97-4605. Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by the Chicago Board Options Exchange, Incorporated Relating to the Policy of the CBOE Relating to Information Obtained Pursuant ...  

  • [Federal Register Volume 62, Number 37 (Tuesday, February 25, 1997)]
    [Notices]
    [Pages 8474-8475]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-4605]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    [Release No. 34-38311; International Series Release No. 1055; File No. 
    SR-CBOE-96-77]
    
    
    Self-Regulatory Organizations; Notice of Filing and Order 
    Granting Accelerated Approval of Proposed Rule Change by the Chicago 
    Board Options Exchange, Incorporated Relating to the Policy of the CBOE 
    Relating to Information Obtained Pursuant to the SEC's Memorandum of 
    Understanding With the CONSOB
    
    February 19, 1997.
        Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
    (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
    on December 17, 1996, the Chicago Board Options Exchange, Incorporated 
    (``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
    Commission (``SEC'' or ``Commission'') the proposed rule change is 
    described in Items I and II 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 and to grant 
    accelerated approval of the proposed rule change.
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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
    
        The CBOE is submitting this rule filing to adopt an official policy 
    concerning the circumstances and conditions under which the Exchange, 
    in order to carry out its market surveillance and enforcement functions 
    for derivative products containing Italian component securities, may 
    obtain access to information regarding activity on the Italian 
    securities markets obtained by the SEC pursuant to the Commission's 
    Memorandum of Understanding (``MOU'') with the Commissione Nazionale 
    per le Societa e la Borsa (``CONSOB''). The text of the proposed rule 
    change is available at the Office of the Secretary, the 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 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 aspects of such statements.
    
    A. Self-Regulatory Organization's Statement of the Purpose of, and 
    Statutory Basis for, the Proposed Rule Change
    
        The CBOE does not have a surveillance sharing agreement with the 
    Milan Exchange, which is an unincorporated association and is not able 
    under Italian law to enter into such an arrangement. Therefore, the 
    purpose of the proposed rule change is to enable the CBOE to carry out 
    its market surveillance and enforcement functions for derivative 
    products containing Italian component securities by seeking the 
    necessary information about activity on the Italian securities markets 
    from the SEC per the latter's MOU with the CONSOB. The Exchange's 
    proposed policy details the circumstances and conditions under which 
    the Exchange may obtain access to such information from the SEC. By 
    adopting this policy, therefore, the Exchange believes it will be in a 
    position to list derivative products containing Italian component 
    securities because it will be able to have access to information on the 
    underlying securities which it may need for enforcement or market 
    surveillance purposes.
        The Exchange's proposed policy provides that the Exchange will 
    advise the SEC of information it needs regarding activity on the 
    Italian securities markets for market surveillance and enforcement 
    purposes. The SEC, in turn, may request the CONSOB's assistance, 
    pursuant to the MOU, in gaining access to such information. The 
    Exchange will use such information it may receive from the SEC only for 
    the purposes of conducting market surveillance and enforcement 
    proceedings. The Exchange will limit distribution of such information 
    to officers and directors of the Exchange and other employees directly 
    responsible for conducting market surveillance and enforcement 
    proceedings relating to the matter in connection with which the SEC 
    provided the information to the CBOE. The Exchange also will undertake 
    to maintain the confidentiality of the information and to take 
    appropriate disciplinary action in the event it learns of a breach of 
    such confidentiality, including referral to the SEC for any action the 
    SEC deems necessary or appropriate.
        By adopting a policy that provides access to information on the 
    underlying securities for market surveillance and enforcement purposes, 
    the Exchange will be able to list options and other derivative products 
    containing Italian component securities, provided that all other 
    applicable product listing standards are met.\3\ Therefore, the 
    Exchange believes that the proposed rule change could potentially 
    provide investors with the opportunity to invest in such products and 
    hedge their exposure to the Italian securities market. The Exchange 
    also believes that the proposed rule change, therefore, is consistent 
    with and furthers the objectives of Section 6(b)(5) of the Act, in that 
    it is designed to perfect the mechanisms of a free and open market
    
    [[Page 8475]]
    
    and to protect investors and the public interest.\4\
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        \3\ This filing only addresses trading requirements relating to 
    necessary surveillance sharing procedures.
        \4\ In approving the rule, the Commission has considered the 
    proposed rule's impact on efficiency, competition, and capital 
    formation. 15 U.S.C. 78c(f).
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    B. Self-Regulatory Organization's Statement on Burden on Competition
    
        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. 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, in that the proposal is 
    consistent with Section 6(b) of the Act, in general and, Section 
    6(b)(5),\5\ in particular, as it is designed to facilitate transactions 
    in securities, to promote just and equitable principles of trade, and 
    to protect investors and the public interest.
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        \5\ 15 U.S.C. 78f(b) and 78f(b)(5).
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        Specifically, the Commission believes that, since the CBOE does not 
    and cannot have a surveillance sharing agreement with the Milan 
    Exchange, the CBOE's adoption of the proposed policy will enable the 
    Exchange to carry out its market surveillance and enforcement functions 
    for derivative products containing Italian component securities by 
    seeking the necessary information about activity on the Italian 
    securities markets from the SEC per the latter's MOU with the CONSOB. 
    The Commission believes that the Exchange's proposed policy adequately 
    details the circumstances and conditions under which the Exchange may 
    obtain access to such information from the SEC.
        The Commission believes that, under the Exchange's proposed policy, 
    the Exchange will advise the SEC of information it needs regarding 
    activity on the Italian securities markets for market surveillance and 
    enforcement purposes. The Commission, in turn, may request the CONSOB's 
    assistance, pursuant to the MOU, in gaining access to such information. 
    The Commission notes that the Exchange will use such information it may 
    receive from the SEC only for the purposes of conducting market 
    surveillance and enforcement proceedings. The Commission also notes 
    that the Exchange will limit distribution of such information to 
    officers and directors of the Exchange and other employees directly 
    responsible for conducting market surveillance and enforcement 
    proceedings relating to the matter in connection with which the SEC 
    provided the information to the CBOE. In view of the importance of 
    maintaining the confidentiality of this information, the SEC believes 
    that the officers and/or directors overseeing the exchange employees 
    conducting the relevant market surveillance and enforcement proceedings 
    would be responsible for ensuring the confidentiality of the 
    information provided by the SEC pursuant to the MOU with the CONSOB and 
    should take reasonable measures to ensure that the information does not 
    become available to unauthorized persons. Thus, the Commission believes 
    that the Exchange will undertake to maintain the confidentiality of 
    such information and to take appropriate disciplinary action in the 
    event it learns of a breach of such confidentiality, including referral 
    to the SEC for any action the SEC deems necessary or appropriate.
        The Commission believes that the CBOE, by adopting a policy that 
    provides access to information on the underlying securities for market 
    surveillance and enforcement purposes, will be in a position to list 
    options and other derivative products containing Italian component 
    securities, provided that all other applicable product listing 
    standards are met. Therefore, the Exchange's proposed rule change could 
    potentially provide investors with the opportunity to invest in such 
    products and hedge their exposure to the Italian securities market. 
    Accordingly, the Commission believes that the proposed rule change is 
    consistent with and furthers the objectives of Section 6(b)(5) of the 
    Act, in that it is designed to perfect the mechanisms of a free and 
    open market and to protect investors and the public interest.
        The Commission notes that a substantially identical proposal was 
    published by the American Stock Exchange (``AMEX'') for the full 21 day 
    comment period without any comments being received by the Commission. 
    The Commission therefore believes that approving the CBOE policy on an 
    accelerated basis will allow the Exchange to pursue trading in options 
    and other derivative products containing Italian component securities 
    without further delay. Accordingly, the Commission finds that, 
    consistent with Section 6(b)(5) of the Act, good cause exists to 
    approve CBOE's proposed rule change on an accelerated basis prior to 
    the thirtieth day after the date of publication thereof in the Federal 
    Register.
    
    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 Room. Copies of such filing will also be 
    available for inspection and copying at the principal office of CBOE. 
    All submissions should refer to File No. SR-CBOE-96-77 and should be 
    submitted by March 18, 1997.
        It is therefore ordered, pursuant to Section 19(b)(2) of the 
    Act,\6\ that the proposed rule change (SR-CBOE-96-77) is hereby 
    approved on an accelerated basis.
    
        \6\ 15 U.S.C. 78s(b)(2).
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        For the Commission, by the Division of Market Regulation, 
    pursuant to delegated authority.\7\
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        \7\ 17 CFR 200.30-3(a)(12).
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    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 97-4605 Filed 2-24-97; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
02/25/1997
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
97-4605
Pages:
8474-8475 (2 pages)
Docket Numbers:
Release No. 34-38311, International Series Release No. 1055, File No. SR-CBOE-96-77
PDF File:
97-4605.pdf