[Federal Register Volume 60, Number 13 (Friday, January 20, 1995)]
[Notices]
[Pages 4208-4209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1494]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35227; File No. SR-CBOE-94-55]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc. Relating to Short
Interest Reporting Requirements
January 13, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on January
3, 1995, 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, II
and III below, which Items have been prepared by the self-regulatory
organization. On January 5, 1995, the CBOE filed Amendment No. 1 to the
proposed rule change.\1\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
\1\See letter from Timothy Thompson, attorney, CBOE, to Glen
Barrentine, Senior Counsel, Commission, dated January 3, 1995.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to require each member of the Exchange to report
their short stock positions if the member meets the following three
requirements: (1) The member clears stock transactions, (2) the
Exchange is the designated Examining Authority (``DEA'') for the
member, and (3) the [[Page 4209]] member is not otherwise required to
report its short stock positions to either the National Association of
Securities Dealers, Inc. (the ``NASD'') or to a stock exchange as a
result of being a member of such organization. The short stock
positions would be required to be furnished to either a stock exchange
or to the NASD, as the Exchange may designate. The form, manner, and
time of such report shall be specified by the appropriate exchange or
the NASD.
The text of the proposed rule change is available at he 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 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 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 assure that all
broker-dealers who clear stock report their short stock positions to
the appropriate regulatory authority, whether it be the NASD or an
exchange on which the security is listed or of which the broker-dealer
is a member. Reports of short stock interest are an important tool of
regulators in monitoring activity in stocks and in detecting possible
cases of insider trading or manipulation. Further, some members'
customers use the publicly reported short interest information when
making investment decisions.
Although the CBOE does not list or trade stock, it is the DEA for
at least one member who clears stock transactions. Under current rules
of the other self regulatory organizations, the member is not required
to report its short stock positions.\2\ Consequently, in an effort to
assure that no broker-dealer can avoid the responsibility to report
short stock interest, the CBOE is adding interpretation .02 to its Rule
15.1, Maintenance, Retention and Furnishing of Books, Records and Other
Information. This interpretation would require members for which the
CBOE is the DEA to report short stock positions to either a stock
exchange or to the NASD, as the CBOE may designate. The specifics of
the reporting would be dictated by the entity to which the report would
be sent. Because the CBOE does not have as great an interest in
reviewing the short stock data as the exchange on which the stock is
listed and because there is currently only one member who would be
required to report its short stock positions under this interpretation,
the CBOE believes it is more practical to have another self regulatory
organization receive the short interest report.
\2\CBOE is the DEA for Gill and Co. which is not a member of the
NASD or the New York Stock Exchange, both of which have
comprehensive short stock reporting rules. Gill and Co. clears stock
transactions at the Midwest Clearing Corporation.
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The CBOE will enter into an agreement with any self regulatory
organization that is to receive a short interest report of our member,
specifying that entity's agreement to receive this report. That
organization will then use the data, along with the short interest data
it receives from its members, for appropriate regulatory purposes.
2. Statutory Basis
The CBOE believes that the proposed rule change is consistent with
Section 6 of the Act in general and Section 6(b)(5) in particular in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote fair and equitable principles of trade, and, in
general, to protect investors and the public interest. The proposed
rule change provides for the public disclosure and dissemination of
short interest data which is not currently disclosed, thereby
augmenting market transparency for the subject securities and enabling
investors to make more informed investment decisions. As mentioned
above, the proposed rule also assists regulatory efforts in discovering
manipulation.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any 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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. 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-94-55 and should be
submitted by February 10, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-1494 Filed 1-19-95; 8:45 am]
BILLING CODE 8010-01-M
