

[Federal Register: July 11, 2006 (Volume 71, Number 132)]
[Notices]               
[Page 39135-39136]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy06-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54097; File No. SR-CBOE-2006-38]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change and Amendment No. 1 
Thereto Regarding Transfer of Designated Primary Market Maker 
Appointments

July 5, 2006.
    On April 17, 2006, the 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 amend Exchange rules relating 
to the transfer of Designated Primary Market Maker (``DPM'') 
appointments. On May 11, 2006, CBOE submitted Amendment No. 1 to the 
proposed rule change. The Commission published the proposed rule 
change, as amended, for comment in the Federal Register on June 1, 
2006.\3\ The Commission received no comments on the proposed rule 
change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53869 (May 25, 
2006), 71 FR 31239.
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    Specifically, the Exchange proposes to eliminate section (f) of 
CBOE Rule 8.89, which subjects any DPM transfer proposal decision made 
by the appropriate Exchange committee (``transfer proposal decision'') 
\4\ to a 10-day review period during which any transfer proposal 
decision may be directly reviewed by the Board of Directors of the 
Exchange (``Board'') upon:

[[Page 39136]]

    (1) A written application by a party claiming to be aggrieved \5\ 
by the DPM transfer decision, or (2) a request for review by any five 
Directors. The Exchange notes that any member aggrieved by a transfer 
proposal decision can still seek a review of the decision through the 
hearing and review process provided for under Chapter XIX of CBOE's 
rules.\6\ In any such appeal proceeding under Chapter XIX, the decision 
regarding a transfer proposal by the appropriate Exchange committee 
under CBOE Rule 8.89 would be subject to review by the CBOE Appeals 
Committee. In addition, the Appeals Committee decision in the matter 
would be subject to review by the Board on its own motion, or could be 
appealed to the Board, pursuant to CBOE Rule 19.5. The Exchange 
believes that the special review process for transfer proposal 
decisions in CBOE Rule 8.89(f) is no longer necessary, given the more 
routine nature of DPM transfers, and that the elimination of the 
special process will improve the overall efficiency of the review 
process.\7\
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    \4\ See CBOE Rule 8.89(c), (d), and (e) for a description of the 
scope of a transfer proposal and the committee decision process.
    \5\ Under CBOE Rule 8.89, a person must be ``aggrieved'' as 
described in Chapter XIX of Exchange Rules.
    \6\ Chapter XIX of CBOE Rules governs the process by which 
persons, including members, claiming to be economically aggrieved by 
Exchange action may seek a review of such a decision.
    \7\ The Exchange also proposes to delete Interpretation and 
Policy .02 of CBOE Rule 8.89, which provided for the application of 
a transfer fee on any DPM appointment transfer, because it expired 
on June 30, 2004.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange, 
and, in particular, with the requirements of section 6(b) of the 
Act.\8\ In particular, the Commission finds that the proposed rule 
change, as amended, is consistent with section 6(b)(5) of the Act,\9\ 
which requires among other things, that the rules of the Exchange be 
designed to promote just and equitable principles of trade, 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. Specifically, the Commission believes it is consistent 
with the Act for the Exchange to eliminate the special review process 
for DPM transfer proposal decisions, which the Exchange believes could 
improve efficiency of the review process for such decisions. The 
Commission notes that such decisions would continue to be subject to a 
hearing and review process at the Exchange under Chapter XIX, which 
provides for review by the Appeals Committee and the Board. The 
Commission also believes it is consistent with the Act for CBOE to 
remove, as a matter of housekeeping, Interpretation and Policy .02 of 
CBOE Rule 8.89 from its rules, as the provision relating to a transfer 
fee has currently expired.
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    \8\ 15 U.S.C. 78f(b). In approving this proposed rule change, 
the Commission considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-CBOE-2006-38) and Amendment 
No. 1 thereto be, and hereby are, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E6-10788 Filed 7-10-06; 8:45 am]

BILLING CODE 8010-01-P
