[Federal Register Volume 64, Number 175 (Friday, September 10, 1999)]
[Notices]
[Pages 49255-49256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23612]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41822; File No. SR-CBOE-99-47]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, Inc. To Increase the Size of Orders Eligible for Automatic
Execution for Certain Classes of Options
September 1, 1999.
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 August 23, 1999, the Chicago Board Options Exchange, Inc. (``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 August 23, 1999, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the CBOE makes additional
representations regarding trading system and market maker capacity.
See letter from Christopher R. Hill, Attorney, CBOE, to Michael A.
Walinskas, Associate Director, Division of Market Regulation,
Commission, dated August 20, 1999 (``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 is proposing to increase the size limit of orders in
certain classes of
[[Page 49256]]
options contracts which are eligible for entry into the CBOE's Retail
Automatic Execution System (``RAES'') to 50 contracts, in order to
match the size limits of orders which will be eligible for entry into
the automatic execution system of the Philadelphia Stock Exchange
(``Phlx'').
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
1. Purpose
CBOE Rule 6.8(e) limits the size of RAES orders to twenty or fewer
contracts.\4\ As of August 20, 1999, options on Dell Computers (DLQ)
are listed only on the Phlx, options on International Business Machines
Corp. (IBM), Johnson & Johnson (JNJ), and Coca Cola (KO) are listed
only on the CBOE, and Ford Motor Corporation (F) is dually listed on
both the CBOE and the Phlx. However, in conformity with procedures of
The Options Clearing Corporation (``OCC'') established under the Joint
Exchange Options Plan (``Plan''), the Phlx recently sent notification
to the OCC, the Commission, and the other options exchanges that it is
seeking to multiply list options on IBM, JNJ, and KO. The CBOE has done
likewise with respect to DLQ. As a result, on Monday, August 23, 1999,
pursuant to OCC procedures, the Phlx plans to commence trading options
on IBM, JNJ, and KO, and the CBOE plans to commence trading options on
DLQ.
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\4\ Subsequently, the Commission has approved a proposed rule
filing by the CBOE to increase the size limit of all RAES orders to
50 contracts. See Securities Exchange Act Release No. 41821
(September 1, 1999) (SR-CBOE-99-17).
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On August 19, 1999, the Phlx announced, pursuant to Rule 1080(c),
that its order size limit for automatic execution for DLQ, IBM, JNJ,
and KO will be 50 contracts. The current size limit for automatic
execution of orders in F is already 50 contracts.
Therefore, pursuant to CBOE Rule 6.8 and Interpretation and Policy
.01, the CBOE proposes to increase the RAES order size limit in F, IBM,
JNJ, and KO to 50 contracts, and to set the initial order size limit
for DLQ at 50 contracts, in order to match the size limits for orders
in these option classes which are eligible for automatic execution on
the Phlx.
The Exchange represents that RAES has the capacity to accommodate a
RAES order limit size of 50 contracts in DLQ, IBM, JNJ, and KO, both in
terms of systems capacity as well as the market-making capacity of
market-makers participating in RAES.\5\
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\5\ See Amendment No. 1.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act, in general, and furthers the objectives
of Sections 6(b)(5) and 6(b)(8) of the Act in particular, in that it is
designed to remove unnecessary burdens on competition, as well as
remove impediments to and perfect the mechanism of a free and open
market and a national market system, for the benefit 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 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 rule change constitutes a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the Exchange, it
has become effective pursuant to section 19(b)(3)(A)(i) of the Act and
subparagraph (f)(1) of Rule 19b-4 thereunder. 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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 in the
Commission's Public Reference Room. 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-99-47 and should
be submitted by October 1, 1999.
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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-23612 Filed 9-9-99; 8:45 am]
BILLING CODE 8010-01-M