Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the BOX LLC Agreement, 39299-39301 [2010-16533]
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
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–
NYSEArca–2010–56 and should be
submitted on or before July 29, 2010.
connection with the restructuring of
subsidiary holding companies by the
Montreal Exchange Inc.,5 a company
´
incorporated in Quebec, Canada (‘‘MX’’),
solely involving MX subsidiaries
indirectly holding ownership interests
in BOX LLC. The text of the proposed
rule change is available from the
principal office of the Exchange, at the
Commission’s Public Reference Room
and also on the Exchange’s Internet Web
site at https://
nasdaqomxbx.cchwallstreet.com/
NASDAQOMXBX/Filings/.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
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.
[FR Doc. 2010–16532 Filed 7–7–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62400; File No. SR–BX–
2010–042]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
BOX LLC Agreement
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 June 28,
2010, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act,3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
srobinson on DSKHWCL6B1PROD with NOTICES
June 29, 2010.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On January 13, 2004, the Commission
approved four Exchange proposals that
together established, through an
operating agreement among its owners,
a Delaware limited liability company,
BOX LLC, to operate BOX as an options
trading facility of the Exchange.6
Prior to the Transfer (as defined
below), MX held (i) 100% of the
common stock of MX US 1, Inc., a
Delaware corporation, (ii) 100% of the
common shares of 3226506 Nova Scotia
Company, a Nova Scotia unlimited
liability company (‘‘NSULC 1’’) and (iii)
100% of the preferred shares and 99.9%
of the common shares of 3226507 Nova
Scotia Company, a Nova Scotia
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
proposed Sixth Amended and Restated
Operating Agreement (‘‘BOX LLC
Agreement’’), of the Boston Options
Exchange Group LLC (‘‘BOX LLC’’), in
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
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5 The Montreal Exchange Inc. is also known in
´
´
French as the Bourse de Montreal Inc.
6 See Securities Exchange Act Release No. 49066
(January 13, 2004), 69 FR 2773 (January 20, 2004)
(establishing a fee schedule for the proposed BOX
facility); Securities Exchange Act Release No. 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004)
(creating Boston Options Exchange Regulation LLC
to which the Exchange would delegate its selfregulatory functions with respect to the BOX
facility); Securities Exchange Act Release No. 49068
(January 13, 2004), 69 FR 2775 (January 20, 2004)
(approving trading rules for the BOX facility);
Securities Exchange Act Release No. 49067 (January
13, 2004), 69 FR 2761 (January 20, 2004) (approving
certain regulatory provisions of the operating
agreement of BOX LLC).
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39299
unlimited liability company (‘‘NSULC
2’’). NSULC 1 held 0.1% of the common
shares of NSULC 2. MX US 1, Inc. held
100% of the common stock of MX US
2, Inc., a Delaware corporation, and
NSULC 2 owned 100% of the preferred
stock of MX US 2, Inc. MX US 2, Inc.
held a 53.83% ownership interest in
BOX LLC.7
Upon effectiveness of this rule filing,
MX is expected to effect a series of
transactions resulting in a new
ownership structure (the ‘‘Transfer’’).
Following the Transfer, the ownership
structure by which MX will indirectly
control MX US 2, Inc. will be as follows:
MX will hold 100% of the common
stock of MX US 1, Inc. MX US 1, Inc.
will hold (i) 100% of the equity of MX
US 1, LLC, a Delaware limited liability
company, and (ii) 100% of the common
stock of MX US 2, Inc. NSULC 1 will be
dissolved and its assets will be
distributed to MX US 1, LLC. MX US 1,
LLC will hold 100% of the equity of MX
US 2, LLC, a Delaware limited liability
company (formerly NSULC 2). MX US 2,
LLC will hold 100% of the preferred
stock of MX US 2, Inc. MX US 2, Inc.
will hold a 53.83% ownership interest
in BOX LLC.
The Exchange is submitting the
proposed rule change to the
Commission to amend the BOX LLC
Agreement pursuant to the proposed
Instruments of Accession in connection
with the Transfer. As a result of the
Transfer, MX US 1, LLC and MX US 2,
LLC will be indirect, wholly-owned
subsidiaries of MX.
Pursuant to Section 8.4(g) of the BOX
LLC Agreement, as previously approved
by the Commission, BOX LLC is
required to amend the BOX LLC
Agreement to make a Controlling
Person 8 a party to the BOX LLC
Agreement if such Controlling Person
establishes a Controlling Interest 9 in
any BOX Member that, alone or together
with any Affiliate of such BOX Member,
holds a Percentage Interest in BOX
7 See Securities Exchange Act Release No. 58822
(Oct. 21, 2008), 73 FR 63742 (Oct. 27, 2008) (SR–
BSE–2008–47) (approving BOX purchase and
cancellation of units held by a BOX LLC member
resulting in increased ownership interest of the
other members of the BOX LLC Agreement).
8 A ‘‘Controlling Person’’ is defined as ‘‘a Person
who, alone or together with any Affiliate of such
Person, holds a controlling interest in a [BOX]
Member.’’ See Section 8.4(g)(v)(B), BOX LLC
Agreement.
9 A ‘‘Controlling Interest’’ is defined as ‘‘the direct
or indirect ownership of 25% or more of the total
voting power of all equity securities of a Member
(other than voting rights solely with respect to
matters affecting the rights, preferences, or
privileges of a particular class of equity securities),
by any Person, alone or together with any Affiliate
of such Person.’’ See Section 8.4(g)(v)(A), BOX LLC
Agreement.
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
equal to or greater than 20%.10 Pursuant
to the Transfer, MX US 1, LLC has
acquired a Controlling Interest in MX
US 2, LLC, which owns 100% of the
preferred shares of MX US 2, Inc.,
which owns a 53.83% Controlling
Interest in BOX LLC. MX US 1, LLC and
MX US 2, LLC, as Controlling Persons,
are required to be and will become
parties to the BOX LLC Agreement
pursuant to the proposed Instruments of
Accession. As a result, MX US 1, LLC
and MX US 2, LLC will agree to abide
by all the provisions of the BOX LLC
Agreement, including those provisions
requiring submission to the jurisdiction
of the Commission.11
For the reasons stated above, the
Exchange is submitting to the
Commission the proposed Instruments
of Accession to the BOX LLC Agreement
as a rule change.
principles of trade, 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
Exchange believes that the proposed
rule change to amend the BOX LLC
Agreement to make MX US 1, LLC and
MX US 2, LLC parties to the BOX LLC
Agreement, pursuant to the proposed
Instruments of Accession, should
provide the Commission with sufficient
authority over changes in control of
BOX LLC to enable the Commission to
carry out its regulatory oversight
responsibilities with respect to BX and
the BOX facility.
2. Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the
Act,12 in general, and furthers the
objectives of Section 6(b)(1),13 in
particular, in that it enables the
Exchange to be so organized so as to
have the capacity to be able to carry out
the purposes of the Act and to comply,
and to enforce compliance by its
exchange members and persons
associated with its exchange members,
with the provisions of the Act, the rules
and regulations thereunder, and the
rules of the Exchange. The Exchange
also believes that this filing furthers the
objectives of Section 6(b)(5) of the Act 14
in that it is designed to facilitate
transactions in securities, to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange 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.
10 See
Section 8.4(g), BOX LLC Agreement.
BOX LLC Agreement states, in part, that
‘‘the Members, officers, directors, agents, and
employees of Members irrevocably submit to the
exclusive jurisdiction of the U.S. Federal courts,
U.S. Securities and Exchange Commission, and the
Boston Stock Exchange, for the purposes of any
suit, action or proceeding pursuant to U.S. Federal
securities laws, the rules or regulations thereunder,
arising out of, or relating to, BOX activities or
Article 19.6(a), (except that such jurisdictions shall
also include Delaware for any such matter relating
to the organization or internal affairs of BOX,
provided that such matter is not related to trading
on, or the regulation, of the BOX Market), and
hereby waive, and agree not to assert by way of
motion, as a defense or otherwise in any such suit,
action or proceeding, any claims that they are not
personally subject to the jurisdiction of the U.S.
Securities and Exchange Commission, that the suit,
action or proceeding is an inconvenient forum or
that the venue of the suit, action or proceeding is
improper, or that the subject matter hereof may not
be enforced in or by such courts or agency.’’ See
BOX LLC Agreement, Section 19.6.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5)[sic].
14 15 U.S.C. 78f(b)(5).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms does not become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) 15 of the Act and
Rule 19b–4(f)(6) thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally may not
become operative prior to 30 days after
U.S.C. 78s(b)(3)(A).
16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
provide the Commission with written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has met this requirement.
17 17 CFR 240.19b–4(f)(6).
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15 15
Frm 00100
Fmt 4703
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the date of filing. However, Rule 19b–
4(f)(6)(iii) 18 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange requests that the Commission
waive the 30-day operative delay, as
specified in Rule 19b–4(f)(6)(iii),19
which would make the rule change
effective and operative upon filing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because the Exchange
has represented that the Transfer is
anticipated to be consummated on June
29, 2010.20 In addition, the proposed
rule change to amend the BOX LLC
Agreement to make MX US 1, LLC and
MX US 2, LLC parties to the BOX LLC
Agreement, pursuant to the proposed
Instruments of Accession, should
provide the Commission with sufficient
authority over changes in control of
BOX LLC to enable the Commission to
carry out its regulatory oversight
responsibilities with respect to BX and
the BOX facility. Accordingly, the
Commission designates the proposed
rule change operative upon filing with
the Commission.
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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–BX–2010–042 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
18 17
CFR 240.19b–4(f)(6)(iii).
19 Id.
20 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).
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BX–2010–042. 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
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–BX–
2010–042 and should be submitted on
or before July 29, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–16533 Filed 7–7–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
srobinson on DSKHWCL6B1PROD with NOTICES
[Release No. 62403; File No. SR–Phlx–2010–
80]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX PHLX, Inc. Relating to the
Options Floor Broker Subsidy
June 30, 2010.
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 June 25,
2010 NASDAQ OMX PHLX, Inc. (‘‘Phlx’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘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: (i)
The threshold volume requirements
related to the Options Floor Broker
Subsidy; and (ii) the Per Contract
Average Daily Volume Subsidy
Payment. The Exchange also proposes
correcting a typographical error.
While changes to the Exchange’s Fee
Schedule pursuant to this proposal are
effective upon filing, the Exchange has
designated this proposal to be effective
for trades settling on or after July 1,
2010.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqtrader.com/
micro.aspx?id=PHLXfilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to decrease the threshold
volume requirements related to the
Options Floor Broker Subsidy and
amend the per contract average daily
volume subsidy payment fees. The
Exchange believes that by eliminating
1 15
21 17
CFR 200.30–3(a)(12).
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2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00101
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39301
certain threshold requirements
additional members may be attracted to
the Options Floor Broker Subsidy. Also,
the Exchange believes that the proposed
rate changes could provide enhanced
benefits to current and future member
organizations who participate in the
Options Floor Broker Subsidy because
the Exchange is increasing the per
contract rate on the Tier II and Tier III
levels. The Exchange still continues to
afford the members [sic] organizations
who transact volume in Tier I a benefit
as well.
Amending the Thresholds
The Exchange currently pays an
Options Floor Broker Subsidy to
member organizations with Exchange
registered floor brokers for eligible
contracts that are entered into the
Exchange’s Floor Broker Management
System (‘‘FBMS’’).3 To qualify for the per
contract subsidy, a member organization
with Exchange registered floor brokers
must have: (1) More than an average of
100,000 executed contracts per day in
the applicable month; and (2) at least
40,000 executed contracts or more per
day for at least eight trading days during
that same month.4 Only the floor broker
volume from orders entered into FBMS
and subsequently executed on the
Exchange are counted. The 100,000
contract and 40,000 contract thresholds,
as described above, are calculated per
member organization floor brokerage
unit. In the event that two or more
member organizations with Exchange
registered floor brokers each entered one
side of a transaction into FBMS, then
the executed contracts is [sic] divided
among each qualifying member
organization that participates in that
transaction.5
The Exchange proposes amending the
threshold volume requirements related
to the Option Floor Broker Subsidy so
that in order to qualify for the per
contract subsidy a member organization
3 FBMS is designed to enable floor brokers and/
or their employees to enter, route, and report
transactions stemming from options orders received
on the Exchange. FBMS also is designed to establish
an electronic audit trail for options orders
represented and executed by floor brokers on the
Exchange. See Exchange Rule 1080, commentary
.06.
4 For purposes of calculating the 100,000 and
40,000 thresholds, customer-to-customer
transactions, customer-to-non-customer
transactions, and non-customer-to-non-customer
transactions would be included.
5 When computing the threshold amounts, the
Exchange would first count all customer-tocustomer transactions and then all other customerto-non-customer transactions. See also Securities
Exchange Act Release No. 57253 (February 1, 2008),
73 FR 7352 (February 7, 2008) (SR–Phlx–2008–08)
(adopting a tiered per contract floor broker options
subsidy payable to member organization with
Exchange registered floor brokers).
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]]>Agencies
[Federal Register Volume 75, Number 130 (Thursday, July 8, 2010)]
[Notices]
[Pages 39299-39301]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16533]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62400; File No. SR-BX-2010-042]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
BOX LLC Agreement
June 29, 2010.
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 June 28, 2010, NASDAQ OMX BX, Inc. (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the self-regulatory organization. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective
upon filing with the Commission. The Commission is publishing this
notice to solicit comments on the proposed rule 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).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the proposed Sixth Amended and
Restated Operating Agreement (``BOX LLC Agreement''), of the Boston
Options Exchange Group LLC (``BOX LLC''), in connection with the
restructuring of subsidiary holding companies by the Montreal Exchange
Inc.,\5\ a company incorporated in Qu[eacute]bec, Canada (``MX''),
solely involving MX subsidiaries indirectly holding ownership interests
in BOX LLC. The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's Internet Web site at https://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.
---------------------------------------------------------------------------
\5\ The Montr[eacute]al Exchange Inc. is also known in French as
the Bourse de Montr[eacute]al Inc.
---------------------------------------------------------------------------
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
1. Purpose
On January 13, 2004, the Commission approved four Exchange
proposals that together established, through an operating agreement
among its owners, a Delaware limited liability company, BOX LLC, to
operate BOX as an options trading facility of the Exchange.\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 49066 (January 13,
2004), 69 FR 2773 (January 20, 2004) (establishing a fee schedule
for the proposed BOX facility); Securities Exchange Act Release No.
49065 (January 13, 2004), 69 FR 2768 (January 20, 2004) (creating
Boston Options Exchange Regulation LLC to which the Exchange would
delegate its self-regulatory functions with respect to the BOX
facility); Securities Exchange Act Release No. 49068 (January 13,
2004), 69 FR 2775 (January 20, 2004) (approving trading rules for
the BOX facility); Securities Exchange Act Release No. 49067
(January 13, 2004), 69 FR 2761 (January 20, 2004) (approving certain
regulatory provisions of the operating agreement of BOX LLC).
---------------------------------------------------------------------------
Prior to the Transfer (as defined below), MX held (i) 100% of the
common stock of MX US 1, Inc., a Delaware corporation, (ii) 100% of the
common shares of 3226506 Nova Scotia Company, a Nova Scotia unlimited
liability company (``NSULC 1'') and (iii) 100% of the preferred shares
and 99.9% of the common shares of 3226507 Nova Scotia Company, a Nova
Scotia unlimited liability company (``NSULC 2''). NSULC 1 held 0.1% of
the common shares of NSULC 2. MX US 1, Inc. held 100% of the common
stock of MX US 2, Inc., a Delaware corporation, and NSULC 2 owned 100%
of the preferred stock of MX US 2, Inc. MX US 2, Inc. held a 53.83%
ownership interest in BOX LLC.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 58822 (Oct. 21,
2008), 73 FR 63742 (Oct. 27, 2008) (SR-BSE-2008-47) (approving BOX
purchase and cancellation of units held by a BOX LLC member
resulting in increased ownership interest of the other members of
the BOX LLC Agreement).
---------------------------------------------------------------------------
Upon effectiveness of this rule filing, MX is expected to effect a
series of transactions resulting in a new ownership structure (the
``Transfer''). Following the Transfer, the ownership structure by which
MX will indirectly control MX US 2, Inc. will be as follows: MX will
hold 100% of the common stock of MX US 1, Inc. MX US 1, Inc. will hold
(i) 100% of the equity of MX US 1, LLC, a Delaware limited liability
company, and (ii) 100% of the common stock of MX US 2, Inc. NSULC 1
will be dissolved and its assets will be distributed to MX US 1, LLC.
MX US 1, LLC will hold 100% of the equity of MX US 2, LLC, a Delaware
limited liability company (formerly NSULC 2). MX US 2, LLC will hold
100% of the preferred stock of MX US 2, Inc. MX US 2, Inc. will hold a
53.83% ownership interest in BOX LLC.
The Exchange is submitting the proposed rule change to the
Commission to amend the BOX LLC Agreement pursuant to the proposed
Instruments of Accession in connection with the Transfer. As a result
of the Transfer, MX US 1, LLC and MX US 2, LLC will be indirect,
wholly-owned subsidiaries of MX.
Pursuant to Section 8.4(g) of the BOX LLC Agreement, as previously
approved by the Commission, BOX LLC is required to amend the BOX LLC
Agreement to make a Controlling Person \8\ a party to the BOX LLC
Agreement if such Controlling Person establishes a Controlling Interest
\9\ in any BOX Member that, alone or together with any Affiliate of
such BOX Member, holds a Percentage Interest in BOX
[[Page 39300]]
equal to or greater than 20%.\10\ Pursuant to the Transfer, MX US 1,
LLC has acquired a Controlling Interest in MX US 2, LLC, which owns
100% of the preferred shares of MX US 2, Inc., which owns a 53.83%
Controlling Interest in BOX LLC. MX US 1, LLC and MX US 2, LLC, as
Controlling Persons, are required to be and will become parties to the
BOX LLC Agreement pursuant to the proposed Instruments of Accession. As
a result, MX US 1, LLC and MX US 2, LLC will agree to abide by all the
provisions of the BOX LLC Agreement, including those provisions
requiring submission to the jurisdiction of the Commission.\11\
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\8\ A ``Controlling Person'' is defined as ``a Person who, alone
or together with any Affiliate of such Person, holds a controlling
interest in a [BOX] Member.'' See Section 8.4(g)(v)(B), BOX LLC
Agreement.
\9\ A ``Controlling Interest'' is defined as ``the direct or
indirect ownership of 25% or more of the total voting power of all
equity securities of a Member (other than voting rights solely with
respect to matters affecting the rights, preferences, or privileges
of a particular class of equity securities), by any Person, alone or
together with any Affiliate of such Person.'' See Section
8.4(g)(v)(A), BOX LLC Agreement.
\10\ See Section 8.4(g), BOX LLC Agreement.
\11\ The BOX LLC Agreement states, in part, that ``the Members,
officers, directors, agents, and employees of Members irrevocably
submit to the exclusive jurisdiction of the U.S. Federal courts,
U.S. Securities and Exchange Commission, and the Boston Stock
Exchange, for the purposes of any suit, action or proceeding
pursuant to U.S. Federal securities laws, the rules or regulations
thereunder, arising out of, or relating to, BOX activities or
Article 19.6(a), (except that such jurisdictions shall also include
Delaware for any such matter relating to the organization or
internal affairs of BOX, provided that such matter is not related to
trading on, or the regulation, of the BOX Market), and hereby waive,
and agree not to assert by way of motion, as a defense or otherwise
in any such suit, action or proceeding, any claims that they are not
personally subject to the jurisdiction of the U.S. Securities and
Exchange Commission, that the suit, action or proceeding is an
inconvenient forum or that the venue of the suit, action or
proceeding is improper, or that the subject matter hereof may not be
enforced in or by such courts or agency.'' See BOX LLC Agreement,
Section 19.6.
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For the reasons stated above, the Exchange is submitting to the
Commission the proposed Instruments of Accession to the BOX LLC
Agreement as a rule change.
2. Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\12\ in general, and furthers
the objectives of Section 6(b)(1),\13\ in particular, in that it
enables the Exchange to be so organized so as to have the capacity to
be able to carry out the purposes of the Act and to comply, and to
enforce compliance by its exchange members and persons associated with
its exchange members, with the provisions of the Act, the rules and
regulations thereunder, and the rules of the Exchange. The Exchange
also believes that this filing furthers the objectives of Section
6(b)(5) of the Act \14\ in that it is designed to facilitate
transactions in securities, to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, 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 Exchange believes that the proposed rule change to amend the BOX
LLC Agreement to make MX US 1, LLC and MX US 2, LLC parties to the BOX
LLC Agreement, pursuant to the proposed Instruments of Accession,
should provide the Commission with sufficient authority over changes in
control of BOX LLC to enable the Commission to carry out its regulatory
oversight responsibilities with respect to BX and the BOX facility.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5)[sic].
\14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6)
thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has met this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
may not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange requests that the
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\19\ which would make the rule change effective and
operative upon filing. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because the Exchange has represented that the Transfer
is anticipated to be consummated on June 29, 2010.\20\ In addition, the
proposed rule change to amend the BOX LLC Agreement to make MX US 1,
LLC and MX US 2, LLC parties to the BOX LLC Agreement, pursuant to the
proposed Instruments of Accession, should provide the Commission with
sufficient authority over changes in control of BOX LLC to enable the
Commission to carry out its regulatory oversight responsibilities with
respect to BX and the BOX facility. Accordingly, the Commission
designates the proposed rule change operative upon filing with the
Commission.
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ Id.
\20\ 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).
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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-BX-2010-042 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 39301]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-BX-2010-042. 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
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-BX-2010-042 and should be
submitted on or before July 29, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16533 Filed 7-7-10; 8:45 am]
BILLING CODE 8010-01-P
