81 FR 36639 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Relating to Senior Management Authority

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 109 (June 7, 2016)

[Federal Register Volume 81, Number 109 (Tuesday, June 7, 2016)]
[Notices]
[Pages 36639-36641]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13316]



[[Page 36639]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77961; File No. SR-C2-2016-005]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing of a Proposed Rule Change Relating to Senior 
Management Authority

June 1, 2016.
    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 23, 2016, C2 Options Exchange, Incorporated (the ``Exchange'' or 
``C2'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange seeks to amend its Bylaws and Rules with respect to 
delegations of certain authorities to senior management. The text of 
the proposed rule change is provided below.
    (additions are italicized; deletions are [bracketed])

[FOURTH] FIFTH AMENDED AND RESTATED

BYLAWS OF

C2 OPTIONS EXCHANGE, INCORPORATED

* * * * *

ARTICLE VI Advisory Board

    Section 6.1. Advisory Board.
    The Board will establish an Advisory Board which shall advise the 
Board and [the Office of the Chairman] management regarding matters of 
interest to Trading Permit Holders. It shall consist of such number of 
members as set by the Board from time to time, including at least two 
members who are Trading Permit Holders or persons associated with 
Trading Permit Holders. The Chief Executive Officer, or his or her 
designee, shall be the Chairman of the Advisory Board. The members of 
the Advisory Board shall be recommended by the Nominating and 
Governance Committee for approval by the Board. There shall be a 
Trading Permit Holders Subcommittee of the Advisory Board consisting of 
all members of the Advisory Board who are Trading Permit Holders or 
persons associated with Trading Permit Holders, which shall act as the 
Representative Director Nominating Body if and to the extent required 
by these Bylaws.
* * * * *

C2 Options Exchange, Incorporated



    Rules
* * * * *

Table of Contents

* * * * *
    Chapter 16 Summary Suspension [by Chairman of the Board or Vice 
Chairman of the Board]
* * * * *

Rule 6.33. Authority to Take Action Under Emergency Conditions

    The [Chairman of the Board] Chief Executive Officer, the President 
or such other person or persons as may be designated by the Board shall 
have the power to halt or suspend trading in some or all securities 
traded on the Exchange, to close some or all Exchange facilities, to 
determine the duration of any such halt, suspension or closing, to take 
one or more of the actions permitted to be taken by any person or body 
of the Exchange under Exchange rules, or to take any other action 
deemed to be necessary or appropriate for the maintenance of a fair and 
orderly market or the protection of investors, or otherwise in the 
public interest, due to emergency conditions or extraordinary 
circumstances, such as (1) actual or threatened physical danger, severe 
climatic conditions, natural disaster, civil unrest, terrorism, acts of 
war, or loss or interruption of facilities utilized by the Exchange, or 
(2) a request by a governmental agency or official, or (3) a period of 
mourning or recognition for a person or event. The person taking the 
action shall notify the Board of actions taken pursuant to this Rule, 
except for a period of mourning or recognition for a person or event, 
as soon thereafter as is feasible.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's Web site (http://www.c2exchange.com/Legal/ Legal/), at the 
Exchange's Office of the Secretary, 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Bylaws and Rules as it relates 
to certain references to senior management. The Exchange notes that 
historically, the C2 Chairman of the Board also held the title of Chief 
Executive Officer (``CEO''). Currently, however, the roles of Chairman 
of the Board, CEO, and President are now occupied by three different 
individuals. As such, the Exchange has conducted a review of its rules 
relating to the authorities delegated to senior management and seeks to 
make changes to its rules to more accurately reflect its senior 
management structure.
    First, the Exchange proposes to amend section 6.1. (Advisory 
Board), of the Exchange's Bylaws. Section 6.1 currently provides that 
the Board will establish an Advisory Board which shall advise the Board 
and the Office of the Chairman regarding matters of interest to Trading 
Permit Holders (``TPHs''). The Exchange notes that the Advisory Board's 
Charter however, provides that the Advisory Board shall advise the 
Board and ``management'' regarding matters of interest to TPHs. In 
order to conform the language in section 6.1 to the Advisory Board 
Charter, the Exchange proposes to replace the reference to ``Office of 
the Chairman'' with ``management''. The Exchange believes the proposed 
change would alleviate confusion and maintain consistency between the 
Exchange's governance documents. Additionally, the title of the Bylaws 
would be changed to Fifth Amended and Restated Bylaws of C2.
    Next, the Exchange proposes to amend the title of chapter 16 in the 
C2 Rule's Table of Contents. Currently, the title of chapter 16 is 
``Summary Suspension by Chairman of the Board or

[[Page 36640]]

Vice Chairman of the Board.'' The Exchange notes that rules contained 
within CBOE chapter XVI are incorporated into C2's chapter 16. CBOE 
Chapter 16 currently provides that the Chairman of the Board or 
President may summarily suspend a TPH and limit or prohibit any person 
with respect to access to services offered by the Exchange. The 
Exchange notes however, that CBOE is concurrently proposing to amend 
its rules to provide that the CEO (rather than Chairman) or President 
may summarily suspend a TPH.\3\ Additionally, the Exchange notes that 
it no longer maintains the role of Vice Chairman of the Board. As such, 
the Exchange proposes to amend the chapter 16 title to simply state 
``Summary Suspension'' to avoid confusion and maintain clarity in the 
rules.
---------------------------------------------------------------------------

    \3\ See SR-CBOE-2016-047.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to amend Rule 6.33 (Authority to Take 
Action Under Emergency Conditions). Rule 6.33 currently provides that 
the Chairman of the Board, the President or such other person or 
persons as may be designated by the Board shall have the power to halt 
or suspend trading in some or all securities traded on the Exchange, to 
close some or all Exchange facilities, to determine the duration of any 
such halt, suspension or closing, to take one or more of the actions 
permitted to be taken by any person or body of the Exchange under 
Exchange rules, or to take any other action deemed to be necessary or 
appropriate for the maintenance of a fair and orderly market or the 
protection of investors, or otherwise in the public interest, due to 
emergency conditions or extraordinary circumstances. The Exchange notes 
that the CEO's responsibility is that of general charge and supervision 
of the business of the Corporation,\4\ whereas the Chairman of the 
Board's responsibility is that of the presiding officer at all meetings 
of the Board and stockholders, as well as of other powers and duties as 
are delegated to him or her by the Board.\5\ The Exchange believes the 
responsibilities currently delegated to the Chairman of the Board under 
Rule 6.33 pertains to the general charge and supervision of the 
Exchange's business and therefor fall within the scope of the CEO's 
stated responsibilities, instead of the Chairman's. Accordingly, the 
Exchange proposes to eliminate the reference to ``Chairman of the 
Board'' and replace with ``Chief Executive Officer.''
---------------------------------------------------------------------------

    \4\ See Section 5.2 of the Bylaws.
    \5\ See Section 3.6 of the Bylaws.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of section 6(b) of the Act.\6\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \7\ requirements that the rules of an exchange be 
designed 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, 
the Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \8\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
---------------------------------------------------------------------------

    In particular, the proposed rule changes will more accurately 
reflect the current management structure and ensure that rules relating 
to senior management authority are clear and transparent, which reduces 
confusion, thereby removing impediments to, and perfecting the 
mechanism for a free and open market and a national market system, and, 
in general, protecting investors and the public interest of market 
participants.
    In particular, the Exchange believes the proposed change to section 
6.1 of C2's Bylaws eliminates an outdated and potentially confusing 
term (i.e., Office of the Chairman) and conforms the language to the C2 
Advisory Board Charter, thereby reducing confusion, which removes 
impediments to, and perfects the mechanism for a free and open market 
and a national market system, and, in general, protects investors and 
the public interest of market participants. The Exchange believes the 
proposal to transfer the authorities under Rule 6.33 from the Chairman 
of the Board to the CEO is appropriate and protects investors and the 
public interest of market participant [sic] as those authorities relate 
to the general charge and supervision of the Exchange business, which 
responsibility is delegated to the CEO. Additionally, the Exchange 
notes that while delegation of the authority is being modified, the 
substantive practices of the Exchange will remain the same. The 
Exchange believes renaming the chapter 16 title alleviates confusion in 
light of CBOE's concurrent proposed rule change to chapter 16 and also 
in light of the fact that it currently references a role no longer used 
(i.e., Vice Chairman).

B. Self-Regulatory Organization's Statement on Burden on Competition

    C2 does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change imposes any burden on intramarket 
competition because it applies to all TPHs and is not designed to 
address any competitive issues. Additionally, as noted above, while the 
delegation of authority is being modified, the substantive practices of 
the Exchange will remain the same. C2 does not believe that the 
proposed rule change will impose any burden on intermarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed rule change merely relates to the 
delegation of authorities to senior management and only affects C2.

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 comments on the 
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove 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.

[[Page 36641]]

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 protected]. Please include 
File Number SR-C2-2016-005 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-C2-2016-005. 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 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-C2-2016-005, and should be 
submitted on or before June 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-13316 Filed 6-6-16; 8:45 am]
 BILLING CODE 8011-01-P