[Federal Register Volume 70, Number 135 (Friday, July 15, 2005)]
[Notices]
[Pages 41062-41063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3772]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51993; File No. SR-CBOE-2005-29]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Order Granting Approval to Proposed Rule Change Relating 
to the Composition of the CBOE's Modified Trading System Appointments 
Committee

July 7, 2005.
    On April 19, 2005, 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 8.82 to 
provide that the members of the Exchange's Modified Trading System 
Appointments Committee (``MTS Committee'') \3\ will be appointed in 
accordance with CBOE Rule 2.1 (Committees of the Exchange). The 
proposed rule change was published for comment in the Federal Register 
on May 25, 2005.\4\ The Commission received no comments on the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Generally, under CBOE rules, the MTS Committee is assigned 
the authority to make determinations concerning whether to grant or 
withdraw the approval to act as a designated primary market maker 
(``DPM''), among other things. See, specifically, CBOE Rule 8.80 
and, generally, CBOE Rules 8.80 through 8.94, which provide the 
scope of the MTS Committee's authority over DPMs.
    \4\ See Securities Exchange Act Release No. 51704 (May 18, 
2005), 70 FR 30156.
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    The Exchange proposes to revise CBOE Rule 8.82 to delete provisions 
relating to the composition of and election procedures for the MTS 
Committee and to establish that the selection of MTS Committee members 
and the determination of the MTS Committee's composition shall be made 
in accordance with CBOE Rule 2.1.\5\ CBOE Rule 2.1 provides, in part, 
that the Vice Chairman of the CBOE Board of Directors (``Vice 
Chairman''), with the approval of the Board of Directors (``Board''), 
shall appoint the chairmen and members of certain committees provided 
for in CBOE Rule 2.1, or any other committees established in accordance 
with the Exchange's Constitution. CBOE Rule 2.1 also provides that the 
Vice Chairman has the authority to remove any member of such committees 
and to fill any vacancies for the remainder of the pertinent committee 
term. Further, CBOE Rule 2.1 requires the Vice Chairman to consider 
having, where appropriate, a cross section of the membership 
represented on each committee and also provides that the MTS Committee 
is subject to the control and supervision of the Board.
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    \5\ Among other things, CBOE Rule 8.82 specified that members of 
the MTS Committee were elected to serve on the MTS Committee by the 
Exchange's membership at the Exchange's annual election and that MTS 
Committee candidates were to be nominated by the Exchange's 
Nominating Committee (or by petition). CBOE Rule 8.82 also had 
requirements regarding the MTS Committee's composition.
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    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 \6\ and, in 
particular, the requirements of Section 6(b) of the Act \7\ and the 
rules and regulations thereunder. The Commission finds specifically 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act \8\ in particular, which requires, among other things, that the 
rules of an 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

[[Page 41063]]

system, and, in general, to protect investors and the public interest.
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    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the proposal is designed to provide the 
Exchange with greater flexibility with respect to the appointment of 
members of the MTS Committee by no longer mandating the composition of 
and election procedures for the MTS Committee and, instead, utilizing 
the process set forth in CBOE Rule 2.1.
    In the Commission's view, because CBOE Rule 2.1 provides that the 
Vice Chairman must consider having, where appropriate, a cross section 
of the membership represented on each committee; the Board must approve 
the Vice Chairman's committee appointments, which would now include 
appointments to the MTS Committee; and ultimately, the MTS Committee is 
subject to the control and supervision of the Board, the proposal is 
consistent with the requirements of Section 6(b)(5) of the Act.\9\
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    \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-2005-29) be, and hereby 
is, 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\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3772 Filed 7-14-05; 8:45 am]
BILLING CODE 8010-01-P