Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Short Sell Order Handling, 5415-5417 [2011-1984]
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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
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16:38 Jan 28, 2011
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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).
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
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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).
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5416
Federal Register / Vol. 76, No. 20 / Monday, January 31, 2011 / Notices
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 is proposing to amend
CBOE Stock Exchange, LLC’s (‘‘CBSX,’’
the CBOE’s stock trading facility) rules
to describe the manner in which the
CBSX System 5 will handle short sell
orders for openings and reopenings in
relation to Rule 201 of Regulation SHO.6
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
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 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
Rule 201,9 the Exchange is proposing to
amend CBSX’s rules to describe the
manner in which the CBSX System will
handle short sell orders during opening
rotations when a circuit breaker is
triggered under Rule 201 of Regulation
SHO.10
In particular, the Exchange is
proposing to amend Interpretation and
Policy .02 to its Rule 51.8, Types of
Orders Handled, to provide that, if a
short sale-related circuit breaker is
triggered under Regulation SHO, orders
marked ‘‘short’’ that are received by the
CBSX System after the time a circuit
breaker is triggered but prior to the
opening of trading or reopening of
trading following a halt, suspension or
pause in the NMS stock will be
cancelled/rejected.11 Consistent with
the existing text of the rule and a
proposed clarifying amendment to that
text, (1) short sell orders that are resting
in the CBSX Book 12 at the time a circuit
breaker is triggered will be permitted to
continue resting and/or execute,13 and
(2) short sell orders that are received by
the CBSX System after the time a circuit
breaker is triggered and while the NMS
stock is open for trading on CBSX that
are (A) priced above the National Best
Bid will be permitted to rest and/or
execute or (B) priced at or below the
National Best Bid will be rejected/
cancelled.14
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act,15 in general, and, in
particular, furthers the objectives of
1. Purpose
jlentini on DSKJ8SOYB1PROD with NOTICES
Rule 201 of Regulation SHO under the
Act 7 sets forth a short sale-related
circuit breaker that, if triggered, will
impose a restriction on the prices at
which NMS stocks 8 may be sold short.
In anticipation of the upcoming
February 28, 2011 compliance date for
5 The ‘‘CBSX System’’ means the electronic system
which performs the functions set out in the CBSX
rules including controlling, monitoring, and
recording trading by CBSX Traders through CBSX
Workstations and trading between CBSX Traders.
See Rule 50.1(a). A ‘‘CBSX Trader’’ means an
individual who or organization which has the right
to trade on CBSX. See Rules 50.1(f) and 50.3. A
‘‘CBSX Workstation’’ means a computer connected
to CBSX for the purposes of trading pursuant to the
CBSX rules. See Rule 50.1(d).
6 17 CFR 242.201. See Securities Exchange Act
Release Nos. 61595 (February 26, 2010), 75 FR
11232 (March 10, 2010) and 63247 (November 4,
2010), 75 FR 68702 (November 9, 2010). In
connection with the adoption of Rule 201, Rule
200(g) of Regulation SHO, 17 CFR 242.200(g), was
amended to include a ‘‘short exempt’’ marking
requirement. The amendments to Rule 201 and Rule
200(g) have a compliance date of February 28, 2011.
7 Id.
8 17 CFR 242.201(a)(1).
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9 See Securities Exchange Act Release No. 63247,
note 6, supra, which extended the compliance date
for Rule 201, 17 CFR 242.201 and Rule 200(g), 17
CFR 242.200(g), from November 10, 2010 to
February 28, 2011.
10 Opening and reopening rotations are conducted
pursuant to Rule 52.2, Opening Procedures. Rule
52.2 provides that the CBSX System shall
automatically open each security at the price that
provides the highest matched quantity of order
volume. Subsequent to any such opening prints, or
immediately if there are no pre-opening orders in
a security, the CBSX System shall disseminate
regular quotations.
11 See proposed paragraph (a)(3) of Rule 51.8.02.
12 The ‘‘CBSX Book’’ means all unexecuted orders
currently held by the CBSX System. See Rule
50.1(c).
13 Short sell orders that are resting in the CBSX
Book at the time a circuit breaker is triggered by
definition are priced above the National Best Bid at
the time of initial display and therefore will be
permitted to continue resting and/or execute intraday and during any opening/reopening rotations
that occur while a circuit breaker is in effect. 17
CFR 242.201(b)(1).
14 See existing paragraphs (a)(1) through (2) of
Rule 51.8.02 and proposed changes to clarify that
subparagraph (2) (which is also numbered as item
(2) in the description above) applies to short sale
orders received while the NMS stock is open for
trading on CBSX.
15 15 U.S.C. 78f(b).
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Section 6(b)(5) of the Act,16 which
requires that an exchange have rules
that are designed to promote just and
equitable principles of trade and, in
general, to protect investors and the
public interest. In particular, the
Exchange believes the proposed change
will provide clarity on the short sell
order handling procedures that the
CBSX System will apply for openings
and reopenings when a short salerelated circuit breaker is triggered under
Rule 201 of Regulation SHO.
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 that is 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 neither solicited nor
received comments on the proposal.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not
(i) significantly affect the protection of
investors or the public interest;
(ii) impose any significant burden on
competition; and (iii) become operative
for 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, provided that the selfregulatory organization has given the
Commission written notice of its intent
to file 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 proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 17 and
Rule 19b–4(f)(6) thereunder.18
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
16 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f)(6).
17 15
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31JAN1
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.19
Elizabeth M. Murphy,
Secretary.
Act, Public Law 111–203, 124 Stat. 1376
(2010) (the ‘‘Dodd-Frank Act’’).5 The
transitional rule provides that on or
after October 1, 2010, and prior to the
formation of the Nominating Committee
for purposes of nominating Board
[FR Doc. 2011–1984 Filed 1–28–11; 8:45 am]
Electronic Comments
members for fiscal year 2012, the Board
BILLING CODE 8011–01–P
will amend the provisions of Rule A–
• Use the Commission’s Internet
3(c) to (a) reflect the composition of the
comment form (https://www.sec.gov/
Board as provided under the DoddSECURITIES AND EXCHANGE
rules/sro.shtml); or
Frank Act, (b) assure that the
COMMISSION
• Send an e-mail to ruleNominating Committee will be
[Release No. 34–63764; File No. SR–MSRB–
composed of a majority of public
comments@sec.gov. Please include File
2010–17]
members and will have fair
Number SR–CBOE–2011–005 on the
representation of broker-dealers, bank
subject line.
Self-Regulatory Organizations;
dealers, and municipal advisors, and (c)
Municipal Securities Rulemaking
Paper Comments
reflect such other considerations
Board; Order Granting Approval of
consistent with the provisions of
Proposed Rule Change Consisting of
• Send paper comments in triplicate
Section 15B of the Exchange Act and the
Amendments to Rule A–3, on
to Elizabeth M. Murphy, Secretary,
Dodd-Frank Act as the Board deems
Membership on the Board
Securities and Exchange Commission,
appropriate. The proposed rule change
100 F Street, NE., Washington, DC
January 25, 2011.
is intended to amend Rule A–3(c) to
20549–1090.
comply with the requirements of
I. Introduction
transitional Rule A–3(i), as approved by
All submissions should refer to File
On November 30, 2010, the Municipal the SEC.
Number SR–CBOE–2011–005. This file
Securities Rulemaking Board (‘‘MSRB’’
Consistent with Rule A–3(i), the
number should be included on the
or ‘‘Board’’), filed with the Securities and Nominating Committee (hereinafter,
subject line if e-mail is used. To help the Exchange Commission (‘‘Commission’’),
‘‘Nominating and Governance
Commission process and review your
pursuant to Section 19(b)(1) of the
Committee’’) would consist of eleven
comments more efficiently, please use
Securities Exchange Act of 1934
members, six of whom would be public
only one method. The Commission will (‘‘Exchange Act’’),1 and Rule 19b–4
members and five of whom would be
post all comments on the Commission’s thereunder,2 a proposed rule consisting
industry members. The Chair of the
Internet Web site (https://www.sec.gov/
of amendments to Rule A–3, on
Committee would be a public member.
rules/sro.shtml). Copies of the
membership on the Board, in order to
Establishing an eleven member
submission, all subsequent
establish a Nominating Committee in
committee would allow for fair
amendments, all written statements
compliance with MSRB transitional
representation of regulated entities by
with respect to the proposed rule
Rule A–3(i). The proposed rule change
reserving five positions for brokers,
change that are filed with the
was published for comment in the
dealers, municipal securities dealers
Federal Register on December 17,
Commission, and all written
and municipal advisors.
2010.3 The Commission received no
communications relating to the
Each constituency identified in the
comment letters about the proposed rule Dodd-Frank Act would be guaranteed a
proposed rule change between the
Commission and any person, other than change.4 This order approves the
minimum of one seat on the Nominating
proposed rule change.
those that may be withheld from the
and Governance Committee but the
level of each constituency would be
public in accordance with the
II. Description of the Proposed Rule
capped to avoid overweighting of any
provisions of 5 U.S.C. 552, will be
Change
one over the others. These ranges of
available for Web site viewing and
The purpose of the proposed rule
membership are as follows:
printing in the Commission’s Public
change is to make changes to MSRB
• Six public members consisting of
Reference Room, 100 F Street, NE.,
Rule A–3(c) as are necessary and
(a) at least one, but no more than three,
Washington, DC 20549, on official
appropriate prior to the creation of the
representative of institutional or retail
business days between the hours of 10
Nominating Committee of the MSRB.
investors; (b) at least one, but no more
a.m. and 3 p.m. Copies of such filing
On September 30, 2010, the SEC
than three, representative of municipal
also will be available for inspection and approved MSRB Rule A–3(i), a
entities; (c) at least one, but no more
copying at the principal office of the
transitional rule for MSRB fiscal year
than three, members of the public with
CBOE. All comments received will be
2011 intended to implement the
knowledge of or experience in the
posted without change; the Commission requirements of the Dodd-Frank Wall
municipal industry and not
does not edit personal identifying
Street Reform and Consumer Protection representative of investors or municipal
information from submissions. You
entities;6 and
19 17 CFR 200.30–3(a)(12).
should submit only information that
• Five regulated members, consisting
1 15 U.S.C. 78s(b)(1).
you wish to make available publicly. All
of (a) at least one, but no more than two,
2 17 CFR 240.19b–4.
submissions should refer to File
representative of broker-dealers; (b) at
3 See Securities Exchange Act Release No. 63533
Number SR–CBOE–2011–005 and
(December 13, 2010), 75 FR 79061 (December 17,
5 See Exchange Act Release No. 63025 (September
should be submitted on or before
2010) (the ‘‘Commission’s Notice’’).
4 On January 13, 2011, Commissioner Aguilar,
30, 2010), 75 FR 61806 (October 6, 2010).
February 22, 2011.
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:
jlentini on DSKJ8SOYB1PROD with NOTICES
5417
along with Michael E. Coe, Counsel to the
Commissioner, met with representatives of the
National Association of Independent Public
Finance Advisors to discuss the proposed rule
change among other matters. See Memorandum
from Michael E. Coe, dated January 13, 2011.
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16:38 Jan 28, 2011
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6 In order to ensure balance on the committee and
reflect the breadth of public representatives on the
Board, the proposal would require one to three
committee members be selected from Board
members who are not representative of municipal
entities or investors.
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]]>Agencies
[Federal Register Volume 76, Number 20 (Monday, January 31, 2011)]
[Notices]
[Pages 5415-5417]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1984]
-----------------------------------------------------------------------
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
[[Page 5416]]
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
The Exchange is proposing to amend CBOE Stock Exchange, LLC's
(``CBSX,'' the CBOE's stock trading facility) rules to describe the
manner in which the CBSX System \5\ will handle short sell orders for
openings and reopenings in relation to Rule 201 of Regulation SHO.\6\
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.
---------------------------------------------------------------------------
\5\ The ``CBSX System'' means the electronic system which
performs the functions set out in the CBSX rules including
controlling, monitoring, and recording trading by CBSX Traders
through CBSX Workstations and trading between CBSX Traders. See Rule
50.1(a). A ``CBSX Trader'' means an individual who or organization
which has the right to trade on CBSX. See Rules 50.1(f) and 50.3. A
``CBSX Workstation'' means a computer connected to CBSX for the
purposes of trading pursuant to the CBSX rules. See Rule 50.1(d).
\6\ 17 CFR 242.201. See Securities Exchange Act Release Nos.
61595 (February 26, 2010), 75 FR 11232 (March 10, 2010) and 63247
(November 4, 2010), 75 FR 68702 (November 9, 2010). In connection
with the adoption of Rule 201, Rule 200(g) of Regulation SHO, 17 CFR
242.200(g), was amended to include a ``short exempt'' marking
requirement. The amendments to Rule 201 and Rule 200(g) have a
compliance date of February 28, 2011.
---------------------------------------------------------------------------
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 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
Rule 201 of Regulation SHO under the Act \7\ sets forth a short
sale-related circuit breaker that, if triggered, will impose a
restriction on the prices at which NMS stocks \8\ may be sold short. In
anticipation of the upcoming February 28, 2011 compliance date for Rule
201,\9\ the Exchange is proposing to amend CBSX's rules to describe the
manner in which the CBSX System will handle short sell orders during
opening rotations when a circuit breaker is triggered under Rule 201 of
Regulation SHO.\10\
---------------------------------------------------------------------------
\7\ Id.
\8\ 17 CFR 242.201(a)(1).
\9\ See Securities Exchange Act Release No. 63247, note 6,
supra, which extended the compliance date for Rule 201, 17 CFR
242.201 and Rule 200(g), 17 CFR 242.200(g), from November 10, 2010
to February 28, 2011.
\10\ Opening and reopening rotations are conducted pursuant to
Rule 52.2, Opening Procedures. Rule 52.2 provides that the CBSX
System shall automatically open each security at the price that
provides the highest matched quantity of order volume. Subsequent to
any such opening prints, or immediately if there are no pre-opening
orders in a security, the CBSX System shall disseminate regular
quotations.
---------------------------------------------------------------------------
In particular, the Exchange is proposing to amend Interpretation
and Policy .02 to its Rule 51.8, Types of Orders Handled, to provide
that, if a short sale-related circuit breaker is triggered under
Regulation SHO, orders marked ``short'' that are received by the CBSX
System after the time a circuit breaker is triggered but prior to the
opening of trading or reopening of trading following a halt, suspension
or pause in the NMS stock will be cancelled/rejected.\11\ Consistent
with the existing text of the rule and a proposed clarifying amendment
to that text, (1) short sell orders that are resting in the CBSX Book
\12\ at the time a circuit breaker is triggered will be permitted to
continue resting and/or execute,\13\ and (2) short sell orders that are
received by the CBSX System after the time a circuit breaker is
triggered and while the NMS stock is open for trading on CBSX that are
(A) priced above the National Best Bid will be permitted to rest and/or
execute or (B) priced at or below the National Best Bid will be
rejected/cancelled.\14\
---------------------------------------------------------------------------
\11\ See proposed paragraph (a)(3) of Rule 51.8.02.
\12\ The ``CBSX Book'' means all unexecuted orders currently
held by the CBSX System. See Rule 50.1(c).
\13\ Short sell orders that are resting in the CBSX Book at the
time a circuit breaker is triggered by definition are priced above
the National Best Bid at the time of initial display and therefore
will be permitted to continue resting and/or execute intra-day and
during any opening/reopening rotations that occur while a circuit
breaker is in effect. 17 CFR 242.201(b)(1).
\14\ See existing paragraphs (a)(1) through (2) of Rule 51.8.02
and proposed changes to clarify that subparagraph (2) (which is also
numbered as item (2) in the description above) applies to short sale
orders received while the NMS stock is open for trading on CBSX.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act,\15\ in general, and, in particular, furthers
the objectives of Section 6(b)(5) of the Act,\16\ which requires that
an exchange have rules that are designed to promote just and equitable
principles of trade and, in general, to protect investors and the
public interest. In particular, the Exchange believes the proposed
change will provide clarity on the short sell order handling procedures
that the CBSX System will apply for openings and reopenings when a
short sale-related circuit breaker is triggered under Rule 201 of
Regulation SHO.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is 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 neither solicited nor received comments on the
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule does not (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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 proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6)
thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6).
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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
[[Page 5417]]
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-2011-005 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-2011-005. 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 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-2011-005 and should be
submitted on or before February 22, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1984 Filed 1-28-11; 8:45 am]
BILLING CODE 8011-01-P
