Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Relating to Exchange Rule 9.21, 28262-28265 [2013-11369]
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28262
Federal Register / Vol. 78, No. 93 / Tuesday, May 14, 2013 / Notices
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ADAMS No.
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Loss of Coolant Accidents Resulting From Spectrum of Postulated Piping Breaks Within the Reactor
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ML12319A576
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Dated at Rockville, Maryland, this 6th day
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For the Nuclear Regulatory Commission.
Yanely Malave,
Project Manager Small Modular Reactor
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[FR Doc. 2013–11394 Filed 5–13–13; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69535; File No. SR–CBOE–
2013–043]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change Relating to
Exchange Rule 9.21
May 8, 2013.
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 April 25,
2013, Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) 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
substantially prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to update
Exchange Rule 9.21, ‘‘Options
Communications.’’ The text of the
proposed rule change is provided
below. (additions are italicized;
deletions are [bracketed])
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated Rules
*
*
1 15
2 17
*
*
*
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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16:52 May 13, 2013
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Rule 9.21. Options Communications
(a) Definitions. For purposes of this
Rule and any interpretation thereof,
‘‘options communications’’ consist of:
(i) [Advertisements. The term
‘‘advertisements’’ shall include any
material concerning options, other than
an independently prepared reprint and
institutional sales material, that is
published, or used in any electronic or
other public media, including any Web
site, newspaper, magazine or other
periodical, radio, television, telephone
or tape recording, video tape display,
motion picture, billboards, signs or
telephone directories (other than routine
listings).
(ii) Sales Literature. The term ‘‘sales
literature’’ shall include any written or
electronic communication concerning
options other than an advertisement,
independently prepared reprint,
institutional sales material and
correspondence, that is generally
available to customers or the public,
including circulars, research reports,
performance reports or summaries,
worksheets, form letters, telemarketing
scripts, seminar texts, reprints (that are
not independently prepared reprints) or
excerpts of any other advertisement,
sales literature or published article and
press release concerning a Trading
Permit Holder’s products or services.
(iii)] Correspondence. The term
‘‘correspondence’’ shall include any
written [letter,] (including electronic)
[mail message or market letter]
communication distributed or made
available [by a Trading Permit Holder]
to[: (A) one of more of its existing retail
customers; and (B)] 25 or fewer [than 25
prospective] retail customers within any
30 calendar-day period.
[(iv)] (ii) Institutional Communication
[Sales Material]. The term ‘‘institutional
communication [sales material]’’ shall
include any written (including
electronic) communication concerning
options that is distributed or made
available only to institutional investors,
but does not include a Trading Permit
Holder’s internal communications. The
term institutional investor shall mean
any qualified investor as defined in
Section 3(a)(54) of the Securities
Exchange Act of 1934.
(iii) Retail Communication. The term
‘‘retail communication’’ means any
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written (including electronic)
communication that is distributed or
made available to more than 25 retail
investors within any 30 calendar-day
period.
[(v) Public Appearances. The term
‘‘public appearance’’ shall include any
participation in a seminar, forum
(including an interactive electronic
forum), radio, television or print media
interview, or other public speaking
activity, or the writing of a print media
article, concerning options.
(vi) Independently Prepared Reprints.
The term ‘‘independently prepared
reprints’’ shall include any reprint or
excerpt of an article issued by a
publisher concerning options, provided
that: the publisher is not an affiliate of
the Trading Permit Holder using the
reprint or any underwriter or issuer of
a security mentioned in the reprint or
excerpt that the Trading Permit Holder
is promoting; neither the Trading Permit
Holder using the reprint or excerpt nor
any underwriter or issuer of a security
mentioned in the reprint or excerpt has
commissioned the reprint or excerpted
article; and the Trading Permit Holder
using the reprint or excerpt has not
materially altered its contents except as
necessary to make the reprint or excerpt
consistent with applicable regulatory
standards or to correct factual errors.]
(b) Approval by Registered Options
Principal.
(i) All retail communications
[advertisements, sales literature] (except
completed worksheets) [and
independently prepared reprints] issued
by a Trading Permit Holder or TPH
organization pertaining to options shall
be approved in advance by a Registered
Options Principal designated by the
Trading Permit Holder or TPH
organization’s written supervisory
procedures.
(ii) Correspondence need not be
approved by a Registered Options
Principal prior to use[, unless such
correspondence is distributed to 25 or
more existing retail customers within
any 30 calendar-day period and makes
any financial or investment
recommendation or otherwise promotes
a product or service of the Trading
Permit Holder]. All correspondence is
subject to the supervision and review
requirements of Rule 9.8.
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Federal Register / Vol. 78, No. 93 / Tuesday, May 14, 2013 / Notices
(iii) Institutional communications.
Each Trading Permit Holder or TPH
organization shall establish written
procedures that are appropriate to its
business, size, structure, and customers
for review by a Registered Options
Principal of institutional
communications used by[sales material
relating to options need not be approved
by a Registered Options Principal prior
to use, but is subject to the supervision
and review requirements as set forth in
the written supervisory procedures of]
the Trading Permit Holder or TPH
organization.
(iv) No change.
(c) Exchange Approval Required. In
addition to the approval required by
paragraph (b) of this Rule, [all
advertisements, sales literature and
independently prepared reprints] retail
communications of a Trading Permit
Holder or TPH organization pertaining
to standardized options that is not
accompanied or preceded by the
applicable current options disclosure
document (‘‘ODD’’) shall be submitted
to the Exchange at least ten calendar
days prior to use (or such shorter period
as the Exchange may allow in particular
instances) for approval and, if changed
or expressly disapproved by the
Exchange, shall be withheld from
circulation until any changes specified
by the Exchange have been made or, in
the event of disapproval, until the
communication has been resubmitted
for, and has received, Exchange
approval. The requirements of this
paragraph shall not be applicable to:
(i) Options communications
submitted to another self-regulatory
organization having comparable
standards pertaining to such
communications and
(ii) communications in which the
only reference to options is contained in
a listing of the services of the TPH
organization[.];
(iii) the ODD; and
(iv) the prospectus.
(d) General Rule. No Trading Permit
Holder or member organization or
associated person shall use any options
communication which:
(i)–(iv) No change.
(v) Fails to reflect the risks attendant
to options transactions and the
complexities of certain options
investment strategies. [Any statement
referring to the potential opportunities
presented by options shall be balanced
by a statement of the corresponding
risks. The risk statement shall reflect the
same degree of specificity as the
statement of opportunities, and broad
generalities must be avoided.]
(vi–vii) No change.
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16:52 May 13, 2013
Jkt 229001
(viii) would constitute a prospectus as
that term is defined in the Securities Act
of 1933, unless it meets the
requirements of Section 10 of the
Securities Act of 1933.
Paragraphs (vi) and (vii) shall not
apply to institutional communications
[sales material] as defined in this Rule
9.21. Any statement in any options
communications referring to the
potential opportunities or advantages
presented by options shall be balanced
by a statement of the corresponding
risks. The risk statement shall reflect the
same degree of specificity as the
statement of opportunities, and broad
generalities must be avoided.
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s Web
site (https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’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, 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to update
Rule 9.21, ‘‘Options Communications,’’
to conform with changes recently made
by the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) to its
corresponding rule.3 The proposed rule
change would make changes to the
Exchange Rule 9.21, ‘‘Options
Communications.’’ The Exchange
believes the proposed changes will alert
Trading Permit Holders (‘‘TPHs’’) to
their requirements with respect to
Options Communications while further
regulating all communications for
compliance with Exchange Rules and
the Securities Exchange Act of 1934 (the
3 See Securities and Exchange Act Release No.
34–68650 (January 14, 2013), 78 FR 4182 (January
18, 2013) (Notice of Immediate Effectiveness of SR–
FINRA–2013–001).
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28263
‘‘Act’’). In addition, the Exchange
believes that the proposed rule change
will help ensure that investors are
protected from potentially false or
misleading communications with the
public distributed by Exchange TPHs.
First, the proposed rule change would
amend the language in Exchange Rule
9.21(a). Specifically, the proposed rule
change would reduce the number of
defined categories of communication
from six (in the current rule) to three.
The proposed three categories of
communications are: retail
communications, correspondence, and
institutional communications. Current
definitions of ‘‘sales literature,’’
‘‘advertisement,’’ and ‘‘independently
prepared reprint’’ would be combined
into a single category of ‘‘retail
communications.’’ Thus, the Exchange
is proposing to define ‘‘retail
communication’’ as ‘‘any written
(including electronic) communication
that is distributed or made available to
more than 25 retail investors within any
30 calendar-day period.’’ The Exchange
will also update the current definition
of ‘‘correspondence’’ to ‘‘any written
(including electronic) communication
distributed or made available by a
Trading Permit Holder to 25 or fewer
retail customers within any 30 calendarday period.’’ Finally, in the proposed
rule filing, ‘‘institutional
communication’’ would include written
(including electronic) communications
that are distributed or made available
only to institutional investors. The
Exchange believes the proposed changes
to the definitions in Rule 9.21(a) to
create a more concise and descriptive
rule which benefits investors by
clarifying the terms.
Next, the Exchange is proposing to
amend Rule 9.21(b), ‘‘Approval by
Registered Options Principal.’’ More
specifically, the Exchange is proposing
to replace the phrase ‘‘advertisements,
sales literature, and independently
prepared reprints’’ in Rule 9.21(b)(i)
with the new proposed term, ‘‘retail
communications.’’ This proposed
change will make the Rule more
consistent with the other proposed
changes.
Under proposed rule 9.21(b)(ii),
correspondence would ‘‘need not be
approved by a Registered Options
Principal prior to use’’ but would be
subject to the supervision and review
requirements of Rule 9.8. The Exchange
is proposing to delete the requirement
for principal approval of
correspondence that is distributed to 25
or more existing retail customers within
a 30 calendar-day period that makes any
financial or investment
recommendation or otherwise promotes
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28264
Federal Register / Vol. 78, No. 93 / Tuesday, May 14, 2013 / Notices
the product or service of a TPH. Under
the proposed Rule 9.21(b), such
communications would be considered
retail communications and therefore
subject to the principal approval
requirement. As such, the proposed
change does not substantively change
the scope of options communications
that would require principal approval.
Next, the Exchange is proposing to
modify the required approvals of
‘‘Institutional communications.’’ More
specifically, the Exchange is proposing
to add that a TPH shall ‘‘establish
written procedures that are appropriate
to its business, size, structure, and
customers for review by a Registered
Options Principal of institutional
communications used by the Trading
Permit Holder or TPH organization.’’
The Exchange is proposing these
changes to conform its rule with the
current FINRA rule.
The Exchange is also proposing to
amend Rule 9.21(c). More specifically,
the Exchange is proposing to, again,
replace the phrase ‘‘advertisements,
sales literature, and independently
prepared reprints’’ with the new
proposed term ‘‘retail communications.’’
The Exchange is also proposing to
further exempt options disclosure
documents and prospectuses from
Exchange review as these documents
have other further requirements under
the Securities Act of 1933. The
Exchange is proposing these changes to
conform its rule with the current FINRA
rule.
The Exchange is proposing to specify
in Rule 9.21(d) that Exchange TPHs may
not use any options communications
that ‘‘constitute a prospectus’’ unless
such communications would meet the
requirements of the Securities Act of
1933. The Exchange believes this
change will put TPHs on notice that all
documents that may constitute a
prospectus will be required to comply
with the Securities Act of 1933 as such.
Finally, the Exchange is proposing to
move and slightly modify Rule 9.21(d)
to state that any statement made
referring to ‘‘potential opportunities or
advantages presented by options’’ must
also be accompanied by a statement
identifying the potential risks posed.
The Exchange believes that moving the
language to the end of paragraph (d) will
alert the public of potential risks
associated with options, as well as the
advantages, which will create more
awareness of the potential harms that
may arise in the participation of such
securities. The Exchange is proposing
these changes to conform its rule with
the current FINRA rule. The Exchange
believes the proposed rule changes will
provide greater clarity to TPHs and the
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16:52 May 13, 2013
Jkt 229001
public regarding the Exchange’s rules.
In addition, the Exchange believes that
the proposed rule change will help
ensure that investors are protected from
potentially false or misleading
communications with the public
distributed by Exchange TPHs.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.4 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 5 requirements that the rules of
an exchange be 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 regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 6 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the proposed rule changes will provide
greater clarity to TPHs and the public
regarding the Exchange’s rules. In
addition, the Exchange believes that the
proposed rule change will help ensure
that investors are protected from
potentially false or misleading
communications with the public
distributed by Exchange TPHs.
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. Specifically,
the proposed rule change will bring
clarity and consistency to Exchange
Rules. The Exchange does not believe
the proposed rule change will impose
any burden on any intramarket
competition as it applies to all TPHs. In
addition, the Exchange does not believe
the proposed rule filing will bring any
unnecessary burden on intermarket
competition as it is consistent with the
4 15
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
6 Id.
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FINRA ‘‘Options Communications’’
rule.7
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 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
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange 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 email to rulecomments@sec.gov. Please include File
Number SR–CBOE–2013–043 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–2013–043. This file
number should be included on the
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
7 See
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FINRA Rule 2220.
14MYN1
Federal Register / Vol. 78, No. 93 / Tuesday, May 14, 2013 / Notices
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
10:00 a.m. and 3:00 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–CBOE–
2013–043 and should be submitted on
or before June 4, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–11369 Filed 5–13–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69528; File No. SR–CBOE–
2013–048]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 6.74A
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May 7, 2013.
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 May 02,
2013, Chicago Board Options Exchange,
Incorporated (the ‘‘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.
8 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 6.74A. The text of the proposed
rule change is provided below.
(Additions are italicized; deletions are
[bracketed].)
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 6.74A. Automated Improvement
Mechanism (‘‘AIM’’)
Notwithstanding the provisions of
Rule 6.74, a Trading Permit Holder that
represents agency orders may
electronically execute an order it
represents as agent (‘‘Agency Order’’)
against principal interest or against a
solicited order provided it submits the
Agency Order for electronic execution
into the AIM auction (‘‘Auction’’)
pursuant to this Rule.
(a) No change
(b) Auction Process. Only one
Auction may be ongoing at any given
time in a series and Auctions in the
same series may not queue or overlap in
any manner. The Auction may not be
cancelled and shall proceed as follows:
(1) Auction Period and Request for
Responses (RFRs).
(A) To initiate the Auction, the
Initiating Trading Permit Holder must
mark the Agency Order for Auction
processing, and specify (i) a single price
at which it seeks to cross the Agency
Order (with principal interest or a
solicited order) (a ‘‘single-price
submission’’), including whether the
Initiating Trading Permit Holder elects
to have last priority in allocation, or (ii)
that it is willing to automatically match
(‘‘auto-match’’) as principal the price
and size of all Auction responses up to
an optional designated limit
price[(‘‘auto-match’’)] in which case the
Agency Order will be stopped at the
NBBO (if 50 standard option contracts
or 500 mini-option contracts or greater)
or one cent/one minimum increment
better than the NBBO (if less than 50
standard option contracts or 500 minioption contracts). Once the Initiating
Trading Permit Holder has submitted an
Agency Order for processing pursuant to
this subparagraph, such submission may
not be modified or cancelled.
(B)–(I) No change
(2)–(3) No change
* * * Interpretations and Policies:
.01–.08 No change
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s Web
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28265
site (https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’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, 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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Rule 6.74A related
to the Automated Improvement
Mechanism (‘‘AIM’’). AIM allows a
Trading Permit Holder (the ‘‘Initiating
Trading Permit Holder’’) to submit an
order it represents as agent (the ‘‘Agency
Order’’) along with a contra-side second
order (a principal order or a solicited
order for the same size as the Agency
Order) into an auction (an ‘‘Auction’’)
for electronic execution.3 During the
Auction, other participants can compete
with the Initiating Trading Permit
Holder’s second order to execute against
the Agency Order, which guarantees
that the Agency Order will receive an
execution.4 Initiating Trading Permit
Holders must stop the Agency Order at
the better of the national best bid or
offer (‘‘NBBO’’) or the Agency Order’s
limit price, if the Agency Order is for 50
standard contracts or 500 mini-option
contracts or more, or at the better of one
minimum increment better than the
NBBO or the Agency Order’s limit price,
if the Agency Order is for fewer than 50
standard contracts or 500 mini-option
contracts.5 Once an Auction
commences, the Initiating Trading
Permit Holder cannot cancel it.6 Upon
receipt of an Agency Order (and the
Initiating Trading Permit Holder’s
second order), the Exchange will
commence the Auction by issuing a
request for responses (‘‘RFR’’) detailing
3 See
Rule 6.74A.
4 Id.
5 Rule
6 Rule
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6.74A(a)(2) and (3).
6.74A(b)(1)(A).
14MYN1
]]>Agencies
[Federal Register Volume 78, Number 93 (Tuesday, May 14, 2013)]
[Notices]
[Pages 28262-28265]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11369]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69535; File No. SR-CBOE-2013-043]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change Relating to
Exchange Rule 9.21
May 8, 2013.
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 April 25, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') 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 substantially
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to update Exchange Rule 9.21, ``Options
Communications.'' The text of the proposed rule change is provided
below. (additions are italicized; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated Rules
* * * * *
Rule 9.21. Options Communications
(a) Definitions. For purposes of this Rule and any interpretation
thereof, ``options communications'' consist of:
(i) [Advertisements. The term ``advertisements'' shall include any
material concerning options, other than an independently prepared
reprint and institutional sales material, that is published, or used in
any electronic or other public media, including any Web site,
newspaper, magazine or other periodical, radio, television, telephone
or tape recording, video tape display, motion picture, billboards,
signs or telephone directories (other than routine listings).
(ii) Sales Literature. The term ``sales literature'' shall include
any written or electronic communication concerning options other than
an advertisement, independently prepared reprint, institutional sales
material and correspondence, that is generally available to customers
or the public, including circulars, research reports, performance
reports or summaries, worksheets, form letters, telemarketing scripts,
seminar texts, reprints (that are not independently prepared reprints)
or excerpts of any other advertisement, sales literature or published
article and press release concerning a Trading Permit Holder's products
or services.
(iii)] Correspondence. The term ``correspondence'' shall include
any written [letter,] (including electronic) [mail message or market
letter] communication distributed or made available [by a Trading
Permit Holder] to[: (A) one of more of its existing retail customers;
and (B)] 25 or fewer [than 25 prospective] retail customers within any
30 calendar-day period.
[(iv)] (ii) Institutional Communication [Sales Material]. The term
``institutional communication [sales material]'' shall include any
written (including electronic) communication concerning options that is
distributed or made available only to institutional investors, but does
not include a Trading Permit Holder's internal communications. The term
institutional investor shall mean any qualified investor as defined in
Section 3(a)(54) of the Securities Exchange Act of 1934.
(iii) Retail Communication. The term ``retail communication'' means
any written (including electronic) communication that is distributed or
made available to more than 25 retail investors within any 30 calendar-
day period.
[(v) Public Appearances. The term ``public appearance'' shall
include any participation in a seminar, forum (including an interactive
electronic forum), radio, television or print media interview, or other
public speaking activity, or the writing of a print media article,
concerning options.
(vi) Independently Prepared Reprints. The term ``independently
prepared reprints'' shall include any reprint or excerpt of an article
issued by a publisher concerning options, provided that: the publisher
is not an affiliate of the Trading Permit Holder using the reprint or
any underwriter or issuer of a security mentioned in the reprint or
excerpt that the Trading Permit Holder is promoting; neither the
Trading Permit Holder using the reprint or excerpt nor any underwriter
or issuer of a security mentioned in the reprint or excerpt has
commissioned the reprint or excerpted article; and the Trading Permit
Holder using the reprint or excerpt has not materially altered its
contents except as necessary to make the reprint or excerpt consistent
with applicable regulatory standards or to correct factual errors.]
(b) Approval by Registered Options Principal.
(i) All retail communications [advertisements, sales literature]
(except completed worksheets) [and independently prepared reprints]
issued by a Trading Permit Holder or TPH organization pertaining to
options shall be approved in advance by a Registered Options Principal
designated by the Trading Permit Holder or TPH organization's written
supervisory procedures.
(ii) Correspondence need not be approved by a Registered Options
Principal prior to use[, unless such correspondence is distributed to
25 or more existing retail customers within any 30 calendar-day period
and makes any financial or investment recommendation or otherwise
promotes a product or service of the Trading Permit Holder]. All
correspondence is subject to the supervision and review requirements of
Rule 9.8.
[[Page 28263]]
(iii) Institutional communications. Each Trading Permit Holder or
TPH organization shall establish written procedures that are
appropriate to its business, size, structure, and customers for review
by a Registered Options Principal of institutional communications used
by[sales material relating to options need not be approved by a
Registered Options Principal prior to use, but is subject to the
supervision and review requirements as set forth in the written
supervisory procedures of] the Trading Permit Holder or TPH
organization.
(iv) No change.
(c) Exchange Approval Required. In addition to the approval
required by paragraph (b) of this Rule, [all advertisements, sales
literature and independently prepared reprints] retail communications
of a Trading Permit Holder or TPH organization pertaining to
standardized options that is not accompanied or preceded by the
applicable current options disclosure document (``ODD'') shall be
submitted to the Exchange at least ten calendar days prior to use (or
such shorter period as the Exchange may allow in particular instances)
for approval and, if changed or expressly disapproved by the Exchange,
shall be withheld from circulation until any changes specified by the
Exchange have been made or, in the event of disapproval, until the
communication has been resubmitted for, and has received, Exchange
approval. The requirements of this paragraph shall not be applicable
to:
(i) Options communications submitted to another self-regulatory
organization having comparable standards pertaining to such
communications and
(ii) communications in which the only reference to options is
contained in a listing of the services of the TPH organization[.];
(iii) the ODD; and
(iv) the prospectus.
(d) General Rule. No Trading Permit Holder or member organization
or associated person shall use any options communication which:
(i)-(iv) No change.
(v) Fails to reflect the risks attendant to options transactions
and the complexities of certain options investment strategies. [Any
statement referring to the potential opportunities presented by options
shall be balanced by a statement of the corresponding risks. The risk
statement shall reflect the same degree of specificity as the statement
of opportunities, and broad generalities must be avoided.]
(vi-vii) No change.
(viii) would constitute a prospectus as that term is defined in the
Securities Act of 1933, unless it meets the requirements of Section 10
of the Securities Act of 1933.
Paragraphs (vi) and (vii) shall not apply to institutional
communications [sales material] as defined in this Rule 9.21. Any
statement in any options communications referring to the potential
opportunities or advantages presented by options shall be balanced by a
statement of the corresponding risks. The risk statement shall reflect
the same degree of specificity as the statement of opportunities, and
broad generalities must be avoided.
* * * * *
The text of the proposed rule change is also available on the
Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange'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, 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to update Rule 9.21, ``Options
Communications,'' to conform with changes recently made by the
Financial Industry Regulatory Authority, Inc. (``FINRA'') to its
corresponding rule.\3\ The proposed rule change would make changes to
the Exchange Rule 9.21, ``Options Communications.'' The Exchange
believes the proposed changes will alert Trading Permit Holders
(``TPHs'') to their requirements with respect to Options Communications
while further regulating all communications for compliance with
Exchange Rules and the Securities Exchange Act of 1934 (the ``Act'').
In addition, the Exchange believes that the proposed rule change will
help ensure that investors are protected from potentially false or
misleading communications with the public distributed by Exchange TPHs.
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\3\ See Securities and Exchange Act Release No. 34-68650
(January 14, 2013), 78 FR 4182 (January 18, 2013) (Notice of
Immediate Effectiveness of SR-FINRA-2013-001).
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First, the proposed rule change would amend the language in
Exchange Rule 9.21(a). Specifically, the proposed rule change would
reduce the number of defined categories of communication from six (in
the current rule) to three. The proposed three categories of
communications are: retail communications, correspondence, and
institutional communications. Current definitions of ``sales
literature,'' ``advertisement,'' and ``independently prepared reprint''
would be combined into a single category of ``retail communications.''
Thus, the Exchange is proposing to define ``retail communication'' as
``any written (including electronic) communication that is distributed
or made available to more than 25 retail investors within any 30
calendar-day period.'' The Exchange will also update the current
definition of ``correspondence'' to ``any written (including
electronic) communication distributed or made available by a Trading
Permit Holder to 25 or fewer retail customers within any 30 calendar-
day period.'' Finally, in the proposed rule filing, ``institutional
communication'' would include written (including electronic)
communications that are distributed or made available only to
institutional investors. The Exchange believes the proposed changes to
the definitions in Rule 9.21(a) to create a more concise and
descriptive rule which benefits investors by clarifying the terms.
Next, the Exchange is proposing to amend Rule 9.21(b), ``Approval
by Registered Options Principal.'' More specifically, the Exchange is
proposing to replace the phrase ``advertisements, sales literature, and
independently prepared reprints'' in Rule 9.21(b)(i) with the new
proposed term, ``retail communications.'' This proposed change will
make the Rule more consistent with the other proposed changes.
Under proposed rule 9.21(b)(ii), correspondence would ``need not be
approved by a Registered Options Principal prior to use'' but would be
subject to the supervision and review requirements of Rule 9.8. The
Exchange is proposing to delete the requirement for principal approval
of correspondence that is distributed to 25 or more existing retail
customers within a 30 calendar-day period that makes any financial or
investment recommendation or otherwise promotes
[[Page 28264]]
the product or service of a TPH. Under the proposed Rule 9.21(b), such
communications would be considered retail communications and therefore
subject to the principal approval requirement. As such, the proposed
change does not substantively change the scope of options
communications that would require principal approval.
Next, the Exchange is proposing to modify the required approvals of
``Institutional communications.'' More specifically, the Exchange is
proposing to add that a TPH shall ``establish written procedures that
are appropriate to its business, size, structure, and customers for
review by a Registered Options Principal of institutional
communications used by the Trading Permit Holder or TPH organization.''
The Exchange is proposing these changes to conform its rule with the
current FINRA rule.
The Exchange is also proposing to amend Rule 9.21(c). More
specifically, the Exchange is proposing to, again, replace the phrase
``advertisements, sales literature, and independently prepared
reprints'' with the new proposed term ``retail communications.'' The
Exchange is also proposing to further exempt options disclosure
documents and prospectuses from Exchange review as these documents have
other further requirements under the Securities Act of 1933. The
Exchange is proposing these changes to conform its rule with the
current FINRA rule.
The Exchange is proposing to specify in Rule 9.21(d) that Exchange
TPHs may not use any options communications that ``constitute a
prospectus'' unless such communications would meet the requirements of
the Securities Act of 1933. The Exchange believes this change will put
TPHs on notice that all documents that may constitute a prospectus will
be required to comply with the Securities Act of 1933 as such. Finally,
the Exchange is proposing to move and slightly modify Rule 9.21(d) to
state that any statement made referring to ``potential opportunities or
advantages presented by options'' must also be accompanied by a
statement identifying the potential risks posed. The Exchange believes
that moving the language to the end of paragraph (d) will alert the
public of potential risks associated with options, as well as the
advantages, which will create more awareness of the potential harms
that may arise in the participation of such securities. The Exchange is
proposing these changes to conform its rule with the current FINRA
rule. The Exchange believes the proposed rule changes will provide
greater clarity to TPHs and the public regarding the Exchange's rules.
In addition, the Exchange believes that the proposed rule change will
help ensure that investors are protected from potentially false or
misleading communications with the public distributed by Exchange TPHs.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\4\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \5\ requirements that the rules of
an exchange be 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 regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \6\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
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In particular, the Exchange believes the proposed rule changes will
provide greater clarity to TPHs and the public regarding the Exchange's
rules. In addition, the Exchange believes that the proposed rule change
will help ensure that investors are protected from potentially false or
misleading communications with the public distributed by Exchange TPHs.
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. Specifically, the proposed rule
change will bring clarity and consistency to Exchange Rules. The
Exchange does not believe the proposed rule change will impose any
burden on any intramarket competition as it applies to all TPHs. In
addition, the Exchange does not believe the proposed rule filing will
bring any unnecessary burden on intermarket competition as it is
consistent with the FINRA ``Options Communications'' rule.\7\
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\7\ See FINRA Rule 2220.
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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
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 up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange 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 email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2013-043 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-2013-043. This file
number should be included on the 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
[[Page 28265]]
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 10:00 a.m. and
3:00 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-CBOE-2013-043 and should be
submitted on or before June 4, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11369 Filed 5-13-13; 8:45 am]
BILLING CODE 8011-01-P
