[Federal Register Volume 59, Number 235 (Thursday, December 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30136]


[[Page Unknown]]

[Federal Register: December 8, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35035; File No. SR-CBOE-94-39]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc., Relating to 
Obligations to Furnish Information

December 1, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on November 
7, 1994, 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 self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to amend its rules to delineate the obligation of 
CBOE members and persons associated with CBOE members to furnish 
information in connection with inquiries arising from regulatory 
agreements that the Exchange has entered into with other regulatory and 
market institutions even in cases where the Exchange has not otherwise 
initiated an investigation. Specifically, the CBOE proposes to amend 
CBOE Rule 15.9, ``Regulatory Cooperation,'' to provide that as long as 
a CBOE member or person associated with a CBOE member is subject to the 
CBOE's jurisdiction, the CBOE member or person associated with a CBOE 
member is obligated to furnish testimony, documentary evidence or other 
information to the full extent provided in CBOE Rule 17.2(b), ``Conduct 
of Investigation,'' whether or not the Exchange has initiated the 
investigation, if the information is requested by the Exchange in 
connection with any inquiry resulting from an agreement entered into by 
the Exchange with a domestic or foreign self-regulatory organization or 
regulator pursuant to CBOE Rule 15.9.
    In addition, the CBOE proposes to amend CBOE Rule 17.2, ``Complaint 
and Investigation,'' to state clearly that each CBOE member and person 
associated with a CBOE member is obligated upon the Exchange's request 
to testify, respond in writing to interrogatories, and furnish 
documentary materials and other information requested by the Exchange 
in connection with an investigation initiated pursuant to CBOE Rule 
17.2(a), ``Initiation of Investigation,'' a hearing or appeal conducted 
pursuant to CBOE Chapter 17, ``Discipline,'' or an inquiry resulting 
from an agreement entered into by the Exchange pursuant to CBOE 15.9. 
The CBOE also proposes to amend Interpretation and Policy .01 to CBOE 
Rule 17.2 to provide that the failure to furnish testimony, documentary 
evidence, or other information requested by the CBOE in the course of 
an Exchange inquiry within the time period specified by the Exchange 
shall be deemed to be a violation of CBOE Rule 17.2.
    The text of the proposal is available at the Office of the 
Secretary, CBOE, and at the Commission.

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

    The CBOE states that the purpose of the proposal is to delineate 
the obligation of CBOE members and persons associated with CBOE members 
to furnish information in connection with inquiries arising from 
regulatory agreements that the CBOE has entered into with other 
regulatory and market institutions even in cases where the CBOE has not 
otherwise initiated an investigation. The proposal also delineates more 
clearly the obligation of CBOE members and persons associated with CBOE 
members to furnish information in connection with an investigation 
initiated by the CBOE itself, including information requested in 
connection with a hearing or appeal or the Exchange's preparation or a 
hearing or appeal.
    The CBOE states that over the past several years, the CBOE and 
other regulatory and market organizations have entered into agreements 
providing for the exchange of information for surveillance, 
investigative, enforcement, and other regulatory purposes. The CBOE's 
existing rules, however, do not clearly delineate the obligation of 
CBOE members or persons associated with CBOE members to furnish 
information when the provision of information is required in connection 
with these regulatory agreements in cases where the CBOE has not itself 
initiated an investigation. The proposal clearly establishes that the 
obligation to furnish information requested by the CBOE pursuant to 
these regulatory agreements is coextensive with the obligation to 
furnish information pursuant to an investigation initiated by the CBOE.
    The CBOE proposes to add paragraph (b) to CBOE Rule 15.9 to state 
clearly that pursuant to regulatory agreements entered into under CBOE 
Rule 15.9(a),\1\ the CBOE may require CBOE members and persons 
associated with CBOE members to provide the same information that must 
be provided under investigations initiated by the CBOE under CBOE Rule 
17.2(a). In addition, the CBOE proposes to amend CBOE Rule 17.2(b), 
``Requirement to Furnish Information,'' to clarify the obligation of 
CBOE members and persons associated with CBOE members to furnish 
information and to state that obligation clearly with respect to both 
investigations initiated by the CBOE and inquiries pursuant to 
regulatory agreements.
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    \1\ CBOE Rule 15.9(a) allows the Exchange to ``enter into 
agreements with domestic and foreign self-regulatory organizations, 
associations and contract markets and the regulators of such markets 
which provide for the exchange of information and other forms of 
mutual assistance for market surveillance, investigative, 
enforcement and other regulatory purposes.''
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    The CBOE states that the Exchange has long required CBOE members or 
persons associated with CBOE members to furnish testimony, documentary 
evidence, or other information requested in connection with an 
investigation initiated by the CBOE pursuant to CBOE Rule 17.2(a). 
Insofar as the proposed amendment to CBOE Rule 17.2(b) or 
Interpretation and Policy .01 to CBOE Rule 17.2 adds or alters language 
relating to the obligation to furnish information in connection with a 
CBOE investigation, hearing or appeal, or the preparation therefor, the 
new language is intended simply as a statement of the CBOE's 
longstanding interpretation of existing CBOE rules.
    The CBOE believes that the proposed rule change is consistent with 
Section 6(b) of the Act, in general, and furthers the objectives of 
Section 6(b)(5), in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices and to foster 
cooperation and coordination with persons engaged in regulating 
transactions in securities.

(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

    Within 35 days after 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 reason for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (a) by order approve such 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. 552, will be available for inspection and copying at the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. Copies of such filing will also be available for 
inspection and copying at the principal office of the above-mentioned 
self-regulatory organization. All submissions should refer to the file 
number in the caption above and should be submitted by December 29, 
1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\2\
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    \2\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-30136 Filed 12-7-94; 8:45 am]
BILLING CODE 8010-01-M