[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Notices]
[Pages 36592-36593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17665]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37393; File No. SR-CBOE-96-35]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc., To Amend the Firm 
Facilitation Exemption

July 2, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 12, 1996, 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. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE, pursuant to Rule 19b-4 of the Act, proposes to amend the 
firm facilitation exemption provisions of its common or basic position 
limit rule.

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

    Earlier in 1996, the CBOE obtained Commission approval to expand 
the firm facilitation exemption \3\ from position and exercise limits 
to all non-multiply-listed Exchange option classes.\4\ Interpretation 
.06 to Exchange Rule 4.11, the common or basic position limit rule, 
contains the new firm facilitation exemption provisions. Currently, 
only a member firm who facilitates and executes an order for its own 
customer \5\ may qualify for a firm facilitation exemption.
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    \3\ The CBOE notes that a facilitation trade is a transaction 
that involves crossing an order of a member firm's public customer 
with an order from the member firm's proprietary account.
    \4\ See Securities Exchange Act Release No. 36964 (March 13, 
1996), 61 FR 11453 (March 20, 1996) (File No. SR-CBOE-95-68).
    \5\ The CBOE defines a customer order as one that is entered, 
cleared, and in which the resulting position is carried with the 
firm.
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    The CBOE is proposing to amend the firm facilitation exemption so 
that both: (a) A member firm who facilitates its own customer whose 
account it carries, whether the firm executes the order itself or gives 
the order to an independent broker for execution; and (b) a member firm 
who receives a customer order for execution only (and thus will not 
have the resulting position carried by the firm, may qualify for this

[[Page 36593]]

exemption. The CBOE believes that the proposed rule change will better 
allow its member firms to meet the investing needs of their customers.
    Because the proposed amendment to the firm facilitation exemption 
should enhance the depth and liquidity of the market by allowing member 
firms an exemption from position limits to facilitate large customer 
orders, whether they are firms who accept customer orders for execution 
only, or they are firms who carry their customers' accounts and 
positions, the Exchange believes that this rule change is consistent 
with and furthers the objectives of Section 6(b)(5) of the Act in that 
it would remove impediments to and perfect the mechanism of a free 
market in a manner consistent with the protection of investors and the 
public interest.

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

    The CBOE does not believe that the proposed rule change will impose 
any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on the Comments on 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 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. Sec. 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 also will be available 
for inspection and copying at the principal office of the CBOE. All 
submissions should refer to File No. SR-CBOE-96-35 and should be 
submitted by August 1, 1996.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-17665 Filed 7-10-96; 8:45 am]
BILLING CODE 8010-01-M