Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Approving a Proposed Rule Change To Add to and Amend Its Rules Regarding the Obligations of Institutional Brokers Registered With the Exchange, 13675-13676 [2012-5474]
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Federal Register / Vol. 77, No. 45 / Wednesday, March 7, 2012 / Notices
subject line if email 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 the 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 Number SR–Phlx–
2012–23 and should be submitted on or
before March 28, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.44
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–5555 Filed 3–6–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66503; File No. SR–CHX–
2012–02]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Order
Approving a Proposed Rule Change To
Add to and Amend Its Rules Regarding
the Obligations of Institutional Brokers
Registered With the Exchange
srobinson on DSK4SPTVN1PROD with NOTICES
On January 6, 2012, the Chicago Stock
Exchange, Inc. (‘‘CHX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
CFR 200.30–3(a)(12).
18:40 Mar 06, 2012
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 66177
(January 18, 2012), 77 FR 3527 (‘‘Notice’’).
4 See CHX Rules, Article 17, Rule 1, Interpretation
and Policy .02.
5 See Securities Exchange Act Release No. 54550
(September 29, 2006), 71 FR 59563 (October 10,
2006) (SR–CHX–2006–05).
6 See id.
7 See Securities Exchange Act Release No. 65633
(October 26, 2011), 76 FR 67509 (November 1, 2011)
(SR–CHX–2011–29).
2 17
I. Introduction
VerDate Mar<15>2010
II. Description of the Proposal
Institutional Brokers are an elective
sub-category of Exchange Participants
who are subject to the obligations of
Article 17 of the CHX rules. Registration
as an Institutional Broker is limited to
Participant Firms, and is not available to
individual persons.4 Under current CHX
rules, each individual person authorized
to enter bids and offers and execute
transactions on behalf of an Institutional
Broker is considered an Institutional
Broker Representative (‘‘IBR’’) and must
be registered with the Exchange as
provided in Article 6.
Institutional Brokers are the
successors to the floor brokers that
operated within the Exchange’s
previous floor-based, auction trading
model. The Exchange replaced its floorbased, auction trading model with its
New Trading Model, which features an
electronic limit order matching system
as its core trading facility (‘‘Matching
System’’), beginning in late 2006.5
Under CHX’s New Trading Model,
Institutional Brokers were regarded as
operating on the Exchange.6 Recently,
the Exchange amended its rules to
provide that Institutional Brokers are no
longer considered to be operating on the
Exchange.7 Given this change in the
status of Institutional Brokers, the
Exchange stated that the instant
proposal is designed to enable
Institutional Brokers to engage in
business activities beyond those
handled by IBRs, such as over-thecounter (‘‘OTC’’) market making, while
ensuring that their activities as an
Institutional Broker are appropriately
governed by CHX rules.
The Exchange proposed to permit
Institutional Brokers to operate a non1 15
March 1, 2012.
44 17
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
permit broker-dealers registered as
Institutional Brokers with CHX to
operate a non-Institutional Broker unit
within the same Participant Firm. The
proposed rule change was published for
comment in the Federal Register on
January 24, 2012.3 The Commission
received no comment letters on the
proposal. This order approves the
proposed rule change.
Jkt 226001
PO 00000
Frm 00147
Fmt 4703
Sfmt 4703
13675
Institutional Broker unit within the
same Participant Firm. A firm registered
with the Exchange as Institutional
Broker could maintain other lines of
business separate and distinct from its
Institutional Broker activities without
subjecting those other areas to the
requirements of Article 17, Rule 3
contingent upon the creation and
maintenance of effective information
barrier procedures as specified in
proposed Rule 6 of Article 17. The
Exchange stated that non-IBR activities
of a Participant Firm registered as an
Institutional Broker would remain
subject to all other applicable provisions
of the Exchange’s rules.8 The non-IBR
personnel at an Institutional Broker
could continue to send orders to the
Exchange, but those orders would be
regarded as standard order-sending
Participant orders, not as Institutional
Broker activity. The Exchange stated
that it can and will distinguish between
orders sent to the Matching System by
IBRs and other orders sent by
Institutional Brokers to the Matching
System for billing and other purposes.9
CHX proposed to modify its rules
correspondingly to redefine IBR 10 and
‘‘Participant Firm,’’ 11 and amend the
obligations of Institutional Brokers and
IBRs.12 Certain Institutional Broker
privileges and responsibilities would
apply only to the activities of those
individuals registered with the
Exchange as IBRs (and clerks thereto).13
Further, the Exchange proposed to
8 See
Notice, 77 FR at 3529.
id.
10 See Article 1, new Rule 1(gg) (defining IBR).
See also amended Interpretation and Policy .02 to
Article 17, Rule 1 (redefining IBR as an individual
person affiliated with an Institutional Broker who
is authorized to accept orders, enter bids and offers
and execute transactions on behalf of an
Institutional Broker and who has registered with the
Exchange as an IBR as provided in Article 6).
11 See Article 17, revised Rule 2 (clarifying that
only Participants Firms are eligible to register as
Institutional Brokers).
12 See Article 17, Rule 3(e) (the obligations owed
by Institutional Brokers under Article 11 include
the affirmative obligation to provide electronic
information to the Exchange in certain
circumstances); Interpretation and Policy .01(a) to
Article 6, Rule 3 (all applicants seeking to register
as IBRs must successfully complete an Institutional
Broker exam).
13 See amended Article 17, Rule 3 (enumerated
Institutional Broker responsibilities apply to
activities by or through an affiliated IRR); amended
Article 17, Rule 5(a) (the ability to make clearing
submissions is limited to IBRs); new Article 17,
Rule 6 (creating a duty of Institutional Brokers with
a non-Institutional Broker unit to establish and
maintain information barriers between the
Institutional Broker unit and non-Institutional
Broker unit); amended Article 17, Rule 1 (only
registered IBRs are permitted to use Exchange
systems provided for Institutional Brokers for
handling orders and reporting transactions, i.e.,
Brokerplex®). For a description of Brokerplex®, see
Notice, 77 FR at 3528, n.9.
9 See
E:\FR\FM\07MRN1.SGM
07MRN1
13676
Federal Register / Vol. 77, No. 45 / Wednesday, March 7, 2012 / Notices
correct typographical mistakes and to
make clarifying changes.
III. Discussion
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.14 Specifically, the
Commission finds that the proposal is
consistent with Section 6(b)(5) of the
Act,15 in that it is designed to promote
just and equitable principles of trade, to
foster cooperation and coordination
with persons engaged in facilitating
transaction in securities, to remove
impediments and perfect the
mechanisms of a free and open market,
and, in general, to protect investors and
the public interest.
As noted above, the Exchange
recently amended its rules to provide
that Institutional Brokers are no longer
deemed to be operating on the
Exchange.16 Accordingly, Institutional
Brokers are now permitted to handle
and execute orders otherwise than on
the Exchange.17 Given this change, the
Commission believes that it is
appropriate and consistent with the Act
for the Exchange to alter the privileges
and responsibilities of Institutional
Brokers to apply only to the activities of
IBRs (and their clerks). The proposed
changes would allow Institutional
Brokers to carry out business strategies
similar to those of other participants on
the Exchange, while still ensuring that
persons acting as IBRs are subject to the
appropriate regulatory obligations.
Further, the proposed rules regarding
information barrier procedures should
help ensure that there are adequate
safeguards to prevent IBR units and
non-IBR units from sharing non-public
market information. As it gains
experience overseeing the new multiunit Institutional Brokers, the
Commission expects the Exchange to
assess whether any other informational
barriers are necessary to prevent the
flow of market information between IBR
units and non-IBR units.
IV. Conclusion
srobinson on DSK4SPTVN1PROD with NOTICES
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change (SR–CHX–2012–
02) be, and it hereby is, approved.
14 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).
15 15 U.S.C. 78f(b)(5).
16 See supra note 7.
17 See id.
18 15 U.S.C. 78s(b)(2).
VerDate Mar<15>2010
18:40 Mar 06, 2012
Jkt 226001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–5474 Filed 3–6–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66501; File No. SR–BX–
2012–014]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule To Amend the BOX LLC
Agreement
March 1, 2012.
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 February
22, 2012, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act,3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposal effective
upon filing with the Commission. 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 the Substance
of the Proposed Rule Change
The Exchange proposes to amend the
Sixth Amended and Restated Operating
Agreement (‘‘BOX LLC Agreement’’) of
the Boston Options Exchange Group
LLC (‘‘BOX LLC’’), in connection with
the proposed acquisition of TMX Group
Inc., a company incorporated in
Ontario, Canada (‘‘TMX Group’’) by
Maple Group Acquisition Corporation, a
company incorporated in Ontario,
Canada (‘‘Maple’’). The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
Internet Web site at https://
nasdaqomxbx.cchwallstreet.com/
NASDAQOMXBX/Filings/.
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
PO 00000
Frm 00148
Fmt 4703
Sfmt 4703
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
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization 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
On January 13, 2004, the Commission
approved four Exchange proposals that
together established, through an
operating agreement among its owners,
BOX LLC, a Delaware limited liability
company, to operate BOX as an options
trading facility of the Exchange.5
Currently, the Montreal Exchange
Inc., a company incorporated in Quebec,
Canada (‘‘MX’’), is a direct subsidiary of
TMX Group. MX US 2, Inc., a Delaware
corporation and indirect, wholly owned
subsidiary of MX (‘‘MX US’’), holds a
53.83% ownership interest in BOX LLC.
The Exchange is submitting the
proposed rule change to the
Commission to amend the BOX LLC
Agreement pursuant to the proposed
Instrument of Accession in connection
with the Acquisition (as defined below).
Maple’s investors comprise Alberta
Investment Management Corporation,
´ ˆ
Caisse de depot et placement du
´
Quebec, Canada Pension Plan
Investment Board, CIBC World Markets
Inc., Desjardins Financial Corporation,
Dundee Capital Markets Inc., Fonds de
´
´
solidarite des travailleurs du Quebec
(F.T.Q.), GMP Capital Inc., The
Manufacturers Life Insurance Company,
National Bank Financial & Co. Inc.,
Ontario Teachers’ Pension Plan Board,
Scotia Capital Inc. and TD Securities
5 See Securities Exchange Act Release No. 49066
(January 13, 2004), 69 FR 2773 (January 20, 2004)
(establishing a fee schedule for the proposed BOX
facility); Securities Exchange Act Release No. 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004)
(creating Boston Options Exchange Regulation LLC
to which the Exchange would delegate its selfregulatory functions with respect to the BOX
facility); Securities Exchange Act Release No. 49068
(January 13, 2004), 69 FR 2775 (January 20, 2004)
(approving trading rules for the BOX facility);
Securities Exchange Act Release No. 49067 (January
13, 2004), 69 FR 2761 (January 20, 2004) (approving
certain regulatory provisions of the operating
agreement of BOX LLC).
E:\FR\FM\07MRN1.SGM
07MRN1
]]>Agencies
[Federal Register Volume 77, Number 45 (Wednesday, March 7, 2012)]
[Notices]
[Pages 13675-13676]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5474]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66503; File No. SR-CHX-2012-02]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Order Approving a Proposed Rule Change To Add to and Amend Its Rules
Regarding the Obligations of Institutional Brokers Registered With the
Exchange
March 1, 2012.
I. Introduction
On January 6, 2012, the Chicago Stock Exchange, Inc. (``CHX'' or
the ``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 permit broker-dealers registered as
Institutional Brokers with CHX to operate a non-Institutional Broker
unit within the same Participant Firm. The proposed rule change was
published for comment in the Federal Register on January 24, 2012.\3\
The Commission received no comment letters on the proposal. This order
approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 66177 (January 18,
2012), 77 FR 3527 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
Institutional Brokers are an elective sub-category of Exchange
Participants who are subject to the obligations of Article 17 of the
CHX rules. Registration as an Institutional Broker is limited to
Participant Firms, and is not available to individual persons.\4\ Under
current CHX rules, each individual person authorized to enter bids and
offers and execute transactions on behalf of an Institutional Broker is
considered an Institutional Broker Representative (``IBR'') and must be
registered with the Exchange as provided in Article 6.
---------------------------------------------------------------------------
\4\ See CHX Rules, Article 17, Rule 1, Interpretation and Policy
.02.
---------------------------------------------------------------------------
Institutional Brokers are the successors to the floor brokers that
operated within the Exchange's previous floor-based, auction trading
model. The Exchange replaced its floor-based, auction trading model
with its New Trading Model, which features an electronic limit order
matching system as its core trading facility (``Matching System''),
beginning in late 2006.\5\ Under CHX's New Trading Model, Institutional
Brokers were regarded as operating on the Exchange.\6\ Recently, the
Exchange amended its rules to provide that Institutional Brokers are no
longer considered to be operating on the Exchange.\7\ Given this change
in the status of Institutional Brokers, the Exchange stated that the
instant proposal is designed to enable Institutional Brokers to engage
in business activities beyond those handled by IBRs, such as over-the-
counter (``OTC'') market making, while ensuring that their activities
as an Institutional Broker are appropriately governed by CHX rules.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 54550 (September 29,
2006), 71 FR 59563 (October 10, 2006) (SR-CHX-2006-05).
\6\ See id.
\7\ See Securities Exchange Act Release No. 65633 (October 26,
2011), 76 FR 67509 (November 1, 2011) (SR-CHX-2011-29).
---------------------------------------------------------------------------
The Exchange proposed to permit Institutional Brokers to operate a
non-Institutional Broker unit within the same Participant Firm. A firm
registered with the Exchange as Institutional Broker could maintain
other lines of business separate and distinct from its Institutional
Broker activities without subjecting those other areas to the
requirements of Article 17, Rule 3 contingent upon the creation and
maintenance of effective information barrier procedures as specified in
proposed Rule 6 of Article 17. The Exchange stated that non-IBR
activities of a Participant Firm registered as an Institutional Broker
would remain subject to all other applicable provisions of the
Exchange's rules.\8\ The non-IBR personnel at an Institutional Broker
could continue to send orders to the Exchange, but those orders would
be regarded as standard order-sending Participant orders, not as
Institutional Broker activity. The Exchange stated that it can and will
distinguish between orders sent to the Matching System by IBRs and
other orders sent by Institutional Brokers to the Matching System for
billing and other purposes.\9\
---------------------------------------------------------------------------
\8\ See Notice, 77 FR at 3529.
\9\ See id.
---------------------------------------------------------------------------
CHX proposed to modify its rules correspondingly to redefine IBR
\10\ and ``Participant Firm,'' \11\ and amend the obligations of
Institutional Brokers and IBRs.\12\ Certain Institutional Broker
privileges and responsibilities would apply only to the activities of
those individuals registered with the Exchange as IBRs (and clerks
thereto).\13\ Further, the Exchange proposed to
[[Page 13676]]
correct typographical mistakes and to make clarifying changes.
---------------------------------------------------------------------------
\10\ See Article 1, new Rule 1(gg) (defining IBR). See also
amended Interpretation and Policy .02 to Article 17, Rule 1
(redefining IBR as an individual person affiliated with an
Institutional Broker who is authorized to accept orders, enter bids
and offers and execute transactions on behalf of an Institutional
Broker and who has registered with the Exchange as an IBR as
provided in Article 6).
\11\ See Article 17, revised Rule 2 (clarifying that only
Participants Firms are eligible to register as Institutional
Brokers).
\12\ See Article 17, Rule 3(e) (the obligations owed by
Institutional Brokers under Article 11 include the affirmative
obligation to provide electronic information to the Exchange in
certain circumstances); Interpretation and Policy .01(a) to Article
6, Rule 3 (all applicants seeking to register as IBRs must
successfully complete an Institutional Broker exam).
\13\ See amended Article 17, Rule 3 (enumerated Institutional
Broker responsibilities apply to activities by or through an
affiliated IRR); amended Article 17, Rule 5(a) (the ability to make
clearing submissions is limited to IBRs); new Article 17, Rule 6
(creating a duty of Institutional Brokers with a non-Institutional
Broker unit to establish and maintain information barriers between
the Institutional Broker unit and non-Institutional Broker unit);
amended Article 17, Rule 1 (only registered IBRs are permitted to
use Exchange systems provided for Institutional Brokers for handling
orders and reporting transactions, i.e., Brokerplex[supreg]). For a
description of Brokerplex[supreg], see Notice, 77 FR at 3528, n.9.
---------------------------------------------------------------------------
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\14\
Specifically, the Commission finds that the proposal is consistent with
Section 6(b)(5) of the Act,\15\ in that it is designed to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transaction in
securities, to remove impediments and perfect the mechanisms of a free
and open market, and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------
\14\ 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).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
As noted above, the Exchange recently amended its rules to provide
that Institutional Brokers are no longer deemed to be operating on the
Exchange.\16\ Accordingly, Institutional Brokers are now permitted to
handle and execute orders otherwise than on the Exchange.\17\ Given
this change, the Commission believes that it is appropriate and
consistent with the Act for the Exchange to alter the privileges and
responsibilities of Institutional Brokers to apply only to the
activities of IBRs (and their clerks). The proposed changes would allow
Institutional Brokers to carry out business strategies similar to those
of other participants on the Exchange, while still ensuring that
persons acting as IBRs are subject to the appropriate regulatory
obligations. Further, the proposed rules regarding information barrier
procedures should help ensure that there are adequate safeguards to
prevent IBR units and non-IBR units from sharing non-public market
information. As it gains experience overseeing the new multi-unit
Institutional Brokers, the Commission expects the Exchange to assess
whether any other informational barriers are necessary to prevent the
flow of market information between IBR units and non-IBR units.
---------------------------------------------------------------------------
\16\ See supra note 7.
\17\ See id.
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-CHX-2012-02) be, and it
hereby is, approved.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5474 Filed 3-6-12; 8:45 am]
BILLING CODE 8011-01-P
