
[Federal Register: September 25, 2007 (Volume 72, Number 185)]
[Notices]               
[Page 54495-54496]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se07-86]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56460; File No. SR-CBOE-2007-84]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change To Amend CBOE's Rule 
Pertaining to Verification Requests for Trade Reporting Minor Rule 
Violations

September 18, 2007.
    On July 18, 2007, 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 CBOE Rule 17.50 
(Imposition of Fines for Minor Rule Violations) Interpretation and 
Policy .02(b) regarding verification requests for fines imposed 
pursuant to the provisions of CBOE Rule 17.50(g)(4) (Failure to Submit 
Trade Information on Time and Failure to Submit Trade Information to 
the Price Reporter). The proposed rule change was published for comment 
in the Federal Register on August 17, 2007.\3\ The Commission received 
no comments regarding the proposal.
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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. 56239(August 10, 
2007), 72 FR 46257.
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    The Commission finds that the proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\4\ In particular, the 
Commission believes that the proposal is consistent with Section 
6(b)(5) of the Act,\5\ which requires that the rules of an exchange be 
designed to, among other things, protect investors and the public 
interest. The Commission believes that the proposed rule change, by 
extending the ``look-back'' period for determining the maximum number 
of verification requests for trade reporting violations, would make a 
reasonable adjustment to its MRVP review process.
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    \4\ In approving this proposed rule change, theCommission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Commission also believes that handling violations of trade 
reporting rules pursuant to the MRVP is consistent with Sections 
6(b)(1) and 6(b)(6) of the Act,\6\ which require that the rules of an 
exchange enforce compliance with, and provide appropriate discipline 
for, violations of Commission and Exchange rules. The Commission also 
finds that the proposal is consistent with the public interest, the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act, as required by Rule 19d-1(c)(2) under the Act,\7\ which 
governs minor rule violation plans. The Commission believes that the 
proposed change to the MRVP should strengthen the Exchange's ability to 
carry out its oversight and enforcement responsibilities as a self-
regulatory organization in cases where full disciplinary proceedings 
are unsuitable in view of the minor nature of the particular violation.
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    \6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \7\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with CBOE rules and all other 
rules subject to the imposition of fines under the MRVP. The Commission 
believes that the violation of any self-regulatory organization's 
rules, as well as Commission rules, is a serious matter.

[[Page 54496]]

However, the MRVP provides a reasonable means of addressing rule 
violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that CBOE will 
continue to conduct surveillance with due diligence and make a 
determination based on its findings, on a case-by-case basis, whether a 
fine of more or less than the recommended amount is appropriate for a 
violation under the MRVP or whether a violation requires formal 
disciplinary action under CBOE Rules 17.1-17.10.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\8\ and Rule 19d-1(c)(2) under the Act,\9\ that the proposed rule 
change (SR-CBOE-2007-84), as amended, be, and hereby is, approved and 
declared effective.
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18824 Filed 9-24-07; 8:45 am]

BILLING CODE 8010-01-P
