[Federal Register Volume 59, Number 235 (Thursday, December 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30136]
[[Page Unknown]]
[Federal Register: December 8, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35035; File No. SR-CBOE-94-39]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc., Relating to
Obligations to Furnish Information
December 1, 1994.
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 November
7, 1994, the Chicago Board Options Exchange, Inc. (``CBOE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to amend its rules to delineate the obligation of
CBOE members and persons associated with CBOE members to furnish
information in connection with inquiries arising from regulatory
agreements that the Exchange has entered into with other regulatory and
market institutions even in cases where the Exchange has not otherwise
initiated an investigation. Specifically, the CBOE proposes to amend
CBOE Rule 15.9, ``Regulatory Cooperation,'' to provide that as long as
a CBOE member or person associated with a CBOE member is subject to the
CBOE's jurisdiction, the CBOE member or person associated with a CBOE
member is obligated to furnish testimony, documentary evidence or other
information to the full extent provided in CBOE Rule 17.2(b), ``Conduct
of Investigation,'' whether or not the Exchange has initiated the
investigation, if the information is requested by the Exchange in
connection with any inquiry resulting from an agreement entered into by
the Exchange with a domestic or foreign self-regulatory organization or
regulator pursuant to CBOE Rule 15.9.
In addition, the CBOE proposes to amend CBOE Rule 17.2, ``Complaint
and Investigation,'' to state clearly that each CBOE member and person
associated with a CBOE member is obligated upon the Exchange's request
to testify, respond in writing to interrogatories, and furnish
documentary materials and other information requested by the Exchange
in connection with an investigation initiated pursuant to CBOE Rule
17.2(a), ``Initiation of Investigation,'' a hearing or appeal conducted
pursuant to CBOE Chapter 17, ``Discipline,'' or an inquiry resulting
from an agreement entered into by the Exchange pursuant to CBOE 15.9.
The CBOE also proposes to amend Interpretation and Policy .01 to CBOE
Rule 17.2 to provide that the failure to furnish testimony, documentary
evidence, or other information requested by the CBOE in the course of
an Exchange inquiry within the time period specified by the Exchange
shall be deemed to be a violation of CBOE Rule 17.2.
The text of the proposal 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 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
The CBOE states that the purpose of the proposal is to delineate
the obligation of CBOE members and persons associated with CBOE members
to furnish information in connection with inquiries arising from
regulatory agreements that the CBOE has entered into with other
regulatory and market institutions even in cases where the CBOE has not
otherwise initiated an investigation. The proposal also delineates more
clearly the obligation of CBOE members and persons associated with CBOE
members to furnish information in connection with an investigation
initiated by the CBOE itself, including information requested in
connection with a hearing or appeal or the Exchange's preparation or a
hearing or appeal.
The CBOE states that over the past several years, the CBOE and
other regulatory and market organizations have entered into agreements
providing for the exchange of information for surveillance,
investigative, enforcement, and other regulatory purposes. The CBOE's
existing rules, however, do not clearly delineate the obligation of
CBOE members or persons associated with CBOE members to furnish
information when the provision of information is required in connection
with these regulatory agreements in cases where the CBOE has not itself
initiated an investigation. The proposal clearly establishes that the
obligation to furnish information requested by the CBOE pursuant to
these regulatory agreements is coextensive with the obligation to
furnish information pursuant to an investigation initiated by the CBOE.
The CBOE proposes to add paragraph (b) to CBOE Rule 15.9 to state
clearly that pursuant to regulatory agreements entered into under CBOE
Rule 15.9(a),\1\ the CBOE may require CBOE members and persons
associated with CBOE members to provide the same information that must
be provided under investigations initiated by the CBOE under CBOE Rule
17.2(a). In addition, the CBOE proposes to amend CBOE Rule 17.2(b),
``Requirement to Furnish Information,'' to clarify the obligation of
CBOE members and persons associated with CBOE members to furnish
information and to state that obligation clearly with respect to both
investigations initiated by the CBOE and inquiries pursuant to
regulatory agreements.
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\1\ CBOE Rule 15.9(a) allows the Exchange to ``enter into
agreements with domestic and foreign self-regulatory organizations,
associations and contract markets and the regulators of such markets
which provide for the exchange of information and other forms of
mutual assistance for market surveillance, investigative,
enforcement and other regulatory purposes.''
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The CBOE states that the Exchange has long required CBOE members or
persons associated with CBOE members to furnish testimony, documentary
evidence, or other information requested in connection with an
investigation initiated by the CBOE pursuant to CBOE Rule 17.2(a).
Insofar as the proposed amendment to CBOE Rule 17.2(b) or
Interpretation and Policy .01 to CBOE Rule 17.2 adds or alters language
relating to the obligation to furnish information in connection with a
CBOE investigation, hearing or appeal, or the preparation therefor, the
new language is intended simply as a statement of the CBOE's
longstanding interpretation of existing CBOE rules.
The CBOE believes that the proposed rule change is consistent with
Section 6(b) of the Act, in general, and furthers the objectives of
Section 6(b)(5), in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices and to foster
cooperation and coordination with persons engaged in regulating
transactions in securities.
(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 after 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 reason 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., 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. Copies of such filing will also be available for
inspection and copying at the principal office of the above-mentioned
self-regulatory organization. All submissions should refer to the file
number in the caption above and should be submitted by December 29,
1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
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\2\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-30136 Filed 12-7-94; 8:45 am]
BILLING CODE 8010-01-M
