
[Federal Register: July 15, 2008 (Volume 73, Number 136)]
[Notices]               
[Page 40646-40647]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy08-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58119; File No. SR-CBOE-2008-53]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Approving Proposed Rule Change Pertaining to the 
Imposition of Fines for Minor Rule Violations

July 8, 2008.
    On May 19, 2008, 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) and to revise the 
provisions of CBOE 17.50(g)(1) (Violations of Position Limits Rules). 
The proposed rule change was published for comment in the Federal 
Register on June 5, 2008.\3\ The Commission received no comments 
regarding the proposal. This order approves the proposed rule change.
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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. 57883 (May 29, 
2008), 73 FR 32065.
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    The proposal would, in connection with any member or customer who 
exceeds the Exchange's position limit in accordance with CBOE Rule 
4.11, increase the fine levels specified in the Minor Rule Violation 
Plan (``MRVP''); consolidate individual members, member organizations, 
and customers into one category; and lengthen the surveillance period 
from a 12-month period to a rolling 24-month period.
    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.\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 promote just and equitable principles of trade, 
to facilitate 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. 
The Commission further believes that CBOE's proposal 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. In 
addition, because existing CBOE Rule 17.50 provides procedural rights 
to a person fined under the MRVP to contest the fine and permits a 
hearing on the matter, the Commission believes that the MRVP, as 
amended by this proposal, provides a fair procedure for the 
disciplining of members and persons associated with members, consistent 
with Sections 6(b)(7) and 6(d)(1) of the Act.\7\ In addition, the 
Commission 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,\8\ which governs minor rule violation plans. The Commission 
believes that the proposed rule change should strengthen the Exchange's 
ability to carry out its oversight and enforcement responsibilities as 
an SRO in cases where full disciplinary proceedings are unsuitable in 
view of the minor nature of the particular violation.
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    \4\ In approving this proposed rule change, the Commission 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).
    \6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \7\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
    \8\ 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 SRO rules, as well as Commission 
rules, is a serious matter. 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 would 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 CBOE MRVP or whether a violation requires formal

[[Page 40647]]

disciplinary action under CBOE Chapter XVII.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\9\ and Rule 19d-1(c)(2) under the Act,\10\ that the proposed rule 
change (SR-CBOE-2008-53) be, and hereby is, approved and declared 
effective.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(44).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16061 Filed 7-14-08; 8:45 am]

BILLING CODE 8010-01-P
