[Federal Register Volume 60, Number 13 (Friday, January 20, 1995)]
[Notices]
[Pages 4208-4209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1494]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35227; File No. SR-CBOE-94-55]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc. Relating to Short 
Interest Reporting Requirements

January 13, 1995.
    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 January 
3, 1995, 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. On January 5, 1995, the CBOE filed Amendment No. 1 to the 
proposed rule change.\1\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.

    \1\See letter from Timothy Thompson, attorney, CBOE, to Glen 
Barrentine, Senior Counsel, Commission, dated January 3, 1995.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to require each member of the Exchange to report 
their short stock positions if the member meets the following three 
requirements: (1) The member clears stock transactions, (2) the 
Exchange is the designated Examining Authority (``DEA'') for the 
member, and (3) the [[Page 4209]] member is not otherwise required to 
report its short stock positions to either the National Association of 
Securities Dealers, Inc. (the ``NASD'') or to a stock exchange as a 
result of being a member of such organization. The short stock 
positions would be required to be furnished to either a stock exchange 
or to the NASD, as the Exchange may designate. The form, manner, and 
time of such report shall be specified by the appropriate exchange or 
the NASD.
    The text of the proposed rule change is available at he 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

1. Purpose
    The purpose of the proposed rule change is to assure that all 
broker-dealers who clear stock report their short stock positions to 
the appropriate regulatory authority, whether it be the NASD or an 
exchange on which the security is listed or of which the broker-dealer 
is a member. Reports of short stock interest are an important tool of 
regulators in monitoring activity in stocks and in detecting possible 
cases of insider trading or manipulation. Further, some members' 
customers use the publicly reported short interest information when 
making investment decisions.
    Although the CBOE does not list or trade stock, it is the DEA for 
at least one member who clears stock transactions. Under current rules 
of the other self regulatory organizations, the member is not required 
to report its short stock positions.\2\ Consequently, in an effort to 
assure that no broker-dealer can avoid the responsibility to report 
short stock interest, the CBOE is adding interpretation .02 to its Rule 
15.1, Maintenance, Retention and Furnishing of Books, Records and Other 
Information. This interpretation would require members for which the 
CBOE is the DEA to report short stock positions to either a stock 
exchange or to the NASD, as the CBOE may designate. The specifics of 
the reporting would be dictated by the entity to which the report would 
be sent. Because the CBOE does not have as great an interest in 
reviewing the short stock data as the exchange on which the stock is 
listed and because there is currently only one member who would be 
required to report its short stock positions under this interpretation, 
the CBOE believes it is more practical to have another self regulatory 
organization receive the short interest report.

    \2\CBOE is the DEA for Gill and Co. which is not a member of the 
NASD or the New York Stock Exchange, both of which have 
comprehensive short stock reporting rules. Gill and Co. clears stock 
transactions at the Midwest Clearing Corporation.
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    The CBOE will enter into an agreement with any self regulatory 
organization that is to receive a short interest report of our member, 
specifying that entity's agreement to receive this report. That 
organization will then use the data, along with the short interest data 
it receives from its members, for appropriate regulatory purposes.
2. Statutory Basis
    The CBOE believes that the proposed rule change is consistent with 
Section 6 of the Act in general and Section 6(b)(5) in particular in 
that it is designed to prevent fraudulent and manipulative acts and 
practices, to promote fair and equitable principles of trade, and, in 
general, to protect investors and the public interest. The proposed 
rule change provides for the public disclosure and dissemination of 
short interest data which is not currently disclosed, thereby 
augmenting market transparency for the subject securities and enabling 
investors to make more informed investment decisions. As mentioned 
above, the proposed rule also assists regulatory efforts in discovering 
manipulation.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 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 the 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. 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 will also be available 
for inspection and copying at the principal office of the CBOE. All 
submissions should refer to File No. SR-CBOE-94-55 and should be 
submitted by February 10, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-1494 Filed 1-19-95; 8:45 am]
BILLING CODE 8010-01-M