Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To Reduce the Minimum Size of the Nominating and Governance Committee, 27112-27114 [2011-11357]
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27112
Federal Register / Vol. 76, No. 90 / Tuesday, May 10, 2011 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64394; File No. SR–C2–
2011–012]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing of a Proposed Rule
Change To Reduce the Minimum Size
of the Nominating and Governance
Committee
May 4, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule
19b–4 thereunder,2 notice is hereby
given that on April 27, 2011, C2 Options
Exchange, Incorporated (‘‘C2’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by C2. 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 amend its Bylaws to
change the minimum size of the C2
Nominating and Governance
Committee.
The text of the proposed amendments
to C2’s Bylaws and the proposed
amendments to C2’s rules is available
on C2’s Web site at (https://
www.c2exchange.com/Legal), at C2’s
Office of the Secretary, and at the
Commission’s Public Reference Room.
jlentini on DSKJ8SOYB1PROD with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, C2
included statements concerning the
purpose of, and basis for, the proposed
rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. C2 has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to reduce the minimum size
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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of C2’s Nominating and Governance
Committee from seven to five directors.
Section 4.4 of the Second Amended and
Restated Bylaws of C2 (‘‘Bylaws’’)
currently provides, in pertinent part,
that the Nominating and Governance
Committee shall consist of at least seven
directors, including both Industry and
Non-Industry Directors; that a majority
of the directors on the Committee shall
be Non-Industry Directors; and that the
exact number of members on the
Committee shall be determined from
time to time by C2’s Board of Directors.
This rule change would be effectuated
by amending Section 4.4 of the Bylaws
to provide that the Nominating and
Governance Committee shall consist of
at least five directors. The other
provisions of Section 4.4 of the Bylaws
would remain unchanged. Additionally,
the title of the Bylaws would be
changed to the Third Amended and
Restated Bylaws of C2.
Section 3.1 of the Bylaws provides
that the C2 Board of Directors shall
consist of not less than eleven and not
more than twenty-three directors, with
the exact size determined by the Board.
C2’s Board size has declined recently
from the Board’s initial size of twentythree directors in 2009 prior to the
launch of trading on C2 to its current
size of nineteen directors. In addition,
the Board size will be declining further
to sixteen directors at the time of the
2011 annual election of C2 directors
(which is anticipated to occur in May
2011). As the Board size declines, it
becomes more challenging to populate
large Board committees since there are
fewer directors to serve on the various
C2 Board committees. The Exchange
believes that reducing the minimum
size of the Nominating and Governance
Committee to five directors will help to
alleviate this issue.
Changing the minimum size of the
Nominating and Governance Committee
to five directors would also make the
minimum size consistent with the
minimum size of the Nominating and
Governance Committee of CBOE
Holdings, Inc. (‘‘CBOE Holdings’’), C2’s
parent company. C2 believes that having
the same composition requirements for
the Nominating and Governance
Committees of both C2 and CBOE
Holdings will promote consistency and
efficiency. C2 and CBOE Holdings
currently have the same individuals
serving on the C2 and CBOE Holdings
Boards of Directors and on the C2 and
CBOE Holdings Nominating and
Governance Committees. This approach
simplifies the process of scheduling and
conducting meetings and allows the
Boards and Nominating and Governance
Committees of both entities to operate
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most efficiently. To the extent that C2
and CBOE Holdings desire to continue
this approach in the future, this
proposed rule change better enables C2
and CBOE Holdings to do so.
The Exchange believes that its
Nominating and Governance Committee
will continue to be able to appropriately
perform its functions if it were to be
composed of five directors. The
Exchange also believes that having a
Nominating and Governance Committee
with a minimum size of five directors is
consistent with prior precedent, in that
the Chicago Stock Exchange (‘‘CHX’’) has
a Nominating and Governance
Committee with a size of four directors.3
Additionally, it should be noted that
although the proposed rule change
would permit the Exchange [sic]
appoint a five-person Nominating and
Governance Committee and that the
Exchange may do so in the future, it is
the current intention of the Exchange to
appoint a six-person Nominating and
Governance Committee at the time of
the 2011 annual election of C2 directors.
The Exchange will continue to
provide for the fair representation of C2
Trading Permit Holders in the selection
of directors and the administration of
the Exchange consistent with Section
6(b)(3) of the Act 4 following this rule
change. In particular, the C2 Bylaws
will continue to require that at least
thirty percent of the directors on the C2
Board of Directors must be Industry
Directors and that at least twenty
percent of C2’s directors must be
Representative Directors. Also, the C2
Nominating and Governance Committee
will continue to include both Industry
and Non-Industry Directors and to have
an Industry-Director Subcommittee that
is composed of all of the Industry
Directors serving on the Committee.
Representative Directors will continue
to be nominated (or otherwise selected
through a petition process) by the
Industry-Director Subcommittee.
Additionally, C2 Trading Permit
Holders will continue to be able to
nominate alternative Representative
Director candidates to those nominated
by the Industry Director Subcommittee,
in which case a Run-off Election will be
held in which C2’s Trading Permit
Holders vote to determine which
candidates will be elected to the C2
Board of Directors to serve as
Representative Directors.
2. Statutory Basis
For the reasons set forth above, C2
believes that this filing is consistent
3 See Article II, Section 3 of the Bylaws of the
Chicago Stock Exchange, Inc.
4 15 U.S.C. 78f(b)(3).
E:\FR\FM\10MYN1.SGM
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jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 90 / Tuesday, May 10, 2011 / Notices
with Section 6(b) of the Act,5 in general,
and furthers the objectives of Section
6(b)(1) of the Act 6 and Section 6(b)(5) of
the Act 7 in particular, in that (i) It
enables C2 to be so organized as to have
the capacity to be able to carry out the
purposes of the Act and to comply, and
to enforce compliance by its Trading
Permit Holders and persons associated
with its Trading Permit Holders, with
the provisions of the Act, the rules and
regulations thereunder, and the rules of
C2 and (ii) to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to, and
perfect the mechanism of, a free and
open market and, in general, to protect
investors and the public interest.
Specifically, the proposed changes
will streamline, make more efficient,
and improve C2’s governance structure
by conforming the minimum size
requirements of the C2 Nominating and
Governance Committee and the CBOE
Holdings Nominating and Governance
Committee, which the Exchange
believes will promote consistency and
efficiency and better enable C2 and
CBOE Holdings to have the same
Nominating and Governance Committee
compositions if desired. To the extent
that the proposed changes enable C2
and CBOE Holdings to have the same
Nominating and Governance Committee
compositions if desired, the process of
scheduling and conducting Nominating
and Governance Committee meetings is
simplified, as there can be meetings
held at the same time instead of
multiple separate meetings at different
times. This furthers C2’s ability to be
organized in a manner to have the
capacity to be able to carry out the
purposes of the Act consistent with
Section 6(b)(1) of the Act 8 and to carry
out the purposes of Section 6(b)(5) of
the Act.9
The proposed rule change will not
impact the current provisions of the C2
Bylaws that are designed to assure the
fair representation of C2 Trading Permit
Holders in the selection of directors and
the administration of C2, and thus is
consistent with Section 6(b)(3) of the
Act.10 In particular, the Bylaws will
continue to require that at least thirty
percent of C2’s directors be Industry
Directors; that at least twenty percent of
C2’s directors be Representative
Directors; that the C2 Nominating and
Governance Committee include both
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(1).
7 15 U.S.C. 78f(b)(5).
8 15 U.S.C. 78f(b)(1).
9 15 U.S.C. 78f(b)(5).
10 15 U.S.C. 78f(b)(3).
6 15
VerDate Mar<15>2010
18:02 May 09, 2011
Industry and Non-Industry Directors
and have an Industry-Director
Subcommittee composed of all of the
Industry Directors on the Committee;
that Representative Directors be
nominated (or otherwise selected
through a petition process) by the
Industry-Director Subcommittee; and
that C2 Trading Permit Holders are able
to nominate alternative Representative
Director candidates to those nominated
by the Industry Director Subcommittee,
in which case a Run-off Election is held
in which C2’s Trading Permit Holders
vote to determine which candidates are
elected as Representative Directors.
The proposed rule change was
prompted by the reduction in the size of
the C2 Board of Directors since, as the
Board size declines, it becomes more
challenging to populate large Board
committees. The Exchange believes that
reducing the minimum size of the C2
Nominating and Governance Committee
will help to alleviate this issue and that,
notwithstanding this change, the
Committee will continue to be able to
appropriately perform its functions,
operate effectively, and thus enable the
Exchange to comply with Section 6(b)(1)
of the Act.11
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 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
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
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
As the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
such proposed rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
11 15
Jkt 223001
PO 00000
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–C2–2011–012 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–C2–2011–012. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–C2–2011–
012 and should be submitted on or
before May 31, 2011.
U.S.C. 78f(b)(1).
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27114
Federal Register / Vol. 76, No. 90 / Tuesday, May 10, 2011 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–11357 Filed 5–9–11; 8:45 am]
BILLING CODE 8011–01–P
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64399; File No. SR–
NYSEArca–2011–20]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending Its Fee
Schedule To Eliminate Registered
Representative Fees for Options
Trading Permit (‘‘OTP’’) Holders and To
Institute a New Transaction-Based
‘‘Options Regulatory Fee’’
May 4, 2011.
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 April 28,
2011, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fee Schedule to eliminate registered
representative fees for Options Trading
Permit (‘‘OTP’’) Holders and institute a
new transaction-based ‘‘Options
Regulatory Fee.’’ The text of the
proposed rule change is available at the
Exchange, at the Commission’s Public
Reference Room, on the Commission’s
Web site at https://www.sec.gov, and
https://www.nyse.com.
jlentini on DSKJ8SOYB1PROD with NOTICES
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
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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18:02 May 09, 2011
Jkt 223001
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.
1. Purpose
This proposed rule change is based on
a rule change previously submitted by
NASDAQ OMX BX, Inc. on behalf of the
Boston Options Exchange Group, LLC
(‘‘BOX’’) that was effective upon filing.3
The Exchange proposes to amend the
NYSE Arca Fee Schedule to institute a
new transaction-based ‘‘Options
Regulatory Fee’’ and eliminate registered
representative fees. Each OTP Holder or
OTP Firm that registers an options
principal and/or representative who is
conducting business on NYSE Arca
currently is assessed a registered
representative fee (‘‘RR Fee’’) based on
the action(s) associated with the
registration. There are annual fees as
well as initial, transfer and termination
fees.4 RR Fees and other regulatory fees
collected by the Exchange were
intended to cover only a portion of the
cost of the Exchange’s regulatory
programs. Prior to rule changes by other
options exchanges, such as the Chicago
Board Options Exchange (‘‘CBOE’’),
BOX, NASDAQ OMX PHLX (‘‘PHLX’’)
and the International Securities
Exchange (‘‘ISE’’), all options exchanges,
regardless of size, charged registered
representative fees.
The Exchange believes that the
current RR Fee is no longer equitable.
The options industry has evolved to a
3 See
Securities Exchange Act Release No. 61388
(January 20, 2010), 75 FR 4431 (January 27, 2010)
(SR–BX–2010–001) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Relating to
the Registered Representative Fee and Options
Regulatory Fee).
4 In this regard, the Exchange proposes to
eliminate from its options fee schedule any
reference to fees the Exchange no longer asks
FINRA to collect on its behalf relating to the
processing of registered representatives. In
particular, the following ‘‘Registration Fees’’ will be
eliminated from the options fee schedule: The
annual fee for new applications, maintenance, or
transfer of registration status for each Registered
Representative and each Registered Options
Principal (collected by the NASD), the fee for
termination of such individuals, the NASD CRD
Processing Fee, the NASD Annual System
Processing Fee, and the NYSE Arca Transfer/Relicense Individual Fee. Fees relating to the
processing of registered representatives that FINRA
collects and retains will remain in the Exchange’s
options fee schedule. In particular, the following
‘‘Registration Fees’’ will remain in the options fee
schedule: The NASD Disclosure Processing Fee and
the NASD Manual Processing Fee for Fingerprint
results submitted by other SROs.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
structure with many more Internetbased and discount brokerage firms.
These firms have few registered
representatives and thus pay very little
in RR Fees compared to full service
brokerage firms that have many
registered representatives. Further, due
to the manner in which RR Fees are
charged, it is possible for an NYSE Arca
OTP Holder or OTP Firm to restructure
its business to avoid paying these fees
altogether. For example, a firm can
avoid RR Fees by terminating its OTP
status and sending its business to NYSE
Arca through another separate NYSE
Arca OTP Holder or OTP Firm, even an
affiliated firm that has many fewer
registered representatives. If firms
terminated their OTP status to avoid RR
Fees, the Exchange would suffer the loss
of a source of funding for its regulatory
programs. More importantly, the
regulatory effort the Exchange expends
to review the transactions of each type
of firm is not commensurate with the
number of registered representatives
that each firm employs.
In order to address the inequity of the
current regulatory fee structure and to
offset more fully the cost of the
Exchange’s regulatory programs, the
Exchange proposes to eliminate the
current RR Fee for NYSE Arca OTP
Holders and OTP Firms and adopt an
Options Regulatory Fee (‘‘ORF’’) of
$0.004 per contract.5 As described
below, this fee would be assessed by the
Exchange on each OTP Holder or OTP
Firm for all options transactions
executed or cleared by the OTP Holder
or OTP Firm that are cleared by OCC in
the customer range, regardless of the
marketplace of execution. In particular,
the Exchange would impose the ORF on
5 Because the annual component of the RR Fee
has already been assessed for 2011, the Exchange
will make a pro rata refund for the remaining
portion of the year following elimination of the RR
Fee. In addition, the Exchange notes that permit
holders who conduct only equities business will no
longer be subject to the RR Fee as a result of the
elimination of this fee. Consequently, the Exchange
proposes to eliminate from its NYSE Arca Equities
fee schedule any reference to fees the Exchange no
longer asks FINRA to collect on its behalf relating
to the processing of Registered Representatives. In
particular, the following ‘‘Registration Fees’’ will be
eliminated from the equities fee schedule: The
annual fee for new applications, maintenance, or
transfer of registration status for each Registered
Representative and each Registered Principal
(collected by the NASD), the two NASD CRD
Processing Fees, the NASD Annual System
Processing Fee, and the NYSE Arca Transfer/Relicense Individual Fee. Fees relating to the
processing of registered representatives that FINRA
collects and retains will remain in the Exchange’s
equities fee schedule. In particular, the following
‘‘Registration Fees’’ will remain in the equities fee
schedule: The NASD Disclosure Processing Fee and
the NASD Manual Processing Fee for Fingerprint
Results submitted by Other SROs. The Exchange
will separately submit a rule filing to address
funding for equities regulation.
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]]>Agencies
[Federal Register Volume 76, Number 90 (Tuesday, May 10, 2011)]
[Notices]
[Pages 27112-27114]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11357]
[[Page 27112]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64394; File No. SR-C2-2011-012]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing of a Proposed Rule Change To Reduce the Minimum Size
of the Nominating and Governance Committee
May 4, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\
notice is hereby given that on April 27, 2011, C2 Options Exchange,
Incorporated (``C2'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by C2. 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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
C2 proposes to amend its Bylaws to change the minimum size of the
C2 Nominating and Governance Committee.
The text of the proposed amendments to C2's Bylaws and the proposed
amendments to C2's rules is available on C2's Web site at (https://www.c2exchange.com/Legal), at C2'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, C2 included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. C2 has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to reduce the minimum
size of C2's Nominating and Governance Committee from seven to five
directors. Section 4.4 of the Second Amended and Restated Bylaws of C2
(``Bylaws'') currently provides, in pertinent part, that the Nominating
and Governance Committee shall consist of at least seven directors,
including both Industry and Non-Industry Directors; that a majority of
the directors on the Committee shall be Non-Industry Directors; and
that the exact number of members on the Committee shall be determined
from time to time by C2's Board of Directors. This rule change would be
effectuated by amending Section 4.4 of the Bylaws to provide that the
Nominating and Governance Committee shall consist of at least five
directors. The other provisions of Section 4.4 of the Bylaws would
remain unchanged. Additionally, the title of the Bylaws would be
changed to the Third Amended and Restated Bylaws of C2.
Section 3.1 of the Bylaws provides that the C2 Board of Directors
shall consist of not less than eleven and not more than twenty-three
directors, with the exact size determined by the Board. C2's Board size
has declined recently from the Board's initial size of twenty-three
directors in 2009 prior to the launch of trading on C2 to its current
size of nineteen directors. In addition, the Board size will be
declining further to sixteen directors at the time of the 2011 annual
election of C2 directors (which is anticipated to occur in May 2011).
As the Board size declines, it becomes more challenging to populate
large Board committees since there are fewer directors to serve on the
various C2 Board committees. The Exchange believes that reducing the
minimum size of the Nominating and Governance Committee to five
directors will help to alleviate this issue.
Changing the minimum size of the Nominating and Governance
Committee to five directors would also make the minimum size consistent
with the minimum size of the Nominating and Governance Committee of
CBOE Holdings, Inc. (``CBOE Holdings''), C2's parent company. C2
believes that having the same composition requirements for the
Nominating and Governance Committees of both C2 and CBOE Holdings will
promote consistency and efficiency. C2 and CBOE Holdings currently have
the same individuals serving on the C2 and CBOE Holdings Boards of
Directors and on the C2 and CBOE Holdings Nominating and Governance
Committees. This approach simplifies the process of scheduling and
conducting meetings and allows the Boards and Nominating and Governance
Committees of both entities to operate most efficiently. To the extent
that C2 and CBOE Holdings desire to continue this approach in the
future, this proposed rule change better enables C2 and CBOE Holdings
to do so.
The Exchange believes that its Nominating and Governance Committee
will continue to be able to appropriately perform its functions if it
were to be composed of five directors. The Exchange also believes that
having a Nominating and Governance Committee with a minimum size of
five directors is consistent with prior precedent, in that the Chicago
Stock Exchange (``CHX'') has a Nominating and Governance Committee with
a size of four directors.\3\ Additionally, it should be noted that
although the proposed rule change would permit the Exchange [sic]
appoint a five-person Nominating and Governance Committee and that the
Exchange may do so in the future, it is the current intention of the
Exchange to appoint a six-person Nominating and Governance Committee at
the time of the 2011 annual election of C2 directors.
---------------------------------------------------------------------------
\3\ See Article II, Section 3 of the Bylaws of the Chicago Stock
Exchange, Inc.
---------------------------------------------------------------------------
The Exchange will continue to provide for the fair representation
of C2 Trading Permit Holders in the selection of directors and the
administration of the Exchange consistent with Section 6(b)(3) of the
Act \4\ following this rule change. In particular, the C2 Bylaws will
continue to require that at least thirty percent of the directors on
the C2 Board of Directors must be Industry Directors and that at least
twenty percent of C2's directors must be Representative Directors.
Also, the C2 Nominating and Governance Committee will continue to
include both Industry and Non-Industry Directors and to have an
Industry-Director Subcommittee that is composed of all of the Industry
Directors serving on the Committee. Representative Directors will
continue to be nominated (or otherwise selected through a petition
process) by the Industry-Director Subcommittee. Additionally, C2
Trading Permit Holders will continue to be able to nominate alternative
Representative Director candidates to those nominated by the Industry
Director Subcommittee, in which case a Run-off Election will be held in
which C2's Trading Permit Holders vote to determine which candidates
will be elected to the C2 Board of Directors to serve as Representative
Directors.
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\4\ 15 U.S.C. 78f(b)(3).
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2. Statutory Basis
For the reasons set forth above, C2 believes that this filing is
consistent
[[Page 27113]]
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(1) of the Act \6\ and Section 6(b)(5) of the
Act \7\ in particular, in that (i) It enables C2 to be so organized as
to have the capacity to be able to carry out the purposes of the Act
and to comply, and to enforce compliance by its Trading Permit Holders
and persons associated with its Trading Permit Holders, with the
provisions of the Act, the rules and regulations thereunder, and the
rules of C2 and (ii) to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of, a free and open market
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)(1).
\7\ 15 U.S.C. 78f(b)(5).
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Specifically, the proposed changes will streamline, make more
efficient, and improve C2's governance structure by conforming the
minimum size requirements of the C2 Nominating and Governance Committee
and the CBOE Holdings Nominating and Governance Committee, which the
Exchange believes will promote consistency and efficiency and better
enable C2 and CBOE Holdings to have the same Nominating and Governance
Committee compositions if desired. To the extent that the proposed
changes enable C2 and CBOE Holdings to have the same Nominating and
Governance Committee compositions if desired, the process of scheduling
and conducting Nominating and Governance Committee meetings is
simplified, as there can be meetings held at the same time instead of
multiple separate meetings at different times. This furthers C2's
ability to be organized in a manner to have the capacity to be able to
carry out the purposes of the Act consistent with Section 6(b)(1) of
the Act \8\ and to carry out the purposes of Section 6(b)(5) of the
Act.\9\
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\8\ 15 U.S.C. 78f(b)(1).
\9\ 15 U.S.C. 78f(b)(5).
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The proposed rule change will not impact the current provisions of
the C2 Bylaws that are designed to assure the fair representation of C2
Trading Permit Holders in the selection of directors and the
administration of C2, and thus is consistent with Section 6(b)(3) of
the Act.\10\ In particular, the Bylaws will continue to require that at
least thirty percent of C2's directors be Industry Directors; that at
least twenty percent of C2's directors be Representative Directors;
that the C2 Nominating and Governance Committee include both Industry
and Non-Industry Directors and have an Industry-Director Subcommittee
composed of all of the Industry Directors on the Committee; that
Representative Directors be nominated (or otherwise selected through a
petition process) by the Industry-Director Subcommittee; and that C2
Trading Permit Holders are able to nominate alternative Representative
Director candidates to those nominated by the Industry Director
Subcommittee, in which case a Run-off Election is held in which C2's
Trading Permit Holders vote to determine which candidates are elected
as Representative Directors.
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\10\ 15 U.S.C. 78f(b)(3).
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The proposed rule change was prompted by the reduction in the size
of the C2 Board of Directors since, as the Board size declines, it
becomes more challenging to populate large Board committees. The
Exchange believes that reducing the minimum size of the C2 Nominating
and Governance Committee will help to alleviate this issue and that,
notwithstanding this change, the Committee will continue to be able to
appropriately perform its functions, operate effectively, and thus
enable the Exchange to comply with Section 6(b)(1) of the Act.\11\
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\11\ 15 U.S.C. 78f(b)(1).
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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 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
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) As the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-C2-2011-012 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-C2-2011-012. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-C2-2011-012 and should be
submitted on or before May 31, 2011.
[[Page 27114]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-11357 Filed 5-9-11; 8:45 am]
BILLING CODE 8011-01-P
