[Federal Register Volume 60, Number 8 (Thursday, January 12, 1995)]
[Notices]
[Pages 3008-3012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-483]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35190; File No. SR-CBOE-94-50]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Partial Accelerated Approval of a Proposed Rule Change and
Amendment No. 1 to the Proposed Rule Change by the Chicago Board
Options Exchange, Inc., Relating to As-Of-Add Submissions
January 3, 1995.
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 December 1, 1994, the Chicago Board Options Exchange, Inc. (``CBOE''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
subsequently filed Amendment No. 1 to the proposed rule change on
December 23, 1994.\3\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons. As discussed below, the Commission has also granted
accelerated approval to a portion of the proposal.
\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1991).
\3\In Amendment No. 1 to the proposal, the Exchange proposes to
change the fine schedule as proposed under CBOE Rule 17.50(g) in two
ways. First, as amended, a fine will be assessed whenever the as-of-
add (as defined herein) submissions of an individual member or a
clearing member equals or exceeds 300% of that member's maximum
nominal as-of-add rate for two, rather than three, consecutive
months. Second, fines will be imposed with reference to a rolling
12-month period, rather than within a calendar year. In Amendment
No. 1, the Exchange also requests accelerated approval of the
proposed rule change. See Letter from Dan Schneider, Schiff Hardin &
Waite, to Sharon Lawson, Assistant Director, Office of Market
Supervision (``OMS''), Division of Market Regulation (``Division''),
Commission, dated December 21, 1994 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to: (1) Amend CBOE Rule 2.26 so as to place a
ceiling on the monthly fees members pay for submitting trade
information under Exchange Rule 6.51\4\ after the trade date (each an
``as-of-add'') on more than a stated maximum percentage of their
monthly trades and to enable the Exchange to suspend the rule in
exigent circumstances; and (2) amend CBOE Rule 17.50(g) to include a
fine schedule [[Page 3009]] for substantial and repeated failures to
submit trade data on the trade date. The Exchange also proposes that
the as-of-add fee pilot program (``Pilot Program''), as proposed to be
amended herein, be made permanent. The text of the proposed rule change
is available at the Office of the Secretary, CBOE, and at the
Commission.
\4\Among other things, Rule 6.51 requires that each transaction
be immediately reported to the Exchange in a form and manner
prescribed by the Exchange. See Rule 6.51(a).
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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 CBOE 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
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to amend the as-of-add
fee Pilot Program in three ways and to have the Pilot Program, as
amended, made permanent. The proposed changes would: (1) Place a
ceiling on the monthly as-of-add fee to be paid under Rule 2.26; (2)
establish a fine schedule under Rule 17.50(g) for substantial and
repeated failures to submit trade data on the trade data; and (3)
incorporate into Rule 2.26 provisions like those currently included in
Rule 2.30(g) (``Fee for Delayed Submission of Trade Information'') that
would authorize the Exchange to suspend Rule 2.26 (and thereby waive
the fees that would otherwise be due) in exigent circumstances. The
Exchange believes these amendments to the Pilot Program are fully
responsive to the concerns the Commission has previously identified
with respect to the Pilot Program.\5\
\5\See Securities Exchange Act Release Nos. 32999 (October 1,
1993), 58 FR 53003 (October 13, 1993) (Order approving the as-of-add
fee Pilot Program on a six-month pilot basis), 33855 (April 4,
1994), 59 FR 17128 (April 11, 1994) (order extending the Pilot
Program until September 30, 1994), and 34783 (October 3, 1994), 59
FR 51459 (October 11, 1994) (order extending the Pilot Program until
December 31, 1994) (``Pilot Extension Approval Order'').
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Under the Pilot Program in its present form, the fee, if any, to an
individual member is $10.00 for each as-of-add submitted during a given
month in excess of the percentage of such submissions considered
``nominal'' under paragraph (a) of Rule 2.26.\6\ The fee to any
clearing firm under paragraph (b) of that rule is $3.00 for each as-of-
add submitted in excess of the ``nominal'' percentage.\7\ In addition,
any member assessed an as-of-add fee may request verification from the
Exchange pursuant to Part B of Chapter XIX of CBOE's Rules and may
appeal the fee assessment pursuant to Part A thereof.
\6\The current ``nominal'' maximum allowable monthly number of
as of adds for individual members is 2.4% of an individual member's
monthly trades.
\7\The current ``nominal'' maximum allowable monthly number of
as of adds for clearing members is 1.2% of clearing members' monthly
trades.
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The CBOE believes that the as-of-add fees assessed pursuant to the
Pilot Program recognize that late trade submissions impose special
processing costs on the Exchange and require significant effort by
clearing firms and executing brokers to check and resolve late trade
reports. The Exchange represents that late trade submissions are
especially likely to burden the Exchange's operations during periods of
high volume and heightened volatility, when added stress is least
tolerable, thereby adding financial risk to members during these
already difficult periods.
The as-of-add fees, according to the Exchange, respond to these
problems in two ways. First, the as-of-add fees help to reimburse the
Exchange for the administrative burdens and costs of processing post-
trade date submissions, and impose the obligation to make such
reimbursement on those members who account for an inordinate number of
as-of-add submissions and who are thus most responsible for these added
costs in the first place (i.e., individual members).
Second, the Pilot Program creates what the Exchange believes to be
reasonable economic incentives for members to submit trade data on the
trade date, thereby relieving the Exchange and Exchange members of high
levels of special handling associated with processing as-of-adds. The
Exchange continues to believe, for the reasons set forth in previous
filings and supplemental correspondence,\8\ that the particular fees
included in the Pilot Program are equitably allocated among individual
members and clearing member organizations.
\8\See supra note 5 and infra note 10.
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In the last extension of the Pilot Program, the Commission approved
the proposed rule change as a fair and equitable allocation of
reasonable fees, but asked the Exchange, in connection with any request
to make the Pilot Program permanent, to consider ways to incorporate
the Pilot Program into Exchange Rule 17.50(g), under which the Exchange
imposes fines for minor rule violations (``Minor Rule Plan'').\9\ The
Commission also required the CBOE to submit a report setting forth
particular statistics about the Pilot Program.\10\
\9\See Pilot Extension Approval Order, supra note 5. In the
Pilot Extension Approval Order the Commission stated that it would
not be inclined to grant a further extension of the as-of-add fee
Pilot Program until the concerns of the Commission expressed therein
had been addressed by the CBOE. Id.
\10\See Letter from Joanne Moffic-Silver, Associate General
Counsel, CBOE, to Sharon Lawson, Assistant Director, OMS, Division,
Commission, dated November 29, 1994 (``Pilot Report'').
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The first proposed amendment to Rule 2.26 would place a cap on the
monthly fee that any individual member or clearing firm would pay under
that rule. The monthly fee to individual members under Rule 2.26(a)
would be capped at $500.00, and the monthly fee to clearing firms under
Rule 2.26(b) would be capped at $1,000.00. The Exchange believes that
the caps, when set at the levels proposed, will enable the Exchange to
recover its costs for as-of-add processing while ensuring that no
individual member or clearing member organization pays an
inappropriately high, or punitive, fee.\11\ In addition, although the
proposed cap levels are different for individual members as compared to
clearing firms, the Exchange believes that the structure and size of
the fee caps are equitable and appropriate. Clearing firms pay, on
average, substantially higher aggregate as-of-add fees than do
individual members, and the fee cap to clearing firms accordingly, in
the Exchange's opinion, should be set at a higher level.
\11\The CBOE notes that the use of fee caps will limit the
incentive effect of the Pilot Program, but that result will, in its
opinion, be offset in part by the introduction of the proposed fine
schedule under Rule 17.50(g).
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The second proposed amendment to Rule 2.26 would incorporate in a
new paragraph (d), provisions authorizing the Clearing Procedures
Committee, with the approval of the President of the Exchange, or his
designee, to suspend application of the rule, and thereby waive the
assessment of as-of-add fees, for periods no greater than seven
calendar days, plus extensions, whenever unusual circumstances so
dictate. This new paragraph corresponds to the similar suspension
provisions contained in Rule 2.30(g).\12\ In the proposal, as in Rule
2.30(g), the term ``unusual circumstances'' refers to
[[Page 3010]] circumstances that affect the ability of a significant
number of members to submit trade information on time. Any such
suspension of the rule must be in writing and must be published by the
Exchange for distribution to the membership.
\12\Rule 2.30 provides for fees to be assessed against market
makers and clearing members for failing to submit trade information
required by Rule 6.51 within two hours after execution of a trade.
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The Exchange anticipates that this authority would be used very
infrequently. The Exchange represents that it has invoked Rule 2.30
suspensions only once a year, on average, since the rule was adopted in
1991. In every case, the CBOE represents that the suspensions have
occurred on a day when there was both extraordinary volume and a
trading surge at the end of the day. Therefore, according to the
Exchange, it is likely that any suspension under proposed Rule 2.26
would ordinarily be matched with a suspension under Rule 2.30.
The third proposed change to the Pilot Program would add a fine
schedule to CBOE Rule 17.50(g) for substantial and repeated failures to
file trade data on the trade date, in contravention of Rule 6.51. As
proposed, any member who exceeds the as-of-add rate considered nominal
under Rule 2.26\13\ by three times or more for two consecutive months
would be subject to a fine of $250 for the first offense, $500 for the
second offense, and $1,000 for each offense thereafter occurring during
any 12-month period.\14\ Fines under this proposal would therefore
currently be triggered for an individual member whenever that member's
as-of-add submissions equal or exceed 7.2% of total trade submissions
in each of two consecutive months, while fines to clearing firms would
be triggered whenever a clearing member's as-of-add submissions equal
or exceed 3.6% of total trade submissions for each of two consecutive
months.\15\ The fines imposed pursuant to Rule 17.50(g) would be in
addition to any fees due under Rule 2.26 and would serve to penalize
those members who submit the greatest number of excessive as-of-add
trades.
\13\See supra notes 6 and 7.
\14\See Amendment No. 1, supra note 3. These fines would be
assessed on a rolling basis. For example, an individual member who
is cited for a first offense for a minor rule violation for
exceeding the nominal allowable number of as-of-adds by three or
more times during each of December and January would be fined for a
second offense if that member again exceeds the allowable number of
as-of-adds by three or more times during February. Telephone
conversation between Dan Schneider, Schiff Hardin & Waite, and Brad
Ritter, Senior Counsel, OMS, Division, Commission, on December 8,
1994.
\15\See supra notes 6 and 7.
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The Exchange believes that the proposed fines would fairly and
effectively supplement the fees assessed under Rule 2.26, by providing
a clear sanction in those circumstances in which discipline is clearly
appropriate. As structured, fines would be imposed when late
submissions by a particular member or members reflect a pronounced
pattern of persistent and excessive use of as-of-adds. Absent such a
pattern, the Exchange believes, that the assessment of fees is
sufficient and that fines should ordinarily not be imposed. Of course,
in any circumstance in which a member's use of as-of-adds suggests that
it may be appropriate to impose more severe disciplinary sanctions than
would be provided for under Rule 17.50(g), the member would be subject
to investigation and discipline in accordance with Chapter XVII.\16\
\16\The CBOE has agreed to issue a Regulatory Circular to
members describing the portions of the proposal approved herein,
describing the portion of the proposal to incorporate the Pilot
Program into the Minor Rule Plan, emphasizing that serious instances
or extended periods of late submissions will be subject to
investigation and possible disciplinary action notwithstanding Rule
17.50(g), and highlighting that all members assessed a fee pursuant
to the Pilot Program may submit a request for verification and may
appeal the fees assessed pursuant to Chapter XIX of the CBOE Rules.
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The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act, in general, and furthers the objectives of
Section 6(b)(5) of the Act,\17\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market, and to protect investors and the public interest.
\17\15 U.S.C. 78f(b)(5) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any inappropriate burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The Exchange has requested that the proposed rule change be given
accelerated effectiveness pursuant to Section 19(b)(2)\18\ of the
Act.\19\
\18\15 U.S.C. 78s(b)(2) (1988).
\19\See Amendment No. 1, supra note 3.
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The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6(b)(5).\20\ Specifically, the
Commission finds, as it did in originally approving the Pilot Program
and the subsequent extensions,\21\ that imposing fees on members who
submit as-of-adds for more than a prescribed percentage of transactions
in any month is likely to: (1) Offset the carrying costs incurred by
the Exchange and Exchange members as a result of these post-trade date
submissions; (2) make trade comparisons on the CBOE more efficient in
terms of the time and expense involved in trade processing; and (3)
reduce the risk exposure to investors and Exchange clearing members.
Additionally, the Commission continues to believe that the Pilot
Program does not raise any due process concerns because of the
availability of the verification and appeals processes pursuant to
Chapter XIX of CBOE's rules.\22\
\20\15 U.S.C. 78f(b)(5) (1988).
\21\See supra note 5.
\22\Id.
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The Commission believes that the proposed caps on the monthly as-
of-add fees that can be assessed against members adequately addresses
one of the concerns previously noted by the Commission of assessing
inordinately high, or punitive, monthly ``fees'' for violations of
Exchange rules.\23\ By placing the proposed caps on the maximum monthly
as-of-add fees, the Commission believes that it is appropriate for the
Exchange to continue to classify these assessments as fees, rather than
requiring the Exchange to institute disciplinary proceedings and to
assess fines against members each time they submit as-of-adds in
violation of Exchange rules.\24\ Additionally, the proposal to
incorporate the Pilot Program into the Minor Rule Plan under Rule 17.50
further minimizes the Commission's concerns about classifying these
assessments as fees rather than fines.\25\ The proposal
[[Page 3011]] ensures that at some objective level, members will be
cited for violating Exchange Rule 6.51\26\ In connection with as-of-add
submissions. The Commission believes that the prospect of being fined
for a rule infraction, particularly where the as-of-adds reflect a
significant pattern of abuse in violation of the requirements of Rule
6.51, will act as a further incentive for encouraging exchange members
to reduce their as-of-add submissions.
\23\Id.
\24\The Commission notes that its findings herein are limited to
as-of-add submissions. For violations of other Exchange rules, it
may be inappropriate to allow the Exchange to assess fees to
encourage compliance rather than instituting disciplinary
proceedings against members for such violations.
\25\The Commission notes that although the proposal to
incorporate the Pilot Program into the Minor Rule Plan is consistent
with the Commission's prior suggestions regarding the Pilot Program,
for the reasons discussed below, this portion of the proposed rule
change is being published for comment and is not being approved by
the Commission on an accelerated basis herein with the remainder of
the proposal.
\26\See supra note 4.
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Furthermore, the Commission does not believe that the fact that the
proposed monthly cap as-of-add fees is higher for clearing members
($1000) than for individual members ($500) raises significant
regulatory concerns. In its present form, the Pilot Program
distinguishes between clearing members and individual members in two
respects. First, the monthly allowable percentage of as-of-adds is
higher for individual members than for clearing members.\27\ Second,
the per-trade fee amount assessed against individual members ($10) is
higher than that assessed against clearing members ($3). Because the
average fee assessed against clearing members during the period between
October 1, 1993, and September 30, 1994, ($307.51) was higher than the
average fee assessed against individual members ($104.50),\28\ the
Commission does not disagree with the Exchange's determination that it
is reasonable for the monthly cap applicable to clearing members to be
higher than the cap applicable to individual members. Moreover, even
though the Exchange represents that most as-of-adds are the result of
late submission by individual members rather than by clearing members,
the Commission believes that clearing members have some ability to
encourage individual members to reduce their number of as-of-adds, for
example, by charging fees to individual members who regularly submit
as-of-adds to the clearing member for processing. Additionally,
assuming that the portion of the proposal to incorporate violations of
Rule 2.26 into the Minor Rule Plan is ultimately approved,\29\ the
Commission notes that it will be possible for individual members who
submit a significant number of as-of-adds in relation to their total
number of monthly trades to be fined for violating the Minor Rule Plan
without reaching the cap on fees pursuant to Rule 2.26. Finally, the
fines proposed for violating the Minor Rule Plan for as-of-add
submissions are the same for individual members and for clearing
members. Even with the lower monthly cap on fees, therefore, the
Commission believes that the proposal provides significant incentives
for individual members to reduce their as-of-add submissions. As a
result, the Commission believes that the difference between the cap
levels for individual members and clearing members is reasonable and
consistent with the Act.
\27\See supra notes 6 and 7.
\28\See Pilot Report, supra note 10.
\29\See supra note 25.
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The Commission also notes that in prior extensions of the Pilot
Program, the Commission expressed concern over the Exchange's inability
to determine, without examining each individual trade, whether
particular as-of-adds are submitted due to the fault of an individual
member or that member's clearing firm.\30\ As a result, in determining
whether a member has exceeded its stated monthly percentage of
allowable as-of-adds, each as-of-add processed by a clearing member is
counted against both the clearing member and the individual member who
executed the transaction. For several reasons, however, the Commission
now believes that this does not prevent a finding that the Pilot
Program is consistent with the Act. First, data gathered by the
Exchange from the first year of operation of the Pilot Program support
the Exchange's representation that most as-of-adds are the result of
late submissions by individual members, not clearing firms. From
October 1, 1993, through September 31, 1994, there were 463 assessments
of fees against individual members pursuant to the Pilot Program but
only 13 such assessments against clearing members.\31\ Second, during
that same period, only one individual member requested verification of
the fee assessed by the Exchange and that member did not appeal the
assessment upon receipt of verification from the Exchange.\32\ Finally,
the Commission has not received any comment concerning the Pilot
Program, in general, or this aspect of the Pilot Program, in
particular. As a result, the Commission does not believe that
individual members are being damaged as a result of the CBOE's
inability to efficiently identify the party actually responsible for
each as-of-add, especially given that members may request verification
of, and may appeal, any as-of-add fee assessed by the Exchange.
\30\See supra note 5.
\31\See Pilot Report, supra note 10.
\32\Id.
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Finally, the Commission believes that the proposal to add paragraph
(d) to Rule 2.26 concerning waivers of the as-of-add fees in unusual
circumstances is also consistent with the Act. Proposed paragraph (d)
substantively mirrors paragraph (g) of Rule 2.30, which was previously
approved by the Commission. Rule 2.30 is similar to Rule 2.26 in that
both rules are concerned with the late submission of trade data.\33\ As
a result, the Commission believes that if Rule 2.30 can be waived in
the event of exigent circumstances, a similar provision should also
apply to Rule 2.26. The Commission believes that when unusual
circumstances exist that affect the ability of a significant number of
members to submit trade information to the Exchange in a timely manner
it may not be appropriate to assess fees, and possibly fines (assuming
the amendment to the Minor Rule Plan discussed herein is ultimately
approved as adopted), against individual members and clearing members.
The Commission expects the CBOE to use its power to waive as-of-add
fees only in highly unusual circumstances. In addition, while the CBOE
has indicated that the power to waive as-of-add fees will usually be
used in conjunction with the similar power in Rule 2.30, the Commission
expects the CBOE to examine each situation on its merits to determine
whether just Rule 2.30 or both Rules 2.26 and 2.30 should be waived in
a particular situation.\34\
\33\See supra note 12.
\34\For example, situations could arise for which it may be
appropriate for the Exchange to waive Rule 2.30, but if the unusual
circumstances last only a few hours, it may be inappropriate to
conclude that trade data could not be submitted by most members on
the same day that the trades occur. In such a situation, the
Commission believes that it would not be appropriate for the
Exchange to also waive Rule 2.26.
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The Commission finds good cause for approving the following
portions of the proposed rule change and Amendment No. 1 thereto prior
to the thirtieth day after the date of publication of notice of filing
thereof in the Federal Register: (1) The request for permanent approval
of the Pilot Program; (2) the proposal to impose caps on the monthly
fee that can be assessed against members; and (3) the portion adopting
paragraph (d) to Rule 2.26 to allow the Exchange to waive application
of the rule in unusual circumstances.
First, granting permanent approval of the Pilot Program will permit
the Pilot Program to remain in effect without
[[Page 3012]] interruption. For the reasons discussed above and in
prior orders concerning the Pilot Program,\35\ the Commission believes
that reducing the number of as-of-adds submitted to the Exchange may
benefit investors by reducing the Exchange's processing costs, making
the CBOE more efficient in terms of the time involved in trade
processing, and reducing risk exposure to investors and Exchange member
firms. Additionally, the Exchange has represented that no problems have
arisen and no formal complaints have been received by the Exchange
concerning the Pilot Program since its implementation.\36\ Accordingly,
the Commission believes it is consistent with Sections 6(b)(5) and
19(b)(2) of the Act to approve, on an accelerated basis, that portion
of the proposed rule change requesting permanent approval of the Pilot
Program.
\35\See supra note 5.
\36\See Pilot Report, supra note 10.
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For the reasons discussed above, the Commission also believes that
it is appropriate to accelerate approval of the proposal to impose caps
on the monthly as-of-add fees assessed against members. The Commission
believes that this portion of the proposal addresses a significant
concern that the Commission previously raised regarding the Pilot
Program by ensuring that members are not assessed fees that are
inordinately high, or punitive.\37\ The Commission continues to believe
that it is inappropriate for the CBOE to promote and enforce compliance
with Exchange rules solely through the assessment of fees. Further,
this proposal is a limitation on the existing Pilot Program, which has
no upper limit on the monthly fee that can be assessed. As a result,
because the Commission has not received comment on the existing Pilot
Program, the Commission believes it is appropriate to approve this
aspect of the proposal on an accelerated basis.
\37\See supra note 5.
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With regard to proposed paragraph (d) to Rule 2.26, the Commission
believes that this amendment will promote uniformity between Rule 2.26
and existing Rule 2.30. The logic for waiving application of Rule 2.30
in the existence of unusual circumstances also applies to Rule 2.26,
i.e., if circumstances prevent a significant number of members from
processing trade information, it generally may be inappropriate to
assess fees against those members for violating Rules 2.26 and 2.30.
Accordingly, the Commission believes it is appropriate to approve this
portion of the proposal on an accelerated basis in order to promote
uniformity between the Exchange's rules and thus minimize potential
confusion, and to avoid inconsistent results where for the same set of
``unusual circumstances,'' the Exchange is able to waive application of
Rule 2.30 but not Rule 2.26.\38\
\38\See supra note 34 and accompanying text.
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At this time the Commission is not approving that portion of the
proposed rule change that would incorporate the Pilot Program into the
Minor Rule Plan. Although the Commission believes that this portion of
the proposal addresses suggestions previously noted by the Commission
concerning the Pilot Program, the Commission believes that prior to
approval, Exchange members should be given adequate notice of, and an
opportunity to comment on, proposals that could subject them to
disciplinary sanctions. As a result, the Commission expects the
Exchange to distribute to its members notice of the rule change as
approved herein and notice of the proposal to incorporate the Pilot
Program into the Minor Rule Plan.\39\ Moreover, the Exchange's request
for accelerated approval of the proposal was for the sole purpose of
avoiding procedural and accounting problems that would result from a
lapse in the Pilot Program.\40\ The Commission believes this concern
has been adequately addressed by accelerating permanent approval of the
Pilot Program
\39\See supra note 16.
\40\See Amendment No. 1, supra note 3.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing proposed rule change and Amendment
No. 1 thereto. Persons making written submissions should file six
copies thereof with the Secretary, Securities and Exchange Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. 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 inspection and copying in the Commission's
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
Copies of such filing will also be available for inspection and copying
at the principal office of the CBOE. All submissions should refer to
File No. SR-CBOE-94-50 and should be submitted by January 31, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act\41\ that the following portions of the proposed rule change (SR-
CBOE-94-50), are approved: (1) The amendments to CBOE Rule 2.26 placing
a ceiling on the monthly as-of-add fees that can be assessed against
individual members and clearing members, and allowing the Exchange to
suspend the rule in exigent circumstances; and (2) permanent approval
of the Pilot Program.
\41\15 U.S.C. 78s(b)(2) (1988).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\42\
\42\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-483 Filed 1-11-95; 8:45 am]
BILLING CODE 8010-01-M
