The SEC accelerated approval of rule changes to allow the Chicago Board Options Exchange to acquire the National Stock Exchange at the end of December.

The accelerated approval came after the CBOE and NSX on November 28 filed proposed rule changes that would take effect upon the acquisition of the NSX by the CBOE Stock Exchange.

The proposed rule changes were published in the Federal Register on December 2. Normally, the rules must be open for comment and review for 30 days. The commission granted accelerated approval on December 29 so that the acquisiton could close by the end of calendar 2011.

The commission, in granting approval, said:

Pursuant to Section 19(b)(2)(C)(iii) of the Act,65 the Commission may not approve a proposed rule change earlier than 30 days after the date of publication thereof unless the Commission finds good cause for so doing. In the case of the CBOE and NSX proposals, the 30th day occurs in three days and falls on a non-business day (a Sunday). Further, the comment period on each proposal has closed, and the Commission has not received comment on either proposal. In light of the Commission’s findings that the proposals are consistent with the Act, the Commission believes that good cause exists to accelerate approval of each proposal by a few days in order to accommodate the closing of the Transaction

NSX becomes a wholly-owned subsidiary of the CBOE Stock Exchange, but remains registered as a national securities exchange.

CBOE has regulatory responsibility for the activities of the CBOE Stock Exchange, a fully automated exchange..

The CBOE Stock Exchange in September agreed to acquire the National Stock Exchange, an all-electronic stock exchange based in Jersey City, N.J.

The move puts two similarly sized electronic exchanges under one roof. At the time of the announcement, CBOE Stock Exchange handled roughly 35.3 million shares a day; NSX handled 42.6 million shares on Thursday.

By comparison, the two all-electronic exchanges operated by BATS Global Markets at the time handled 1.1 billion shares a day.

Concurrent with the conclusion of the transaction, data on trading activity in United States markets for exchange-traded funds that used to be distributed by the NSX began being distributed by a newly formed Exchange Traded Fund Association.

Download the SEC's Approval Order Here

Tom Steinert-Threlkeld writes for Securities Technology Monitor.




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