[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Notices]
[Pages 36592-36593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17665]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37393; File No. SR-CBOE-96-35]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc., To Amend the Firm
Facilitation Exemption
July 2, 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 June 12, 1996, the Chicago Board Options Exchange, Inc. (``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 self-regulatory
organization. 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. Sec. 78s(b)(1) (1988).
\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, pursuant to Rule 19b-4 of the Act, proposes to amend the
firm facilitation exemption provisions of its common or basic position
limit rule.
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
Earlier in 1996, the CBOE obtained Commission approval to expand
the firm facilitation exemption \3\ from position and exercise limits
to all non-multiply-listed Exchange option classes.\4\ Interpretation
.06 to Exchange Rule 4.11, the common or basic position limit rule,
contains the new firm facilitation exemption provisions. Currently,
only a member firm who facilitates and executes an order for its own
customer \5\ may qualify for a firm facilitation exemption.
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\3\ The CBOE notes that a facilitation trade is a transaction
that involves crossing an order of a member firm's public customer
with an order from the member firm's proprietary account.
\4\ See Securities Exchange Act Release No. 36964 (March 13,
1996), 61 FR 11453 (March 20, 1996) (File No. SR-CBOE-95-68).
\5\ The CBOE defines a customer order as one that is entered,
cleared, and in which the resulting position is carried with the
firm.
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The CBOE is proposing to amend the firm facilitation exemption so
that both: (a) A member firm who facilitates its own customer whose
account it carries, whether the firm executes the order itself or gives
the order to an independent broker for execution; and (b) a member firm
who receives a customer order for execution only (and thus will not
have the resulting position carried by the firm, may qualify for this
[[Page 36593]]
exemption. The CBOE believes that the proposed rule change will better
allow its member firms to meet the investing needs of their customers.
Because the proposed amendment to the firm facilitation exemption
should enhance the depth and liquidity of the market by allowing member
firms an exemption from position limits to facilitate large customer
orders, whether they are firms who accept customer orders for execution
only, or they are firms who carry their customers' accounts and
positions, the Exchange believes that this rule change is consistent
with and furthers the objectives of Section 6(b)(5) of the Act in that
it would remove impediments to and perfect the mechanism of a free
market in a manner consistent with the protection of investors and the
public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The CBOE does not believe that the proposed rule change will impose
any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on the Comments on 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 of 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 reasons for so finding, or (ii) as to
which self-regulatory organization consents, the Commission will:
A. By order approve the 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. Sec. 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 also will be available
for inspection and copying at the principal office of the CBOE. All
submissions should refer to File No. SR-CBOE-96-35 and should be
submitted by August 1, 1996.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-17665 Filed 7-10-96; 8:45 am]
BILLING CODE 8010-01-M
