[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Notices]
[Pages 62287-62289]
[FR Doc No: 2012-25104]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67991; File No. SR-Phlx-2012-116]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Exchange Rule 3315(a)(1)(A) To Reflect a Change in Its Routing
Functionality To Allow Routable Orders to Simultaneously Execute
Against Exchange Available Shares and Route to Other Markets for
Execution of the Remainder of the Order

October 5, 2012.
    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 September 25, 2012, NASDAQ OMX PHLX LLC (``PHLX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
proposed rule change as described in Items I and II 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
persons.
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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

    PHLX proposes to amend Rule 3315(a)(1)(A) to reflect a change in
its routing functionality. The Exchange is proposing to implement the
rule change as soon as practicable, but in no case later than thirty
calendar days from the filing date of this proposal. The text of the
proposed rule change is available at http://nasdaqomxphlx.cchwallstreet.com, at PHLX's principal office, and at the
Commission's Public Reference Room.

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. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    PHLX is proposing to amend Rule 3315(a)(1)(A) to reflect a change
in PHLX's order routing functionality, which will allow routable orders
\3\ to simultaneously execute against PHLX available shares and route
to other markets for execution of the remainder of the order.
Currently, when a routable order is entered into the PHLX system, the
PHLX book is first checked for available shares. If such an order is
not filled or filled only partially, then the order is routed to away
markets with the best bid or best offer pursuant to PHLX's System
routing table.\4\ For example, if a PHLX member submitted an order to
buy 5,000 shares of a security, and PHLX had 500 shares displayed with
another 500 shares undisplayed, under the current routing process 1,000
shares

would be executed on PHLX. Thereafter, PHLX would route the remaining
4,000 shares of the order to other markets for execution.
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    \3\ For purposes of this filing, a ``routable order'' is an
order entered into the PHLX System, which is not of an Order Type
precluded from routing to other markets.
    \4\ The ``System routing table'' is the proprietary process for
determining the specific trading venues to which the System routes
orders and the order in which it routes them. See Rule
3315(a)(1)(A).
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    PHLX has observed that upon partial execution of a routable order
at PHLX, as in the example above, market participants often react to
the order by cancelling their orders on other markets and entering new
orders at inferior prices. This occurs because the current process
directs the order to PHLX before attempting to access available
liquidity at other markets and thereby allows market participants to
react to the execution (an effect known as ``market impact'' or
``information leakage''). As a consequence, the available shares at the
away market are no longer available, resulting in a lower likelihood of
successfully accessing liquidity on away markets (i.e., the ``fill
rate'') and an increased likelihood of ultimately receiving an
execution at an inferior price. As such, PHLX is addressing this
problem by changing how the routing process will operate.
    PHLX is proposing to execute routable orders against the PHLX book
for available shares and to simultaneously route any remaining shares
to additional markets. Specifically, under the proposed change a
routable order would attempt to execute against the available shares at
PHLX and, to the extent the order would not be filled by such available
shares, PHLX would simultaneously route the remainder of the order to
other venues, according to PHLX's System routing table, in a manner
consistent with Regulation NMS (i.e., satisfying all displayed
protected quotes). For example, using the scenario above, if a member
enters a routable order to buy 5,000 shares of a security and PHLX is
displaying 500 shares of that security, with 500 undisplayed, PHLX
would execute against the 500 displayed shares and 500 undisplayed
shares, while simultaneously routing the remaining 4,000 shares to
other venues for execution. In the event that the amount of shares on
other markets is insufficient to completely fill the order, or the
order fails to completely execute, PHLX would then post the remaining
shares on the PHLX book or cancel the remaining shares per the routed
order's instructions. PHLX believes that this simultaneous execution
against PHLX available shares and routing to other venues' shares will
avoid the deleterious effect of market impact discussed above and
result in overall faster and better executions of its members' routable
orders.
    PHLX notes that it is not changing the execution and routing
sequence of all routable orders. The PTFY, PMOP, and PCRT orders are
designed to execute serially as part of their strategies, which is
generally to reduce the blended fees associated with transacting on
multiple markets. As such, simultaneous routing of such orders would
not result in a better execution in terms of the goals of these
routable order types.
    The proposed change is based on the recently-approved change to the
analogous NASDAQ Stock Market LLC (``NASDAQ'') rule.\5\ Although PHLX
does not have all of the order types that NASDAQ has, it is making the
identical changes applicable to the analogous routable order types
shared in common with NASDAQ. The Exchange will implement the proposed
change as soon as practicable and in no event later than 30 calendar
days from the filing date of this proposal.
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    \5\ See Securities Exchange Act Release No. 67639 (August 10,
2012), 77 FR 49034 (August 15, 2012) (SR-NASDAQ-2012-071).
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2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\6\ which requires the rules of an exchange 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 system
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed rule meets these requirements in
that it promotes efficiency in the market, and increases the speed of
execution and likelihood that a routable order will be filled at the
best price possible. In this regard, the Exchange notes that
simultaneous execution minimizes the market impact a routable order has
on other markets under the current multi-step execution and routing
process, thus improving fill rates. Accordingly, the proposed rule
change will serve to improve execution quality for investors sending
their routable orders to the Exchange.
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    \6\ 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 will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and Rule 19b-4(f)(6) \8\ thereunder because
the proposal does not: (i) Significantly affect the protection of
investors or the public interest; (ii) impose any significant burden on
competition; and (iii) by its terms, become operative for 30 days from
the date on which it was filed, or such shorter time as the Commission
may designate.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. The Exchange has satisfied this
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \10\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay period. The Commission
believes that waiver of the 30-day operative delay period is consistent
with the protection of investors and the public interest. Specifically,
the Commission believes that the proposal should increase the
likelihood that a routable order would receive a more complete fill and
should improve the Exchange's ability to process such orders. For these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. Therefore, the Commission designates the proposed rule change
to be operative upon filing with the Commission.\11\
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    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(C).

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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 email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2012-116 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2012-116. This file
number should be included on the subject line if email 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. 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-Phlx-2012-116 and should be
submitted on or before November 2, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25104 Filed 10-11-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
[Notices]
[Page 72678]
[FR Doc No: 2020-25085]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4563-DR; Docket ID FEMA-2020-0001]

Alabama; Amendment No. 4 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Alabama (FEMA-4563-DR), dated September 20, 2020, and
related determinations.

DATES: This amendment was issued October 13, 2020.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Alabama is hereby amended to include the following
areas among those areas determined to have been adversely affected by
the event declared a major disaster by the President in his declaration
of September 20, 2020.

    Barbour, Butler, Clark, Coffee, Covington, Crenshaw, Geneva,
Houston, and Pike Counties for Public Assistance.
    The Poarch Band of Creek Indians for debris removal [Category A]
and permanent work [Categories C-G] (already designated for
emergency protective measures [Category B], including direct federal
assistance, under the Public Assistance program).

    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households In Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050 Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

Pete Gaynor,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2020-25085 Filed 11-12-20; 8:45 am]
BILLING CODE 9111-23-P


[Federal Register: October 9, 2007 (Volume 72, Number 194)]
[Notices]
[Page 57314-57315]
[DOCID:fr09oc07-57]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RP06-182-001]

Midwestern Gas Transmission Company; Notice of Third Party
Balancing Activity Report

September 25, 2007.
    Take notice that on March 15, 2007, Midwestern Gas Transmission
Company (Midwestern) tendered for filing a Third Party Balancing
Activity Report.
    Midwestern states that this report complies with the Commission's
order issued February 28, 2006, in Docket No.

RP06-182-000, wherein the Commission directed Midwestern to file an
activity report after one year of service detailing its experience with
the implementation of the new service under Rate Schedule TPB.
    Any person desiring to protest this filing must file in accordance
with Rule 211 of the Commission's Rules of Practice and Procedure (18
CFR 385.211). Protests to this filing will be considered by the
Commission in determining the appropriate action to be taken, but will
not serve to make protestants parties to the proceeding. Such protests
must be filed on or before the date as indicated below. Anyone filing a
protest must serve a copy of that document on all the parties to the
proceeding.
    The Commission encourages electronic submission of protests in lieu
of paper using the ``eFiling'' link at http://www.ferc.gov. Persons

unable to file electronically should submit an original and 14 copies
of the protest to the Federal Energy Regulatory Commission, 888 First
Street, NE., Washington, DC 20426.
    This filing is accessible on-line at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For

TTY, call<PHONE_NUMBER>.
    Protest Date: 5 p.m. Eastern Time on October 3, 2007.

Kimberly D. Bose,
Secretary.
[FR Doc. E7-19773 Filed 10-5-07; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register: February 1, 2007 (Volume 72, Number 21)]
[Notices]
[Page 4745-4751]
[DOCID:fr01fe07-98]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55172; File No. SR-CBOE-2006-110]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of a Proposed Rule Change and Amendment
No. 1 Thereto Relating to the Establishment of CBOE Stock Exchange, LLC

January 25, 2007.
    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 December 26, 2006, the Chicago Board Options Exchange, Incorporated
(the ``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (the ``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been
substantially prepared by the Exchange. CBOE filed Amendment No. 1 to
the proposed rule change on January 10, 2007. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    CBOE proposes to establish CBOE Stock Exchange (``CBSX'') as a
facility, as that term is defined in Section 3(a)(2) of the Act,\3\ of
CBOE. CBSX will administer a fully automated marketplace for the
trading of securities other than options by CBOE members. CBSX will be
operated by CBOE Stock Exchange, LLC (``CBSX LLC''), a Delaware limited
liability company. In this filing, CBOE submitted to the Commission the
First Amended and Restated Operating Agreement (``Operating
Agreement'') of CBSX LLC. The Certificate of Formation and the
Operating Agreement are the source of CBSX LLC's governance and
operating authority, and therefore, function in a similar manner as
articles of incorporation and bylaws for a corporation. Additionally,
CBOE proposes to adopt Rule 3.32 pertaining to ownership concentration
and affiliation limitations.
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    \3\ 15 U.S.C. 78c(a)(2).
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    The text of the proposed rule change is available on the Exchange's
Web site (http://www.cboe.com), at the Office of the Secretary, CBOE,

and at the Commission's Public Reference Room. The text of the proposed
rule change is also available on the Commission's Web site (http://www.sec.gov/rules/sro.shtml
).

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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 these statements may be examined at the places specified in
Item IV below. CBOE 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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE is a registered national securities exchange under Section 6
of the Act and a self-regulatory organization (``SRO''). CBOE indicates
that CBSX will be a facility of CBOE, subject to self-regulation by
CBOE and oversight by the SEC. CBOE will act as the SRO for CBSX
pursuant to a Services Agreement to be entered into between CBOE and
CBSX LLC. CBOE will have the primary regulatory responsibility for the
activities of CBSX. CBOE represents that it has adequate funds to
discharge all regulatory functions related to the facility that it has
undertaken to perform under the Services Agreement.\4\
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    \4\ CBOE represents that CBSX LLC will not be entitled to any
revenue generated in connection with penalties, fines, and
regulatory fees that may be assessed by CBOE against CBOE members in
connection with trading on CBSX. Rather, all regulatory fines,
penalties and fees assessed against and paid by CBOE members to CBOE
in connection with trading on CBSX shall remain with CBOE.

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    In this filing, CBOE submitted to the SEC the Certificate of
Formation and the Operating Agreement of CBSX LLC, which specifically
relate to the control and governance of CBSX LLC that would ensure that
CBOE has the authority within CBSX LLC to maintain CBOE's
responsibility for all regulatory functions related to CBSX. The
Operating Agreement provides that CBOE and the SEC would have
regulatory authority over the CBSX LLC owners and the members of CBSX
LLC's Board of Directors. CBOE will submit separate rule filings to
establish rules relating to listing, membership and trading on CBSX.\5\
Because the primary purpose of this rule filing is to focus on those
provisions that are directly related to CBSX LLC's governance and
ownership, and CBOE's authority for all regulatory functions of the
CBSX, the Exchange's discussion in this filing will be limited to those
relevant provisions of the Operating Agreement.
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    \5\ The Commission notes that on December 18, 2006, the Exchange
filed a proposed rule change relating to a permit program for CBSX.
See Securities Exchange Act Release No. 54987, 71 FR 78481 (December
29, 2006). The Commission also notes that on December 29, 2006, the
Exchange filed a proposed rule change to establish the equity
trading rules for CBSX. See Securities Exchange Act Release No.
55034, 72 FR 1350 (January 11, 2007).
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CBSX LLC

    As a limited liability company, ownership of CBSX LLC is
represented by limited liability membership interests in CBSX LLC. The
holders of such interests are referred to as ``Owners'' in this rule
filing.\6\ Initially, there are five Owners of CBSX LLC. CBOE is one of
the Owners of CBSX LLC, and owns all ``Series A'' Voting Shares \7\ of
CBSX LLC, representing (50%) of CBSX LLC.\8\ The other four Owners and
their respective ownership interests are: VDM Chicago, LLC (20%);
LaBranche & Co., Inc. (10%); IB Exchange Corp. (10%); and Susquehanna
International Group, LLP. (10%). Each of these four Owners owns
``Series B'' Voting Shares of CBSX LLC.
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    \6\ ``Owner'' means a limited liability company ``member'' as
that term is defined in Sec.  18-101(11) of the Delaware Limited
Liability Company Act (``DLLCA''), and shall include each Voting
Owner and each Management Owner, but only so long as such person is
shown on CBSX's books and records as the owner of at least one (1)
Share (or fraction of one (1) Share). ``Owner'' shall include a
``Substituted Owner'' as defined in Section 6.5(a) of the Operating
Agreement, but only upon compliance with all of the requirements of
Sections 6.4 and 6.5 of the Operating Agreement. For purposes of
clarity, no person shall become an ``Owner'' as to any Shares, if
the acquisition of those Shares will require a change of ownership
notice to the SEC, or will constitute a proposed rule change subject
to the requirements of the rule filing process of Section 19 of the
Act, until all of the requirements of such notice or rule filing
process have been accomplished and, if necessary, approved by the
SEC. See Section 2.1(16) of the Operating Agreement.
    \7\ ``Voting Shares'' means those Shares entitled to vote on
matters submitted to the Owners, which Voting Shares are held by the
Voting Owners. See Section 2.1(27) of the Operating Agreement.
    \8\ As noted in Section 3.2 of the Operating Agreement, it is
the intention of the Owners that no other members of CBSX LLC (other
than Affiliates of CBOE) be owners of Series A Voting Shares, and
that no additional Series A Voting Shares be authorized, created or
issued for such purpose; provided however, that this provision is
not intended to limit or restrict any rights of CBOE to transfer any
of its Series A Voting Shares with the prior approval of the SEC as
provided for in Article VI, including Section 6.14 of the Operating
Agreement, or any other provision thereof, or any rights to be
acquired by a transferee of those Shares as provided therein.
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    Under Section 3.2 of the Operating Agreement, the CBSX LLC Board of
Directors may authorize the issuance of ``Series C'' Non-Voting
Restricted Shares \9\ from time to time to employees, consultants, or
officers of CBSX LLC, or any other person, each of whom will become a
Management Owner \10\ of CBSX LLC.
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    \9\ ``Non-Voting Restricted Share'' means a Share held by a
Management Owner containing the voting limitations and other
restrictions described in the Operating Agreement. See Section
2.1(15) of the Operating Agreement.
    \10\ ``Management Owner'' means a natural person who is
identified on Exhibit A of the Operating Agreement (Exhibit 5C to
the proposed rule change) as a Management Owner, who subsequently
becomes a Management Owner pursuant to the provisions of Section
3.2(c) of the Operating Agreement, or who is a transferee or
assignee of Non-Voting Restricted Shares (other than a Voting
Owner). See Section 2.1(13) of the Operating Agreement.
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    As provided in Section 8.9 of the Operating Agreement, the
outstanding Series A Voting Shares shall, in the aggregate (and without
being deemed to be a voting trust), be entitled to a number of votes
equal to 50% of the total number of Voting Shares outstanding, on each
matter submitted to a vote of the Owners. Each outstanding Series B
Voting Share shall be entitled to one vote on each matter submitted to
a vote of the Owners. The Series C Non-Voting Restricted Shares shall
not be entitled to vote on any matter submitted to a vote of the
Owners.

Governance of CBSX LLC

    Pursuant to Section 9.1 of the Operating Agreement, CBSX LLC will
be managed by or under the direction of its own Board of Directors.
Section 9.2 of the Operating Agreement provides that the Board of
Directors will consist of 9 Directors and also provides how the
composition of the Board of Directors shall be determined. Each Owner
owning Series B Voting Shares representing at least five percent (5%)
of the aggregate ``Percentage Interests'' \11\ of CBSX LLC shall be
entitled to designate one Director. The Owners of Series A Voting
Shares (currently, CBOE) shall collectively be entitled to designate a
number of Directors equal to the aggregate number of Directors
designated by the Owners owning Series B Voting Shares representing at
least five percent (5%) of the aggregate Percentage Interests of CBSX
LLC. The Directors then shall designate one additional Director from
the executive management of CBSX LLC.
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    \11\ ``Percentage Interest'' means with respect to an Owner, a
fraction (expressed as a percentage) determined from time to time,
the numerator of which is the number of all Shares held by such
Owner and the denominator of which is the sum of all Shares held by
all Owners. See Section 2.1(17) of the Operating Agreement.
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    Thus, initially, VDM Chicago, LLC, LaBranche & Co., Inc., IB
Exchange Corp., and Susquehanna International Group, LLP will each be
entitled to designate one Director. CBOE, as the Owner of the Series A
shares, will be entitled to designate four Directors. The eight
Directors will then designate one additional Director from among the
executive management of CBSX LLC.
    Section 9.2 of the Operating Agreement also provides that as long
as CBSX remains a facility of CBOE, CBOE shall have the right to
retain/designate one Director in the event CBOE is no longer otherwise
entitled to designate any Directors pursuant to Section 9.2 of the
Operating Agreement, whether or not CBOE maintains any Percentage
Interest or is admitted to CBSX as an Owner.
    Under Section 9.3 of the Operating Agreement, a Director appointed
pursuant to Section 9.2 of the Operating Agreement shall serve until
his or her earlier death, resignation, or removal in a manner permitted
by applicable law or the Operating Agreement, or, with respect to
Directors designated by Owners of Series B Voting Shares, until such
time as the Owner designating such Director ceases to own a Percentage
Interest representing at least five percent (5%) of the aggregate
Percentage Interests of CBSX LLC. In such latter event, upon the
termination of service of such a Series B-designated Director, the
service of a single Director designated by the Owner(s) of the Series A
Voting Shares (identified by the Series A Owner(s) in their sole
discretion) shall simultaneously terminate.
    Section 1.8 of the Operating Agreement provides that
notwithstanding anything contained in

the Operating Agreement to the contrary, so long as CBSX is a facility
of CBOE, in the event that CBOE, in its sole discretion, determines
that any action, transaction or aspect of an action or transaction, is
necessary or appropriate for, or interferes with, the performance or
fulfillment of CBOE's regulatory functions, its responsibilities under
the Act or as specifically required by the SEC (collectively,
``Regulatory Requirements''), (i) CBOE's affirmative vote will be
required to be included in order to constitute a ``Super Majority Vote
of the Owners,'' \12\ (ii) without CBOE's affirmative vote no such
action, transaction or aspect of an action or transaction shall be
authorized, undertaken or effective, and (iii) CBOE shall have the sole
and exclusive right to direct that any such required, necessary or
appropriate act, as it may determine in its sole discretion, to be
taken or transaction be undertaken by or on behalf of CBSX LLC without
regard to the vote, act or failure to vote or act by any other party in
any capacity.
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    \12\ ``Super Majority Vote of the Owners'' means, subject to the
provisions of Section 1.8 of the Operating Agreement as to
Regulatory Requirements, the affirmative vote of both (i) all of the
Owners of the Series A Voting Shares at the time, and (ii) any two
(2) of the Initial Owners of Series B Voting Shares who then retain
ownership of Series B Voting Shares. See Section 2.1(25) of the
Operating Agreement.
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    Section 5.6 of the Operating Agreement states that except as
otherwise specifically provided by the Operating Agreement or required
by the DLLCA or by the SEC pursuant to the Act, no Owner shall have the
power to act for or on behalf of, or to bind, CBSX LLC.
    Section 5.7 of the Operating Agreement provides that CBSX LLC, and
to the extent that it relates to CBSX LLC, each Owner, agrees to comply
with the federal securities laws and the rules and regulations
thereunder; to cooperate with the SEC and CBOE pursuant to their
regulatory authority and the provisions of the Operating Agreement; and
to engage in conduct that fosters and does not interfere with CBSX
LLC's ability to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating 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.
    Additionally, Section 5.7 of the Operating Agreement states that,
after appropriate notice and opportunity for hearing, the Board, with
the approving vote of both CBOE, in exercise of its authority under
Section 1.8 of the Operating Agreement, and a majority vote of the
Owners, excluding the vote of the Owner subject to sanction, may
suspend or terminate an Owner's voting privileges or membership in CBSX
LLC under the Operating Agreement: (i) In the event such Owner is
subject to a ``statutory disqualification,'' as defined in Section
3(a)(39) of the Act; or (ii) in the event such Owner has violated any
provision of the Operating Agreement implicating any federal or state
securities law; or (iii) if the Board determines that such action is
necessary or appropriate in the public interest or for the protection
of investors.
    Section 9.13 of the Operating Agreement also provides that a
Director may be removed for cause by the act of a ``Majority in
Interest of the Owners'' \13\ at a meeting of the Owners called
expressly for the purpose of removing the Director. For these purposes,
``for cause'' shall mean: (1) The Director has (A) committed a willful
serious act of dishonesty, such as fraud, embezzlement or theft, (B)
committed or attempted any act against CBSX LLC intending to enrich
himself or herself at the expense of CBSX LLC, or (C) made an
unauthorized use or disclosure of ``Confidential Information;'' \14\
(2) the Director has been charged with an act constituting a felony;
(3) the Director has engaged in conduct that has caused serious injury,
monetary or otherwise, to CBSX LLC; or (4) the Director, in carrying
out his or her duties, has been guilty of negligence or willful
misconduct.
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    \13\ ``Majority in Interest of the Owners'' means the
affirmative vote of more than 50% of the Voting Shares held solely
by the Voting Owners. See Section 2.1(12) of the Operating
Agreement.
    \14\ ``Confidential Information'' means (A) information relating
to the terms of any contract, agreement or other relationship
between CBSX LLC and a third party, an Owner, an Affiliate of CBSX
LLC or an Owner, or any other person, (B) information relating to
the terms of the Operating Agreement or any other agreement between
or among CBSX LLC, and an Owner, an Affiliate of CBSX LLC or an
Owner, or any other person (C) financial information about CBSX LLC,
an Owner, an Affiliate of CBSX LLC or an Owner, (D) any process,
system or procedure with which or whereby CBSX LLC or any Owner or
Affiliate of an Owner does business, (E) any trade secrets,
confidential know-how or designs, formulae, plans, devices, business
information, software, systems, technology, financial data or
material (whether or not patented or patentable) of CBSX LLC, or an
Owner or Affiliate of CBSX LLC or an Owner, and (F) any confidential
member or user or customer lists of CBSX LLC, or an Owner or
Affiliate of CBSX LLC or an Owner, in each case to which a party
hereto becomes privy or learns of by reason of the Operating
Agreement, discussions or negotiations relating to the Operating
Agreement or the relationship of the parties contemplated hereby.
See Section 2.1(6), and Section 15.2 of the Operating Agreement.
---------------------------------------------------------------------------

    Under Section 9.14 of the Operating Agreement, the Board of
Directors may designate one or more committees, which shall be
comprised of individuals chosen by the Board, and may at the Board's
discretion include non-Board members. Any such committee, to the extent
provided in the resolution, shall have the authority and power to
exercise such functions as may be delegated by the Board, which
delegation may be revoked by the Board at any time in its discretion
and any action taken pursuant to such delegation may be modified,
suspended, overruled or revoked by the Board at any time in its
discretion.
    Section 9.15(a) of the Operating Agreement contains limitations on
the authority of the Board of Directors. Specifically, Section 9.15(a)
of the Operating Agreement provides that notwithstanding any contrary
provision of this Agreement, and subject always to CBOE's rights to act
under Section 1.8 of the Operating Agreement and the final provision of
Section 9.15(a) of the Operating Agreement, it shall require the
affirmative action of the Board, acting on behalf of CBSX LLC, the
additional prior approving vote of CBOE, in exercise of its authority
under Section 1.8 of the Operating Agreement, and a Super Majority of
the Owners, to cause CBSX LLC to:
     Enter into a material new line of business or exit or
change a material line of business outside the scope of the business
contemplated in Section 1.6 of the Operating Agreement;
     Enter into any transaction with an Owner or Affiliate \15\
of an Owner outside the ordinary course of business or requiring
payments in excess of $1 million;
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    \15\ ``Affiliate'' means with respect to any person, any other
person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such person. As used in this definition, the term
``control'' means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise with respect to such person.
See Section 2.1(1) of the Operating Agreement.
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     Make any material amendment to the organizational
documents of CBSX LLC;
     Engage in any liquidation, dissolution, reorganization or
recapitalization;
     Enter into licensing or other contractual arrangements,
including without limitation, those providing for the encumbrance of
assets or properties,

outside the ordinary course of business, or requiring payments in
excess of $1 million;
     Grant Board seats to new Owners or alter Board seat
allocations for or among existing Owners (which action will require
compliance with the rule filing process of Section 19 of the Act as
well);
     Issue additional equity securities of CBSX LLC or
securities convertible into equity securities of CBSX LLC, other than
as provided for in Section 3.2(c) and (d) of the Operating Agreement;
     Declare or pay dividends or distributions, or repurchase
any securities of CBSX LLC (other than Series C Non-Voting Restricted
Shares), other than those that apply proportionately to all Owners;
     Enter into any merger, consolidation or acquisition or
sale of material assets or ownership interests;
     Undertake an initial public offering;
     Change senior level management, including entering into,
terminating or amending employment agreements with management and key
employees;
     Materially change CBSX LLC's business model;
     Change auditors or accounting policies, practices or
procedures;
     Change the status or registration of CBSX LLC as a
facility of CBOE (which action will require compliance with the rule
filing process of Section 19 of the Act as well);
     Create or designate any new or additional class or series
of Shares or increase the authorized number of Shares of any class or
series;
     Approve or authorize the acquisition by any person or
group of a greater than 20% Percentage Interest in CBSX LLC (which
action will require compliance with Section 6.14 of the Operating
Agreement as well); or
     Amend, or be bound by or recognize an amendment of, the
provisions of Section 9.15(a) of the Operating Agreement in any way.
    Section 9.15(a) of the Operating Agreement further provides that
without the affirmative vote of CBOE if exercised under Section 1.8 of
the Operating Agreement, no such action, transaction or aspect of an
action or transaction shall be authorized, undertaken or effective.
Additionally, with respect to any matter, including those listed above,
that implicates Regulatory Requirements, CBOE shall always have the
sole discretion and authority to cause any action to be taken by and on
behalf of CBSX LLC, as provided for in Section 1.8 of the Operating
Agreement, without regard to the foregoing requirements of Section
9.15(a) of the Operating Agreement.
    CBOE believes that the foregoing limitations on the authority of
the CBSX LLC Board enable CBOE to have authority over the actions of
CBSX LLC especially as they relate to regulatory responsibilities.
    Under Section 9.15(c) of the Operating Agreement, each Director
shall agree to comply with the federal securities laws and the rules
and regulations thereunder, and to cooperate with the SEC and CBOE
pursuant to their regulatory authority and the provisions of the
Operating Agreement. In addition, each Director will take into
consideration whether any actions taken or proposed to be taken as a
Director for or on behalf of CBSX LLC, or any failure or refusal to act
(including a failure to be present to constitute a quorum, or to
reasonably provide an affirmative vote or consent) would constitute
interference with CBOE's regulatory functions and responsibilities in
violation of the Operating Agreement or the Act. Interference shall be
determined reasonably and in good faith by the Board designees of CBOE,
which determination will be final and binding.
    Section 9.16 of the Operating Agreement also provides that in
serving as a Director, each Director agrees to comply with the federal
securities laws and the rules and regulations thereunder; to cooperate
with the SEC and CBOE pursuant to their regulatory authority and the
provisions of the Operating Agreement; and to engage in conduct that
fosters and does not interfere with CBSX LLC's ability to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating 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. Moreover, after appropriate
notice and opportunity for hearing, the Board, with the approving vote
of both CBOE in exercise of its authority under Section 1.8 of the
Operating Agreement, and a majority vote of the Owners, excluding the
vote of the Owner whose Director designee is subject to sanction, may
suspend or terminate a Director's service as such to CBSX LLC under the
Operating Agreement: (i) In the event such Director is subject to a
``statutory disqualification,'' as defined in Section 3(a)(39) of the
Act; or (ii) in the event such Director has violated any provision of
the Operating Agreement implicating any federal or state securities
law; or (iii) if the Board determines that such action is necessary or
appropriate in the public interest or for the protection of investors.
    CBOE believes that these provisions, including Sections 5.7,
9.15(c) and 9.16 of the Operating Agreement, would require each CBSX
LLC Director to adhere to regulatory responsibilities in that they must
comply with federal securities laws and the rules and regulations
promulgated thereunder, and cooperate with the SEC and CBOE pursuant to
their regulatory authority.

Changes in Ownership of CBSX LLC

    Pursuant to Section 6.1 of the Operating Agreement, an Owner shall
have the right to assign Shares only by a written assignment, the terms
of which do not contravene any provision of this Operating Agreement,
and which has been duly executed by the assignor and assignee, received
by the Board, and recorded on the books of CBSX LLC. For all purposes
of the Operating Agreement, the terms ``transfer'' and ``assign,'' and
all derivatives or variants of those terms, include any transfer,
disposition, sale, gift, bequest, pledge, encumbrance, hypothecation,
exchange or other act whether voluntary or involuntary, by operation of
law or otherwise, whereby an Owner's ownership, interest, or rights in
any Shares are disposed of, impaired, or in any way affected.
    Section 6.2 of the Operating Agreement states that, subject to the
requirements of Article VI of the Operating Agreement, an Owner can
assign any portion of its shares to a ``Permitted Transferee.'' A
``Permitted Transferee'' means (i) as to any Owner, an Affiliate of
such Owner, and not the Affiliate of any other Owner, (ii) as to VDM
Chicago, LLC during the period specified in the Operating Agreement,
Mill Bridge IV, LLC or CBONP, LLC,\16\ or (iii) as to any Owner that is
an individual (A) such Owner's estate, heirs or beneficiaries, (B) any
guardian or conservator appointed for such Owner's estate, or (C) any
trust for the benefit of such Owner or such Owner's immediate family
members, or to any limited partnership or limited liability company in
which the non-controlling partners or members, as the case may be, are
members of such Owner's immediate family, and so long as the Owner is
the sole trustee, general partner or manager of such trust, limited

partnership or limited liability company, as the case may be. A
Permitted Transferee shall become a Substituted Owner only if and as
provided in Sections 6.4 and 6.5 of the Operating Agreement.
---------------------------------------------------------------------------

    \16\ Prior to SEC approval of this rule filing, VDM Chicago
Holdings, LLC, Mill Bridge IV, LLC, and CBONP, LLC will execute an
Indirect Controlling Party Amendment to the Operating Agreement,
pursuant to Section 15.16 of the Operating Agreement.
---------------------------------------------------------------------------

    Section 6.3 of the Operating Agreement further provides that no
Owner may sell, assign, give, pledge, or otherwise voluntarily
transfer, or involuntarily transfer by bankruptcy, death or disability,
shares to a person other than a Permitted Transferee, and no shares
shall be transferred on the books of CBSX LLC other than a transfer to
a Permitted Transferee, unless prior to that transfer, an Owner, or, in
the case of an involuntary transfer, the legal representative or
successor in interest of an Owner (the ``Transferring Owner''), first
notifies CBSX LLC and all voting Owners (but not Management Owners) in
writing of the number of shares that the Transferring Owner proposes to
transfer pursuant to a bona fide offer received by the Transferring
Owner, and otherwise complies with restrictions and conditions in
Article VI pertaining to sale and transfer of shares.
    Under Section 6.4 of the Operating Agreement, a Permitted
Transferee and a transferee having purchased Shares after the
Transferring Owner has complied with the right of first refusal set
forth in Section 6.3(a) and (b) of the Operating Agreement, shall
become a Substituted Owner,\17\ provided that (i) the Permitted
Transferee or other transferee executes a written acceptance and
adoption of all terms and provisions of the Operating Agreement, as the
same may have been amended, and (ii) all of the applicable requirements
of a change of ownership notice to the SEC as required by Section 6.13
of the Operating Agreement, or a proposed rule change subject to the
requirements of the rule filing process of Section 19 of the Act as
required by Section 6.14 of the Operating Agreement have been
accomplished and, if necessary, approved by the SEC.
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    \17\ ``Substituted Owner'' is a person admitted to all of the
rights, and except as provided in the following sentence, who
assumes all of the obligations, of an Owner who has made an
assignment of shares in accordance with Section 6.4 of the Operating
Agreement. Such obligations shall not include any obligation of the
assignor to return to CBSX LLC or pay to a creditor, in accordance
with Section 3.4 of the Operating Agreement, all or any part of a
distribution that previously was made to the assignor. See Section
6.5 of the Operating Agreement.
---------------------------------------------------------------------------

    Section 6.7 of the Operating Agreement provides that no transfer or
assignment of any shares may be made if, in the written opinion of
counsel for CBSX LLC: (1) Such transfer or assignment, together with
all other transfers and assignments of shares within the preceding
twelve months, would result in a termination of CBSX LLC for purposes
of Internal Revenue Code Sec.  708 or any comparable provision then in
effect; (2) such transfer or assignment would violate the Securities
Act of 1933, as amended, or applicable state securities or Blue Sky
laws, or any other applicable provision of law in any respect; or (3)
such transfer or assignment would cause CBSX LLC to be treated as an
association taxable as a corporation rather than as a partnership for
federal, state or local income tax purposes.

Ownership/Voting Limitations

    Section 6.12 of the Operating Agreement contains ownership
concentration limitations. Specifically, Section 6.12(a) of the
Operating Agreement provides that no person (other than CBOE), either
alone or together with its Affiliates, at any time, may be an Owner,
directly or indirectly, of record or beneficially, of an aggregate
amount of Shares that would result in a greater than twenty percent
(20%) Percentage Interest in CBSX LLC (the ``Concentration
Limitation''). Section 6.12(b) of the Operating Agreement states that
the Concentration Limitation shall apply to each person (other than
CBOE) unless and until: (i) Such person shall have delivered to the
Board a notice in writing, not less than 45 days (or such shorter
period as the Board shall expressly consent to) prior to the
acquisition of any Shares that would cause such person (either alone or
together with its Affiliates) to exceed the Concentration Limitation,
of such person's intention to acquire such ownership; (ii) the Board
shall have, in its sole discretion, consented to expressly permit such
ownership; and (iii) such waiver shall have been filed with, and
approved by, the SEC under Section 19(b) of the Act and shall have
become effective thereunder. Section 6.12(c) of the Operating Agreement
states that in exercising its discretion under Section 6.12(b) of the
Operating Agreement, the Board shall have determined that (i) such
beneficial ownership of Shares by such person, either alone or together
with its Affiliates, will not impair the ability of CBSX LLC and the
Board to carry out their functions and responsibilities, including but
not limited to, under the Act, and is otherwise in the best interests
of CBSX LLC and its Owners; (ii) such beneficial ownership of Shares by
such person, either alone or together with its Affiliates, will not
impair the ability of the SEC to enforce the Act; (iii) neither such
person nor its Affiliates are subject to any applicable ``statutory
disqualification'' (within the meaning of Section 3(a)(39) of the Act);
and (iv) neither such person nor its Affiliates is a member of CBOE.
    Section 6.13 of the Operating Agreement provides that beginning
after SEC approval of this proposed rule change, CBSX LLC shall provide
the SEC with written notice ten days prior to the closing date of any
transaction that results in a person's Percentage Interest, alone or
together with any Affiliate, meeting or crossing the threshold level of
5% or the successive 5% Percentage Interest levels of 10% and 15%.
    Section 6.14 of the Operating Agreement provides that beginning
after SEC approval of this proposed rule change, in addition to the
notice requirement in Section 6.13 of the Operating Agreement, (i) any
transfer that results in the acquisition and holding by any person,
alone or together with any Affiliate, of an aggregate Percentage
Interest level permitted by Section 6.12 of the Operating Agreement
that meets or crosses the threshold level of 20% or any successive 5%
Percentage Interest level (i.e., 25%, 30%, etc.); and (ii) any transfer
of Series A Voting Shares to a Permitted Transferee of CBOE or any of
its Affiliates, will constitute a proposed rule change that will be
subject to the requirements of the rule filing process of Section 19 of
the Act, subject to approval by the SEC, and CBSX LLC shall make all
necessary filings with the SEC thereunder.
    Under Section 8.10 of the Operating Agreement, in the event that,
despite the Concentration Limitation prohibitions of Section 6.12 of
the Operating Agreement, an Owner of Series B Voting Shares that is
also a CBOE member owns more than 20% of the outstanding Voting Shares,
alone or together with any Affiliate of such Owner (Shares owned in
excess of 20% being referred to as ``Excess Shares''), the Owner and
its designated Directors shall have no voting rights whatsoever, nor
right to give any proxy in relation to a vote of the Owner, with
respect to the Excess Shares held by such Owner. However, irrespective
of whether such Owner or its designated Directors otherwise participate
in a meeting in person or by proxy, such Owner's Excess Shares shall be
counted for quorum purposes, and shall be counted as being voted on
each matter in the same proportions as the Voting Shares held by the
other Owners are voted (including any abstentions from voting).
    CBOE believes that these provisions will prevent any person from
exercising undue control over CBSX LLC and will

protect the ability of CBOE, as well as other investors, to exercise
its full ownership rights. By specifically imposing a voting limitation
on any person other than CBOE that owns shares which represent in the
aggregate more than 20% of the voting power then entitled to be cast,
CBOE is ensuring that it is in all cases, able to maintain proper
control over the exercise of its regulatory function in relation to
CBSX LLC, and is not subject to influence that may be adverse to its
regulatory responsibilities from any person who may own a substantial
number of the outstanding shares. This provision and other related
provisions relating to notice and rule filing requirements with respect
to any person who acquires certain Percentage Interest levels in CBSX
LLC will serve to protect the integrity of CBOE's self-regulatory
responsibilities.

Regulatory Jurisdiction Over CBSX LLC and Its Owners

    As noted earlier, CBOE will regulate CBSX as a facility of the
Exchange. CBOE has responsibility under the Act for the CBSX facility.
CBSX LLX, as owner and operator of the CBSX facility, will also be
subject to the SEC's jurisdiction. In this regard, Section 6.15(a) of
the Operating Agreement provides that the Owners acknowledge that to
the extent they are directly related to CBSX LLC's activities, the
books, records, premises, officers, directors, agents, and employees of
the Owners shall be deemed to be the books, records, premises,
officers, directors, agents, and employees of the Regulatory Services
Provider \18\ and its Affiliates for the purpose of and subject to
oversight pursuant to the Act. Section 6.15(b) of the Operating
Agreement additionally provides that the books, records, premises,
officers, directors, agents, and employees of CBSX LLC shall be deemed
to be the books, records, premises, officers, directors, agents, and
employees of CBOE for the purpose of and subject to oversight pursuant
to the Act.
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    \18\ ``Regulatory Services Provider'' means CBOE for the term of
the regulatory services to be provided under the Services Agreement.
See Section 2.1(22) of the Operating Agreement.
---------------------------------------------------------------------------

    Under Section 6.15(c) of the Operating Agreement, CBSX LLC, the
Owners and the respective officers, directors, agents, and employees of
each irrevocably submit to the jurisdiction of the U.S. federal courts,
the SEC, and CBOE, for the purposes of any suit, action or proceeding
pursuant to U.S. federal securities laws or the rules or regulations
thereunder, directly arising out of, or directly relating to, CBSX
LLC's activities, and hereby waive, and agree not to assert by way of
motion, as a defense or otherwise in any such suit, action or
proceeding, any claims that they are not personally subject to the
jurisdiction of the U.S. federal courts, SEC, or CBOE, that the suit,
action or proceeding is an inconvenient forum or that the venue of the
suit, action or proceeding is improper, or that the subject matter
thereof may not be enforced in or by such courts or agency, and, to the
fullest extent permitted by law, waive the defense or application of
any foreign secrecy or blocking statues or regulations with respect to
the Owner, its officers, directors, agents and employees, that relate
to CBSX LLC's activities or their participation therein or in
connection therewith.
    Section 6.15(d) of the Operating Agreement states that CBSX LLC and
each Owner shall take such action as is necessary, unless otherwise
provided for by law, written statement of policy, individual contract
or otherwise, to ensure that the officers, directors, agents and
employees of each consent in writing to the applicability of this
provision with respect to CBSX LLC-related activities. Consent in
writing to the provisions of this Section 16.15(d) of the Operating
Agreement extends to the confidentiality provisions in Section 15.2 of
the Operating Agreement.
    Section 13.2 of the Operating Agreement provides, in part, that
CBSX LLC's complete records and books of account shall be subject at
all times to inspection and examination by CBOE and the SEC at no
additional charge to CBOE and the SEC.
    CBOE believes that these provisions will serve as notice to Owners
that they will be subject to the jurisdiction of the U.S. federal
courts, the SEC, and CBOE. It is important that regulatory cooperation
is assured from all Owners, regardless of the Owner's business
location, country of domicile or other circumstances which the SEC may
deem to have the potential to be adverse to the regulatory
responsibilities and interests of CBOE, the SEC or the U.S. federal
courts.
    Finally, Section 15.2 of the Operating Agreement generally provides
that no Owner shall disclose any ``Confidential Information'' to any
person or use any confidential information to the detriment of CBSX LLC
or its Owners or for its own benefit or the benefit of others, except
with the consent of the Board or as required by law or as requested by
any governmental or regulatory authority (provided that such Owner
shall notify the Board promptly of any request for information before
disclosing it, if practicable and permitted by applicable law), and
other than with respect to CBOE's communications with the SEC with
respect to the conduct of CBSX LLC's business. Section 15.2 of the
Operating Agreement further provides that nothing in the Operating
Agreement shall be interpreted to limit or impede the rights of the SEC
or CBOE to access and examine any Confidential Information pursuant to
the U.S. federal securities laws and the rules thereunder, or to limit
or impede the ability of an Owner or an officer, director, agent or
employee of an Owner to disclose any Confidential Information to the
SEC or CBOE.

Proposed New Rule 3.32

    CBOE proposes to adopt a new Rule 3.32--Ownership Concentration and
Affiliation Limitation, as requested by the SEC staff.\19\ Paragraph
(a) of Rule 3.32 sets forth the ``Concentration Limitation'' applicable
to CBSX LLC, and specifically states that for as long as CBSX LLC
operates as a facility of the Exchange, no member of the Exchange,
either alone or together with its Affiliates, at any time, may own,
directly or indirectly, of record or beneficially, an aggregate amount
of Shares that would result in a greater than twenty percent (20%)
Percentage Interest in CBSX LLC.\20\ In the event a member
inadvertently violates the ``Concentration Limitation,'' Paragraph (c)
of Rule 3.32 provides that the member shall have 180 days to cure the
inadvertent violation. In the event the violation is not cured during
such time, the member shall have all trading rights and privileges
suspended on CBSX, and shall also be subject to any appropriate
disciplinary action, including action for the failure of such member to
enter into the CBSX LLC Operating Agreement.
---------------------------------------------------------------------------

    \19\ CBOE notes that Rule 3.32 is similar to ISE Rule 312, and
Article 9 Section 12 of the Boston Stock Exchange Constitution.
    \20\ For purposes of this paragraph (a), and unless the context
otherwise requires, the terms ``Affiliate,'' ``Share,'' and
``Percentage Interest'' shall have the same meaning specified in the
CBSX LLC Operating Agreement.
---------------------------------------------------------------------------

    Paragraph (b) of Rule 3.32 provides that without prior SEC
approval, the Exchange or any entity with which it is affiliated shall
not directly acquire or maintain an ownership interest in an Exchange
member. In addition, without prior SEC approval, no Exchange member
shall be or become affiliated with (i) the Exchange or (ii) any
affiliate of the Exchange. Paragraph (b) of Rule 3.32 also states that
nothing therein shall prohibit a member from acquiring or holding an
equity interest in CBSX

LLC that is permitted by the ``Concentration Limitation'' or from being
affiliated with OneChicago, LLC, provided that the Exchange's
proportionate share of OneChicago, LLC's gross revenues does not exceed
5% of the Exchange's gross revenues.\21\
---------------------------------------------------------------------------

    \21\ See Amendment No. 1. OneChicago, LLC is a joint venture of
Interactive Brokers Group, LLC, CBOE, the Chicago Mercantile
Exchange, and the Chicago Board of Trade. It is an electronic
security futures exchange that trades futures on individual stocks,
narrow-based indexes and ETFs.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations under the Act applicable to a
national securities exchange and, in particular, the requirements of
Section 6(b) of the Act. Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) Act \22\
requirements that the rules of an exchange be designed to promote just
and equitable principles of trade, to prevent fraudulent and
manipulative acts and, in general, to protect investors and the public
interest.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 CBOE 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_ADDRESS>Please include

File Number SR-CBOE-2006-110 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2006-110. 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. Copies of the filing
also will be available for inspection and copying at the principal
office of the Exchange. 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-2006-110 and should be submitted on or before February 22,
2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1595 Filed 1-31-07; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register: June 2, 2009 (Volume 74, Number 104)]
[Notices]
[Page 26445-26447]
[DOCID:fr02jn09-113]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59983; File No. SR-BX-2009-027]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Extending
the Effective Date of the Rule Governing Exchange's Directed Order
Process on the Boston Options Exchange

May 27, 2009.
    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 May 21, 2009, NASDAQ OMX BX, Inc. (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which items have been
prepared by the Exchange. The Exchange has designated the proposed rule
change as a ``non-controversial'' rule change pursuant to Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which
renders the proposal effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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

    The Exchange proposes to extend the effective date of the amended
rule governing the Exchange's Directed Order Process on the Boston
Options Exchange (``BOX'') from May 29, 2009 to November 30, 2009. The
text of the proposed rule change is available from the principal office
of the Exchange, at the Commission's Public Reference Room and also on
the Exchange's Internet Web site at http://
nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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 and
discussed any comments it received on the proposed rule change. The
text of these 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
Statutory Basis for the Proposed Rule Change

1. Purpose
    On March 14, 2006, the Exchange proposed an amendment to the BOX
Rules governing the Directed Order \5\ process on BOX.\6\ The Rules
were amended to clearly state that the BOX Trading Host identifies to
an Executing Participant (``EP'') the identity of the firm entering a
Directed Order. The amended rule was to be effective until June 30,
2006, (``Pilot Program'') while the Securities and Exchange Commission
(``Commission'') considered a corresponding Exchange proposal \7\ to
amend its rules to permit EPs to choose the firms from whom they will
accept Directed Orders, while providing complete anonymity of the firm
entering a Directed Order.
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    \5\ Capitalized terms not otherwise defined herein shall have
the meanings prescribed within the BOX Rules.
    \6\ See Securities Exchange Act Release No. 53516 (March 20,
2006), 71 FR 15232 (March 27, 2006) (SR-BSE-2006-14).
    \7\ See Securities Exchange Act Release No. 53357 (February 23,
2006), 71 FR 10730 (March 2, 2006) (SR-BSE-2005-52).
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    On June 20, 2006, the Exchange proposed extending the effective
date of the rule governing its Directed Order process on BOX from June
30, 2006 to September 30, 2006,\8\ while the Commission continued to
consider the corresponding Exchange proposal.
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    \8\ See Securities Exchange Act Release No. 54082 (June 30,
2006), 71 FR 38913 (July 10, 2006) (SR-BSE-2006-29).
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    On September 11, 2006, January 16, 2007, July 2, 2007, January 18,
2008 and January 26, 2009 the Exchange proposed extending the effective
date of the amended rule governing the Directed Order process on BOX
from September 30, 2006 until January 31, 2007,\9\ from January 31,
2007 until July 31, 2007,\10\ from July 31, 2007 until January 31,
2008,\11\ from January 31, 2008 until January 31, 2009,\12\ and from
January

31, 2009 until May 29, 2009,\13\ respectively, while the Commission
considered the corresponding Exchange proposal to amend the BOX Rules
to permit EPs to choose the firms from whom they will accept Directed
Orders, while providing complete anonymity of the firm entering a
Directed Order.
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    \9\ See Securities Exchange Act Release No. 54469 (September 19,
2006), 71 FR 56201 (September 26, 2006) (SR-BSE-2006-38).
    \10\ See Securities Exchange Act Release No. 55139 (January 19,
2007), 72 FR 3448 (January 25, 2007) (SR-BSE-2007-01).
    \11\ See Securities Exchange Act Release No. 56014 (July 5,
2007), 72 FR 38104 (July 12, 2007) (SR-BSE-2007-31).
    \12\ See Securities Exchange Act Release No. 57195 (January 24,
2008), 73 FR 5610 (January 30, 2008) (SR-BSE-2008-04).
    \13\ See Securities Exchange Act Release No. 59311 (January 28,
2009), 74 FR 6071 (February 4, 2009) (SR-BX-2009-007).
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    This filing from the Exchange again proposes extending the
effective date of the amended rule governing its Directed Order process
on BOX, from May 29, 2009 to November 30, 2009.\14\ In the event the
Commission reaches a decision with respect to the corresponding
Exchange proposal to amend the BOX Rules before November 30, 2009, the
amended rule governing the Directed Order process on the BOX will cease
to be effective at the time of that decision.
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    \14\ In the event that the issue of anonymity in the Directed
Order process is not resolved by November 30, 2009 the Exchange will
consider whether to submit another filing under Rule 19b-4(f)(6)
extending this rule and system process.
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2. Statutory Basis
    The amended rule is designed to clarify the information contained
in a Directed Order. This proposed rule filing seeks to extend the
amended rule's effectiveness from May 29, 2009 to November 30, 2009.
This extension will afford the Commission the necessary time to
consider the Exchange's corresponding proposal to amend the BOX rule to
permit EPs to choose the firms from whom they will accept Directed
Orders while providing complete anonymity of the firm entering a
Directed Order. Accordingly, the Exchange believes that the proposal is
consistent with the requirements of Section 6(b) of the Act,\15\ in
general, and Section 6(b)(5) of the Act,\16\ in particular, in that it
is designed to foster cooperation and coordination with persons engaged
in regulating, clearing, settling, processing information with respect
to, and facilitating transactions in securities, to remove impediments
to and perfect the mechanism for a free and open market and a national
market system and, in general, to protect investors and the public
interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 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 will
result in any burden on competition that is 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 has neither solicited nor received comments on the
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \17\ of the Act and Rule 19b-4(f)(6)
thereunder.\18\ As required under Rule 19b-4(f)(6)(iii),\19\ the
Exchange provided the Commission with written notice of its intent to
file the proposed rule change, along with a brief description and text
of the proposed rule change, at least five business days prior to the
date of the filing of the proposed rule change.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally
may not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange requests that the
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii),\22\ which would make the rule change effective and
operative upon filing. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because such waiver would continue to conform the BOX
rules to BOX's current practice and clarify that Directed Orders on BOX
are not anonymous without interruption.\23\ Accordingly, the Commission
designates the proposed rule change operative upon filing with the
Commission.
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ Id.
    \23\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of such proposed rule
change, 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.

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_ADDRESS>Please include
File Number SR-BX-2009-027 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2009-027. 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. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. 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-BX-2009-027
and should be submitted on or before June 23, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
Florence E. Harmon,
Deputy Secretary.
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    \24\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-12718 Filed 6-1-09; 8:45 am]

BILLING CODE 8010-01-P