81 FR 46723 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change Relating to Senior Management Authority
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 137 (July 18, 2016)
Federal Register Volume 81, Issue 137 (July 18, 2016)
| Page Range | 46723-46724 | |
| FR Document | 2016-16853 |
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)] [Notices] [Pages 46723-46724] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16853] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78293; File No. SR-CBOE-2016-047] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change Relating to Senior Management Authority July 12, 2016. I. Introduction On May 23, 2016, Chicago Board Options Exchange, Incorporated (``CBOE'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend its Bylaws and Rules with respect to delegations of certain authorities to senior management. The proposed rule change was published for comment in the Federal Register on June 7, 2016.\3\ The Commission received no comments on the proposal. This order approves the proposed rule change. --------------------------------------------------------------------------- \9\ 17 CFR 200.30-3(a)(12). \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 77962 (June 1, 2016), 81 FR 36641 (June 7, 2016) (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change \4\ --------------------------------------------------------------------------- \4\ A more detailed description of the proposed rule change appears in the Notice. See id. --------------------------------------------------------------------------- The Exchange proposes to update references to senior management contained in its Bylaws and Rules to more accurately reflect roles and responsibilities within its current senior management structure. The Exchange notes that historically the CBOE Chairman of the Board also held the title of Chief Executive Officer (``CEO''). Currently, however, the titles of Chairman of Board, CEO, and President are held by three different individuals. As such, the Exchange proposes to amend its rules relating to authorities delegated to senior management to more accurately reflect the current senior management structure. A. References to Chairman of the Board First, the Exchange proposes to amend Rule 2.15 (Divisions of Exchange), Rule 4.10 (Other Restrictions on Trading Permit Holders), Rule 6.17 (Authority to Take Action Under Emergency Conditions), Rule 10.2 (Contracts of Suspended Trading Permit Holders), and Rule 16.1 (Imposition of Suspension) to eliminate references to ``Chairman of the Board'' and replace those references with ``Chief Executive Officer.'' \5\ The Exchange notes that the CEO's responsibility is that of general charge and supervision of the business of the Corporation, 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 by the Board.\6\ The Exchange believes the responsibilities currently delegated to the Chairman of the Board under Rules 2.15, 4.10, 6.17, 10.2 and 16.1 pertain to the general charge and supervision of the Exchange's business and therefore fall within the scope of the CEO's stated responsibilities, instead of the Chairman of the Board's.\7\ --------------------------------------------------------------------------- \5\ See Notice, supra note 3, at 36644. \6\ See id.; see also Sections 3.6 and 5.2 of the CBOE Bylaws. \7\ See Notice, supra note 3, at 36644. --------------------------------------------------------------------------- B. Office of the Chairman Second, the Exchange proposes to eliminate the term ``Office of the Chairman'' (``OOC'') in Rule 4.10 (Other Restrictions on Trading Permit Holders) and Rule 18.31 (Awards) and replace these references with ``Chief Executive Officer or President.'' \8\ The Exchange notes that historically, the OOC was considered to be the management committee of the Exchange and consisted of the Chairman of the Board (who at the time was also the CEO), the Vice-Chairman (which role no longer exists) and the President.\9\ As the Exchange's senior management structure has since changed, the Exchange proposes to eliminate the references to the OOC in its rules. In its place, the Exchange proposes that the powers and responsibilities delegated to the OOC as a whole will now be delegated to either the CEO or the President. The Exchange believes the authorities delegated in Rules 4.10 and 18.31 fall more squarely within the scope of the CEO's or President's roles and responsibilities.\10\ --------------------------------------------------------------------------- \8\ See id. \9\ See id. \10\ See id. --------------------------------------------------------------------------- Third, the Exchange proposes to eliminate the reference to the OOC in Section 6.1 (Advisory Board) of the Exchange's Bylaws and replace it with a reference to ``management.'' \11\ 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 provides that the Advisory Board shall advise the Board and ``management'' regarding matters of interest to TPHs.\12\ In order to conform the language in Section 6.1 to the Advisory Board Charter, the Exchange proposes to replace the reference to the OOC with management.\13\ --------------------------------------------------------------------------- \11\ See id. \12\ See id. \13\ See id. Additionally, the title of the Bylaws will be changed to Seventh Amended and Restated Bylaws of CBOE. See id. --------------------------------------------------------------------------- C. Designee of the President Last, the Exchange proposes to amend Rules 4.14 (Liquidation of Positions) and 6.20 (Admission to and Conduct on the Trading Floor; Trading Permit Holder Education) to provide that in addition to the President, a designee of the President may act pursuant to the authorities delegated by those Rules.\14\ The Exchange notes that allowing such authorities to also be delegated to a designee of the President provides additional flexibility and certainty that if the President were unavailable, an alternate Exchange official could carry out the designated responsibilities of the President if needed.\15\ --------------------------------------------------------------------------- \14\ See id. \15\ See Notice, supra note 3, at 36645. --------------------------------------------------------------------------- III. Discussion and Commission Findings The Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\16\ Specifically, the Commission believes the proposed rule change is consistent with the Section 6(b)(5) \17\ 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 [[Page 46724]] system, and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b). \17\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- In particular, the Commission believes the proposed rule change will remove impediments to, and perfect the mechanism of a free and open market and a national market system, and, in general, will protect investors and the public interest by updating the delegation of authority to senior management under certain of the Exchange's Rules, which should facilitate the Exchange's ability to operate and carry out its self-regulatory responsibilities. In particular, the proposed rule changes to amend Rules 2.15, 4.10, 6.17, 10.2, and 16.1 to replace the references to the Chairman of the Board with the CEO should update and clarify which Exchange official is vested with the authorities established in those rules. The Exchange represents that while historically the Chairman of the Board also held the title of CEO, currently, the two titles are held by different individuals.\18\ The Exchange Bylaws confer different responsibilities on the Chairman of the Board and the CEO.\19\ These proposed rule changes will ensure that the authorities delegated pursuant to Rules 2.15, 4.10, 6.17, 10.2, and 16.1 are consistent with the roles and responsibilities established in the Bylaws. --------------------------------------------------------------------------- \18\ See Notice, supra note 3, at 36644. \19\ See id. --------------------------------------------------------------------------- Similarly, the proposed rule changes to amend Rules 4.10 and 18.31 and Section 6.1 of the Bylaws to remove references to the OOC will reduce confusion by eliminating references to a term the Exchange believes is antiquated. The Exchange notes that historically the OOC consisted of the Chairman of the Board (who also was the CEO), the Vice-Chairman, and the President.\20\ Currently, however, the Chairman of the Board no longer holds the title of CEO and as such does not bear responsibility for the CEO's functions.\21\ In addition, the Exchange has eliminated the role of Vice-Chairman.\22\ As such, the proposed rule changes to replace the references to the OOC in Rules 4.10 and 18.31 with references to the CEO or President will remove an outdated term, ensure that delegated authorities are consistent with the roles and responsibilities delineated in the Bylaws, and will clarify that the authorities in those rules are delegated solely to the CEO or President. --------------------------------------------------------------------------- \20\ See id. \21\ See id. \22\ See id. --------------------------------------------------------------------------- Likewise, the Exchange's proposal to eliminate the reference to the OOC and replace it with a reference to management in Section 6.1. of the Exchange's Bylaws will alleviate confusion regarding the responsibilities of the Advisory Board. The Exchange notes that the Advisory Board's Charter provides that the Advisory Board shall advise the Board and ``management'' regarding matters of interest to TPHs.\23\ Replacing the term OOC with management will ensure that the Exchange's Bylaws conform to the Advisory Board Charter, thereby reducing uncertainty about the responsibilities of the Advisory Board. --------------------------------------------------------------------------- \23\ See id. --------------------------------------------------------------------------- Lastly, the proposed changes to Rules 4.14 and 6.20 will provide the Exchange with additional flexibility should the President be unavailable and thus unable to carry out the authorities delegated in those rules. The Commission believes that authorizing the President to designate an appropriately qualified alternate Exchange official to perform the responsibilities of the President will clarify the appropriate officials authorized to carry out certain duties should the President be unavailable. Such clarification should perfect the mechanism of a free and open market and protect investors and the public interest by eliminating potential uncertainty regarding the appropriate individual to carry out certain Exchange authorities in the absence of the President, which should enable the Exchange to continue operations with minimal disruption. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\24\ that the proposed rule change (SR-CBOE-2016-047) be, and it hereby is, approved. --------------------------------------------------------------------------- \24\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-16853 Filed 7-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46723
For the Commission, by the Division of A. References to Chairman of the Board Section 6.1 (Advisory Board) of the
Trading and Markets, pursuant to delegated Exchange’s Bylaws and replace it with
authority.9 First, the Exchange proposes to
amend Rule 2.15 (Divisions of a reference to ‘‘management.’’ 11 Section
Robert W. Errett, 6.1 currently provides that the Board
Exchange), Rule 4.10 (Other Restrictions
Deputy Secretary. on Trading Permit Holders), Rule 6.17 will establish an Advisory Board which
[FR Doc. 2016–16852 Filed 7–15–16; 8:45 am] (Authority to Take Action Under shall advise the Board and the Office of
BILLING CODE 8011–01–P Emergency Conditions), Rule 10.2 the Chairman regarding matters of
(Contracts of Suspended Trading Permit interest to Trading Permit Holders
Holders), and Rule 16.1 (Imposition of (‘‘TPHs’’). The Exchange notes that the
SECURITIES AND EXCHANGE Suspension) to eliminate references to Advisory Board’s Charter provides that
COMMISSION ‘‘Chairman of the Board’’ and replace the Advisory Board shall advise the
those references with ‘‘Chief Executive Board and ‘‘management’’ regarding
[Release No. 34–78293; File No. SR–CBOE– Officer.’’ 5 The Exchange notes that the matters of interest to TPHs.12 In order to
2016–047] CEO’s responsibility is that of general conform the language in Section 6.1 to
charge and supervision of the business the Advisory Board Charter, the
Self-Regulatory Organizations; Exchange proposes to replace the
of the Corporation, whereas the
Chicago Board Options Exchange, reference to the OOC with
Chairman of the Board’s responsibility
Incorporated; Order Approving a management.13
is that of the presiding officer at all
Proposed Rule Change Relating to
meetings of the Board and stockholders, C. Designee of the President
Senior Management Authority
as well as of other powers and duties as
July 12, 2016. are delegated by the Board.6 The Last, the Exchange proposes to amend
Exchange believes the responsibilities Rules 4.14 (Liquidation of Positions)
I. Introduction currently delegated to the Chairman of and 6.20 (Admission to and Conduct on
On May 23, 2016, Chicago Board the Board under Rules 2.15, 4.10, 6.17, the Trading Floor; Trading Permit
Options Exchange, Incorporated 10.2 and 16.1 pertain to the general Holder Education) to provide that in
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the charge and supervision of the addition to the President, a designee of
Securities and Exchange Commission Exchange’s business and therefore fall the President may act pursuant to the
(‘‘Commission’’), pursuant to Section within the scope of the CEO’s stated authorities delegated by those Rules.14
19(b)(1) of the Securities Exchange Act responsibilities, instead of the Chairman The Exchange notes that allowing such
of 1934 (‘‘Act’’) 1 and Rule 19b–4 of the Board’s.7 authorities to also be delegated to a
thereunder,2 a proposed rule change to designee of the President provides
B. Office of the Chairman additional flexibility and certainty that
amend its Bylaws and Rules with
respect to delegations of certain Second, the Exchange proposes to if the President were unavailable, an
authorities to senior management. The eliminate the term ‘‘Office of the alternate Exchange official could carry
proposed rule change was published for Chairman’’ (‘‘OOC’’) in Rule 4.10 (Other out the designated responsibilities of the
comment in the Federal Register on Restrictions on Trading Permit Holders) President if needed.15
June 7, 2016.3 The Commission received and Rule 18.31 (Awards) and replace
III. Discussion and Commission
no comments on the proposal. This these references with ‘‘Chief Executive
Findings
order approves the proposed rule Officer or President.’’ 8 The Exchange
change. notes that historically, the OOC was The Commission finds that the
considered to be the management proposed rule change is consistent with
II. Description of the Proposed Rule committee of the Exchange and the Act and the rules and regulations
Change 4 consisted of the Chairman of the Board thereunder applicable to the Exchange
The Exchange proposes to update (who at the time was also the CEO), the and, in particular, the requirements of
references to senior management Vice-Chairman (which role no longer Section 6(b) of the Act.16 Specifically,
contained in its Bylaws and Rules to exists) and the President.9 As the the Commission believes the proposed
more accurately reflect roles and Exchange’s senior management rule change is consistent with the
responsibilities within its current senior structure has since changed, the Section 6(b)(5) 17 requirements that the
management structure. The Exchange Exchange proposes to eliminate the rules of an exchange be designed to
notes that historically the CBOE references to the OOC in its rules. In its prevent fraudulent and manipulative
Chairman of the Board also held the title place, the Exchange proposes that the acts and practices, to promote just and
of Chief Executive Officer (‘‘CEO’’). powers and responsibilities delegated to equitable principles of trade, to foster
Currently, however, the titles of the OOC as a whole will now be cooperation and coordination with
Chairman of Board, CEO, and President delegated to either the CEO or the persons engaged in regulating, clearing,
are held by three different individuals. President. The Exchange believes the settling, processing information with
As such, the Exchange proposes to authorities delegated in Rules 4.10 and respect to, and facilitating transactions
amend its rules relating to authorities 18.31 fall more squarely within the in securities, to remove impediments to
delegated to senior management to more scope of the CEO’s or President’s roles and perfect the mechanism of a free and
accurately reflect the current senior and responsibilities.10 open market and a national market
management structure. Third, the Exchange proposes to
asabaliauskas on DSK3SPTVN1PROD with NOTICES
eliminate the reference to the OOC in 11 See id.
9 17 12 See id.
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1). 5 See
Notice, supra note 3, at 36644. 13 See id. Additionally, the title of the Bylaws will
2 17 CFR 240.19b–4. 6 See
id.; see also Sections 3.6 and 5.2 of the be changed to Seventh Amended and Restated
3 See Securities Exchange Act Release No. 77962 CBOE Bylaws. Bylaws of CBOE. See id.
7 See Notice, supra note 3, at 36644. 14 See id.
(June 1, 2016), 81 FR 36641 (June 7, 2016)
8 See id. 15 See Notice, supra note 3, at 36645.
(‘‘Notice’’).
4 A more detailed description of the proposed 9 See id. 16 15 U.S.C. 78f(b).
rule change appears in the Notice. See id. 10 See id. 17 15 U.S.C. 78f(b)(5).
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![46724 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices
system, and, in general, to protect replace it with a reference to SECURITIES AND EXCHANGE
investors and the public interest. management in Section 6.1. of the COMMISSION
In particular, the Commission Exchange’s Bylaws will alleviate
believes the proposed rule change will [Release No. 34–78290; File No. SR–
confusion regarding the responsibilities NASDAQ–2016–071]
remove impediments to, and perfect the of the Advisory Board. The Exchange
mechanism of a free and open market notes that the Advisory Board’s Charter Self-Regulatory Organizations; The
and a national market system, and, in provides that the Advisory Board shall NASDAQ Stock Market LLC; Notice of
general, will protect investors and the advise the Board and ‘‘management’’ Designation of a Longer Period for
public interest by updating the Commission Action on Proposed Rule
regarding matters of interest to TPHs.23
delegation of authority to senior Change To List and Trade Shares of
Replacing the term OOC with
management under certain of the the First Trust CEF Income
Exchange’s Rules, which should management will ensure that the
Exchange’s Bylaws conform to the Opportunity ETF and the First Trust
facilitate the Exchange’s ability to Municipal CEF Income Opportunity
operate and carry out its self-regulatory Advisory Board Charter, thereby
reducing uncertainty about the ETF
responsibilities. In particular, the
proposed rule changes to amend Rules responsibilities of the Advisory Board. July 12, 2016.
2.15, 4.10, 6.17, 10.2, and 16.1 to Lastly, the proposed changes to Rules On May 10, 2016, The NASDAQ
replace the references to the Chairman 4.14 and 6.20 will provide the Exchange Stock Market LLC (‘‘Exchange’’) filed
of the Board with the CEO should with additional flexibility should the with the Securities and Exchange
update and clarify which Exchange President be unavailable and thus Commission (‘‘Commission’’), pursuant
official is vested with the authorities unable to carry out the authorities to section 19(b)(1) of the Securities
established in those rules. The Exchange delegated in those rules. The Exchange Act of 1934 (‘‘Act’’) 1 and Rule
represents that while historically the Commission believes that authorizing 19b–4 thereunder,2 a proposed rule
Chairman of the Board also held the title change to list and trade shares of the
the President to designate an
of CEO, currently, the two titles are held First Trust CEF Income Opportunity
appropriately qualified alternate
by different individuals.18 The ETF and the First Trust Municipal CEF
Exchange official to perform the
Exchange Bylaws confer different Income Opportunity ETF under Nasdaq
responsibilities of the President will Rule 5735, which governs the listing
responsibilities on the Chairman of the
clarify the appropriate officials and trading of Managed Fund Shares.
Board and the CEO.19 These proposed
rule changes will ensure that the authorized to carry out certain duties On May 20, 2016, the Exchange filed
authorities delegated pursuant to Rules should the President be unavailable. Amendment No. 1 to the proposed rule
2.15, 4.10, 6.17, 10.2, and 16.1 are Such clarification should perfect the change. The proposed rule change was
consistent with the roles and mechanism of a free and open market published for comment in the Federal
responsibilities established in the and protect investors and the public Register on May 31, 2016.3 The
Bylaws. interest by eliminating potential Commission has received one comment
Similarly, the proposed rule changes uncertainty regarding the appropriate letter on the proposed rule change.4
to amend Rules 4.10 and 18.31 and individual to carry out certain Exchange Section 19(b)(2) of the Act 5 provides
Section 6.1 of the Bylaws to remove authorities in the absence of the that, within 45 days of the publication
references to the OOC will reduce President, which should enable the of notice of the filing of a proposed rule
confusion by eliminating references to a Exchange to continue operations with change, or within such longer period up
term the Exchange believes is minimal disruption. to 90 days as the Commission may
antiquated. The Exchange notes that designate if it finds such longer period
historically the OOC consisted of the IV. Conclusion to be appropriate and publishes its
Chairman of the Board (who also was reasons for so finding or as to which the
It is therefore ordered, pursuant to
the CEO), the Vice-Chairman, and the self-regulatory organization consents,
Section 19(b)(2) of the Act,24 that the
President.20 Currently, however, the the Commission shall either approve the
proposed rule change (SR–CBOE–2016– proposed rule change, disapprove the
Chairman of the Board no longer holds
047) be, and it hereby is, approved. proposed rule change, or institute
the title of CEO and as such does not
bear responsibility for the CEO’s For the Commission, by the Division of proceedings to determine whether the
functions.21 In addition, the Exchange Trading and Markets, pursuant to delegated proposed rule change should be
has eliminated the role of Vice- authority.25 disapproved. The Commission is
Chairman.22 As such, the proposed rule Robert W. Errett, extending this 45-day time period. The
changes to replace the references to the Deputy Secretary. Commission finds that it is appropriate
OOC in Rules 4.10 and 18.31 with [FR Doc. 2016–16853 Filed 7–15–16; 8:45 am]
to designate a longer period within
references to the CEO or President will which to take action on the proposed
BILLING CODE 8011–01–P
remove an outdated term, ensure that rule change so that it has sufficient time
delegated authorities are consistent with to consider the proposed rule change.
the roles and responsibilities delineated Accordingly, the Commission,
in the Bylaws, and will clarify that the pursuant to section 19(b)(2) of the Act,6
authorities in those rules are delegated
asabaliauskas on DSK3SPTVN1PROD with NOTICES
1 15 U.S.C. 78s(b)(1).
solely to the CEO or President.
2 17 CFR 240.19b–4.
Likewise, the Exchange’s proposal to
3 See Securities Exchange Act Release No. 77895
eliminate the reference to the OOC and (May 24, 2016), 81 FR 34407.
4 See letter from Stephanie Price, dated May 31,
18 See Notice, supra note 3, at 36644. 2016. This comment letter is available at: https://
19 See id. www.sec.gov/comments/sr-nasdaq-2016-071/
20 See id. 23 See id. nasdaq2016071-1.htm.
21 See id. 24 15 U.S.C. 78s(b)(2). 5 15 U.S.C. 78s(b)(2).
22 See id. 25 17 CFR 200.30–3(a)(12). 6 Id.
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Document Created: 2016-07-16 02:28:18
Document Modified: 2016-07-16 02:28:18
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 81 FR 46723 |
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