Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Update Rules Based on Chicago Board Options Exchange, Inc. Rules and Recent Chicago Board Options Exchange, Inc. Rule Filings, 68844-68846 [2010-28246]
Download as PDF
<![CDATA[
68844
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
operative upon filing with the
Commission.29
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend 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–2010–099 on the
subject line.
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
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–2010–099. 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
29 For
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
VerDate Mar<15>2010
15:18 Nov 08, 2010
Jkt 223001
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–2010–099 and
should be submitted on or before
November 30, 2010 in the Federal
Register.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–28244 Filed 11–8–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63238; File No. SR–C2–
2010–008]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change to Update Rules Based on
Chicago Board Options Exchange, Inc.
Rules and Recent Chicago Board
Options Exchange, Inc. Rule Filings
November 3, 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 October
29, 2010, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
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 ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
C2 proposes to update its rules based
on Chicago Board Options Exchange,
Inc. (‘‘CBOE’’) rules and recent CBOE
rule filings. The text of the proposed
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)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
rule change is available on the
Exchange’s Web site (https://
www.cboe.org/legal/
crclc2rulefiling.aspx), at the Exchange’s
Office of the Secretary, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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
In 2009, C2 was registered as a
national securities exchange under
Section 6 of the Exchange Act.5 C2 is
anticipated to launch on October 29,
2010. The purpose of this filing is to
update the C2 rules based on rules and
recent rule filings of CBOE.
First, C2 proposes to delete the
definition of ‘‘Short Term Option’’ from
Rule 1.1. The definition is not used
elsewhere in the C2 Rules and is
superfluous and unnecessary. The
Exchange notes that CBOE Chapter V
(specifically Rule 5.5(d)), which is
incorporated by reference into Chapter
V of the C2 Rules, defines ‘‘Short Term
Option Series.’’
Second, C2 proposes to adopt Rule
3.13, Educational Classes, which would
require Trading Permit Holders (‘‘TPHs’’)
and persons associated with TPHs to
attend such educational classes as C2
may require from time to time. The
proposed rule would also provide that
failure to attend C2 mandated
continuing educational classes may
subject TPHs and associated persons to
sanctions under the Exchange’s Minor
Rule Violation Plan. Any action taken
by the Exchange would not preclude
further disciplinary action under C2
Rules. Proposed C2 Rule 3.13 is similar
to existing CBOE Rule 6.20(e).
Third, C2 proposes to add Rule 6.17,
Price Check Parameters. Under the
proposed rule, C2 would not
automatically execute eligible orders
5 See Exchange Act Release No. 61152 (Dec. 10,
2009), 74 FR 66699 (Dec. 16, 2009).
E:\FR\FM\09NON1.SGM
09NON1
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
that are marketable if (1) the width
between the national best bid and
national best offer is not within an
acceptable price range (as determined
by the Exchange on a series by series
basis for market orders and/or
marketable limit orders and announced
to TPHs via Regulatory Circular), or (2)
the execution would follow an initial
partial execution on the Exchange and
would be at a subsequent price that is
not within an acceptable tick distance
from the initial execution (as
determined by the Exchange on a series
by series and premium basis for market
orders and/or marketable limit orders
and announced to TPHs via Regulatory
Circular).
For purposes of the proposed rule, an
‘‘acceptable price range’’ (‘‘APR’’) shall be
determined by the Exchange on a classby-class basis and shall be no less than:
$0.375 between the bid and offer for
each option contract for which the bid
is less than $2, $0.60 where the bid is
at least $2 but does not exceed $5, $0.75
where the bid is more than $5 but does
not exceed $10, $1.20 where the bid is
more than $10 but does not exceed $20,
and $1.50 where the bid is more than
$20. An ‘‘acceptable tick distance’’
(‘‘ATD’’) shall be no less than 2
minimum increment ticks. Under the
proposed rule, the senior official in the
C2 Help Desk may grant intra-day relief
by widening the APR and ATD for one
or more option series. Notification of
intra-day relief will be announced via
electronic message to TPHs that request
to receive such messages. If an
execution is suspended because the
APR has not been met, the order will be
cancelled. If an execution is suspended
because executing the remaining portion
of an order would exceed the ATD, then
such remaining portion will be
cancelled.
Proposed Rule 6.17 is similar to
existing CBOE Rule 6.13(b)(vi), except
that provisions in the CBOE rule related
to the handling of orders in open outcry
have not been incorporated.
Fourth, C2 proposes to adopt Rule
6.37, Reporting of Trade Information, to
require TPHs to file with the Exchange
trade information in such form as may
be prescribed by the Exchange covering
each Exchange transaction during each
business day in order to allow the
Exchange to properly match and clear
trades. The trade information shall show
for each transaction (1) The identity of
the Clearing Participant, (2) the
underlying security, (3) the exercise
price, (4) the expiration month, (5) the
number of option contracts, (6) the
premium per unit, (7) the identity of the
executing broker representing the
Clearing Participants, (8) whether a
VerDate Mar<15>2010
15:18 Nov 08, 2010
Jkt 223001
purchase or a writing transaction, (9)
except for a transaction executed by or
for a Market-Maker, whether an opening
or closing transaction, (10) the identity
of the account of the Clearing
Participant in which the transaction was
effected, (11) the time of purchase or
sale, (12) whether a put or call, and (13)
such other information as may be
required by the Exchange. Proposed
Rule 6.37 is similar to existing CBOE
Rule 6.51(d), except that trade
information in the CBOE rule related to
the reporting of open outcry
transactions has not been incorporated.
Fifth, C2 proposes to amend Rule
6.51, Automated Improvement
Mechanism (‘‘AIM’’), to extend until July
18, 2011 the Pilot Period during which
there will be no minimum size
requirement for orders to be eligible for
the AIM auction. This proposed
amendment to extend the pilot program
is based on a recent CBOE rule filing.6
Lastly, C2 also proposes to amend
Chapter 24, Index Options. Chapter 24
of the C2 rules incorporates by reference
CBOE Chapter XXIV, with the exception
of certain specified rules contained in
CBOE Chapter XXIV. C2 proposes to
amend the list of excepted rules in two
respects. We are inserting a reference to
provide that CBOE Rule 24.15,
Automatic Execution of Index Options,
does not apply to C2. CBOE Rule 24.15
addresses the applicability of certain
CBOE automatic execution rules to
index options. The rules are
inapplicable to the operations of C2, and
thus the rule itself should not apply to
C2. We are also deleting a reference to
CBOE Rule 24.16, Nullification and
Adjustment of Transactions in Index
Options, Options on ETFs, and Options
on HOLDRS, because that rule has been
deleted from the CBOE rules and thus
the cross-reference is outdated and no
longer necessary.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) 7 and the rules and regulations
thereunder and, in particular, the
requirements of Section 6(b) of the Act.8
Specifically, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 9 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
6 See Securities Exchange Act Release No. 34–62–
522 (July 16, 2010), 75 FR 43596 (July 26, 2010)
(SR–CBOE–2010–067).
7 15 U.S.C. 78s(b)(1).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
68845
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. Updating the C2 rules to
keep them in line with those of CBOE
(as relevant) provides for consistency in
rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
C2 does not believe that the proposed
rule change will impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change: (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) of the Act 10 and
Rule 19b–4(f)(6) thereunder.11
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, Rule 19b–
4(f)(6)(iii) 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),12
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
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b4(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. C2
has satisfied this requirement.
12 17 CFR 240.19b–4(f)(6)(iii).
11 17
E:\FR\FM\09NON1.SGM
09NON1
68846
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
public interest.13 The Commission notes
that the proposal is designed to conform
C2’s rules to the rules of the CBOE, and
does not raise any new regulatory
issues. For these reasons, the
Commission designates the proposed
rule change as operative upon filing.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend 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:
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
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–C2–2010–008 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–C2–2010–008. 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
13 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Mar<15>2010
15:18 Nov 08, 2010
Jkt 223001
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–C2–
2010–008 and should be submitted on
or before November 30, 2010 in the
Federal Register.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–28246 Filed 11–8–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63239; File No. SR–
NASDAQ–2010–137]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Amend IM–5101–2 To Provide
Acquisition Companies the Option To
Hold a Tender Offer in Lieu of a
Shareholder Vote on a Proposed
Acquisition
November 3, 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 October
22, 2010, 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. 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 provide
acquisition companies an option to hold
a tender offer in lieu of a shareholder
vote on a proposed acquisition.
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
Proposed new language is in italics;
proposed deletions are in [brackets].3
IM–5101–2. Listing of Companies Whose
Business Plan is to Complete One or More
Acquisitions
Generally, Nasdaq will not permit the
initial or continued listing of a Company that
has no specific business plan or that has
indicated that its business plan is to engage
in a merger or acquisition with an
unidentified company or companies.
However, in the case of a Company whose
business plan is to complete an initial public
offering and engage in a merger or acquisition
with one or more unidentified companies
within a specific period of time, Nasdaq will
permit the listing if the Company meets all
applicable initial listing requirements, as
well as the conditions described below.
(a)–(c) No change.
(d) Until the Company has satisfied the
condition in paragraph (b) above, if the
Company holds a shareholder vote on a
business combination for which the
Company must file and furnish a proxy or
information statement subject to Regulation
14A or 14C under the Act in advance of the
shareholder meeting, the[each] business
combination must be approved by a majority
of the shares of common stock voting at the
meeting at which the combination is being
considered. If a shareholder vote on the
business combination is held,
[(e) Until the Company has satisfied the
condition in paragraph (b) above,] public
Shareholders voting against a business
combination must have the right to convert
their shares of common stock into a pro rata
share of the aggregate amount then in the
deposit account (net of taxes payable and
amounts distributed to management for
working capital purposes) if the business
combination is approved and consummated.
A Company may establish a limit (set no
lower than 10% of the shares sold in the IPO)
as to the maximum number of shares with
respect to which any Shareholder, together
with any affiliate of such Shareholder or any
person with whom such shareholder is acting
as a ‘‘group’’ (as such term is used in Sections
13(d) and 14(d) of the Act), may exercise
such conversion rights. For purposes of this
paragraph [(e)] (d), public Shareholder
excludes officers and directors of the
Company, the Company’s sponsor, the
founding Shareholders of the Company, and
any Family Member or affiliate of any of the
foregoing persons, or the beneficial holder of
more than 10% of the total shares
outstanding.
Until the Company completes a business
combination where all conditions in
paragraph (b) above are met, the Company
must notify Nasdaq on the appropriate form
about each proposed business combination.
Following each business combination, the
combined Company must meet the
requirements for initial listing. If the
Company does not meet the requirements for
initial listing following a business
combination or does not comply with one of
3 Changes are marked to the rule text that appears
in the electronic manual of Nasdaq found at
https://nasdaqomx.cchwallstreet.com.
E:\FR\FM\09NON1.SGM
09NON1
]]>Agencies
[Federal Register Volume 75, Number 216 (Tuesday, November 9, 2010)]
[Notices]
[Pages 68844-68846]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28246]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63238; File No. SR-C2-2010-008]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
to Update Rules Based on Chicago Board Options Exchange, Inc. Rules and
Recent Chicago Board Options Exchange, Inc. Rule Filings
November 3, 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 October 29, 2010, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') 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
C2 proposes to update its rules based on Chicago Board Options
Exchange, Inc. (``CBOE'') rules and recent CBOE rule filings. The text
of the proposed rule change is available on the Exchange's Web site
(https://www.cboe.org/legal/crclc2rulefiling.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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
In 2009, C2 was registered as a national securities exchange under
Section 6 of the Exchange Act.\5\ C2 is anticipated to launch on
October 29, 2010. The purpose of this filing is to update the C2 rules
based on rules and recent rule filings of CBOE.
---------------------------------------------------------------------------
\5\ See Exchange Act Release No. 61152 (Dec. 10, 2009), 74 FR
66699 (Dec. 16, 2009).
---------------------------------------------------------------------------
First, C2 proposes to delete the definition of ``Short Term
Option'' from Rule 1.1. The definition is not used elsewhere in the C2
Rules and is superfluous and unnecessary. The Exchange notes that CBOE
Chapter V (specifically Rule 5.5(d)), which is incorporated by
reference into Chapter V of the C2 Rules, defines ``Short Term Option
Series.''
Second, C2 proposes to adopt Rule 3.13, Educational Classes, which
would require Trading Permit Holders (``TPHs'') and persons associated
with TPHs to attend such educational classes as C2 may require from
time to time. The proposed rule would also provide that failure to
attend C2 mandated continuing educational classes may subject TPHs and
associated persons to sanctions under the Exchange's Minor Rule
Violation Plan. Any action taken by the Exchange would not preclude
further disciplinary action under C2 Rules. Proposed C2 Rule 3.13 is
similar to existing CBOE Rule 6.20(e).
Third, C2 proposes to add Rule 6.17, Price Check Parameters. Under
the proposed rule, C2 would not automatically execute eligible orders
[[Page 68845]]
that are marketable if (1) the width between the national best bid and
national best offer is not within an acceptable price range (as
determined by the Exchange on a series by series basis for market
orders and/or marketable limit orders and announced to TPHs via
Regulatory Circular), or (2) the execution would follow an initial
partial execution on the Exchange and would be at a subsequent price
that is not within an acceptable tick distance from the initial
execution (as determined by the Exchange on a series by series and
premium basis for market orders and/or marketable limit orders and
announced to TPHs via Regulatory Circular).
For purposes of the proposed rule, an ``acceptable price range''
(``APR'') shall be determined by the Exchange on a class-by-class basis
and shall be no less than: $0.375 between the bid and offer for each
option contract for which the bid is less than $2, $0.60 where the bid
is at least $2 but does not exceed $5, $0.75 where the bid is more than
$5 but does not exceed $10, $1.20 where the bid is more than $10 but
does not exceed $20, and $1.50 where the bid is more than $20. An
``acceptable tick distance'' (``ATD'') shall be no less than 2 minimum
increment ticks. Under the proposed rule, the senior official in the C2
Help Desk may grant intra-day relief by widening the APR and ATD for
one or more option series. Notification of intra-day relief will be
announced via electronic message to TPHs that request to receive such
messages. If an execution is suspended because the APR has not been
met, the order will be cancelled. If an execution is suspended because
executing the remaining portion of an order would exceed the ATD, then
such remaining portion will be cancelled.
Proposed Rule 6.17 is similar to existing CBOE Rule 6.13(b)(vi),
except that provisions in the CBOE rule related to the handling of
orders in open outcry have not been incorporated.
Fourth, C2 proposes to adopt Rule 6.37, Reporting of Trade
Information, to require TPHs to file with the Exchange trade
information in such form as may be prescribed by the Exchange covering
each Exchange transaction during each business day in order to allow
the Exchange to properly match and clear trades. The trade information
shall show for each transaction (1) The identity of the Clearing
Participant, (2) the underlying security, (3) the exercise price, (4)
the expiration month, (5) the number of option contracts, (6) the
premium per unit, (7) the identity of the executing broker representing
the Clearing Participants, (8) whether a purchase or a writing
transaction, (9) except for a transaction executed by or for a Market-
Maker, whether an opening or closing transaction, (10) the identity of
the account of the Clearing Participant in which the transaction was
effected, (11) the time of purchase or sale, (12) whether a put or
call, and (13) such other information as may be required by the
Exchange. Proposed Rule 6.37 is similar to existing CBOE Rule 6.51(d),
except that trade information in the CBOE rule related to the reporting
of open outcry transactions has not been incorporated.
Fifth, C2 proposes to amend Rule 6.51, Automated Improvement
Mechanism (``AIM''), to extend until July 18, 2011 the Pilot Period
during which there will be no minimum size requirement for orders to be
eligible for the AIM auction. This proposed amendment to extend the
pilot program is based on a recent CBOE rule filing.\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 34-62-522 (July 16,
2010), 75 FR 43596 (July 26, 2010) (SR-CBOE-2010-067).
---------------------------------------------------------------------------
Lastly, C2 also proposes to amend Chapter 24, Index Options.
Chapter 24 of the C2 rules incorporates by reference CBOE Chapter XXIV,
with the exception of certain specified rules contained in CBOE Chapter
XXIV. C2 proposes to amend the list of excepted rules in two respects.
We are inserting a reference to provide that CBOE Rule 24.15, Automatic
Execution of Index Options, does not apply to C2. CBOE Rule 24.15
addresses the applicability of certain CBOE automatic execution rules
to index options. The rules are inapplicable to the operations of C2,
and thus the rule itself should not apply to C2. We are also deleting a
reference to CBOE Rule 24.16, Nullification and Adjustment of
Transactions in Index Options, Options on ETFs, and Options on HOLDRS,
because that rule has been deleted from the CBOE rules and thus the
cross-reference is outdated and no longer necessary.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') \7\ and the rules and
regulations thereunder and, in particular, the requirements of Section
6(b) of the Act.\8\ Specifically, the Exchange believes the proposed
rule change is consistent with the Section 6(b)(5) \9\ 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. Updating the C2 rules to keep them
in line with those of CBOE (as relevant) provides for consistency in
rules.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(1).
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
C2 does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (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) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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. C2 has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) 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),\12\
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
[[Page 68846]]
public interest.\13\ The Commission notes that the proposal is designed
to conform C2's rules to the rules of the CBOE, and does not raise any
new regulatory issues. For these reasons, the Commission designates the
proposed rule change as operative upon filing.
---------------------------------------------------------------------------
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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-C2-2010-008 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-C2-2010-008. 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 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-C2-2010-008 and should be
submitted on or before November 30, 2010 in the Federal Register.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28246 Filed 11-8-10; 8:45 am]
BILLING CODE 8011-01-P
