Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend CBOE Rule 31.85 to, Among Other Things, Prohibit Broker Discretionary Voting on the Elections of Directors, 14231-14233 [2010-6514]
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Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices
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 Web site viewing and
printing 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 the filing also
will be available for inspection and
copying at the principal office of the
Exchange. 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–
NASDAQ–2010–038 and should be
submitted on or before April 14, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–6515 Filed 3–23–10; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–61732; File No. SR–CBOE–
2010–027]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend CBOE Rule
31.85 to, Among Other Things, Prohibit
Broker Discretionary Voting on the
Elections of Directors
srobinson on DSKHWCL6B1PROD with NOTICES
March 18, 2010.
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 March 4,
2010, the Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
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
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend CBOE Rule
31.85 to eliminate broker discretionary
voting for all elections of directors at
shareholder meetings, whether
contested or not, except for companies
registered under the Investment
Company Act of 1940 (the ‘‘1940 Act’’),
to amend CBOE Rule 31.85 to preclude
broker discretionary voting on a matter
that materially amends an investment
advisory contract with an investment
company, and to define that a material
amendment to an investment advisory
contract would include any proposal to
obtain shareholder approval of an
investment company’s investment
advisory contract with a new
investment advisor The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
Office of the Secretary, and at the
Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
13 17
solicit comments on the proposed rule
change from interested persons.
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
A shareholder of a public company
may hold shares either directly, as the
record holder, or indirectly, as the
beneficial holder, with the shares held
in the name of the beneficial
shareholder’s broker-dealer, bank
nominee, or custodian (‘‘securities
intermediary’’), which is the record
holder.5 The latter generally is referred
to as holding securities in ‘‘street
name.’’ 6 The number of beneficial
owners holding securities in street name
1 15
VerDate Nov<24>2008
16:24 Mar 23, 2010
5 See Commission Release No. 34–60215 (July 1,
2009).
6 See supra note 2 [sic].
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14231
has increased significantly over the past
thirty-three years.
Currently, CBOE Rule 31.85 permits
brokers to vote without voting
instructions from the beneficial owner
on uncontested elections of directors.7
Rule 31.85 also lays out a list of
enumerated items for which a member
may not give a proxy to vote without
instructions from the beneficial owner.8
This list does not include the election
of directors. Due to the increase in the
holding of securities in street name, the
impact of the broker vote on the election
of directors has become increasingly
significant. At the same time, the
number of proxy campaigns, such as
‘‘just vote no’’ or ‘‘withhold’’ campaigns,
that have targeted the election of
directors without a formal contest has
also increased. This has made the
‘‘uncontested’’ election of directors a
more controversial, as opposed to
routine, matter.9
In light of this development, the New
York Stock Exchange proposed a rule
filing to declare the election of directors
ineligible for broker discretionary
voting.10 The Commission approved
this filing, as amended, on July 1,
2009.11 Correspondingly, CBOE
proposes to amend CBOE Rule 31.85 to
add all elections of directors at
shareholder meetings whether contested
or not, except for companies registered
under the 1940 Act, to the list of
enumerated items for which a member
may not give a proxy to vote without
instructions from the beneficial owner.
CBOE also proposes to amend CBOE
Rule 31.85 to preclude broker
discretionary voting on a matter that
materially amends an investment
advisory contract with an investment
company and to define that a material
amendment to an investment advisory
contract would include any proposal to
obtain shareholder approval of an
investment company’s investment
advisory contract with a new
investment advisor for which
shareholder approval is required by the
1940 Act and the rules thereunder.
These proposed amendments will help
ensure the full and effective voting
rights of investment company
shareholders on material matters.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
7 See CBOE Rule 31.85(a), which explains the
process and situations in which brokers may vote
without voting instructions from the beneficial
owner.
8 See CBOE Rule 31.85(b).
9 See supra note 2 [sic].
10 See SR–NYSE–2006–92.
11 See supra note 2 [sic].
E:\FR\FM\24MRN1.SGM
24MRN1
14232
Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices
Securities Exchange Act of 1934 (the
‘‘Act’’) 12 and the rules and regulations
thereunder and, in particular, the
requirements of Section 6(b) of the
Act.13 The Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 14 requirements that
the rules of an exchange be designed to
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts, to remove
impediments to and to perfect the
mechanism for a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. Specifically, the
Exchange believes that the proposed
rule change will protect investors and
the public interest by ensuring better
corporate governance and transparency
of the election process for directors and
by promoting greater uniformity with
the proxy rules of other exchanges.15 In
particular, for Exchange member firms
that are also members of other
exchanges, confusion might arise as to
which exchange’s proxy voting rules are
applicable to a company listed on the
Exchange if there are disparities
between proxy voting rules of different
exchanges.16 The proposed rule change
will better enfranchise shareholders and
enhance corporate governance and
accountability to shareholders.17
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and Rule
19b–4(f)(6) thereunder.19 Because the
proposed rule change does not: (i)
srobinson on DSKHWCL6B1PROD with NOTICES
12 15
U.S.C. 78s(b)(1).
U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
15 See Securities Exchange Act Release No. 34–
61292 (January 5, 2010), 75 FR 1664 (January 12,
2010) (SR–NYSEAmex–2009–93).
16 See supra note 12 [sic].
17 See supra note 2 [sic].
18 15 U.S.C. 78s(b)(3)(A)(iii).
19 17 CFR 240.19b–4(f)(6).
13 15
VerDate Nov<24>2008
16:24 Mar 23, 2010
Jkt 220001
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) by its terms,
become operative prior to 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, the proposed rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 20 and Rule 19b4(f)(6)(iii) thereunder.21
A proposed rule change filed under
Rule 19b–4(f)(6) 22 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),23 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has requested the Commission
to waive the 30-day operative delay so
that the proposal may become operative
immediately upon filing. In making this
request, the Exchange stated that the
proposal is based upon the rules of
NYSE and NYSE Amex. The Exchange
stated that waiver of the 30-day
operative delay will allow the change to
become operative immediately and
conform to the Commission’s desire to
eliminate any disparities involving
voting.
The Commission believes that the
waiver of the 30-day operative delay
period is consistent with the protection
of investors and the public interest.24
The proposal would permit the
Exchange to comply with the
Commission’s stated goal that selfregulatory organizations who currently
allow members to use discretionary
voting for director elections conform
their rules to the NYSE’s rules to
eliminate any voting disparities
depending on where the shares are held.
Further, the proposal would conform
the Exchange’s rule to the NYSE’s rule
with respect to voting on investment
advisory contracts. Moreover, the
Commission notes that the NYSE’s
adopted rule changes were subject to
full notice and comment, and
20 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied the pre-filing requirement.
22 17 CFR 240.19b–4(f)(6).
23 17 CFR 240.19b–4(f)(6)(iii).
24 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
21 17
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
considered and approved by the
Commission.25 Based on the above, the
Commission finds that waiving the 30day operative delay period is consistent
with the protection of investors and the
public interest and the proposal is
therefore deemed effective upon filing.
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–2010–027 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–2010–027. 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
25 See
E:\FR\FM\24MRN1.SGM
supra note 5.
24MRN1
Federal Register / Vol. 75, No. 56 / Wednesday, March 24, 2010 / Notices
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of the
Exchange. 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–
2010–027 and should be submitted on
or before April 14, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–6514 Filed 3–23–10; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61731; File No. SR–ISE–
2010–18]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Adopt a Fee Credit
March 18, 2010.
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 March 1,
2010, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
srobinson on DSKHWCL6B1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend its
Schedule of Fees by adopting a per
contract fee credit related to the
execution on ISE of customer orders
exposed to members before those orders
are sent out for execution on another
exchange through the intermarket
linkage. The text of the proposed rule
change is available on the Exchange’s
Web site (https://www.ise.com), at the
principal office of the Exchange, and at
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
16:24 Mar 23, 2010
1. Purpose
Before a Primary Market Maker
(‘‘PMM’’) sends a customer order to
another exchange for execution when
ISE is not at the national best bid or
offer (‘‘NBBO’’), the Exchange exposes
these customer orders to all its members
to give them an opportunity to match
the NBBO. This exposure is intended to
allow ISE to retain more order flow by
giving these customer orders additional
opportunity to be executed at the NBBO
at ISE, which also reduces PMM costs
by reducing the number of orders they
must send to other exchanges on behalf
of customer orders.
Specifically, before a PMM sends an
order on behalf of a customer, the
customer order is exposed at the NBBO
price for a period established by the
Exchange not to exceed one second.
During this exposure period, Exchange
members may enter responses up to the
size of the order being exposed in the
regular trading increment applicable to
the option. The Exchange currently has
fee waivers in place for members who
step up and match or improve the
NBBO during the exposure period.3 If at
the end of the exposure period, the
order is executable at the then-current
NBBO and ISE is not at the then-current
NBBO, the order is executed against
responses that equal or better the thencurrent NBBO. The exposure period is
terminated if the exposed order becomes
executable on the ISE at the prevailing
NBBO or if the Exchange receives an
unrelated order that could trade against
the exposed order at the prevailing
NBBO price. If, after an order is
3 See Exchange Act Release Nos. 58164 (July 15,
2008), 73 FR 42638 (July 22, 2008); 58216 (July 23,
2008), 73 FR 44302 (July 30, 2008).
1 15
VerDate Nov<24>2008
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
26 17
the Commission’s Public Reference
Room.
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14233
exposed, the order is not executed in
full on the Exchange at the then-current
NBBO or better, and it is marketable
against the then-current NBBO, the
PMM sends an order on the customer’s
behalf for the balance of the order as
provided in Rule 803(c)(2)(ii). If the
balance of the order is not marketable
against the then-current NBBO, it is
placed on the ISE book.
All customer orders, including
professional customer orders, receive
trade through protection under the ISE’s
rules.4 Therefore, all customer orders
are exposed when ISE is not at the best
bid or offer. Members, however, do not
know whether an order being exposed is
for a Priority Customer 5 or a
professional customer. Members have a
natural incentive to step up to trade
against Priority Customers as they view
this as providing a service to retail
customers. Members do not have a
natural incentive to trade against
professional customers who they view
as their competitors. Thus, to encourage
members to participate in the flash
auction and thereby keep trades at the
Exchange, ISE proposes to adopt a fee
credit. Specifically, ISE proposes to
adopt a $0.20 per contract fee credit for
members who execute a transaction as
a response to a Professional Order 6 in
the Exchange’s flash auction.
2. Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Exchange
Act’’) for this proposed rule change is
the requirement under Section 6(b)(4)
that an exchange have an equitable
allocation of reasonable dues, fees and
other charges among its members and
other persons using its facilities. In
particular, the proposed rule change
will allow ISE to retain more order flow
by giving these customer orders
additional opportunity to be executed
ISE at the NBBO or better and will also
reduce PMM costs by reducing the
number of orders they must send to
other exchanges for execution.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
4 See
ISE Rule 1902.
Priority Customer is defined in ISE Rule
100(a)(37A) as a person or entity that is not a broker
or dealer in securities, and does not place more
than 390 orders in listed options per day on average
during a calendar month for its own beneficial
account(s).
6 A Professional Order is defined in ISE Rule
100(a)(37C) as an order that is for the account of a
person or entity that is not a Priority Customer.
5A
E:\FR\FM\24MRN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 56 (Wednesday, March 24, 2010)]
[Notices]
[Pages 14231-14233]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6514]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61732; File No. SR-CBOE-2010-027]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend CBOE Rule 31.85 to, Among Other Things,
Prohibit Broker Discretionary Voting on the Elections of Directors
March 18, 2010.
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 March 4, 2010, the Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CBOE proposes to amend CBOE Rule 31.85 to eliminate broker
discretionary voting for all elections of directors at shareholder
meetings, whether contested or not, except for companies registered
under the Investment Company Act of 1940 (the ``1940 Act''), to amend
CBOE Rule 31.85 to preclude broker discretionary voting on a matter
that materially amends an investment advisory contract with an
investment company, and to define that a material amendment to an
investment advisory contract would include any proposal to obtain
shareholder approval of an investment company's investment advisory
contract with a new investment advisor The text of the proposed rule
change is available on the Exchange's Web site (https://www.cboe.org/legal), at the Exchange's Office of the Secretary, and at the
Commission.
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
A shareholder of a public company may hold shares either directly,
as the record holder, or indirectly, as the beneficial holder, with the
shares held in the name of the beneficial shareholder's broker-dealer,
bank nominee, or custodian (``securities intermediary''), which is the
record holder.\5\ The latter generally is referred to as holding
securities in ``street name.'' \6\ The number of beneficial owners
holding securities in street name has increased significantly over the
past thirty-three years.
---------------------------------------------------------------------------
\5\ See Commission Release No. 34-60215 (July 1, 2009).
\6\ See supra note 2 [sic].
---------------------------------------------------------------------------
Currently, CBOE Rule 31.85 permits brokers to vote without voting
instructions from the beneficial owner on uncontested elections of
directors.\7\ Rule 31.85 also lays out a list of enumerated items for
which a member may not give a proxy to vote without instructions from
the beneficial owner.\8\ This list does not include the election of
directors. Due to the increase in the holding of securities in street
name, the impact of the broker vote on the election of directors has
become increasingly significant. At the same time, the number of proxy
campaigns, such as ``just vote no'' or ``withhold'' campaigns, that
have targeted the election of directors without a formal contest has
also increased. This has made the ``uncontested'' election of directors
a more controversial, as opposed to routine, matter.\9\
---------------------------------------------------------------------------
\7\ See CBOE Rule 31.85(a), which explains the process and
situations in which brokers may vote without voting instructions
from the beneficial owner.
\8\ See CBOE Rule 31.85(b).
\9\ See supra note 2 [sic].
---------------------------------------------------------------------------
In light of this development, the New York Stock Exchange proposed
a rule filing to declare the election of directors ineligible for
broker discretionary voting.\10\ The Commission approved this filing,
as amended, on July 1, 2009.\11\ Correspondingly, CBOE proposes to
amend CBOE Rule 31.85 to add all elections of directors at shareholder
meetings whether contested or not, except for companies registered
under the 1940 Act, to the list of enumerated items for which a member
may not give a proxy to vote without instructions from the beneficial
owner.
---------------------------------------------------------------------------
\10\ See SR-NYSE-2006-92.
\11\ See supra note 2 [sic].
---------------------------------------------------------------------------
CBOE also proposes to amend CBOE Rule 31.85 to preclude broker
discretionary voting on a matter that materially amends an investment
advisory contract with an investment company and to define that a
material amendment to an investment advisory contract would include any
proposal to obtain shareholder approval of an investment company's
investment advisory contract with a new investment advisor for which
shareholder approval is required by the 1940 Act and the rules
thereunder. These proposed amendments will help ensure the full and
effective voting rights of investment company shareholders on material
matters.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the
[[Page 14232]]
Securities Exchange Act of 1934 (the ``Act'') \12\ and the rules and
regulations thereunder and, in particular, the requirements of Section
6(b) of the Act.\13\ The Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \14\ requirements that the rules of
an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest. Specifically, the Exchange believes that the
proposed rule change will protect investors and the public interest by
ensuring better corporate governance and transparency of the election
process for directors and by promoting greater uniformity with the
proxy rules of other exchanges.\15\ In particular, for Exchange member
firms that are also members of other exchanges, confusion might arise
as to which exchange's proxy voting rules are applicable to a company
listed on the Exchange if there are disparities between proxy voting
rules of different exchanges.\16\ The proposed rule change will better
enfranchise shareholders and enhance corporate governance and
accountability to shareholders.\17\
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\12\ 15 U.S.C. 78s(b)(1).
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ See Securities Exchange Act Release No. 34-61292 (January
5, 2010), 75 FR 1664 (January 12, 2010) (SR-NYSEAmex-2009-93).
\16\ See supra note 12 [sic].
\17\ See supra note 2 [sic].
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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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) by its terms, become
operative prior to 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, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\20\ and Rule 19b-4(f)(6)(iii) thereunder.\21\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written
notice of the Exchange's intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied the pre-filing requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\23\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. In making
this request, the Exchange stated that the proposal is based upon the
rules of NYSE and NYSE Amex. The Exchange stated that waiver of the 30-
day operative delay will allow the change to become operative
immediately and conform to the Commission's desire to eliminate any
disparities involving voting.
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\22\ 17 CFR 240.19b-4(f)(6).
\23\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that the waiver of the 30-day operative
delay period is consistent with the protection of investors and the
public interest.\24\ The proposal would permit the Exchange to comply
with the Commission's stated goal that self-regulatory organizations
who currently allow members to use discretionary voting for director
elections conform their rules to the NYSE's rules to eliminate any
voting disparities depending on where the shares are held. Further, the
proposal would conform the Exchange's rule to the NYSE's rule with
respect to voting on investment advisory contracts. Moreover, the
Commission notes that the NYSE's adopted rule changes were subject to
full notice and comment, and considered and approved by the
Commission.\25\ Based on the above, the Commission finds that waiving
the 30-day operative delay period is consistent with the protection of
investors and the public interest and the proposal is therefore deemed
effective upon filing.
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\24\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\25\ See supra note 5.
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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-2010-027 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-2010-027. 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
[[Page 14233]]
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. 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-2010-027 and should be
submitted on or before April 14, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6514 Filed 3-23-10; 8:45 am]
BILLING CODE 8011-01-P
