[Federal Register Volume 63, Number 212 (Tuesday, November 3, 1998)]
[Notices]
[Pages 59350-59351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29342]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40604; File No. SR-CBOE-98-44]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc. Relating to
Authority Over RAES Rejects
October 26, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on October 2, 1998, the Chicago Board Options
Exchange, Inc. (``CBOE'' or ``Exchange'') filed with the Securities and
Exchange Commission
[[Page 59351]]
(``Commission'' or ``SEC'') the proposed rule change as described in
items I, II, and III below, which Items have been prepared by CBOE. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
CBOE proposes to amend CBOE Rule 6.8(b) to allow either the
Exchange's Vice Chairman or the Chairman of the appropriate Market
Performance Committee (``MPC'') to allow transactions on the Exchange's
Retail Automated Execution System (``RAES'') to be executed at the
price of the best bid or offer in the Exchange book. Currently, CBOE
Rule 6.8(b) requires both these individuals to make this decision. The
text of the proposed rule change is available at the Office of the
Secretary, CBOE and 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, CBOE included statements
concerning the purpose of, and statutory 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 Exchange 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 permit either the
Exchange's Vice Chairman or the Chairman of the appropriate MPC to
individually allow RAES to execute orders at the price of the best bid
or offer in the Exchange's Book. Under current CBOE Rules, such a
decision must be made jointly. Absent such a joint determination,
Exchange Rules do not permit a trade to be executed on RAES when the
prevailing market bid or offer equals the best bid or offer on the
Exchange's customer limit order book (``Book''), and instead requires
that related RAES orders be rejected and re-routed by the Order Routing
System to the broker for manual representation.
For practical reasons, CBOE believes that it is necessary to have
only one person make this decision instead of two. On the infrequent
occasion when the prevailing market bid or offer equals the best bid or
offer on the Exchange's customer limit order book, immediate action is
required. In these situations, it is often extremely difficult to
contact both people. For instance, either Vice Chairman or Chairman may
not be in the vicinity of the Exchange or reachable; however, in this
situation usually the other individual is reachable.
2. Statutory Basis
The Exchange believes that the proposed rule change enhances its
ability to make competitive, fair and orderly markets in options. The
Exchange believes that the proposed rule change is consistent with
Section 11A(a)(1)(C)(ii) \3\ of the Act in that it assures fair
competition among markets. In addition, CBOE believes that the proposed
rule change is in furtherance of Section 6(b)(5) of the Act \4\ in that
it is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and to protect investors and the
public interest.
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\3\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
\4\ 15 U.S.C. 78f(b)(5).
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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 burden on competition that is not necessary or appropriate
in furtherance of the Act.
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
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, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commissions, 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 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 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-98-44 and should
be submitted by November 24, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-29342 Filed 11-2-98; 8:45 am]
BILLING CODE 8010-01-M
