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]

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 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 (http://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). VerDate Mar<15>2010 16:38 Jan 28, 2011 Jkt 223001 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). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 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 E:\FR\FM\31JAN1.SGM 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 (http://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 (http://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. VerDate Mar<15>2010 16:38 Jan 28, 2011 Jkt 223001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 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. E:\FR\FM\31JAN1.SGM 31JAN1

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]


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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).
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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 (http://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\
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    \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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 (http://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 (http://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