[Federal Register Volume 73, Number 247 (Tuesday, December 23, 2008)]
[Notices]
[Pages 78862-78864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30408]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59104; File No. SR-CBOE-2008-117]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change to Amend
Exchange Rule 4.21 Relating to Third Party Deposits
December 15, 2008.
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 December 2, 2008, Chicago Board Options Exchange, Incorporated
(``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 prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested parties.
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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 Chicago Board Options Exchange, Incorporated (``CBOE'' or
``Exchange'') proposes to amend CBOE Rule 4.21--Third Party Deposits
Prohibited, to add an interpretation that includes certain permissive
deposits. The text of the proposed rule change is available on the
Exchange's Web site (http://www.cboe.com/Legal), at the Exchange's
Office of the Secretary, and at the Commission.
[[Page 78863]]
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 those statements may be examined at
the places specified in Item IV below and is set forth in sections (A),
(B), and (C) below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed amendment to Exchange Rule 4.21 would expand the
permissive deposits to checks or funds transfers for deposit to a
broker-dealer's account (i) that constitute an award or settlement paid
as the result of the resolution of litigation or arbitration which
arose in connection with the broker-dealer's securities or futures
business; (ii) that are drawn on an account of the government of the
United States; or (iii) are drawn on the account of another broker-
dealer for satisfaction of the resolution of transaction disputes. This
rule filing has been undertaken as a result of recommendations by the
Exchange's Member Firm community.
The rule was intended to prohibit member organizations that are
engaged in the business of clearing and carrying the accounts of
options market-makers (``Clearing Firm'') from accepting for deposit
into an account cleared or carried by the Clearing Firm a check or
funds transfer drawn on the account of a third party. Pursuant to
Exchange Rule 4.21, Clearing Firms are prohibited (with certain
exceptions) from accepting a check or funds transfer if the name on the
account from which the funds are drawn is different (i.e., ``third
party'') from the name on the account cleared or carried by the
Clearing Firm. In addition to checks or funds transfers from third
parties, the rule also prohibits (with certain exceptions) Clearing
Firms from accepting deposits or transfers of securities in the name of
third parties.
The Exchange believes that the proposed exceptions do not present
any concerns or business risks to the clearing firm that the original
rule was intended to address. While Clearing Firms make a reasonable
effort to confirm that funds deposited via a third party's check are
the property of the market-maker or market-making entity, and the
transaction exhibits no obvious improprieties, repercussions can arise
later. However, the exceptions set forth in the proposed Interpretation
and Policy .03, are such that demonstrate a legal entitlement to a
broker-dealer to receive the check or fund transfer. For example, a
floor broker that is registered as a broker-dealer may be required to
reimburse another broker-dealer as a result of a trading error. This
proposed rule amendment would enable a broker-dealer to deposit these
funds directly into the broker-dealer's account at the clearing firm.
Finally, while each Clearing Firm could make a business decision to
refuse to accept third party checks, funds transfers and securities,
the Exchange continues to believe that this rule establishes a uniform,
safe practice.
2. Statutory Basis
Exchange Rule 4.21 is intended to promote a greater level of
financial safety and soundness across Clearing Firms. The proposed
amendment will allow clearing firms some flexibility in complying with
these requirements to facilitate routine business transactions. The
Exchange believes that the proposed rule changes will strengthen its
ability to carry out its oversight responsibilities as a self-
regulatory organization and reinforce its surveillance and enforcement
functions. The Exchange believes that the proposed rule change is
consistent with Section 6(b) of the Act,\3\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\4\ in particular, in that
it would promote just and equitable principles of trade, facilitate
transactions in securities, remove impediments to and perfect the
mechanisms of a free and open market and a national market system, and
protect investors and the public interest.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(6).
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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 not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve 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 (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-CBOE-2008-117 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2008-117. This file
number should be included on the subject line if e-mail 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 (http://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 inspection and
copying 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.
[[Page 78864]]
Copies of the filing will also be available for inspection and copying
at the principal office of the self-regulatory organization. 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-2008-117 and should be
submitted on or January 13, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30408 Filed 12-22-08; 8:45 am]
BILLING CODE 8011-01-P