[Federal Register Volume 61, Number 178 (Thursday, September 12, 1996)]
[Notices]
[Pages 48180-48181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23315]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37646; File No. SR-CBOE-96-47]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Incorporated Relating To 
Permitting a Subject of an Exchange Investigation To Submit a 
Videotaped Response in Lieu of or in Addition to a Written Response

September 5, 1996.
    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 July 10, 
1996, the Chicago Board Options Exchange, Incorporated (``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.

[[Page 48181]]

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

    The CBOE proposes to permit the subject of an Exchange 
investigation (``Subject'') to submit a videotaped presentation to the 
Exchange's Business Conduct Committee (``BCC'') in response to Exchange 
staff's notice given pursuant to Rule 17.2(d). That notice describes 
the general nature of allegations and specific rules that appear to 
have been violated by the Subject. This videotaped presentation could 
be submitted by the Subject to the BCC in lieu of, or in addition to, 
submitting a written statement as permitted by Rule 17.2(d).
    The text of the proposed rule change 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 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. The CBOE 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 permit subjects of 
Exchange investigations to submit a videotaped presentation to the BCC 
in response to Exchange staff's notice given pursuant to Rule 17.2(d). 
That notice describes the general nature of allegations against, and of 
specific rules that appear to have been violated by, the Subject of the 
Exchange investigation. This videotaped presentation could be submitted 
to the BCC in lieu of, or in addition to, submitting a written 
statement as permitted by Rule 17.2(d).
    Under existing Rule 17.2, if, after conducting an investigation, 
Exchange staff finds that there are reasonable grounds to believe that 
a rule violation has been committed, the Exchange staff submits a 
written report to the BCC.1 Prior to submitting the report to the 
BCC, the Exchange staff notifies the Subject of the general nature of 
the allegations and the specific provisions of the rules or regulations 
that appear to have been violated. Pursuant to Rule 17.2(d), except 
when the BCC determines that expeditious action is required, the 
Subject then has fifteen (15) days from the date of the Exchange 
staff's notice to submit a written statement to the BCC explaining why 
no disciplinary action should be taken.
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    \1\ Exchange staff may draft and submit a report to the BCC if 
it finds that there are not reasonable grounds to believe a 
violation has been committed; however, such a report is not required 
under Exchange rules.
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    The proposed rule change would permit the Subject's statement to be 
made in a videotaped format instead of, or in addition to, submitting a 
written response. The Exchange decided to propose this change because a 
number of members have indicated that they would be more comfortable 
presenting their position orally, rather than attempting to draft a 
persuasive response letter. The Exchange believes that permitting a 
Subject of an investigation to respond on videotape, which could then 
be viewed by BCC members at their convenience, would be beneficial to 
the BCC and the Subject.
    The proposal grants the Exchange the discretion to set a time limit 
on the videotaped response. Initially, the Exchange will set a time 
limit of fifteen minutes on a videotaped response. The videotaped 
response would also have to be submitted in a format approved by the 
Exchange. Initially, the Exchange will require that a videotaped 
response be in a VHS format. The Exchange may change the foregoing time 
limit and format requirements from time to time, and will publish the 
applicable time limit and format requirements in a regulatory circular 
to the Exchange membership.
2. Statutory Basis
    By permitting Subjects of Exchange investigations to submit a 
response in a videotaped format, the Exchange believes the disciplinary 
process can be enhanced by giving Subjects more flexibility in 
responding to a Rule 17.2(d) notice. For this reason, this policy 
furthers the objectives of Section 6(b)(7) of the Act in that it is 
designed to provide a fair procedure for the disciplining of members 
and persons associated with members.

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

    The Exchange believes the proposed rule change will impose no 
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
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-96-47 and should be 
submitted by October 3, 1996.

    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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-23315 Filed 9-11-96; 8:45 am]
BILLING CODE 8010-01-M