[Federal Register Volume 62, Number 1 (Thursday, January 2, 1997)]
[Notices]
[Pages 136-137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33315]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38086; File No. SR-CBOE-96-69]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the Chicago
Board Options Exchange, Incorporated Relating to Calculating Blue
Sheets Violation Aggregate Fines on a Rolling Year Basis
December 26, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on November 20, 1996,\3\ the Chicago Board Options Exchange,
Incorporated (``CBOE'' or ``Exchange'') filed with the Securities and
Exchange Commission (``SEC'' or
[[Page 137]]
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons and to
grant accelerated approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ On December 17, 1996, the Exchange filed Amendment No. 1 to
the proposed rule change. Amendment No. 1 is a technical amendment,
correcting Exhibit I, Section I to the filing. See letter from
Margaret Abrams, Senior Attorney, CBOE to Janice Mitnick, Attorney,
Division of Market Regulation, SEC, dated December 17, 1996.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its minor rule violation plan so
that automated submission of trading data (``Blue Sheets'') violation
aggregate fines are calculated on a rolling year basis. The text of the
proposed rule change is available at the Office of the Secretary, CBOE
and at the Commission.
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 self-regulatory organization
included statements concerning the purpose of the 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 self-regulatory organization
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
1. Purpose
The purpose of the proposed rule change is to amend CBOE's minor
rule violation plan contained in Exchange Rule 17.50 (``minor rule
plan'') to change provisions calculating time for aggregate fines for
Blue Sheets violations from a calendar year basis to a rolling year
basis. The rule change will implement the Commission's recommendation
to amend the minor rule plan following a 1995 inspection of CBOE's
regulatory and enforcement programs.
In an inspection report dated January 3, 1996 \4\, the Commission's
Office of Compliance Inspections and Examinations recommended amendment
of CBOE's minor rule plan to consider previous Blue Sheets violations
on a rolling basis in order to deter repeat, or recidivist, violators;
\4\ See Letter and attached Inspection Report from Lori A.
Richards, Director, Office of Compliance Inspections and
Examinations, Commission to Charles Henry, President, CBOE, dated
January 3, 1996.
---------------------------------------------------------------------------
The current plan calculates aggregate fines on a calendar year
basis for violations of position limits and bluesheet requests.
Presently, if a member violates a position limit in March 1995, the
CBOE would review whether the member had been sanctioned only in the
prior two months and not the previous year. Reviewing sanctions
levied on a rolling year basis would prove more beneficial.\5\
---------------------------------------------------------------------------
\5\See Inspection Report, p.9.
The filing will amend Rule 17.50(g)(3) relating to failures to
respond in a timely manner to a request for Blue Sheets accordingly.
The Exchange notes that no Blue Sheets violations have been processed
as summary fines under the Exchange's minor rule plan in 1996.
2. Statutory Basis
By amending Exchange rules to implement the Commission's
recommendations to more effectively deter repeat violations of the Blue
Sheets provisions of CBOE's minor rule plan, the Exchange believes that
the proposed rule change is consistent with Section 6 of the Securities
Exchange Act of 1934 (``Act'') in general and with Section 6(b)(5) of
the Act in particular in that it is designed to promote just and
equitable principles of trade, and to protect investors and the public
interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will impose no
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Exchange has requested that the proposed rule change be given
accelerated effectiveness pursuant to Section 19(b)(2) of the Act. 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, with
the requirements of Section 6(b) of the Act. Specifically, the
Commission believes that the rule change to calculate aggregate fines
on a rolling year basis, implementing Commission recommendations,
should deter more effectively repeat violations of CBOE's minor rule
plan, and should promote just and equitable principles of trade, and
the protection of investors and the public interest.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice in the Federal Register. Immediate approval will allow the
Exchange to adopt a Commission staff recommended change to its existing
minor rule violation plan without further delay. Further, the
Commission notes that the rule change merely conforms to the standard
used by the New York Stock Exchange.\6\ Accordingly, the Commission
believes, consistent with Section 6(b)(5) of the Act, that good cause
exists to approve the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\6\ See New York Stock Exchange Rule 476A, Supplementary
Material (using ``a `rolling' 12-month period'' to determine
multiple minor violations).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. 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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Room. Copies of such filing will also
be available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-CBOE-96-69 and
should be submitted by January 23, 1997.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-CBOE-96-69) is hereby
approved on an accelerated basis.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jonathan G. Katz,
Secretary.
[FR Doc. 96-33315 Filed 12-31-96; 8:45 am]
BILLING CODE 8010-01-M
