Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Notice of Proposed Rule Change Regarding Rule 4.20-Anti-Money Laundering Compliance Program, 5415 [2011-1983]

Download as PDF Federal Register / Vol. 76, No. 20 / Monday, January 31, 2011 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–1982 Filed 1–28–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63762; File No. SR–CBOE– 2010–109] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Notice of Proposed Rule Change Regarding Rule 4.20—Anti-Money Laundering Compliance Program January 25, 2011. jlentini on DSKJ8SOYB1PROD with NOTICES I. Introduction On December 2, 2010, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b-4 thereunder,2 a proposed rule change to amend CBOE Rule 4.20 to require all Trading Permit Holders or TPH organizations to conduct independent testing during the first calendar year of becoming a Trading Permit Holder or TPH organization. The proposed rule change was published for comment in the Federal Register on December 22, 2010.3 The Commission did not receive any comments on the proposal. This order approves the proposed change. II. Background CBOE proposed to amend CBOE Rule 4.20, Anti-Money Laundering Compliance Program, to require all Trading Permit Holders or TPH organizations to conduct independent testing during the first calendar year of becoming a Trading Permit Holder or TPH organization. CBOE Rule 4.20 generally requires annual (on a calendar-year basis) independent testing for compliance. However, if the Trading Permit Holder or TPH organization does not execute transactions for customers or otherwise hold customer accounts, or does not act as an introducing broker with respect to customer accounts (e.g., engages solely in proprietary trading or conducts business only with other CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 See Securities and Exchange Act Release No. 63559 (December 16, 2010), 75 FR 80560 (December 22, 2010) (‘‘Notice’’) broker-dealers), such ‘‘independent testing’’ is required every two years (on a calendar-year basis). The Exchange believes that it is prudent to amend this rule to require that all Trading Permit Holders or TPH organizations conduct testing during the first calendar year of the Trading Permit Holder’s or TPH organization’s existence to ensure antimoney laundering compliance is in place and established at the outset of the Trading Permit Holder’s or TPH organization’s existence, even if they would thereafter conduct such testing every two years. CBOE Interpretations and Policies .01 continues to provide that all Trading Permit Holders should undertake more frequent testing than required by Rule 4.20 if circumstances warrant (e.g., should the business mix of the Trading Permit Holder or TPH organization materially change, in the event of a merger or acquisition, in light of a systemic weakness uncovered via testing of the anti-money laundering program, or in response to any other ‘‘red flags’’).4 As explained in the Notice, the Exchange believes that the proposed rule change is consistent with Section 6(b)5 of the Act and the rules and regulations thereunder, in general, and furthers the objectives of Section 6(b)(5),6 in particular, in that it is designed 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 facilitating transactions in securities, and to remove impediments to and perfect the mechanisms of a free and open market and a national market system, and, in general, to protect investors and the public interest. 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. III. Discussion of Comment Letters The Commission did not receive any comment letters regarding the proposed rule change. IV. Commission Findings The Commission has carefully reviewed the proposed rule change and finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national 15 17 1 15 VerDate Mar<15>2010 16:38 Jan 28, 2011 Jkt 223001 4 See Securities Exchange Act Release No. 57044 (December 27, 2007), 73 FR 2 (January 3, 2008) (SR– CBOE–2007–130). 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 5415 securities association.7 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5), of the Act,8 which, among other things, requires that CBOE rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,9 that the proposed rule change (SR–CBOE–2010– 109), be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–1983 Filed 1–28–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63763; File No. SR–CBOE– 2011–005] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Short Sell Order Handling January 25, 2011. 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 January 14, 2011, the Chicago Board Options Exchange, Incorporated (‘‘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 substantially prepared by the Exchange. The Exchange has designated 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 7 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78s(b)(2). 10 17 CFR 200.30–3(a)(12). 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). E:\FR\FM\31JAN1.SGM 31JAN1

Agencies

[Federal Register Volume 76, Number 20 (Monday, January 31, 2011)]
[Notices]
[Page 5415]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1983]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63762; File No. SR-CBOE-2010-109]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Notice of Proposed Rule Change Regarding 
Rule 4.20--Anti-Money Laundering Compliance Program

January 25, 2011.

I. Introduction

    On December 2, 2010, the Chicago Board Options Exchange, 
Incorporated (``Exchange'' or ``CBOE'') filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend CBOE Rule 4.20 to 
require all Trading Permit Holders or TPH organizations to conduct 
independent testing during the first calendar year of becoming a 
Trading Permit Holder or TPH organization. The proposed rule change was 
published for comment in the Federal Register on December 22, 2010.\3\ 
The Commission did not receive any comments on the proposal. This order 
approves the proposed change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities and Exchange Act Release No. 63559 (December 
16, 2010), 75 FR 80560 (December 22, 2010) (``Notice'')
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II. Background

    CBOE proposed to amend CBOE Rule 4.20, Anti-Money Laundering 
Compliance Program, to require all Trading Permit Holders or TPH 
organizations to conduct independent testing during the first calendar 
year of becoming a Trading Permit Holder or TPH organization. CBOE Rule 
4.20 generally requires annual (on a calendar-year basis) independent 
testing for compliance. However, if the Trading Permit Holder or TPH 
organization does not execute transactions for customers or otherwise 
hold customer accounts, or does not act as an introducing broker with 
respect to customer accounts (e.g., engages solely in proprietary 
trading or conducts business only with other broker-dealers), such 
``independent testing'' is required every two years (on a calendar-year 
basis). The Exchange believes that it is prudent to amend this rule to 
require that all Trading Permit Holders or TPH organizations conduct 
testing during the first calendar year of the Trading Permit Holder's 
or TPH organization's existence to ensure anti-money laundering 
compliance is in place and established at the outset of the Trading 
Permit Holder's or TPH organization's existence, even if they would 
thereafter conduct such testing every two years.
    CBOE Interpretations and Policies .01 continues to provide that all 
Trading Permit Holders should undertake more frequent testing than 
required by Rule 4.20 if circumstances warrant (e.g., should the 
business mix of the Trading Permit Holder or TPH organization 
materially change, in the event of a merger or acquisition, in light of 
a systemic weakness uncovered via testing of the anti-money laundering 
program, or in response to any other ``red flags'').\4\
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    \4\ See Securities Exchange Act Release No. 57044 (December 27, 
2007), 73 FR 2 (January 3, 2008) (SR-CBOE-2007-130).
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    As explained in the Notice, the Exchange believes that the proposed 
rule change is consistent with Section 6(b)\5\ of the Act and the rules 
and regulations thereunder, in general, and furthers the objectives of 
Section 6(b)(5),\6\ in particular, in that it is designed 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    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.

III. Discussion of Comment Letters

    The Commission did not receive any comment letters regarding the 
proposed rule change.

IV. Commission Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to a 
national securities association.\7\ In particular, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(5), of 
the Act,\8\ which, among other things, requires that CBOE rules be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest.
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    \7\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CBOE-2010-109), be, and 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1983 Filed 1-28-11; 8:45 am]
BILLING CODE 8011-01-P