3 and
Rule 19b–4(f)(1) 4 thereunder, which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is seeking effectiveness
of an interpretation of a CBOE
Constitution provision related to
affiliations with broker-dealers. The
proposed rule change is available on
CBOE’s Web site (https://www.cboe.org/
legal), at the CBOE’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant 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 Exchange is in the process of
forming a wholly owned broker-dealer
subsidiary. With respect to the
contemplated establishment of the
broker-dealer, the Exchange is seeking
effectiveness of an interpretation of a
CBOE Constitution provision related to
affiliations with broker-dealers.
In particular, the Exchange notes that
Article VIII, Section 8.1(b) of the CBOE
Constitution provides in part that ‘‘[n]o
officer, other than the Vice Chairman of
the Board, shall be a member or
affiliated with a member or a broker or
dealer in securities or commodities.’’ 5
3 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
5 The Exchange notes that this provision of the
Constitution is proposed to be deleted as part of the
Exchange’s contemplated demutualization and,
upon its deletion, there would no longer be such
a restriction. See SR–CBOE–2008–88. The Exchange
also notes that other self-regulatory organizations
4 17
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Federal Register / Vol. 74, No. 7 / Monday, January 12, 2009 / Notices
sroberts on PROD1PC70 with NOTICES
The term ‘‘affiliated with’’ is not
explicitly defined in the Constitution,
but that term, and the related definition
of control, has been defined in the
Exchange Rules since 1973, the year the
Exchange was founded.6 The term
‘‘affiliate’’ or a person ‘‘affiliated with’’
another person is defined in the
Exchange Rule 1.1(j) as, ‘‘a person who,
directly or indirectly, controls, is
controlled by, or is under common
control with, such other person.’’ The
term ‘‘control’’ is defined in Exchange
Rule 1.1(k) as ‘‘the power to exercise a
controlling influence over the
management or policies of a person,
unless such power is solely the result of
an official position with such person.
Any person who owns beneficially,
directly or indirectly, more than 20% of
the voting power in the election of
directors of a corporation, or more than
25% of the voting power in the election
of directors of any other corporation
which directly or through one or more
affiliates owns beneficially more than
25% of the voting power in the election
of directors of such corporation, shall be
presumed to control such corporation.’’
The purpose of this rule filing is to
seek effectiveness of an Exchange
interpretation that Section 8.1(b), by its
terms, does not apply to instances in
which an Exchange officer acts solely in
an official position for a broker-dealer,
consistent with the longstanding
definition and application of the term
‘‘affiliated with’’ in the Exchange
Rules.7 The essence of this
interpretation is that if an Exchange
officer is not in a control relationship
with a broker-dealer subsidiary of the
Exchange, the officer is not an
‘‘affiliate’’ of the subsidiary even if the
officer serves in an official position with
the subsidiary, and thus the Exchange
officer’s serving in an official position of
the subsidiary is not prohibited by
Section 8.1(b) of the Constitution. For
example, the Exchange believes it
would be permissible and consistent
with Section 8.1(b) for an Exchange
officer to be a director, officer, principal,
or an employee of a broker-dealer that
is a wholly-owned subsidiary of the
Exchange.
do not have restrictions in their rules preventing
their respective officers from acting in an official
capacity with a broker-dealer affiliate. For example,
certain officers of the National Stock Exchange, Inc.
(‘‘NSX’’) are also officers and principals of NSX’s
subsidiary broker-dealer, NSX Securities LLC.
6 E-mail from Jennifer M. Lamie, Assistant
General Counsel, CBOE, to Richard Holley III,
Senior Special Counsel, Division of Trading and
Markets, Commission, dated January 5, 2009
(adding the preceding sentence to clarify the nature
of the proposed interpretation).
7 Id.
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The Exchange notes that until it
demutualizes it only intends to utilize
the interpretation to permit Exchange
officers to act in an official position
with the wholly-owned broker-dealer
subsidiary in accordance with Section
8.1(b) and to form the broker-dealer. The
Exchange represents that the brokerdealer will not perform any operations
without first discussing with the
Commission staff whether any of the
broker-dealer’s operations should be
subject to an Exchange rule filing
required under the Act.8 These
Exchange also notes that there are other
protections in place that limit the
potential conflicts between the
Exchange as a self-regulator and brokerdealers, including, among other things,
the existence of a Regulatory Oversight
Committee as a committee of the CBOE
Board of Directors that consists solely of
public directors.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act 9 in general and furthers
the objectives of Section 6(b)(5) of the
Act 10 in particular in that it is designed
to foster cooperation and coordination
with persons engaged in regulating,
clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The proposed rule
change is also consistent with the
requirements of Section 6(b)(1) of the
Act,11 which requires that an exchange
be so organized so as to have the
capacity to be able to carry out the
purposes of the Act and to comply, and
(subject to any rule or order of the
Commission pursuant to Section
17(d) 12 or 19(g)(2) 13 of the Act) to
enforce compliance by its members and
persons associated with its members,
with the provisions of the Act, the rules
and regulations thereunder and the
rules of the Exchange. This rule change
is designed to clarify the meaning and
8 15 U.S.C. 78s(b)(1). In particular, the Exchange
represents that it will not commence operations for
such broker-dealer prior to an effective rule filing
with the Commission setting forth the manner in
which the broker-dealer would operate. E-mail from
Jennifer M. Lamie, Assistant General Counsel,
CBOE, to Richard Holley III, Senior Special
Counsel, Division of Trading and Markets,
Commission, dated January 5, 2009 (adding the
preceding clarifying text).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 15 U.S.C. 78f(b)(1).
12 15 U.S.C. 78q(d).
13 15 U.S.C. 78s(g)(2).
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1265
scope of CBOE’s Constitution and Rules
related to affiliations with brokerdealers.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange neither received nor
solicited written comments on the
proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
will take effect upon filing with the
Commission pursuant to Section
19(b)(3)(A)(i) of the Act 14 and Rule 19b–
4(f)(1) thereunder,15 because it
constitutes a stated policy, practice, or
interpretation with respect to the
meaning, administration, or
enforcement of an existing rule.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2008–125 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington DC
20549–1090.
14 15
15 17
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U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
12JAN1
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Federal Register / Vol. 74, No. 7 / Monday, January 12, 2009 / Notices
All submissions should refer to File
Number SR–CBOE–2008–125. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of the CBOE. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File No.
SR–CBOE–2008–125 and should be
submitted on or before February 2, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–350 Filed 1–9–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59199; File No. SR–DTC–
2008–14]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify
Existing Operational Arrangements
sroberts on PROD1PC70 with NOTICES
January 6, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
October 21, 2008, The Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
16 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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20:34 Jan 09, 2009
Jkt 217001
change described in Items I, II, and III
below, which items have been prepared
primarily by DTC. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The purpose of the proposed rule
change is to modify DTC’s existing
Operational Arrangements (‘‘OA’’)
necessary for a securities issue to
become and remain eligible for the
services of DTC.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
DTC included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. DTC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.2
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
DTC’s OA was first published in June
1987.3 It was then updated in June 1988,
in February 1992, in December 1994, in
January 1998, and most recently in May
2002.4 DTC’s OA is designed to
maximize the number of issues that can
be made eligible while ensuring orderly
processing and timely payments to its
participants. DTC’s experience
demonstrates that when issuers,
underwriters, and their counsel are
aware of DTC’s requirements, those
requirements can be met almost without
exception. The purpose of this rule
change is not substantive in nature in
that it is merely an update to the OA in
an attempt to assemble relevant
requirements, including requirements
resulting from Commission approval of
2 The Commission has modified the text of the
summaries prepared by DTC.
3 Securities Exchange Act Release No. 24818
(August 19, 1987), 52 FR 31833 (August 24, 1987)
(File No. SR–DTC–87–10).
4 Securities Exchange Act Release Nos. 25948
(July 27, 1988), 53 FR 29294 (August 3, 1988) (File
No. SR–DTC–88–13); 30625 (April 30, 1992), 57 FR
18534 (April 30, 1992) (File No. SR–DTC–92–06);
35342 (February 8, 1995), 60 FR 8434 (February 14,
1995) (File No. SR–DTC–94–19); 39894 (April 21,
1998), 63 FR 23310 (April 28, 1998) (SR–DTC–97–
23); and 45994 (May 29, 2002), 68 FR 35037 (June
11, 2003) (File No. SR–DTC–2002–02).
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prior DTC rule changes, in one place.
Additionally, some clerical changes,
reorganization, and clarification of
language have been made in order to
provide a concise and coherent version
of the OA.
The primary differences between the
attached modified OA and the OA filed
with the Commission in 2002 are as
follows:
1. In an effort to update the OA and make
it more comprehensive, DTC has included a
description of the following, all of which
have been previously approved by the
Commission:
(a) In 1988, the Commission approved a
DTC rule filing related to certificates of
deposit.5 The OA has been updated to
include a section describing procedures
unique to retail certificates of deposit.
(b) In 1994, the Commission approved a
DTC rule filing which consisted of
enhancements to the reorganization and
deposit services of DTC. The OA has been
updated accordingly to specify that issuers’
agents are required to provide timely
notification to DTC for conversions with
variable rate (cash and share) entitlements.6
(c) In 1995, the Commission approved a
DTC rule filing in which DTC was designated
as the ‘‘appropriate qualified registered
securities depository’’ to receive notices of
transfer agent changes pursuant to Rule
17Ad–16 of the Act.7 The OA has been
updated to reflect the procedures for
notifying DTC of transfer agency changes.8
(d) In 1996, the Commission approved a
DTC rule filing which established procedures
for the Direct Registration System (‘‘DRS’’).9
DRS permits an investor to hold a security as
the registered owner of the security in
electronic form on the books of the issuer
rather than (i) indirectly through a financial
intermediary that holds the security in street
name; or (ii) in the form of a certificate. The
OA has been updated to include a
description of DRS.
(e) In 1997, the Commission approved a
rule filing amending DTC’s Return-of-Funds
Policy.10 The rule change amended DTC’s
charge back and return of funds policies to
shorten from ten business days to one
business day after the payable date the period
within which a paying agent can request that
DTC return principal and income payments
that have been allocated to participants. The
rule change also amended the procedure so
if a paying agent requests the return of a
principal and income payment more than
5 Securities Exchange Act Release No. 25870 (May
7, 1988), 53 FR 25870 (May 12, 1988) (File No. SR–
DTC–88–3).
6 Securities Exchange Act Release No. 34189
(June 9, 1994), 59 FR 30818 (June 15, 1994) (File
No. SR–DTC–94–06).
7 15 U.S.C. 78 et seq.
8 Securities Exchange Act Release Act No. 35378
(February 15, 1995), 60 FR 9875 (February 22, 1995)
(File No. SR–DTC–95–02).
9 Securities Exchange Act Release Act No. 37931
(November 7, 1996), 61 FR 58600 (November 15,
1996) (File No. SR–DTC–96–15).
10 Securities Exchange Act Release Act No. 38564
(April 30, 1997), 62 FR 25008 (May 7, 1997) (File
No. SR–DTC–96–22).
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]]>Agencies
[Federal Register Volume 74, Number 7 (Monday, January 12, 2009)]
[Notices]
[Pages 1264-1266]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-350]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59200; File No. SR-CBOE-2008-125]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Related to Affiliations With Broker-Dealers
January 6, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 15, 2008, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the CBOE.
The Exchange has designated this proposal as one constituting a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule under Section
19(b)(3)(A)(i) of the Act,\3\ and Rule 19b-4(f)(1) \4\ thereunder,
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is seeking effectiveness of an interpretation of a
CBOE Constitution provision related to affiliations with broker-
dealers. The proposed rule change is available on CBOE's Web site
(https://www.cboe.org/legal), at the CBOE's Office of the Secretary, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant 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 Exchange is in the process of forming a wholly owned broker-
dealer subsidiary. With respect to the contemplated establishment of
the broker-dealer, the Exchange is seeking effectiveness of an
interpretation of a CBOE Constitution provision related to affiliations
with broker-dealers.
In particular, the Exchange notes that Article VIII, Section 8.1(b)
of the CBOE Constitution provides in part that ``[n]o officer, other
than the Vice Chairman of the Board, shall be a member or affiliated
with a member or a broker or dealer in securities or commodities.'' \5\
[[Page 1265]]
The term ``affiliated with'' is not explicitly defined in the
Constitution, but that term, and the related definition of control, has
been defined in the Exchange Rules since 1973, the year the Exchange
was founded.\6\ The term ``affiliate'' or a person ``affiliated with''
another person is defined in the Exchange Rule 1.1(j) as, ``a person
who, directly or indirectly, controls, is controlled by, or is under
common control with, such other person.'' The term ``control'' is
defined in Exchange Rule 1.1(k) as ``the power to exercise a
controlling influence over the management or policies of a person,
unless such power is solely the result of an official position with
such person. Any person who owns beneficially, directly or indirectly,
more than 20% of the voting power in the election of directors of a
corporation, or more than 25% of the voting power in the election of
directors of any other corporation which directly or through one or
more affiliates owns beneficially more than 25% of the voting power in
the election of directors of such corporation, shall be presumed to
control such corporation.''
---------------------------------------------------------------------------
\5\ The Exchange notes that this provision of the Constitution
is proposed to be deleted as part of the Exchange's contemplated
demutualization and, upon its deletion, there would no longer be
such a restriction. See SR-CBOE-2008-88. The Exchange also notes
that other self-regulatory organizations do not have restrictions in
their rules preventing their respective officers from acting in an
official capacity with a broker-dealer affiliate. For example,
certain officers of the National Stock Exchange, Inc. (``NSX'') are
also officers and principals of NSX's subsidiary broker-dealer, NSX
Securities LLC.
\6\ E-mail from Jennifer M. Lamie, Assistant General Counsel,
CBOE, to Richard Holley III, Senior Special Counsel, Division of
Trading and Markets, Commission, dated January 5, 2009 (adding the
preceding sentence to clarify the nature of the proposed
interpretation).
---------------------------------------------------------------------------
The purpose of this rule filing is to seek effectiveness of an
Exchange interpretation that Section 8.1(b), by its terms, does not
apply to instances in which an Exchange officer acts solely in an
official position for a broker-dealer, consistent with the longstanding
definition and application of the term ``affiliated with'' in the
Exchange Rules.\7\ The essence of this interpretation is that if an
Exchange officer is not in a control relationship with a broker-dealer
subsidiary of the Exchange, the officer is not an ``affiliate'' of the
subsidiary even if the officer serves in an official position with the
subsidiary, and thus the Exchange officer's serving in an official
position of the subsidiary is not prohibited by Section 8.1(b) of the
Constitution. For example, the Exchange believes it would be
permissible and consistent with Section 8.1(b) for an Exchange officer
to be a director, officer, principal, or an employee of a broker-dealer
that is a wholly-owned subsidiary of the Exchange.
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\7\ Id.
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The Exchange notes that until it demutualizes it only intends to
utilize the interpretation to permit Exchange officers to act in an
official position with the wholly-owned broker-dealer subsidiary in
accordance with Section 8.1(b) and to form the broker-dealer. The
Exchange represents that the broker-dealer will not perform any
operations without first discussing with the Commission staff whether
any of the broker-dealer's operations should be subject to an Exchange
rule filing required under the Act.\8\ These Exchange also notes that
there are other protections in place that limit the potential conflicts
between the Exchange as a self-regulator and broker-dealers, including,
among other things, the existence of a Regulatory Oversight Committee
as a committee of the CBOE Board of Directors that consists solely of
public directors.
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\8\ 15 U.S.C. 78s(b)(1). In particular, the Exchange represents
that it will not commence operations for such broker-dealer prior to
an effective rule filing with the Commission setting forth the
manner in which the broker-dealer would operate. E-mail from
Jennifer M. Lamie, Assistant General Counsel, CBOE, to Richard
Holley III, Senior Special Counsel, Division of Trading and Markets,
Commission, dated January 5, 2009 (adding the preceding clarifying
text).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act \9\ in general and furthers the objectives of
Section 6(b)(5) of the Act \10\ in particular in that it is designed to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
The proposed rule change is also consistent with the requirements of
Section 6(b)(1) of the Act,\11\ which requires that an exchange be so
organized so as to have the capacity to be able to carry out the
purposes of the Act and to comply, and (subject to any rule or order of
the Commission pursuant to Section 17(d) \12\ or 19(g)(2) \13\ of the
Act) to enforce compliance by its members and persons associated with
its members, with the provisions of the Act, the rules and regulations
thereunder and the rules of the Exchange. This rule change is designed
to clarify the meaning and scope of CBOE's Constitution and Rules
related to affiliations with broker-dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(1).
\12\ 15 U.S.C. 78q(d).
\13\ 15 U.S.C. 78s(g)(2).
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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 that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange neither received nor solicited written comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change will take effect upon filing
with the Commission pursuant to Section 19(b)(3)(A)(i) of the Act \14\
and Rule 19b-4(f)(1) thereunder,\15\ because it constitutes a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule.
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\14\ 15 U.S.C. 78s(b)(3)(A)(i).
\15\ 17 CFR 240.19b-4(f)(1).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2008-125 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington DC 20549-1090.
[[Page 1266]]
All submissions should refer to File Number SR-CBOE-2008-125. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the CBOE. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-CBOE-2008-125 and should be
submitted on or before February 2, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-350 Filed 1-9-09; 8:45 am]
BILLING CODE 8011-01-P
