[Federal Register Volume 59, Number 106 (Friday, June 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13471]
[[Page Unknown]]
[Federal Register: June 3, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34127; File No. SR-CBOE-94-01]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by the Chicago Board Options Exchange, Inc., Relating to the
Submission of Options Transaction Data for Trade Recording and Price
Reporting Purposes
May 27, 1994.
On January 22, 1994, the Chicago Board Options Exchange, Inc.
(``CBOE'' or ``Exchange'') submitted to the Securities and Exchange
Commission (``SEC'' or ``Commission''), pursuant to section 19(b) of
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposal to amend CBOE Rule 6.51, ``Reporting
Duties,'' Interpretation and Policy .01, to allow members to submit
options transaction data to the Exchange for trade recording and price
reporting purposes through an electronic data storage medium approved
by the Exchange.\3\
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\1\15 U.S.C. 78(b)(1) (1982).
\2\17 CFR 240.19b-4 (1993).
\3\On April 12, 1994, the CBOE submitted a letter clarifying
that the proposal would allow buyers and sellers to submit
transaction information through an electronic data storage medium
acceptable to the Exchange and allow them to provide the information
required for price reporting through an electronic data transmission
link approved by the CBOE. See letter from Michael L. Meyer, Schiff
Hardin & Waite, to Yvonne Fraticelli, Staff Attorney, Options
Branch, Division of Market Regulation (``Division''), Commission,
dated April 8, 1994.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 33730 (March 8, 1994), 59 FR 11814. No
comments were received on the proposed rule change.
Currently, CBOE Rule 6.51, Interpretation and Policy .01, requires
both the buyer and the seller in a transaction to record on a card or
ticket information concerning the transaction, including the buyer's or
seller's assigned broker initial code and his clearing firm (if a
market maker), the symbol of the underlying security, the type,
expiration month and exercise price of the option contract, the
transaction price, the number of contract units comprising the
transaction, the time of the transaction, the name of the contra
clearing firm member and the assigned broker initial code of the contra
member. Under Interpretation and Policy .01, this information
constitutes the ``transaction record.'' The CBOE proposes to amend
Interpretation and Policy .01 to allow members to submit options
transaction data to the Exchange for trade recording and price
reporting purposes through an electronic data storage medium approved
by the Exchange.
Under current CBOE Rule 6.51, Interpretation and Policy .01, buyers
and sellers must submit transaction data in paper form only, either on
a trade ticket or transaction card. The CBOE believes that in today's
market and operations technology environment, that limitation is unduly
restrictive, and some CBOE members have requested the opportunity to
submit transaction record data by means of electronic data
transmission. Submission in that form would enable those members to
enjoy the efficiency of reporting trades and prices to the CBOE through
the same automated medium they use to report that information to their
clearing firms. Accordingly, the CBOE seeks authority to approve
particular electronic media in addition to paper that CBOE members may
use for trade recording and price reporting purposes.
In administering the proposed rule change, the CBOE states that the
Exchange will from time to time identify particular electronic media
and formats acceptable for use under Exchange Rule 6.51 based on
members' needs, and will inform members about acceptable media and
formats through appropriate circulars. The CBOE expects to identify as
acceptable only those electronic media that involve secure and tested
technology.
The CBOE believes that the proposed rule change is consistent with
section 6(b) of the Act, in general, and with Section 6(b)(5), in
particular, in that it is designed to facilitate cooperation and
coordination with persons engaged in the clearance and settlement of
securities transactions, consistent with the protection of investors
and the public interest.
The Commission finds that the proposal is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange and, in particular, with
the requirements of section 6(b)(5) and section 17A(a)(1)(A) of the
Act.\4\ Specifically, the Commission believes that the CBOE's proposal
will provide buyers and sellers on the CBOE with an efficient and
accurate means of recording options transactions and submitting price
reporting information to the CBOE with an efficient and accurate means
of recording options transactions and submitting price reporting
information to the CBOE while preserving the CBOE's ability to create
necessary and reliable audit trail information. The Commission believes
that the electronic submission of transaction data should help to
ensure the accuracy of the CBOE's audit trails by reducing the
possibility of human error.\5\ In turn, the audit trail information
should help the CBOE to enforce compliance by its members with the
federal securities laws and the CBOE's rules, thereby increasing the
CBOE's ability to prevent fraudulent and manipulative acts and
practices, promote just and equitable principles of trade and protect
investors and the public interest, consistent with section 6(b)(5) of
the Act. Moreover, the Commission finds that the proposal is consistent
with section 17A(a)(1)(A) of the Act because it is designed to promote
the prompt and accurate clearance and settlement of securities
transactions.
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\4\15 U.S.C 78f and 78q-1 (1982).
\5\Telephone conversation between Barbara Casey, CBOE, and
Yvonne Fraticelli, Staff Attorney, Options Branch, Division,
Commission, on April 22, 1994.
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In addition, the CBOE has represented that it will approve only
those electronic media that involve secure and tested technology for
submitting options transaction data under CBOE Rule 6.51. The
Commission expects the CBOE to notify the Commission of any changes in
the technology approved by the Exchange for submitting options
transaction data.
It is therefore ordered, pursuant to section 19(b)(2) of the Act\6\
that the proposed rule change (SR-CBOE-94-01) is approved.
\6\15 U.S.C. 78s(b)(2) 1982).
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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) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13471 Filed 6-2-94; 8:45am]
BILLING CODE 8010-01-M
