Federal Register: October 11, 2002 (Volume 67, Number 198)
DOCID: FR Doc 02-26018
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-46598; File No. SR-CBOE-2002-56]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Inc. Relating to Broker-Dealer Access on RAES
DOCUMENT SUMMARY:
October 3, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given
that on September 25, 2002, 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. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons. \1\ 15 U.S.C. 78(b)(1).
\2\ 17 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The CBOE is proposing to allow brokerdealer (``BD'') orders in
equity options to be eligible for routing through the Exchange's Retail
Automatic Execution System (``RAES''). The text of the proposed rule
change is available at the Office of the Secretary, CBOE and at the Commission.
II. SelfRegulatory 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 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 Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such statements.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange currently allows BD orders in certain index option
series to receive automatic execution through RAES, subject to the
conditions contained in Interpretation and Policy .01 (``I&P .01'') to
CBOE Rule 6.8. CBOE hereby proposes to amend I&P .01 to allow BDs to
submit orders through RAES in certain equity option classes and/or
series.\3\ Under the proposal, the Exchange intends to vest the
appropriate floor procedure committee (``FPC'') with the authority to
determine the classes and/or series in which BDs may submit orders
through RAES.\4\ As such, the Equity Floor Procedure Committee
(``EFPC'') would have responsibility for determining the eligible
equity option classes and/or series while the Index FPC (``IFPC'')
would have the authority for determining the eligible index option
classes and/or series (with the exception of the S&P 500, which falls
under the jurisdiction of the SPX FPC). In this regard, the Exchange
notes that with respect to equity options, the EFPC could determine to
make BD orders eligible for automatic execution in the 100 most active
classes, or conversely, the EFPC may allow BD orders in all series in
all equity option classes. Pronouncements regarding eligible classes
and/or series will be made by Regulatory Circular. The Exchange does
not propose any changes to the types of BD orders eligible for automatic execution.\5\
\3\ Correspondingly, BDs will be eligible to submit orders in
certain index option classes and/or series. Currently, BDs may submit orders in certain index option series.
\4\ The current rule allows the Exchange to determine the products in which BD orders may be submitted to RAES.
\5\ Currently, the Exchange may allow all categories of BD
orders to receive automatic execution or it may allow only those BD
orders that are not for the accounts of market makers or specialists to qualify for automatic execution.
Currently, there are three primary limitations on BD access to
SUMMARY:
Chicago Board Options Exchange, Inc.,
DOCUMENT BODY 2:
October 3, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given
that on September 25, 2002, 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. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons. \1\ 15 U.S.C. 78(b)(1).
\2\ 17 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The CBOE is proposing to allow brokerdealer (``BD'') orders in
equity options to be eligible for routing through the Exchange's Retail
Automatic Execution System (``RAES''). The text of the proposed rule
change is available at the Office of the Secretary, CBOE and at the Commission.
II. SelfRegulatory 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 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 Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such statements.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange currently allows BD orders in certain index option
series to receive automatic execution through RAES, subject to the
conditions contained in Interpretation and Policy .01 (``I&P .01'') to
CBOE Rule 6.8. CBOE hereby proposes to amend I&P .01 to allow BDs to
submit orders through RAES in certain equity option classes and/or
series.\3\ Under the proposal, the Exchange intends to vest the
appropriate floor procedure committee (``FPC'') with the authority to
determine the classes and/or series in which BDs may submit orders
through RAES.\4\ As such, the Equity Floor Procedure Committee
(``EFPC'') would have responsibility for determining the eligible
equity option classes and/or series while the Index FPC (``IFPC'')
would have the authority for determining the eligible index option
classes and/or series (with the exception of the S&P 500, which falls
under the jurisdiction of the SPX FPC). In this regard, the Exchange
notes that with respect to equity options, the EFPC could determine to
make BD orders eligible for automatic execution in the 100 most active
classes, or conversely, the EFPC may allow BD orders in all series in
all equity option classes. Pronouncements regarding eligible classes
and/or series will be made by Regulatory Circular. The Exchange does
not propose any changes to the types of BD orders eligible for automatic execution.\5\
\3\ Correspondingly, BDs will be eligible to submit orders in
certain index option classes and/or series. Currently, BDs may submit orders in certain index option series.
\4\ The current rule allows the Exchange to determine the products in which BD orders may be submitted to RAES.
\5\ Currently, the Exchange may allow all categories of BD
orders to receive automatic execution or it may allow only those BD
orders that are not for the accounts of market makers or specialists to qualify for automatic execution.
Currently, there are three primary limitations on BD access to