[Federal Register Volume 61, Number 122 (Monday, June 24, 1996)]
[Notices]
[Pages 32470-32471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16029]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37313; File No. SR-CBOE-96-30]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Incorporated Relating to Its Retail Automatic Execution
System Participation Requirements in OEX Options
June 14, 1996.
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 May 9, 1996, 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
Exchange. The Exchange submitted to the Commission Amendment No. 1 on
June 12, 1996.\3\ 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.
\3\ The Exchange submitted Amendment No. 1 to clarify the duties
of the OEX Market Performance Committee, as described more fully
herein. See Letter from Timothy Thompson, Senior Attorney, CBOE, to
John Ayanian, Attorney, Office of Market Supervision (``OMS''),
Division of Market Regulation (``Market Regulation''), Commission,
dated June 4, 1996 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules respecting eligibility to
participate in the CBOE's Retail Automatic Execution System (``RAES'')
for transactions in Standard & Poor's 100 Index (``OEX'') options. The
text of the proposed rule change is available at the Office of the
Secretary, the Exchange, 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 Exchange included statements
concerning the purpose of and basis for 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
Section (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 purpose of the proposed rule change is to amend Rule 24.17
(``RAES Eligibility in OEX'') to require individual market-makers, who
are eligible to participate on OEX RAES, to log onto OEX RAES any time
they are present in the OEX trading crowd until the expiration date if
they have logged onto OEX RAES at any earlier time in that expiration
month.\4\ This rule proposal would conform the OEX RAES eligibility
rule to a similar requirement in the SPX RAES eligibility rule and the
RAES eligibility rule for equity options. The rule proposal also would
move authority over certain of the provisions of the rule from the OEX
Floor Procedure Committee to the OEX Market Performance Committee
(``OEXMPC''). The OEXMPC was recently formed by the Exchange to handle
market performance issues of the OEX trading post, including RAES
related issues.\5\ The Exchange represents that it will issue a
regulatory circular to its membership outlining the duties to be
performed by the OEXMPC.\6\
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\4\ The ``expiration month'' is from the Monday following an
expiration date to the next expiration date. For example, the July
expiration month starts on June 24, 1996, and ends on July 19, 1996.
\5\ The OEX Market Performance Committee was created in November
1995 in order to evaluate the performance of the OEX trading crowd
in fulfilling its general market-related duties and to make
recommendations on how to improve trading crowd performance. The
OEXMPC will, among other things, recommend rules and programs to
enhance market performance, respond to market performance related
issues in the OEX trading crowd including RAES and firm quote
concerns, monitor the opening rotation procedures used in OEX, and
conduct OEX crowd evaluation surveys. See Amendment No. 1, supra
note 3.
\6\ Telephone Conversation between Timothy Thompson, Senior
Attorney, CBOE, to John Ayanian, Attorney, OMS, Market Regulation,
Commission, on June 12, 1996.
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By requiring market-makers to log onto OEX RAES each time they are
in the trading crowd, the Exchange expects to ensure that there is
always adequate participation in RAES to handle the small customer
orders that are eligible for RAES, even in the busiest market
conditions, without having to assign an inordinate number of RAES
trades to any particular market-maker. Currently, the Rule does not
permit the Exchange to require RAES participation by members of the OEX
trading crowd in the event there appears to be inadequate
participation. The Exchange believes, however, that this proposed rule
change will help to avoid forced participation.
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act, in general, and furthers the objectives of
Section 6(b)(5), in particular, in that it is designed to promote just
and equitable principles of trade, to foster cooperation with persons
engaged in facilitating and clearing transactions in securities, and to
protect investors and the public interest.
(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.
(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
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
(3) was provided to the Commission for its review at least five days
prior to the filing date; and (4) does not become operative for 30 days
from June 12, 1996,\7\ the rule change proposal has
[[Page 32471]]
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule
19b-4(e)(6) thereunder. In particular, the Commission believes the
proposal would qualify as a ``noncontroversial filing'' in that the
proposed standards do not significantly affect the protection of
investors or the public interest and do not impose any significant
burden on competition. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\7\ Because the Exchange filed Amendment No. 1 subsequent to the
original filing date, the 30-day period commences on the filing date
of Amendment No. 1.
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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. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the CBOE. All
submissions should refer to SR-CBOE-96-30 and should be submitted by
July 15, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-16029 Filed 6-21-96; 8:45 am]
BILLING CODE 8010-01-M
