Federal Register: October 21, 2002 (Volume 67, Number 203)
DOCID: FR Doc 02-26689
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-46644; File No. SR-CBOE-2002-60]
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. Extending for a Two-Month Period the Pilot Program for the Exchange's 100 Spoke RAES Wheel
DOCUMENT SUMMARY:
October 10, 2002.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on September 30, 2002, 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
Exchange. The proposed rule change has been filed by CBOE as a ``non
controversial'' rule change under Rule 19b4(f)(6) of the Act.\3\ The
Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 17 CFR 240.19b4(f)(6).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
CBOE proposes to extend, for an additional twomonth period, the pilot program that permits the appropriate Floor Procedure Committee (``FPC'') to allocate orders on the Exchange's Retail Automatic Execution System (``RAES'') under the allocation system known as the 100 Spoke RAES Wheel.
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, 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. CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
On May 25, 2000, the Commission approved on a ninemonth pilot
basis the Exchange's proposal to amend Rule 6.8, which governs the
operation of RAES,\4\ to provide the appropriate FPC with a third
choice for apportioning RAES trades among participating market makers,
the 100 Spoke RAES Wheel.\5\ In those classes where the 100 Spoke RAES
Wheel is employed, the distribution of RAES trades to participating
marketmakers is essentially identical to the distribution of inperson
agency marketmaker trades for nonRAES trades in that class. The 100 Spoke RAES Wheel pilot program is used as anticipated.
\4\ RAES is the Exchange's automatic execution system for public
customer market or marketable limit orders of less than a certain size.
\5\ Securities Exchange Act Release No. 42824 (May 25, 2000), 65 FR 37442 (June 14, 2000) (SRCBOE9940).
The pilot program was extended four times and currently ends on
September 28, 2002.\6\ The Exchange now proposes to extend the pilot
program for an additional twomonth period ending November 28, 2002 pending permanent approval of the pilot program.
\6\ Securities Exchange Act Release No. 44020 (February 28,
2001), 66 FR 13985 (March 8, 2001) (sixmonth extension, SRCBOE
200107); Securities Exchange Act Release No. 44749 (August 28,
2001), 66 FR 46487 (September 5, 2001) (fourmonth extension, SR
CBOE200147); Securities Exchange Act Release No. 45230 (January 3,
2002), 67 FR 1380 (January 10, 2002) (sixmonth extension, SRCBOE
200168); and Securities Exchange Act Release No. 46149 (June 28,
2002), 67 FR 45161 (July 8, 2002) (threemonth extension, SRCBOE 200234).
2. Statutory Basis
The Exchange believes that the proposed rule change will continue to be consistent with the requirements of Section 6(b)(5) of the Act.\7\ Section 6(b)(5) of the Act requires, among other things, that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to facilitate transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
\7\ 15 U.S.C. 78f(b)(5).
CBOE believes that the pilot program will continue to provide the
appropriate FPC with flexibility in determining the appropriate
allocation system for a given class of options on RAES. CBOE believes
that the continuation of the pilot program will continue to reward
those market makers who are most active in providing liquidity to agency business in the assigned option class.
B. SelfRegulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
C. SelfRegulatory 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
The proposed rule change has been filed by the Exchange as a ``non
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act
\8\ and Rule 19b4(f)(6) thereunder.\9\ 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, and (3) by its terms does not become operative
for 30 days after the date of this filing, or such shorter time as the
Commission may designate, if consistent with the protection of investors and the public interest,
[[Page 64672]]
provided that the selfregulatory organization has given the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b4(f)(6)\11\ thereunder.
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b4(f)(6).
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b4(f)(6).
The Exchange has requested that the Commission waive the fiveday prenotice requirement and the 30day operative delay, to permit the Exchange to implement the proposal on September 30, 2002, the date of filing. September 30, 2002 is the first trading day after expiration of the pilot program on Saturday, September 28, 2002. Under Rule 19b 4(f)(6)(iii), a proposed ``noncontroversial'' rule change does not become operative for 30 days after the date of filing, unless the Commission designates a shorter time.
The Commission believes that waiving the 30day operative delay is
consistent with the protection of investors and the public interest
because it will allow for the continued operation of the pilot without
interruption.\12\ According to CBOE, with the continuation of the pilot
program, market makers will continue to have greater incentive to
compete effectively for orders in the crowd, which benefits investors
and promotes the public interest. In addition, CBOE maintains that
given the widespread use of the 100 Spoke RAES Wheel in equity options
trading stations, requiring the Exchange to discontinue the use of the
100 Spoke RAES Wheel as of September 30, 2002 would cause disruption to
those trading stations and thus, be disruptive to investors and the
public interest. For these reasons, the Commission designates the
proposed rule change to be effective and operative upon filing with the
Commission. The Commission also waives the fivebusinessday prefiling
requirement. 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.
\12\ For the purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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 205490609. 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 Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange.
All submissions should refer to the File No. SRCBOE200260 and should be submitted by November 12, 2002.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\13\
\13\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0226689 Filed 101802; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Chicago Board Options Exchange, Inc.,
DOCUMENT BODY 2:
October 10, 2002.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on September 30, 2002, 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
Exchange. The proposed rule change has been filed by CBOE as a ``non
controversial'' rule change under Rule 19b4(f)(6) of the Act.\3\ The
Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 17 CFR 240.19b4(f)(6).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
CBOE proposes to extend, for an additional twomonth period, the pilot program that permits the appropriate Floor Procedure Committee (``FPC'') to allocate orders on the Exchange's Retail Automatic Execution System (``RAES'') under the allocation system known as the 100 Spoke RAES Wheel.
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, 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. CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
On May 25, 2000, the Commission approved on a ninemonth pilot
basis the Exchange's proposal to amend Rule 6.8, which governs the
operation of RAES,\4\ to provide the appropriate FPC with a third
choice for apportioning RAES trades among participating market makers,
the 100 Spoke RAES Wheel.\5\ In those classes where the 100 Spoke RAES
Wheel is employed, the distribution of RAES trades to participating
marketmakers is essentially identical to the distribution of inperson
agency marketmaker trades for nonRAES trades in that class. The 100 Spoke RAES Wheel pilot program is used as anticipated.
\4\ RAES is the Exchange's automatic execution system for public
customer market or marketable limit orders of less than a certain size.
\5\ Securities Exchange Act Release No. 42824 (May 25, 2000), 65 FR 37442 (June 14, 2000) (SRCBOE9940).
The pilot program was extended four times and currently ends on
September 28, 2002.\6\ The Exchange now proposes to extend the pilot
program for an additional twomonth period ending November 28, 2002 pending permanent approval of the pilot program.
\6\ Securities Exchange Act Release No. 44020 (February 28,
2001), 66 FR 13985 (March 8, 2001) (sixmonth extension, SRCBOE
200107); Securities Exchange Act Release No. 44749 (August 28,
2001), 66 FR 46487 (September 5, 2001) (fourmonth extension, SR
CBOE200147); Securities Exchange Act Release No. 45230 (January 3,
2002), 67 FR 1380 (January 10, 2002) (sixmonth extension, SRCBOE
200168); and Securities Exchange Act Release No. 46149 (June 28,
2002), 67 FR 45161 (July 8, 2002) (threemonth extension, SRCBOE 200234).
2. Statutory Basis
The Exchange believes that the proposed rule change will continue to be consistent with the requirements of Section 6(b)(5) of the Act.\7\ Section 6(b)(5) of the Act requires, among other things, that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to facilitate transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
\7\ 15 U.S.C. 78f(b)(5).
CBOE believes that the pilot program will continue to provide the
appropriate FPC with flexibility in determining the appropriate
allocation system for a given class of options on RAES. CBOE believes
that the continuation of the pilot program will continue to reward
those market makers who are most active in providing liquidity to agency business in the assigned option class.
B. SelfRegulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
C. SelfRegulatory 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
The proposed rule change has been filed by the Exchange as a ``non
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act
\8\ and Rule 19b4(f)(6) thereunder.\9\ 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, and (3) by its terms does not become operative
for 30 days after the date of this filing, or such shorter time as the
Commission may designate, if consistent with the protection of investors and the public interest,
[[Page 64672]]
provided that the selfregulatory organization has given the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b4(f)(6)\11\ thereunder.
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b4(f)(6).
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b4(f)(6).
The Exchange has requested that the Commission waive the fiveday prenotice requirement and the 30day operative delay, to permit the Exchange to implement the proposal on September 30, 2002, the date of filing. September 30, 2002 is the first trading day after expiration of the pilot program on Saturday, September 28, 2002. Under Rule 19b 4(f)(6)(iii), a proposed ``noncontroversial'' rule change does not become operative for 30 days after the date of filing, unless the Commission designates a shorter time.
The Commission believes that waiving the 30day operative delay is
consistent with the protection of investors and the public interest
because it will allow for the continued operation of the pilot without
interruption.\12\ According to CBOE, with the continuation of the pilot
program, market makers will continue to have greater incentive to
compete effectively for orders in the crowd, which benefits investors
and promotes the public interest. In addition, CBOE maintains that
given the widespread use of the 100 Spoke RAES Wheel in equity options
trading stations, requiring the Exchange to discontinue the use of the
100 Spoke RAES Wheel as of September 30, 2002 would cause disruption to
those trading stations and thus, be disruptive to investors and the
public interest. For these reasons, the Commission designates the
proposed rule change to be effective and operative upon filing with the
Commission. The Commission also waives the fivebusinessday prefiling
requirement. 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.
\12\ For the purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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 205490609. 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 Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange.
All submissions should refer to the File No. SRCBOE200260 and should be submitted by November 12, 2002.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\13\
\13\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0226689 Filed 101802; 8:45 am]
BILLING CODE 801001P