Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, to Reduce the Minimum Size of the Nominating and Governance Committee, 37867-37868 [2011-16133]

Download as PDF Federal Register / Vol. 76, No. 124 / Tuesday, June 28, 2011 / Notices reasonable fees and other charges among Exchange members and other persons using its facilities. The Exchange believes that it is reasonable to remove DNDN, MSI and XHB from its list of Select Symbols and add VXX to its list of Select Symbols to attract additional order flow to the Exchange. The Exchange anticipates that the addition of VXX to Section I of the Fee Schedule would attract market participants to transact equity options at the Exchange because of the available rebates. In addition, the Exchange believes that applying the fees in Section II, entitled ‘‘Equity Options Fees’’ 6 to DNDN, MSI and XHB, including the opportunity to receive payment for order flow, would also attract order flow to the Exchange. The Exchange believes that it is equitable to amend the list of Select Symbols by removing DNDN, MSI and XHB and adding VXX because the list of Select Symbols would apply uniformly to all categories of participants in the same manner. All market participants who trade the Select Symbols would be subject to the rebates and fees in Section I of the Fee Schedule. Also, all market participants would be uniformly subject to the fees in Section II. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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. mstockstill on DSK4VPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.7 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall 6 Section II includes options overlying equities, ETFs, ETNs, indexes and HOLDRS which are Multiply Listed. 7 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:46 Jun 27, 2011 Jkt 223001 institute proceedings to determine whether the proposed rule should be approved or 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 37867 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–16148 Filed 6–27–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64725; File No. SR–CBOE– 2011–044] • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–Phlx–2011–85 on the subject line. Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change, as Modified by Amendment No. 1, to Reduce the Minimum Size of the Nominating and Governance Committee Paper Comments June 22, 2011. I. Introduction On April 27, 2011, Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section All submissions should refer to File 19(b)(1) of the Securities Exchange Act Number SR–Phlx–2011–85. This file of 1934 (‘‘Act’’),1 and Rule 19b–4 number should be included on the thereunder,2 a proposed rule change to subject line if e-mail is used. To help the reduce the minimum size of the Commission process and review your Nominating and Governance Committee comments more efficiently, please use (‘‘NGC’’) from seven to five. On May 18, only one method. The Commission will 2011, the Exchange filed Amendment post all comments on the Commission’s No. 1 to the proposed rule change.3 The Internet Web site (http://www.sec.gov/ proposed rule change was published for rules/sro.shtml). Copies of the comment in the Federal Register on submission, all subsequent May 10, 2011.4 The Commission amendments, all written statements received no comment letters regarding with respect to the proposed rule the proposal. This order approves the change that are filed with the proposed rule change, as modified by Commission, and all written Amendment No. 1. communications relating to the II. Description of the Proposal proposed rule change between the CBOE is proposing to reduce the Commission and any person, other than minimum size of its NGC from seven to those that may be withheld from the five directors. Section 4.4 of the Second public in accordance with the Amended and Restated Bylaws of CBOE provisions of 5 U.S.C. 552, will be (‘‘Bylaws’’) currently provides, in available for Web site viewing and printing in the Commission’s Public 8 17 CFR 200.30–3(a)(12). Reference Room, 100 F Street, NE., 1 15 U.S.C. 78s(b)(1). Washington, DC 20549, on official 2 17 CFR 240.19b–4. business days between the hours of 10 3 At the time CBOE submitted the original a.m. and 3 p.m. Copies of the filing also proposed rule change, it had not yet obtained formal approval from its Board of Directors for the will be available for inspection and specific Bylaw changes set forth in this proposed copying at the principal office of the rule change. CBOE stated that once that approval Exchange. All comments received will was obtained, it would file a technical amendment be posted without change; the to its proposed rule change to reflect that approval. In Amendment No. 1, the Exchange notes that the Commission does not edit personal CBOE Board of Directors approved the specific identifying information from Bylaw changes set forth in SR–CBOE–2011–044 on submissions. You should submit only May 17, 2011 and stated that no further action was information that you wish to make necessary in connection with its proposal. Because Amendment No. 1 is technical in nature, the available publicly. All submissions Commission is not required to publish it for public should refer to File Number SR–Phlx– comment. 2011–85 and should be submitted on or 4 See Securities Exchange Act Release No. 64395 before July 19, 2011. (May 4, 2011), 76 FR 27125 (‘‘Notice’’). • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\28JNN1.SGM 28JNN1 37868 Federal Register / Vol. 76, No. 124 / Tuesday, June 28, 2011 / Notices pertinent part, that the NGC shall consist of at least seven directors, including both Industry and NonIndustry 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 CBOE’s Board of Directors (the ‘‘Board’’ or ‘‘CBOE Board’’). Pursuant to the proposed rule change, Section 4.4 of the Bylaws would be amended to provide that the NGC shall consist of at least five directors. The other provisions of Section 4.4 of the Bylaws would remain unchanged.5 In outlining the purpose behind its proposal, the Exchange noted that the size of its Board declined from its initial size of twenty-three to nineteen directors in 2009 and again to sixteen directors in 2011.6 As the size of its Board has declined, the Exchange noted that it has become more challenging to populate larger-size Board committees since there are fewer directors to serve on a multitude of committees.7 The Exchange’s proposal to reduce the minimum size of the NGC is intended to help address this issue. mstockstill on DSK4VPTVN1PROD with NOTICES III. Discussion After careful review of the proposal, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.8 In particular, the Commission finds that the proposal is consistent with Section 6(b)(1) of the Act,9 which requires a national securities exchange to be so organized and have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its members and persons associated with its members, with the provisions of the Act, as well as Section 6(b)(5) of the Act,10 in that it is designed 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 5 Additionally, the title of the Bylaws would be changed to the Third Amended and Restated Bylaws of CBOE. 6 Section 3.1 of the Bylaws provides that the CBOE Board shall consist of not less than eleven and not more than twenty-three directors, with the exact size determined by the Board. 7 See Notice, supra note 4, at 27125–26. 8 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). 9 15 U.S.C. 78f(b)(1). 10 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 16:46 Jun 27, 2011 Jkt 223001 the public interest. While the Exchange has proposed to reduce the minimum size of the NGC, it has not proposed any other changes to the composition of the committee or the scope or exercise of its responsibilities. In its filing, the Exchange affirmatively represented that the NGC ‘‘will continue to be able to appropriately perform its functions’’ despite the reduction in minimum required size.11 The Commission further finds that the proposal, as modified by Amendment No. 1, is consistent with the requirements of Section 6(b)(3) of the Act,12 which requires that one or more directors of an exchange shall be representative of issuers and investors and not be associated with a member of the exchange, broker or dealer. In particular, the Commission notes that the Exchange will continue to provide for the fair representation of CBOE Trading Permit Holders in the selection of directors and the administration of the Exchange consistent with Section 6(b)(3) of the Act 13 following this rule change. Specifically, the CBOE Bylaws will continue to require that at least thirty percent of the directors on the Board be Industry Directors and that at least twenty percent of CBOE’s directors be Representative Directors elected by permit holders.14 Further, the NGC will continue to include both Industry and Non-Industry Directors (including a majority Non-Industry Directors) and 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, CBOE 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 CBOE’s Trading Permit Holders vote to determine which candidates will be elected to the Board to serve as Representative Directors. Furthermore, the Commission notes that the Exchange’s proposal to reduce the minimum size of its NGC is consistent with a proposal that the Commission previously approved for another selfregulatory organization in which that self-regulatory organization reduced the minimum size of its nominating and 11 See Notice, supra note 4, at 27126. U.S.C. 78f(b)(3). 13 15 U.S.C. 78f(b)(3). 14 See Section 3.2 of the CBOE Bylaws (defining ‘‘Representative Director’’). 12 15 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 governance committee from six to four members.15 Finally, the Exchange has represented that, although the proposed rule change would permit the Exchange to appoint a five-person NGC and the Exchange may elect to do so in the future, it is the current intention of the Exchange to appoint a six-person NGC.16 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,17 that the proposed rule change (SR–CBOE–2011– 044), as modified by Amendment No. 1, be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–16133 Filed 6–27–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64722; File No. SR–CBOE– 2011–055] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change to Trade Options on the CBOE Silver ETF Volatility Index June 22, 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 June 15, 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 prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 15 See Securities Exchange Act Release No. 54494 (September 25, 2006), 71 FR 58023 (October 2, 2006) (SR–CHX–2006–23) (approving reduction of the Chicago Stock Exchange’s Nominating and Governance Committee from six directors to four directors). See also Article II, Section 3 of the Bylaws of the Chicago Stock Exchange, Inc. (providing for a Nominating and Governance Committee with four directors). 16 See Notice, supra note 4, at 27126. 17 15 U.S.C. 78s(b)(2). 18 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. E:\FR\FM\28JNN1.SGM 28JNN1

Agencies

[Federal Register Volume 76, Number 124 (Tuesday, June 28, 2011)]
[Notices]
[Pages 37867-37868]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16133]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64725; File No. SR-CBOE-2011-044]


 Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change, as Modified by 
Amendment No. 1, to Reduce the Minimum Size of the Nominating and 
Governance Committee

June 22, 2011.

I. Introduction

    On April 27, 2011, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') 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 reduce the minimum size of the 
Nominating and Governance Committee (``NGC'') from seven to five. On 
May 18, 2011, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change was published for comment in the 
Federal Register on May 10, 2011.\4\ The Commission received no comment 
letters regarding the proposal. This order approves the proposed rule 
change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ At the time CBOE submitted the original proposed rule 
change, it had not yet obtained formal approval from its Board of 
Directors for the specific Bylaw changes set forth in this proposed 
rule change. CBOE stated that once that approval was obtained, it 
would file a technical amendment to its proposed rule change to 
reflect that approval. In Amendment No. 1, the Exchange notes that 
the CBOE Board of Directors approved the specific Bylaw changes set 
forth in SR-CBOE-2011-044 on May 17, 2011 and stated that no further 
action was necessary in connection with its proposal. Because 
Amendment No. 1 is technical in nature, the Commission is not 
required to publish it for public comment.
    \4\ See Securities Exchange Act Release No. 64395 (May 4, 2011), 
76 FR 27125 (``Notice'').
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II. Description of the Proposal

    CBOE is proposing to reduce the minimum size of its NGC from seven 
to five directors. Section 4.4 of the Second Amended and Restated 
Bylaws of CBOE (``Bylaws'') currently provides, in

[[Page 37868]]

pertinent part, that the NGC 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 CBOE's Board of Directors (the ``Board'' or ``CBOE 
Board''). Pursuant to the proposed rule change, Section 4.4 of the 
Bylaws would be amended to provide that the NGC shall consist of at 
least five directors. The other provisions of Section 4.4 of the Bylaws 
would remain unchanged.\5\
---------------------------------------------------------------------------

    \5\ Additionally, the title of the Bylaws would be changed to 
the Third Amended and Restated Bylaws of CBOE.
---------------------------------------------------------------------------

    In outlining the purpose behind its proposal, the Exchange noted 
that the size of its Board declined from its initial size of twenty-
three to nineteen directors in 2009 and again to sixteen directors in 
2011.\6\ As the size of its Board has declined, the Exchange noted that 
it has become more challenging to populate larger-size Board committees 
since there are fewer directors to serve on a multitude of 
committees.\7\ The Exchange's proposal to reduce the minimum size of 
the NGC is intended to help address this issue.
---------------------------------------------------------------------------

    \6\ Section 3.1 of the Bylaws provides that the CBOE Board shall 
consist of not less than eleven and not more than twenty-three 
directors, with the exact size determined by the Board.
    \7\ See Notice, supra note 4, at 27125-26.
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III. Discussion

    After careful review of the proposal, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\8\ In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(1) of the Act,\9\ which requires a national securities 
exchange to be so organized and have the capacity to carry out the 
purposes of the Act and to comply, and to enforce compliance by its 
members and persons associated with its members, with the provisions of 
the Act, as well as Section 6(b)(5) of the Act,\10\ in that it is 
designed 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. While the 
Exchange has proposed to reduce the minimum size of the NGC, it has not 
proposed any other changes to the composition of the committee or the 
scope or exercise of its responsibilities. In its filing, the Exchange 
affirmatively represented that the NGC ``will continue to be able to 
appropriately perform its functions'' despite the reduction in minimum 
required size.\11\ The Commission further finds that the proposal, as 
modified by Amendment No. 1, is consistent with the requirements of 
Section 6(b)(3) of the Act,\12\ which requires that one or more 
directors of an exchange shall be representative of issuers and 
investors and not be associated with a member of the exchange, broker 
or dealer.
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    \8\ 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).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See Notice, supra note 4, at 27126.
    \12\ 15 U.S.C. 78f(b)(3).
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    In particular, the Commission notes that the Exchange will continue 
to provide for the fair representation of CBOE Trading Permit Holders 
in the selection of directors and the administration of the Exchange 
consistent with Section 6(b)(3) of the Act \13\ following this rule 
change. Specifically, the CBOE Bylaws will continue to require that at 
least thirty percent of the directors on the Board be Industry 
Directors and that at least twenty percent of CBOE's directors be 
Representative Directors elected by permit holders.\14\ Further, the 
NGC will continue to include both Industry and Non-Industry Directors 
(including a majority Non-Industry Directors) and 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, CBOE 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 
CBOE's Trading Permit Holders vote to determine which candidates will 
be elected to the Board to serve as Representative Directors. 
Furthermore, the Commission notes that the Exchange's proposal to 
reduce the minimum size of its NGC is consistent with a proposal that 
the Commission previously approved for another self-regulatory 
organization in which that self-regulatory organization reduced the 
minimum size of its nominating and governance committee from six to 
four members.\15\
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    \13\ 15 U.S.C. 78f(b)(3).
    \14\ See Section 3.2 of the CBOE Bylaws (defining 
``Representative Director'').
    \15\ See Securities Exchange Act Release No. 54494 (September 
25, 2006), 71 FR 58023 (October 2, 2006) (SR-CHX-2006-23) (approving 
reduction of the Chicago Stock Exchange's Nominating and Governance 
Committee from six directors to four directors). See also Article 
II, Section 3 of the Bylaws of the Chicago Stock Exchange, Inc. 
(providing for a Nominating and Governance Committee with four 
directors).
---------------------------------------------------------------------------

    Finally, the Exchange has represented that, although the proposed 
rule change would permit the Exchange to appoint a five-person NGC and 
the Exchange may elect to do so in the future, it is the current 
intention of the Exchange to appoint a six-person NGC.\16\
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    \16\ See Notice, supra note 4, at 27126.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-CBOE-2011-044), as modified 
by Amendment No. 1, be, and hereby is, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-16133 Filed 6-27-11; 8:45 am]
BILLING CODE 8011-01-P