[Federal Register Volume 62, Number 249 (Tuesday, December 30, 1997)]
[Notices]
[Pages 67926-67927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33830]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39467; File No. SR-CBOE-97-42]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change By the Chicago Board Options Exchange, Incorporated Relating to
Proactive Disclosure of ``n'' Orders
December 19, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on August 25,
1997, the Chicago Board Options Exchange, Incorporated (``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 CBOE. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
1. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CBOE proposes to amend Exchange Rule 7.5 (``Rule'') regarding
disclosure obligations for ``n'' orders by adding Interpretation .04.
An ``n'' order as defined in Rule 6.51 is an order for any account of a
non-member market-maker or specialist relating to his assignment in a
class of options listed for trading both at this Exchange and at the
exchange of the market-maker or specialist. 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, the CBOE 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 parts 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 require a Floor
Broker who holds a so-called ``n'' order to affirmatively disclose the
status of the ``n'' order as such by public outcry at the post prior to
representing the order in the trading crowd. An ``n'' order is defined
in Rule 6.51 as an order for the account of a broker-dealer who is a
non-member market-maker or specialist relating to his assignment in a
class of options listed on CBOE and on another exchange. Disclosing the
status of orders as ``n'' orders will make the trading crowd aware that
the orders are broker-dealer orders and not public customer orders, so
that they may be properly treated under CBOE Rules that give
preferential treatment to non-broker-dealer public customer orders. For
example, Rule 6.45 gives priority to non-broker-dealer public customer
bids and offers in the customer limit order book over other bids and
offers at the same price, and Rule 8.51 provides that a trading crowd's
firm quote obligations apply to non-broker-dealer public customer
orders only. Requiring the identification of ``n'' orders as broker-
dealer orders should reduce the likelihood that such orders will be
inadvertently treated as public customer orders, thereby assuring that
actual public customer orders will receive the priorities to which they
are entitled under the Rules.
By requiring the affirmative disclosure of a category of broker-
dealer orders that might otherwise by mistakenly identified as orders
of public customers, the proposed rule change will safeguard the
priorities granted under CBOE Rules to the orders of non-broker-dealer
public customers, thereby serving to promote just and equitable
principles of trade and to protect investors and the public interest in
furtherance of the objectives of Section 6(b)(5) of the Securities
Exchange Act of 1934.
B. Self-Regulatory Organization's Statement on Burden on Competition
The CBOE 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 date of 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 such 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.,
[[Page 67927]]
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. 20549.
Copies of such filing will also be available for inspection and copying
at he principal office of the CBOE. All submissions should refer to the
file number in the caption above and should be submitted by January 20,
1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\1\
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\1\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-33830 Filed 12-29-97; 8:45 am]
BILLING CODE 8010-01-M
