81 FR 46746 - Self-Regulatory Organizations; C2 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, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46746-46747]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16854]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78294; File No. SR-C2-2016-005]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Order Approving a Proposed Rule Change Relating to Senior Management 
Authority

July 12, 2016.

I. Introduction

    On May 23, 2016, C2 Options Exchange, Incorporated (``C2'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 77961 (June 1, 
2016), 81 FR 36639 (June 7, 2016) (``Notice'').
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II. Description of the Proposed Rule Change \4\
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    \4\ A more detailed description of the proposed rule change 
appears in the Notice. See id.
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    The Exchange proposes to updates 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 C2 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. Reference to Office of the Chairman

    First, the Exchange proposes to eliminate the reference to the 
Office of the Chairman in Section 6.1 (Advisory Board) of the 
Exchange's Bylaws and replace it with a reference to ``management.'' 
\5\ 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.\6\ In order to 
conform the language in Section 6.1 to the Advisory Board Charter, the 
Exchange proposes to replace the reference to the Office of the 
Chairman with management.\7\
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    \5\ See id.
    \6\ See id.
    \7\ See id. Additionally, the title of the Bylaws will be 
changed to Fifth Amended and Restated Bylaws of C2. See id.

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[[Page 46747]]

B. Title of Chapter 16 in the C2 Rule's Table of Contents

    Second, the Exchange proposes to amend the title of Chapter 16 in 
the C2 Rule's Table of Contents.\8\ Currently, the title of Chapter 16 
is ``Summary Suspension by Chairman of the Board or Vice Chairman of 
the Board.'' The Exchange notes that rules contained within CBOE 
Chapter XVI are incorporated into C2's Chapter 16.\9\ CBOE Chapter XVI 
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.\10\ 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.\11\ Additionally, the Exchange notes that it no longer 
maintains the role of Vice Chairman of the Board.\12\ 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.
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    \8\ See id.
    \9\ See id.
    \10\ See CBOE Rule 16.1.
    \11\ See Securities Exchange Act Release No. 77962 (June 1, 
2016), 81 FR 36641 (June 7, 2016) (SR-CBOE-2016-047).
    \12\ See Notice, supra note 3, at 36640.
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C. References to Chairman of the Board

    Last, the Exchange proposes to amend Rule 6.33 (Authority to Take 
Action Under Emergency Conditions) to eliminate the reference to 
``Chairman of the Board'' and replace it with ``Chief Executive 
Officer.'' 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,\13\ 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.\14\ The Exchange believes the responsibilities 
currently delegated to the Chairman of the Board under Rule 6.33 
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's.
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    \13\ See Section 5.2 of the C2 Bylaws.
    \14\ See Section 3.6 of the C2 Bylaws.
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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.\15\ Specifically, the Commission believes the proposed rule change 
is consistent with the Section 6(b)(5) \16\ 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.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    In particular, the Commission believes the proposed rule changes 
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 eliminate the reference to the Office of the Chairman 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.\17\ 
Replacing the term Office of the Chairman with the term management will 
ensure that the Exchange's Bylaws conform to the Advisory Board 
Charter, thereby reducing uncertainty about the responsibilities of the 
Advisory Board.
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    \17\ See Notice, supra note 3, at 36639.
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    The Exchange's proposal to rename the title of Chapter 16 will 
alleviate confusion as that Chapter incorporates by reference CBOE's 
Chapter XVI rules that are subject to a proposed rule change to remove 
references to the Chairman of the Board and replace them with CEO. 
Moreover, the proposed rule change will eliminate a reference to the 
Vice Chairman, a title that C2 no longer uses.
    Finally, the Exchange's proposal to amend Rule 6.33 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 that rule. 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\ The proposed rule change will ensure that 
the authority delegated pursuant to Rule 6.33 is consistent with the 
roles and responsibilities established in the Bylaws.
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    \18\ See id.
    \19\ See id. at 36640.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-C2-2016-005) be, and it 
hereby is, approved.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16854 Filed 7-15-16; 8:45 am]
 BILLING CODE 8011-01-P