[Federal Register Volume 62, Number 57 (Tuesday, March 25, 1997)]
[Notices]
[Pages 14172-14173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7395]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38414; File No. SR-CBOE-97-01]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of a Proposed Rule Change and Amendment
No. 1 to the Proposed Rule Change by the Chicago Board Options
Exchange, Inc. Relating to Listing Criteria for Other Securities
March 18, 1997.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''), and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 21, 1997, the Chicago Board Options Exchange,
Incorporated (``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 CBOE. On March 14, 1997, the CBOE submitted
Amendment No. 1 to the proposed rule change.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons and to grant accelerated approval to the
proposed rule change, as amended.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange clarified that Rule 31.5.F
currently requires a minimum of 100 public holders if the security
that is the subject of the listing is traded in thousand dollar
denominations. The CBOE's original filing had misstated the current
provision as requiring a minimum of 400 public holders if the
security is traded in thousand dollar denominations. See Letter from
Timothy Thompson, Senior Attorney, CBOE, to Debbie Flynn, Division
of Market Regulation, Commission, dated March 14, 1997 (``Amendment
No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CBOE proposes to amend its Rule 31.5.F to conform the
Exchange's listing criteria for ``Other Securities'' to those of other
exchanges. The text of the proposed rule change 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, 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 if received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend Exchange Rule
31.5.F which sets forth the listing criteria for ``Other Securities.''
Securities that might be listed by the Exchange under this category are
securities that do not fit within the traditional definitions of equity
or debt securities or that do not otherwise qualify for listing under
Exchange Rule 31.5. These ``Other Securities'' may have certain
characteristics of any of these other types of securities.
CBOE believes Rule 31.5 is more restrictive than comparable rules
of the New York Stock Exchange (``NYSE'') and the American Stock
Exchange (``Amex''). Rule 31.5.F specifies minimum issuer
qualifications with respect to assets and stockholders' equity, the
minimum public distribution, the minimum aggregate market value and
other criteria to assist the Exchange in considering the suitability of
these securities for listing on the Exchange. To make its rule
consistent with rules of the other exchanges, the Exchange is proposing
to eliminate current provisions that prohibit the listing of (1) any
cash settled product that is settled in any currency other than U.S.
dollars, or (2) any product that has a mandatory redemption price of
less than three dollars. Additionally, the Exchange proposes to delete
the provision requiring 100 public holders if the security is traded in
thousand dollar denominations.
2. Statutory Basis
The proposed rule change is designed to enable the CBOE to compete
effectively for listings in these types of securities. As such, the
proposed rule change is consistent with Section 6(b) \4\ of the Act, in
general, and furthers the objectives of Section 6(b)(5) \5\ in
particular in that it is designed to promote just and equitable
principles of trade and to protect investors and the public interest.
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\4\ 15 U.S.C. Sec. 78f(b).
\5\ 15 U.S.C. Sec. 78f(b)(5).
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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. 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 20549. Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the
[[Page 14173]]
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. Sec. 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 the principal office of CBOE. All
submissions should refer to File No. SR-CBOE-97-01 and should be
submitted by April 15, 1997.
IV. Commission's Findings and Order Granting Approval of Proposed Rule
Change
The Commission has reviewed carefully the CBOE's proposed rule
change and proposed Amendment No. 1 and believes, for the reasons set
forth below, this proposal is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to a national
securities exchange. Specifically, the Commission believes the proposal
is consistent with Section 6(b)(5) \6\ of the Act which requires
national securities exchanges to have rules designed to remove
impediments to and perfect the mechanism of a free and open market and
in general, to protect investors and the public interest.
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\6\ 15 U.S.C. Sec. 78f(b)(5).
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The Commission notes that the CBOE proposal conforms the CBOE's
listing standards for ``Other Securities'' to those of other
exchanges.\7\ As such, the Commission believes the proposal should
allow the Exchange to compete more effectively with other exchanges for
the listing of these types of securities. The Commission notes that
although it is reasonable for the Exchange to delete from CBOE's rules
certain mandatory listing standards for ``Other Securities,'' \8\
proposals that deviate from these standards might raise novel or
significant regulatory issues that would require a proposed rule change
to list the product.\9\ Further, in approving the elimination of the
100 holder requirement where the security is traded in thousand dollar
denominations, the Commission notes that the rule will still require
that the security have a minimum market value at issuance of $4
million. This should help to ensure that issuances in $1,000
denominations are large enough to support a liquid market.
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\7\ See, e.g., Section 107A of the Amex Company Guide; Section
703.19 of the NYSE Listed Company Manual.
\8\ The affected provisions currently prevent the listing of (1)
any cash settled product settled in any currency other than U.S.
dollars or (2) any product that has a mandatory redemption price of
less than three dollars. In addition, CBOE proposes to eliminate the
provision requiring a minimum of 100 public holders if the security
is traded in thousand dollar denominations.
\9\ See e.g., Securities Exchange Act Release No. 27753 (March
1, 1990), 55 FR 8626 (March 8, 1990) (order approving File No. SR-
Amex-89-29). For example, a stock index-linked note that was payable
in foreign currency would raise important regulatory issues among
which might include the need to address appropriate product term and
risk disclosure, customer suitability, and settlement procedures.
Accordingly, the Commission expects the CBOE to consult with it on
the need to file a Section 19(b) rule change to list a product with
such terms under the Rule 31.5 listing standards.
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The Commission finds good cause for approving the foregoing rule
change proposal and proposed Amendment No. 1 on an accelerated basis
prior to the thirtieth day after the date of publication thereof in the
Federal Register. As discussed above, the proposal received no
comments.\10\ Based on the above, the Commission finds that consistent
with Sections 6(b)(5) \11\ and 19(b)(2) \12\ of the Act, good cause
exists to accelerate approval of the proposal, as amended.
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\10\ See Securities Exchange Act Release No. 37472 (July 23,
1996), 61 FR 40058 (July 31, 1996) (approving File No. SR-Phlx-96-
28); Securities Exchange Act Release No. 37165 (May 3, 1996), 61 FR
21215 (May 9, 1996) (approving File No. SR-Amex-96-15).
\11\ 15 U.S.C. Sec. 78f(b)(5).
\12\ 15 U.S.C. Sec. 78s(b)(2).
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It is therefore ordered, pursuant to section 19(b)(2) \13\ of the
Act, that the proposed rule change (SR-CBOE-97-01), including Amendment
No. 1, is hereby approved on an accelerated basis.
\13\ 15 U.S.C. Sec. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to the delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-7395 Filed 3-24-97; 8:45 am]
BILLING CODE 8010-01-M
