Self-Regulatory Organizations; Order Granting Approval to Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval of Amendments No. 1 and 2 Thereto by the Boston Stock Exchange, Inc. Relating to the LLC Operating Agreement of the Proposed New Exchange Facility to Be Operated by the Boston Options Exchange Group LLC

Securities and Exchange Commission

(Release No. 34-49067; File No. SR-BSE-2003-19)

January 13, 2004

On October 16, 2003, the Boston Stock Exchange, Inc. ("BSE" 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 proposal to establish, through an operating agreement among its owners, a Delaware limited liability company known as the Boston Options Exchange Group LLC ("BOX LLC"). BOX LLC would operate a new options trading facility of the Exchange. On October 23, 2003, the Commission published the proposal in the Federal Register.³ The Commission received one comment on the proposal.⁴ On November 14, 2003, BSE submitted Amendment No. 1 to the proposal.⁵ On January 9, 2004, BSE submitted Amendment No. 2 to the proposal.⁶ This order approves the proposed rule change, issues notice of and solicits comment on Amendments No. 1 and 2, and approves Amendments No. 1 and 2 on an accelerated basis.

I. Description of the Proposal

A. Corporate Organization of BOX LLC

Through a series of related filings, BSE is proposing to establish a new options trading facility⁷ to be known as the Boston Options Exchange ("BOX").⁸ In this filing, BSE is seeking the Commission's approval of the operating agreement of BOX LLC (the "LLCOA"). Unlike a corporation's charter or bylaws, the LLCOA is a signed contract between the owners of BOX LLC ("unitholders").⁹ BSE has asserted that certain provisions of the LLCOA do not constitute "rules of an exchange" within the meaning of Section 3(a)(27) of the Act¹⁰ and Rule 19b 4. Accordingly, BSE did not file, and the Commission is not addressing, these provisions.

B. Current Ownership and Control of BOX LLC

Currently, there are three unitholders who have a direct controlling interest in BOX ("direct controlling parties"): Bourse de Montréal Inc. ("Bourse") (31.27%), the largest derivatives exchange in Canada; BSE (26.89%); and Interactive Brokers Group LLC ("IBG") (22.41%), a registered broker-dealer that intends to apply to be an Option Participant in the BOX facility.¹¹ None of the remaining unitholders holds more than a 5% interest in BOX LLC. There is one person that has an indirect controlling interest in BOX LLC (i.e., is an "indirect controlling party"): Mr. Thomas Peterffy, who holds a controlling interest in IBG, which has a direct controlling interest in BOX LLC. No person or entity has a controlling interest in either BSE or Bourse.

C. Changes in Ownership of BOX LLC

Section 8.1(a) of the LLCOA defines a Transfer broadly to be any disposition of, sale, assignment, exchange, participation, subparticipation, encumbrance, or other transfer of units, and provides that, except in certain limited circumstances, no Person may directly or indirectly Transfer any BOX LLC units, or any rights arising thereunder, without the prior approval of the board of directors of BOX LLC.¹² To be eligible for such approval, the proposed transferee must be: (1) of high professional and financial standing; (2) able to carry out its duties as a unitholder under the LLCOA; and (3) under no regulatory or governmental disqualification. Section 8.1(b) provides, in addition, that a Person shall be admitted to BOX only if such Person, among other things, accepts in writing the terms and provisions of the LLCOA and the BOX Board accepts it by resolution. Section 8.4(a) provides that no Transfer of BOX LLC units shall take place if such transaction is prohibited by the LLCOA or any state, federal, or provincial securities law. Section 8.4(d) provides that any Transfer of BOX LLC units that contravenes Article 8 of the LLCOA shall be void and ineffectual and shall not bind or be recognized by BOX LLC.

Section 8.4(e) of the LLCOA provides that, beginning after Commission approval of this proposed rule change, BOX LLC must provide the Commission with written notice ten days prior to the closing date of any acquisition that results in a unitholder's percentage ownership interest in BOX LLC, alone or together with any affiliate,¹³ meeting or crossing either the 5%, 10%, or 15% thresholds. Section 8.4(f) provides that any Transfer of BOX LLC units that results in the acquisition and holding by any unitholder, alone or together with any affiliate, of an interest that meets or crosses the 20% threshold or any successive 5% threshold (i.e., 25%, 30%, etc.), would trigger an amendment to the LLCOA that would constitute a proposed rule change that BSE would have to file with the Commission under Section 19(b) of the Act.¹⁴ In addition, Section 8.4(f) provides that an amendment to the LLCOA resulting from a Transfer of BOX LLC units that reduces BSE's ownership in BOX LLC to below the 20% threshold would constitute a proposed rule change under Section 19(b) of the Act.

Section 8.4(g) of the LLCOA provides for indirect changes in control of BOX LLC. Any person that acquires a controlling interest (i.e., an interest of 25% or greater) in a unitholder that holds 20% or more of the BOX LLC units would be required to agree to become a party to the LLCOA and abide by its terms.¹⁵ The amendment to the LLCOA caused by the addition of the indirect controlling party would trigger a proposed rule change that BSE would have to file with the Commission pursuant to Section 19(b) of the Act. The rights and privileges of the direct controlling party would be suspended until this proposed rule change becomes effective under the Act or until the indirect controlling party ceases to have a controlling interest in the direct controlling party.

In addition to the requirements for proposed rule changes relating to direct and indirect changes in control of BOX LLC, Section 4.3(b) of the LLCOA prohibits unitholders from entering into voting trust agreements with respect to their ownership interests in BOX LLC.

D. Commission Jurisdiction Over Owners of BOX LLC

In Section 19.6(a), each unitholder of BOX LLC acknowledges that, to the extent that they are related to BOX activities, the books, records, premises, officers, directors, agents, and employees of the unitholder shall be deemed to be the books, records, premises, officers, directors, agents, and employees of BSE for the purpose of and subject to oversight pursuant to the Act. In Section 19.6(b), each unitholder and the officers, directors, agents, and employees thereof irrevocably submit to the exclusive jurisdiction of the U.S. federal courts, the Commission, and BSE¹⁶ for the purposes of any suit, action, or proceeding pursuant to the U.S. federal securities laws and the rules or regulations thereunder, arising out of or relating to BOX activities or Section 19.6(a). Also as provided in Section 19.6(b) of the LLCOA, each unitholder and the officers, directors, agents, and employees thereof waive, and agree not to assert by way of motion, as a defense or otherwise in any such suit, action, or proceeding, any claim that they are not personally subject to the jurisdiction of the Commission; that the suit, action or proceeding is an inconvenient forum; that the venue of the suit, action, or proceeding is improper; or that the subject matter of the suit, action, or proceeding may not be enforced in or by such courts or agency.

Section 19.6(c) of the LLCOA provides that the BSE and each unitholder shall take such action as is necessary to ensure that such unitholder's officers, directors, and employees consent to the application of Section 19.6 with respect to their BOX-related activities.¹⁷ Finally, Section 19.6(c) further provides that the Bourse and the BSE shall take such action as is necessary to ensure that, with respect to their BOX-related activities, the Bourse's officer, directors, and employees consent to the communication of their "personal information" by the Bourse to the Commission and the BSE and agree to waive the protection of such "personal information" that is provided by the Act Respecting the Protection of Personal Information in the Private Sector, R.S.Q.c.P-39.1 ("Private Sector Privacy Act").¹⁸

E. Governance of BOX LLC

Section 4.2(b) of the LLCOA gives the board of directors of BOX LLC the power and responsibility to manage the business of BOX LLC, select and evaluate the performance of the Senior Executive, and establish and monitor capital and operating budgets. Section 4.1(a) provides that the board of BOX LLC will consist of between six and 13 directors. Section 4.1(b) provides that, initially, Bourse, BSE, and IBG will be entitled to designate two directors each. Moreover, for as long as BOX remains a facility of the Exchange, BSE has the right to designate at least one director. Section 4.1(c) provides that any new unitholder that acquires a prescribed percentage interest in BOX LLC also would be entitled to designate one director. Section 4.8 provides that, except as otherwise expressly provided in the LLCOA or as requested by the board, no unitholder shall take part in the day-to-day management or operation of the business or affairs of BOX LLC.

Pursuant to Section 4.1(d) of the LLCOA, a director shall be terminated by the board: (i) in the event such director has violated any provision of the LLCOA; or (ii) if the board determines that such action is necessary or appropriate in the public interest or for the protection of investors. In addition, Section 4.2(a) requires each director to comply with the federal securities laws and the rules and regulations thereunder and to cooperate with the Commission and BSE pursuant to their regulatory authority. Section 4.2(a) also requires each director to take into consideration whether his or her actions as a director would cause BOX LLC to engage in conduct that fosters and does not interfere with its ability to prevent fraudulent and manipulative acts and practices; promote just and equitable principles of trade; foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; remove impediments to and perfect the mechanism of a free and open market and a national market system; and, in general, protect investors and the public interest.

F. Regulation of BOX

BSE will operate BOX as a facility of the Exchange. Accordingly, BSE has responsibility under the Act for the BOX facility. In this regard, Sections 12.1 and 15 of the LLCOA each provide that the books, records, premises, officers, directors, agents, and employees of BOX shall be deemed to be the books, records, premises, officers, directors, agents, and employees of BSE for the purpose of and subject to oversight pursuant to the Act. Moreover, under Section 5.3 of the LLCOA, each unitholder agrees to comply with the federal securities laws and the rules and regulations thereunder; to cooperate with the Commission and BSE pursuant to their regulatory authority and the provisions of the LLCOA; and to engage in conduct that fosters and does not interfere with BOX LLC's ability to prevent fraudulent and manipulative acts and practices; promote just and equitable principles of trade; foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; remove impediments to and perfect the mechanism of a free and open market and a national market system; and, in general, protect investors and the public interest.

Section 5.9 of the LLCOA further provides that, after appropriate notice and opportunity for hearing, the board, by a two-thirds vote, including the affirmative vote of BSE and excluding the vote of the unitholder subject to sanction, may suspend or terminate a unitholder's voting privileges or ownership: (i) in the event such unitholder is subject to a statutory disqualification, as defined in Section 3(a)(39) of the Act; (ii) in the event such unitholder has violated any provision of the LLCOA or 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.

In addition, Section 4.4(a) of the LLCOA provides that BOX LLC may not take any major action unless such action is approved by a majority of the board, including the affirmative vote of all of the directors designated by BSE. A "major action" is defined in Section 4.4(b) to include, among other things, a merger or consolidation involving BOX LLC, a sale of any material portion of its assets, the dissolution or winding-up of BOX LLC, entry by BOX into any line of business other than that set forth in the LLCOA, entering into any agreement, commitment, or transaction with an affiliate of a unitholder that is not on commercially reasonable terms, and the purchase of any units of BOX LLC.

Section 16.2(a) of the LLCOA generally provides that a unitholder may not disclose any confidential information of BOX LLC to any person, except as expressly provided by the LLCOA. However, Section 16.2(b) provides exceptions for, among other things, disclosure required by the federal securities laws or in response to a request by the Commission pursuant to the Act or by the BSE. Similarly, Section 16.5 of the LLCOA provides that nothing in the LLCOA should be interpreted as to limit or impede the rights of the Commission, BSE, or BOXR to access or examine BOX Confidential Information, or to limit or impede the ability of unitholders, or their officers, directors, agents, or employees, to disclose BOX Confidential Information to the Commission, BSE, or BOXR.¹⁹

G. Ownership Restrictions on BOX Unitholders Who Are Also Options Participants

Section 8.4(h) of the LLCOA imposes a "voting collar" on any unitholder who, alone or together with an affiliate, has an interest in BOX LLC in excess of 20% and is also an Options Participant in the BOX market. The interests owned by such a unitholder in excess of 20% are deemed "excess units." No unitholder who is also an Options Participant is permitted to vote or give proxy rights to vote with respect to any excess units. However, Section 8.4(h) further provides that the excess units would be considered for quorum purposes of any meeting of the board, and the person presiding over quorum and vote matters would vote the excess units in the same proportion that the units held by the other unitholders are voted.

BSE is proposing a temporary exemption until January 1, 2014 from the voting collar provisions of Section 8.4(h) for IBG, a unitholder that is also an Options Participant. Under the second paragraph of Section 8.4(h), IBG is permitted to vote its excess units, but only with respect to any vote regarding a merger, consolidation, or dissolution of BOX LLC or any sale of all or substantially all of the assets of BOX LLC.

II. Comment Received

The Commission received one comment letter on the proposal, from the Chicago Board Options Exchange ("CBOE").²⁰ CBOE's principal concern is that BSE and its partners propose to create a new securities exchange to act as a market for the trading of standardized securities options without registering the new exchange as a national securities exchange. Moreover, CBOE questions whether "a web of undertakings and provisions embodied in various complex and apparently overlapping agreements (not all of which have been filed with the Commission) will be sufficient to assure the adequacy of regulation and of the Commission's jurisdiction over BOX and its owners," and questions "how the independence of BOX's governance will be assured" and "the conflicts between its for-profit structure and its regulatory obligations will be resolved."

In addition, CBOE criticizes the manner in which BSE presented the LLCOA to the Commission for its review under Section 19(b) of the Act, arguing that BSE should have filed the LLCOA in its entirety, rather than in redacted form. In support of that view, CBOE likens an LLCOA to the articles of incorporation of a corporation and claims that, if an entity organized as a corporation applied for registration as a national securities exchange, it would be required to provide its articles in their entirety. CBOE argues, in addition, that "the filing does not present a comprehensive description of who are the owners of BOX," noting that only the three controlling unitholders that collectively have an ownership interest of 80.67% were listed. CBOE notes that its concerns about the ownership and control of BOX LLC were "heightened by the fact that BOX's largest single owner is a non-U.S. person." CBOE also objects to redactions to the LLCOA regarding the "major actions" over which BSE had veto power, arguing that a proper analysis of BOX's governance and regulation could not be performed without the redacted information. CBOE concludes that "the idea that an applicant can pick and choose which provisions of the [LLCOA] of an exchange to submit for review is wholly inconsistent with the statutory scheme of exchange regulation provided for in the Exchange Act."

III. Discussion

A. BOX as a Facility of the Exchange

B. Changes in Control of BOX LLC

C. Regulatory Jurisdiction Over Owners of BOX LLC

D. Ownership Restrictions on BOX Option Participants

E. Accelerated Approval

IV. Solicitation of Comments

V. Conclusion

By the Commission.

Endnotes

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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. 48650 (October 17, 2003), 68 FR 60731 ("Notice").

⁴ See infra Section II.

⁵ See letter from George W. Mann, Jr., General Counsel, BSE, to Nancy Sanow, Division of Market Regulation ("Division"), Commission, dated November 13, 2003 ("Amendment No. 1"). In Amendment No. 1, BSE proposes a technical change to substitute the term "BSE" for the phrase "Regulatory Services Provider and its Affiliates."

⁶ See letter from George W. Mann, Jr., General Counsel, BSE, to Nancy Sanow, Division, Commission, dated January 9, 2004 ("Amendment No. 2"). In Amendment No. 2, BSE proposes to clarify the restrictions on the Transfer of BOX LLC units and to clarify the Commission's jurisdiction over the owners of BOX LLC.

⁷ See Section 3(a)(2) of the Act, 15 U.S.C. 78c(a)(2).

⁸ Today the Commission is approving three other BSE proposals that together establish the BOX facility. See Securities Exchange Act Release Nos. 49066 (January 13, 2004) (SR-BSE-2003-17) (establishing fee schedule for proposed BOX facility); 49065 (January 13, 2004) (SR-BSE-2003-04) creating Boston Options Exchange Regulation LLC to which BSE would delegate its self-regulatory functions with respect to BOX facility); and 49068 (January 13, 2004) (SR-BSE-2002-15) (approving trading rules for BOX facility) ("BOX Rules"). In addition, the Commission previously approved BSE rules providing for the allocation of market maker appointments in the BOX facility. See Securities Exchange Act Release No. 48644 (October 16, 2003), 68 FR 60423 (October 22, 2003) (SR-BSE-2003-13).

⁹ While ownership interests in a corporation are generally referred to as "shares" or "stock," ownership interests in an LLC are referred to as "units." Therefore, the owners of BOX LLC are referred to as "unitholders."

¹⁰ 15 U.S.C. 78c(a)(27).

¹¹ An Options Participant is a firm or organization that is registered with the Exchange to participate in options trading on BOX as an order flow provider and/or as a market maker. See BOX Rules, Chapter I, Section 1(a)(40).

¹² In Amendment No. 2, the BSE filed changes to Article 8 to enhance BOX's ability to prevent Transfers of BOX LLC units in contravention of the LLCOA. See Amendment No. 2, supra note 6.

¹³ The term "affiliate" is defined in Section 1.1 of the LLCOA and means, with respect to any person, any other person controlling, controlled by, or 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. A person is presumed to control any other person, if that person: (1) is a director, general partner, or officer exercising executive responsibility (or having similar status or performing similar functions); (2) directly or indirectly has the right to vote 25% or more of a class of voting security, or has the power to sell or direct the sale of 25% or more of a class of voting securities of the person; or (3) in the case of a partnership, has contributed, or has the right to receive upon dissolution, 25% or more of the capital of the partnership.

¹⁴ For example, assume that a unitholder owns a 28% interest in BOX LLC and buys units constituting an additional 3%. Because the unitholder would cross the 30% ownership threshold, the acquisition would trigger an amendment to the LLCOA that BSE would have to submit as a proposed rule change. However, an acquisition of an additional 3% that would raise the unitholder's interest from 31% to 34% would not trigger a proposed rule change.

¹⁵ For example, assume Company XYZ owns a 25% interest in BOX LLC and Firm ABC acquires 35% of Company XYZ. Firm ABC must execute an amendment to the LLCOA whereby Firm ABC agrees to become a new party to the agreement and abide by all of its provisions. Furthermore, a person could become subject to Section 8.4(g) of the LLCOA if it acquires an indirect controlling interest in a direct controlling party of BOX LLC.

¹⁶ Such jurisdiction includes Delaware for matters relating to the organization or internal affairs of BOX LLC, provided that such matter is not related to trading on, or the regulation of, the BOX Market. See Section 19.6(b) of the LLCOA; see also Amendment No. 2, supra note 6.

¹⁷ See Amendment No. 2, supra note 6.

¹⁸ Id.

¹⁹ See Amendment No. 2, supra note 6.

²⁰ See letter from William J. Brodsky, Chairman and Chief Executive Officer, CBOE, to Jonathan G. Katz, Secretary, Commission, dated November 20, 2003.

²¹ In approving the proposed rule change, the Commission has considered its impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

²² 15 U.S.C. 78f(b)(1).

²³ 15 U.S.C. 78f(b)(5).

²⁴ 15 U.S.C. 78f(b)(1).

²⁵ 15 U.S.C. 78f(a).

²⁶ The Commission notes that the BOX facility includes the server, its hardware and software, wherever located.

²⁷ The CBOE also states that it assumed that the BSE would only file changes to those provisions of the operating agreement included in this filing. In this regard, the Commission clarifies that whether or not a proposed rule change must be filed under Section 19(b) of the Act is not determined solely on the basis of whether the original rule was filed.

²⁸ See Securities Exchange Act Release No. 44983 (October 25, 2001), 66 FR 55225, 55229-30 (November 1, 2001) (approving SR PCX 00 25) ("PCX/Arca Approval Order"). ArcaEx is operated by Archipelago Exchange LLC ("Arca LLC"). At the time of this approval, PCX's ownership interest in Arca LLC consisted solely of a 10% interest in Archipelago Holdings LLC, the parent company of Arca LLC. See 66 FR at 55225.

²⁹ Id. at 66 FR at 55229 (citation omitted). PCX established a new subsidiary, PCX Equities Inc. ("PCXE"), to which it delegated its authority as an SRO to surveil and regulate the PCX's trading functions. In its approval order, the Commission noted that PCX retained ultimate responsibility for the operation, administration, rules, and regulation of PCXE. The Commission added that PCX must review rulemaking and disciplinary decisions of PCXE and direct PCXE to take action that may be necessary to effectuate the purposes and functions of the Act. See id.

³⁰ BSE - through a newly established wholly owned subsidiary, Boston Options Exchange Regulation LLC ("BOXR") - will assume all regulatory responsibilities under the Act for the BOX facility. See SR BSE 2003-04, supra note 8.

³¹ CBOE objects to the fact that BSE redacted from the published version of the LLCOA certain of the major actions over which the controlling unitholders and BSE (regardless of whether it remains a controlling unitholder) will have veto power. BSE is not required to file these portions of Section 4.4(b) under Section 19(b) of the Act and Rule 19b-4 thereunder if they do not constitute a material aspect of the operation of the BOX facility, or are otherwise rules of, or stated policies, practices or interpretations, of the exchange. See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). See also 17 CFR 240.19b 4(b).

³² In the event that BSE ceases to be a unitholder of BOX LLC at some future date, the Commission would have to consider whether this provision should be amended so that BSE could continue to carry out its regulatory responsibilities with respect to BOX.

³³ See Amendment No. 2, supra note 6.

³⁴ This is consistent with the Commission's approval of ArcaEx as the equities trading facility of PCX pursuant to a rule filing submitted by the PCX under Section 19(b)(1) of the Act, 15 U.S.C. 78s(b)(1), and Rule 19b-4 hereunder, 17 CFR 240.19b-4. See PCX/Arca Approval Order, supra note 28.

³⁵ 17 CFR 249.1 and 17 CFR 249.1a.

³⁶ This reporting requirement applies only to exchanges that have one or more owners, shareholders, or partners that are not also members of the exchange. See Form 1, Exhibit K. Exhibit K applies only to the exchange itself, not to entities that operate facilities of the exchange.

³⁷ 17 CFR 240.6a-2(a)(2).

³⁸ BOX LLC currently has an indirect controlling party, Mr. Thomas Peterffy, who holds a controlling interest in IBG. Under Section 19.6(a) of the LLCOA, IBG acknowledges that, to the extent that they are related to BOX activities, the officers and directors of IBG are deemed to be the officers and directors of BSE for the purpose of and subject to oversight pursuant to the Act. Because Mr. Peterffy is an officer and director of IBG, he is deemed, with respect to IBG's BOX activities, to be an officer and director of BSE itself, thereby subjecting him to Commission authority under Section 19(h)(4) of the Act, 15 U.S.C. 78s(h)(4). Furthermore, under Section 19.6(b) of the LLCOA, IBG and its officers and directors (including Mr. Peterffy) irrevocably submit to the jurisdiction of the U.S. federal courts, the Commission, and BSE for the purposes of any suit, action, or proceeding pursuant to the U.S. federal securities laws arising out of or relating to their BOX activities. In addition, as a registered broker-dealer, IBG is subject to Commission authority pursuant to Section 15(b)(4) of the Act, 15 U.S.C. 78o(b)(4). Also, a "person associated with a broker or dealer" is defined in Section 3(a)(18) of the Act, 15 U.S.C 78c(a)(18), to include in part an officer or director of a broker or dealer, as well as any person directly or indirectly controlling such broker or dealer. Under Section 15(b)(6) of the Act, 15 U.S.C. 78o(b)(6), the Commission has the authority to censure a person associated with a broker or dealer, place limitations on such person's activities or functions, suspend such person for a period not exceeding twelve months or bar such person from being associated with a broker or dealer. Mr. Peterffy, as an officer and director of, and the holder of a controlling interest in, IBG, falls within the definition of "person associated with a broker or dealer" and therefore is subject to the Commission's authority under Section 15(b)(6) of the Act.

³⁹ 15 U.S.C. 78s(h)(4). Section 19(h)(4) authorizes the Commission, by order, to remove from office or censure any officer or director of a national securities exchange if it finds, after notice and an opportunity for hearing, that such officer or director has: (1) willfully violated any provision of the Act or the rules and regulations thereunder, or the rules of a national securities exchange; (2) willfully abused his or her authority; or (3) without reasonable justification or excuse, has failed to enforce compliance with any such provision by a member or person associated with a member of the national securities exchange.

⁴⁰ 15 U.S.C. 78q(b)(1).

⁴¹ 15 U.S.C. 78t(a).

⁴² 15 U.S.C. 78c(a)(27).

⁴³ 15 U.S.C. 78s(h)(1).

⁴⁴ However, the LLCOA treats as belonging to a single unitholder any BOX LLC units held by affiliated parties of the unitholder. See Sections 8.4(e)-(g) of the LLCOA.

⁴⁵ See Securities Exchange Act Release Nos. 45803 (April 23, 2002), 67 FR 21306, 21307 (April 30, 2002) (approval of SR-ISE-2002-01) (conversion of ISE from an LLC to a corporation); and 42455 (February 24, 2000), 65 FR 11388, 11391-92 (March 2, 2000) (File No. 10 127) (approval of registration of ISE as a national securities exchange).

⁴⁶ 15 U.S.C. 78s(b)(2).

⁴⁷ 15 U.S.C. 78s(b)(2).

http://www.sec.gov/rules/sro/34-49067.htm