[Federal Register Volume 61, Number 74 (Tuesday, April 16, 1996)]
[Notices]
[Pages 16662-16663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9304]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37090; File No. SR-CBOE-96-05]


Self-Regulatory Organizations; Order Granting Approval to 
Proposed Rule Change by the Chicago Board Options Exchange, Inc., 
Relating to Limitation of Liability of Index Reporting Authorities

April 9, 1996.

I. Introduction

    On February 7, 1996, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange Rule 24.14, 
which provides for disclaimers of liability on behalf of designated 
index reporting authorities.
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    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4 (1994).
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    The proposed rule change appeared in the Federal Register on March 
5, 1996.\3\ No comments were received on the

[[Page 16663]]

proposed rule change. This order approves the CBOE's proposal.
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    \3\ See Securities Exchange Act Release No. 36896 (February 27, 
1996), 61 FR 8698 (March 5, 1996).
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II. Background and Description

    The purpose of the proposed rule change is to amend Exchange Rule 
24.14, which in its present form contains four separate disclaimers of 
liability on behalf of four different index reporting authorities.\4\ 
Index reporting authorities provide index values to the Exchange that 
serve as the basis for the various classes of index options listed and 
traded on the Exchange. Pursuant to the terms of the Exchange's 
contracts with certain index reporting authorities, the Exchange has 
agreed to include these specific liability disclaimers in its rules. 
Although the substance of each of these disclaimers is the same, they 
differ somewhat in their language, as reflected in the four paragraphs 
of existing Exchange Rule 24.14. The proposed rule change would combine 
the four existing disclaimers in a single paragraph in order to 
eliminate editorial differences among them, and add the CBOE and any 
other designated index reporting authorities as persons entitled to the 
benefit of the disclaimer.
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    \4\ In Exchange Rule 24.1(h), the CBOE defines the term 
``reporting authority'' in respect of a particular index as the 
institution or reporting service designated by the Exchange as the 
official source for calculating the level of the index from the 
reported prices of the underlying securities that are the basis of 
the index and reporting such level.
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular, with the requirements of Section 6(b)(5),\5\ in that by 
retaining and clarifying existing disclaimers of liability that have 
been found to satisfy statutory standards, the proposed rule change 
will improve the basis on which index options are listed and traded on 
the CBOE. This improvement, in turn, will serve to promote just and 
equitable principles of trade as well as to protect investors and the 
public interest. In addition, the Commission believes that it is 
reasonable for the Exchange to define the domain of persons who are 
entitled to the benefits associated with the disclaimer.
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    \5\ 15 U.S.C. 78f(b)(5) (1988).
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IV. Conclusion

    For the foregoing reasons, the Commission finds that the CBOE's 
proposal to amend Exchange Rule 24.14 is consistent with the 
requirements of the Act and the rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-CBOE-96-05) is approved.

    \6\ 15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-9304 Filed 4-15-96; 8:45 am]
BILLING CODE 8010-01-M