[Federal Register Volume 70, Number 67 (Friday, April 8, 2005)]
[Notices]
[Pages 18064-18066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1621]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51472; File No. SR-CBOE-2005-25]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change, and Amendment No. 1 Thereto, 
by the Chicago Board Options Exchange, Incorporated Relating to the 
Appointment of the Chairman and Members of CBOE's Regulatory Oversight 
Committee

April 4, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 16, 2005, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. On March 17, 2005, the Exchange filed Amendment No. 1 to the 
proposed rule change.\3\ The Exchange has designated the proposed rule 
change, as amended, as ``non-controversial'' under Section 19(b)(3)(A) 
of the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ which renders the 
proposal effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange revised Section III of 
Exhibit 1 to the proposal to set forth expressly the requirements 
contained in Rule 19b-4(f)(6) under the Act for the designation of 
the proposed rule change as ``non-controversial.''
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to amend CBOE Rule 2.1 pertaining to the appointment 
of the members and the chairman of CBOE's Regulatory Oversight 
Committee. Below is the text of the proposed rule change, as amended. 
Proposed new language is in italics.
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[[Page 18065]]

Chicago Board Options Exchange, Incorporated

Rules

* * * * *

CHAPTER II--ORGANIZATION AND ADMINISTRATION

PART-A--COMMITTEES

Committees of the Exchange

Rule 2.1. Committees of the Exchange

    Rule 2.1(a) Establishment of Committees. In addition to committees 
specifically provided for in the Constitution, there shall be the 
following committees: Appeals, Arbitration, Business Conduct, 
appropriate Floor Procedure Committees, Floor Officials, appropriate 
Market Performance Committees, Membership, Product Development and such 
other committees as may be established in accordance with the 
Constitution. Except as may be otherwise provided in the Constitution 
or the Rules, the Vice Chairman of the Board, with the approval of the 
Board, shall appoint the chairmen and members of such committees to 
serve for terms expiring at the first regular meeting of the Board of 
Directors of the next calendar year and until their successors are 
appointed or their earlier death, resignation or removal. Consideration 
shall be given to continuity and to having, where appropriate, a cross 
section of the membership represented on each committee. Except as may 
be otherwise provided in the Constitution or the Rules, the Vice 
Chairman of the Board may, at any time, with or without cause, remove 
any member of such committees. Any vacancy occurring in one of these 
committees shall be filled by the Vice Chairman of the Board for the 
remainder of the term. Notwithstanding the foregoing, the Chairman of 
the Board, with the approval of the Board, shall appoint Directors to 
serve on the Governance Committee and the Regulatory Oversight 
Committee, whose members shall not be subject to removal except by the 
Board. The Chairman of the Governance Committee and the Chairman of the 
Regulatory Oversight Committee shall be appointed by the Chairman of 
the Board. Whenever the Vice Chairman of the Board is, or has reason to 
believe he may become, a party to any proceeding of an Exchange 
committee, he shall not exercise his power to appoint or remove members 
of that committee, and the Chairman of the Board shall have such power.
    (b)-(d) No change.
* * * * *

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, as 
amended, and discussed any comments it received on the proposal. The 
text of those 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change, as amended, is to amend 
CBOE Rule 2.1 to provide that the Chairman of the Board shall have the 
authority to appoint the directors who will serve on CBOE's Regulatory 
Oversight Committee, and also to appoint the chairman of the Regulatory 
Oversight Committee.\6\ The Regulatory Oversight Committee is a 
standing committee of CBOE's Board of Directors, which generally 
oversees the independence and integrity of the regulatory functions of 
the Exchange, and seeks to ensure that the regulatory functions of the 
Exchange remain free from inappropriate influence. Pursuant to its 
Board approved charter, the Regulatory Oversight Committee is comprised 
solely of public directors.
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    \6\ Pursuant to Section 7.1 of CBOE's Constitution, CBOE's Vice 
Chairman has the authority to appoint the directors to serve on the 
Regulatory Oversight Committee and the chairman of such committee, 
except as may be otherwise provided in the Constitution or Rules.
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    The proposed amendment to CBOE Rule 2.1 granting to the Chairman of 
the Board the authority to appoint the members and the chairman of the 
Regulatory Oversight Committee is consistent with other provisions in 
CBOE's Constitution and rules which grant CBOE's Chairman of the Board 
the authority to appoint the members and chairman of other committees 
of the Board of Directors, such as the Audit, Compensation and 
Governance Committees.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with the requirements of Section 6(b) of the Act,\7\ in 
general, and Section 6(b)(5) of the Act,\8\ in particular, in that the 
proposed rule change is designed to promote just and equitable 
principles of trade, remove impediments to and perfect the mechanisms 
of a free and open market and a national market system and, in general, 
to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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

    The Exchange neither solicited nor received written comments on the 
proposed rule change, as amended.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange asserts that the foregoing proposed rule change, as 
amended, has become effective upon filing pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder \10\ because 
it does not:
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date of filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest; provided that the 
self-regulatory organization has given the Commission written notice of 
its intent to file the proposed rule change at least five business days 
prior to the filing date of the proposed rule change.
    At any time within 60 days of the filing of the proposed rule 
change, as amended, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\11\
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    \11\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under Section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on March 17, 2005, the date on 
which the Exchange submitted Amendment No. 1. See 15 U.S.C. 
78s(b)(3)(C).

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[[Page 18066]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2005-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-CBOE-2005-25. 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, as amended, 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. 
Copies of such filing also will be available for inspection and copying 
at the principal office of CBOE. 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-2005-25 and should be submitted on or before April 
29, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1621 Filed 4-7-05; 8:45 am]
BILLING CODE 8010-01-P