Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Amend Its Rules Prohibiting Members From Functioning as Market-Makers, 8829-8831 [E9-4120]
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Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices
where applicable, will vote the shares of
each Insurance Fund held in their VLI
Accounts and VA Accounts in a manner
consistent with voting instructions
timely received from Variable Contract
owners. Participating Insurance
Companies will be responsible for
assuring that each of their VLI and VA
Accounts investing in an Insurance
Fund calculates voting privileges in a
manner consistent with all other
Participating Insurance Companies
investing in that Fund. The obligation to
calculate voting privileges as provided
in this Application shall be a
contractual obligation of all
Participating Insurance Companies
under their Participation Agreement
with the Insurance Fund. Each
Participating Insurance Company will
vote shares of each Insurance Fund held
in its VLI or VA Accounts for which no
timely voting instructions are received,
as well as shares held by its general
account or otherwise attributed to it, in
the same proportion as those shares for
which voting instructions are received.
Each Plan will vote as required by
applicable law, governing Plan
documents and as provided in this
application.
7. As long as the Act requires passthrough voting privileges to be provided
to Variable Contract owners or the
Commission interprets the Act to
require the same, an Insurance Fund
investment adviser (or its affiliates) or
any general account will vote their
shares of the Insurance Fund in the
same proportion as all votes cast on
behalf of all Variable Contract owners
having voting rights; provided, however,
that such an investment adviser (or
affiliates) shall vote its shares in such
other manner as may be required by the
Commission or its staff.
8. Each Insurance Fund will comply
with all provisions of the Act requiring
voting by shareholders (which, for these
purposes, shall be the persons having a
voting interest in its shares), and, in
particular, the Insurance Fund will
either provide for annual meetings
(except to the extent that the
Commission may interpret Section 16 of
the Act not to require such meetings) or
comply with Section 16(c) of the Act
(although each Insurance Fund is not, or
will not be, one of those trusts of the
type described in Section 16(c) of the
Act), as well as with Section 16(a) of the
Act and, if and when applicable,
Section 16(b) of the Act. Further, each
Insurance Fund will act in accordance
with the Commission’s interpretations
of the requirements of Section 16(a)
with respect to periodic elections of
directors/trustees and with whatever
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16:56 Feb 25, 2009
Jkt 217001
rules the Commission may promulgate
thereto.
9. An Insurance Fund will make its
shares available to the VLI Accounts,
VA Accounts, and Plans at or about the
time it accepts any capital from its
investment adviser (or affiliates) or from
a general account of a Participating
Insurance Company.
10. Each Insurance Fund has notified,
or will notify, all Participants that
disclosure regarding potential risks of
mixed and shared funding may be
appropriate in VLI Account and VA
Account prospectuses or Plan
documents. Each Insurance Fund will
disclose, in its prospectus that: (a)
Shares of the Fund may be offered to
both VA Accounts and VLI Accounts
and, if applicable, to Plans, (b) due to
differences in tax treatment and other
considerations, the interests of various
Variable Contract owners participating
in the Insurance Fund and the interests
of Plan participants investing in the
Insurance Fund, if applicable, may
conflict, and (c) the Insurance Fund’s
Board will monitor events in order to
identify the existence of any material
irreconcilable conflicts and to determine
what action, if any, should be taken in
response to any such conflicts.
11. If and to the extent Rule 6e–2 and
Rule 6e–3(T) under the Act are
amended, or Rule 6e–3 under the Act is
adopted, to provide exemptive relief
from any provision of the Act, or the
rules thereunder, with respect to mixed
or shared funding, on terms and
conditions materially different from any
exemptions granted in the order
requested in this Application, then each
Insurance Fund and/or Participating
Insurance Companies, as appropriate,
shall take such steps as may be
necessary to comply with Rules 6e–2 or
6e–3(T), as amended, or Rule 6e–3, to
the extent such rules are applicable.
12. Each Participant, at least annually,
shall submit to the Board of each
Insurance Fund such reports, materials
or data as the Board reasonably may
request so that the directors/trustees of
the Board may fully carry out the
obligations imposed upon the Board by
the conditions contained in this
Application. Such reports, materials and
data shall be submitted more frequently
if deemed appropriate by the Board of
an Insurance Fund. The obligations of
the Participants to provide these reports,
materials and data to the Board, when
it so reasonably requests, shall be a
contractual obligation of all Participants
under their Participation Agreement
with the Insurance Fund.
13. All reports of potential or existing
conflicts received by the Board of each
Insurance Fund, and all Board action
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Fmt 4703
Sfmt 4703
8829
with regard to determining the existence
of a conflict, notifying Participants of a
conflict and determining whether any
proposed action adequately remedies a
conflict, will be properly recorded in
the minutes of the Board or other
appropriate records, and such minutes
or other records shall be made available
to the Commission upon request.
14. Each Insurance Fund will not
accept a purchase order from a Plan if
such purchase would make the Plan an
owner of 10 percent or more of the net
assets of the Insurance Fund unless the
Plan executes an agreement with the
Insurance Fund governing participation
in the Insurance Fund that includes the
conditions set forth herein to the extent
applicable. A Plan will execute an
application containing an
acknowledgement of this condition at
the time of its initial purchase of shares.
15. Each Insurance Fund will make its
shares available through an Account at
or about the same time that the
Insurance Fund receives any seed
money from the general account of a
Participating Insurance Company.
Conclusion:
For the reasons summarized above,
applicants assert that the requested
exemptions are appropriate in the
public interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–4064 Filed 2–25–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59425; File No. SR–CBOE–
2009–009]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change To Amend Its
Rules Prohibiting Members From
Functioning as Market-Makers
February 19, 2009.
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 February
18, 2009, the Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
1 15
2 17
E:\FR\FM\26FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
26FEN1
8830
Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 6.8C, Prohibition Against Members
Functioning as Market-Makers, to
eliminate some of its restrictions. The
Exchange also proposes to make a
related cross-reference update to Rule
1.1(fff), which pertains to Voluntary
Professionals. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.cboe.org/Legal), at the Office of the
Secretary, CBOE 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
Rule 6.8C in order to eliminate some of
its restrictions. First, Rule 6.8C
currently provides that a member, acting
either as principal or agent, may neither
enter nor permit the entry of orders into
the Exchange’s electronic order routing
system if (i) the orders are limit orders
for the account or accounts of the same
beneficial owner(s) and (ii) the limit
orders are entered in such a manner that
the beneficial owner(s) effectively is
operating as a market maker by holding
itself out as willing to buy and sell such
securities on a regular or continuous
basis. The Exchange is proposing that
these restrictions be amended to only be
applicable to customer orders (i.e., nonbroker-dealer orders) that are not
Voluntary Professional orders (as
described below), since such customer
orders have priority at any price over
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16:56 Feb 25, 2009
Jkt 217001
the bids and offers of non-customers.3
The restrictions would no longer be
applicable to instances where a member
is acting as principal on its own behalf
or is acting as agent on behalf of other
broker-dealer orders or Voluntary
Professional orders (which are a subcategory of customer orders that are
treated in the same manner as brokerdealer orders).4
Rule 6.8C was adopted in 2001 to
limit the ability of members that are not
Designated Primary Market-Makers or
market makers to compete on
preferential terms within CBOE’s
automated systems. Because customer
orders are provided with certain
benefits such as priority of bids and
offers, the Exchange continues to
believe that customer orders should be
subject to the Rule’s restrictions.
However, because broker-dealer orders
are not subject to priority that is any
better than market makers, the Exchange
no longer believes it is necessary to
impose the Rule’s restrictions on the
entry of broker-dealer orders. Similarly,
because Voluntary Professionals are not
subject to priority that is any better than
market makers, the Exchange does not
believe it is necessary to impose the
Rule’s restrictions on Voluntary
Professionals.5
3 The Exchange notes that the Commission has
previously found that it is consistent with the Act
for an options exchange not to prohibit a user of its
market from effectively operating as a market maker
by holding itself out as willing to buy and sell
options contracts on a regular or continuous basis
without registering as a market maker. See
Securities Exchange Act Release No. 57478 (March
12, 2008), 73 FR 14521 (March 18, 2008) (SR–
NASDAQ–2007–004 and SR–NASDAQ–2007–080)
(order approving, among other things, the rules
governing the trading of options on the NASDAQ
Options Market (‘‘NOM’’)). The Exchange also notes
that the Commission has published a rule proposal
for the NYSE Alternext U.S. LLC (‘‘Amex’’) that
would only prohibit de facto market making
through the use of customer orders, since customer
orders have priority at any price over the bids and
offers of non-customers but that would not prohibit
such activity for other non-market maker brokerdealers. See Securities Exchange Act Release No.
59142 (December 22, 2008), 73 FR 80494 (December
31, 2008) (SR–NYSEALTR–2008–14) (notice of
proposal to, among other things, adopt rules
governing the trading of options on a new Amex
trading platform).
4 A Voluntary Professional is a new category of
non-member market participant on the Exchange.
The term ‘‘Voluntary Professional,’’ means any
person or entity that is not a broker or dealer in
securities that elects, in writing, to be treated in the
same manner as a broker or dealer in securities for
purposes of certain order handling, order execution,
and cancel fee calculation purposes. See Rule
1.1(fff) and Securities Exchange Act Release No.
58327 (August 7, 2008), 73 FR 47988 (August 15,
2008) (SR–CBOE–2008–09). As part of this rule
change, the Exchange is proposing to amend Rule
1.1(fff) to provide that a Voluntary Professional will
be treated in the same manner as a broker or dealer
in securities for purposes of Rule 6.8C.
5 The Exchange notes that this rule change would
only eliminate the restrictions of Rule 6.8C in the
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Fmt 4703
Sfmt 4703
Second, in those instances where the
restrictions are applicable, Rule 6.8C
currently provides that, in determining
whether a beneficial owner effectively is
operating as a market maker, the
Exchange will consider, among other
things, the simultaneous or near
simultaneous entry of limit orders to
buy and sell the same security, the entry
of multiple limit orders at different
prices in the same security, and the
multiple acquisition and liquidation of
positions in the security during the
same day. The Exchange is proposing to
remove this latter condition pertaining
to the multiple acquisition and
liquidation of positions from its list of
factors used for determining whether a
beneficial owner is operating as a
market maker. In light of the
proliferation of day trading activity and
the fact that such a prohibition does not
exist on at least one other market,6 the
Exchange no longer believes this
activity should be considered a factor in
determining whether a beneficial owner
is effectively acting as a market maker.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
manner proposed. Members would continue to
remain subject to the requirements of Rule 4.18
(which requires members to establish, maintain and
enforce written policies and procedures reasonably
designed, taking into consideration the nature of
such member’s business, to prevent the misuse of
material, nonpublic information by such member or
persons associated with such member); Rule 6.9(e),
(which considers it conduct inconsistent with just
and equitable principles of trade and a violation of
Rule 4.1 for any member or person associated with
a member, who has knowledge of all material terms
and conditions of an original order and a solicited
order, including a facilitation order, that matches
the original order’s limit, the execution of which are
imminent, to enter, based on such knowledge, an
order to buy or sell an option of the same class as
an option that is the subject of the original order,
or an order to buy or sell the security underlying
such class, or an order to buy or sell any related
instrument until either (i) all the terms and
conditions of the original order and any changes in
the terms and conditions of the original order of
which that member or associated person has
knowledge are disclosed to the trading crowd or (ii)
the solicited trade can no longer reasonably be
considered imminent in view of the passage of time
since the solicitation); Rules 6.45A.01 and 6.45B.01
(which provide that order entry firms may not
execute as principal against orders they represent
as agent unless: (i) agency orders are first exposed
on the Hybrid System for at least one second, (ii)
the order entry firm has been bidding or offer for
at least one second prior to receiving an agency
order that is executable against such bid or offer,
or (iii) the order entry firm proceeds in accordance
with the crossing rules contained in Rule 6.74); and
Rules 6.45A.02 and 6.45B.02 (which provide that
order entry firms must expose orders they represent
as agent for at least one second before such orders
may be executed electronically via the electronic
execution mechanism of the Hybrid System, in
whole or in part, against orders solicited from
members and non-member broker-dealers to
transact with such orders).
6 See note 3, supra.
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Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices
6(b) of the Act,7 in general, and furthers
the objectives of Section 6(b)(5) of the
Act,8 in particular, in that it is designed
to prevent fraudulent and manipulative
acts and practices, promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanisms of a free and open market
and a national market system, and, in
general, protect investors and the public
interest. The proposed changes to the
rule should continue to contribute to the
Exchange’s ability to maintain a fair and
orderly market in a manner that will
limit unfair advantage and encourage
competition.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Number SR–CBOE–2009–009 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–59424; File No. SR–
NASDAQ–2009–009]
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2009–009. 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
Number SR–CBOE–2009–009 and
should be submitted on or before March
19, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–4120 Filed 2–25–09; 8:45 am]
BILLING CODE 8011–01–P
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
7 15
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Nov<24>2008
16:56 Feb 25, 2009
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Clarify
Nasdaq’s Definition of ‘‘Controlled
Company’’
February 19, 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 February
10, 2009, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by Nasdaq. Nasdaq has designated the
proposed rule change as effecting a
change described under Rule 19b–4(f)(6)
under the Act,3 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 the Substance
of the Proposed Rule Change
Nasdaq proposes to clarify its
definition of a ‘‘controlled company.’’
Nasdaq will implement the proposed
rule upon approval [sic]. The text of the
proposed rule change is below.
Proposed new language is in italics.4
*
*
*
*
*
4350. Qualitative Listing
Requirements for Nasdaq Issuers Except
for Limited Partnerships.
(a)–(b) No change.
(c) Independent Directors
(1)–(4) No change.
(5) A Controlled Company is exempt
from the requirements of this Rule
4350(c), except for the requirements of
subsection (c)(2) which pertain to
executive sessions of independent
directors. A Controlled Company is a
company of which more than 50% of
the voting power for the election of
directors is held by an individual, a
group or another company. A Controlled
Company relying upon this exemption
must disclose in its annual meeting
proxy statement (or, if the issuer does
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
4 Changes are marked to the rule text that appears
in the electronic manual of Nasdaq found at
https://nasdaqomx.cchwallstreet.com.
2 17
9 17
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8831
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 74, Number 37 (Thursday, February 26, 2009)]
[Notices]
[Pages 8829-8831]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4120]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59425; File No. SR-CBOE-2009-009]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change To Amend Its
Rules Prohibiting Members From Functioning as Market-Makers
February 19, 2009.
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 February 18, 2009, the Chicago Board Options Exchange,
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities
and Exchange Commission (the
[[Page 8830]]
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 6.8C, Prohibition Against
Members Functioning as Market-Makers, to eliminate some of its
restrictions. The Exchange also proposes to make a related cross-
reference update to Rule 1.1(fff), which pertains to Voluntary
Professionals. The text of the proposed rule change is available on the
Exchange's Web site (https://www.cboe.org/Legal), at the Office of the
Secretary, CBOE 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend Rule 6.8C in order to eliminate
some of its restrictions. First, Rule 6.8C currently provides that a
member, acting either as principal or agent, may neither enter nor
permit the entry of orders into the Exchange's electronic order routing
system if (i) the orders are limit orders for the account or accounts
of the same beneficial owner(s) and (ii) the limit orders are entered
in such a manner that the beneficial owner(s) effectively is operating
as a market maker by holding itself out as willing to buy and sell such
securities on a regular or continuous basis. The Exchange is proposing
that these restrictions be amended to only be applicable to customer
orders (i.e., non-broker-dealer orders) that are not Voluntary
Professional orders (as described below), since such customer orders
have priority at any price over the bids and offers of non-
customers.\3\ The restrictions would no longer be applicable to
instances where a member is acting as principal on its own behalf or is
acting as agent on behalf of other broker-dealer orders or Voluntary
Professional orders (which are a sub-category of customer orders that
are treated in the same manner as broker-dealer orders).\4\
---------------------------------------------------------------------------
\3\ The Exchange notes that the Commission has previously found
that it is consistent with the Act for an options exchange not to
prohibit a user of its market from effectively operating as a market
maker by holding itself out as willing to buy and sell options
contracts on a regular or continuous basis without registering as a
market maker. See Securities Exchange Act Release No. 57478 (March
12, 2008), 73 FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004 and SR-
NASDAQ-2007-080) (order approving, among other things, the rules
governing the trading of options on the NASDAQ Options Market
(``NOM'')). The Exchange also notes that the Commission has
published a rule proposal for the NYSE Alternext U.S. LLC (``Amex'')
that would only prohibit de facto market making through the use of
customer orders, since customer orders have priority at any price
over the bids and offers of non-customers but that would not
prohibit such activity for other non-market maker broker-dealers.
See Securities Exchange Act Release No. 59142 (December 22, 2008),
73 FR 80494 (December 31, 2008) (SR-NYSEALTR-2008-14) (notice of
proposal to, among other things, adopt rules governing the trading
of options on a new Amex trading platform).
\4\ A Voluntary Professional is a new category of non-member
market participant on the Exchange. The term ``Voluntary
Professional,'' means any person or entity that is not a broker or
dealer in securities that elects, in writing, to be treated in the
same manner as a broker or dealer in securities for purposes of
certain order handling, order execution, and cancel fee calculation
purposes. See Rule 1.1(fff) and Securities Exchange Act Release No.
58327 (August 7, 2008), 73 FR 47988 (August 15, 2008) (SR-CBOE-2008-
09). As part of this rule change, the Exchange is proposing to amend
Rule 1.1(fff) to provide that a Voluntary Professional will be
treated in the same manner as a broker or dealer in securities for
purposes of Rule 6.8C.
---------------------------------------------------------------------------
Rule 6.8C was adopted in 2001 to limit the ability of members that
are not Designated Primary Market-Makers or market makers to compete on
preferential terms within CBOE's automated systems. Because customer
orders are provided with certain benefits such as priority of bids and
offers, the Exchange continues to believe that customer orders should
be subject to the Rule's restrictions. However, because broker-dealer
orders are not subject to priority that is any better than market
makers, the Exchange no longer believes it is necessary to impose the
Rule's restrictions on the entry of broker-dealer orders. Similarly,
because Voluntary Professionals are not subject to priority that is any
better than market makers, the Exchange does not believe it is
necessary to impose the Rule's restrictions on Voluntary
Professionals.\5\
---------------------------------------------------------------------------
\5\ The Exchange notes that this rule change would only
eliminate the restrictions of Rule 6.8C in the manner proposed.
Members would continue to remain subject to the requirements of Rule
4.18 (which requires members to establish, maintain and enforce
written policies and procedures reasonably designed, taking into
consideration the nature of such member's business, to prevent the
misuse of material, nonpublic information by such member or persons
associated with such member); Rule 6.9(e), (which considers it
conduct inconsistent with just and equitable principles of trade and
a violation of Rule 4.1 for any member or person associated with a
member, who has knowledge of all material terms and conditions of an
original order and a solicited order, including a facilitation
order, that matches the original order's limit, the execution of
which are imminent, to enter, based on such knowledge, an order to
buy or sell an option of the same class as an option that is the
subject of the original order, or an order to buy or sell the
security underlying such class, or an order to buy or sell any
related instrument until either (i) all the terms and conditions of
the original order and any changes in the terms and conditions of
the original order of which that member or associated person has
knowledge are disclosed to the trading crowd or (ii) the solicited
trade can no longer reasonably be considered imminent in view of the
passage of time since the solicitation); Rules 6.45A.01 and 6.45B.01
(which provide that order entry firms may not execute as principal
against orders they represent as agent unless: (i) agency orders are
first exposed on the Hybrid System for at least one second, (ii) the
order entry firm has been bidding or offer for at least one second
prior to receiving an agency order that is executable against such
bid or offer, or (iii) the order entry firm proceeds in accordance
with the crossing rules contained in Rule 6.74); and Rules 6.45A.02
and 6.45B.02 (which provide that order entry firms must expose
orders they represent as agent for at least one second before such
orders may be executed electronically via the electronic execution
mechanism of the Hybrid System, in whole or in part, against orders
solicited from members and non-member broker-dealers to transact
with such orders).
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Second, in those instances where the restrictions are applicable,
Rule 6.8C currently provides that, in determining whether a beneficial
owner effectively is operating as a market maker, the Exchange will
consider, among other things, the simultaneous or near simultaneous
entry of limit orders to buy and sell the same security, the entry of
multiple limit orders at different prices in the same security, and the
multiple acquisition and liquidation of positions in the security
during the same day. The Exchange is proposing to remove this latter
condition pertaining to the multiple acquisition and liquidation of
positions from its list of factors used for determining whether a
beneficial owner is operating as a market maker. In light of the
proliferation of day trading activity and the fact that such a
prohibition does not exist on at least one other market,\6\ the
Exchange no longer believes this activity should be considered a factor
in determining whether a beneficial owner is effectively acting as a
market maker.
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\6\ See note 3, supra.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section
[[Page 8831]]
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, remove impediments to and perfect the
mechanisms of a free and open market and a national market system, and,
in general, protect investors and the public interest. The proposed
changes to the rule should continue to contribute to the Exchange's
ability to maintain a fair and orderly market in a manner that will
limit unfair advantage and encourage competition.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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-2009-009 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.
All submissions should refer to File Number SR-CBOE-2009-009. 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 Number SR-CBOE-2009-009 and
should be submitted on or before March 19, 2009.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4120 Filed 2-25-09; 8:45 am]
BILLING CODE 8011-01-P
