[Federal Register Volume 62, Number 37 (Tuesday, February 25, 1997)]
[Notices]
[Pages 8474-8475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4605]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38311; International Series Release No. 1055; File No.
SR-CBOE-96-77]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the Chicago
Board Options Exchange, Incorporated Relating to the Policy of the CBOE
Relating to Information Obtained Pursuant to the SEC's Memorandum of
Understanding With the CONSOB
February 19, 1997.
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 December 17, 1996, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change is
described in Items I and II below, which Items have been prepared by
the CBOE. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons and to grant
accelerated approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\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 is submitting this rule filing to adopt an official policy
concerning the circumstances and conditions under which the Exchange,
in order to carry out its market surveillance and enforcement functions
for derivative products containing Italian component securities, may
obtain access to information regarding activity on the Italian
securities markets obtained by the SEC pursuant to the Commission's
Memorandum of Understanding (``MOU'') with the Commissione Nazionale
per le Societa e la Borsa (``CONSOB''). The text of the proposed rule
change is available at the Office of the Secretary, the 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
The CBOE does not have a surveillance sharing agreement with the
Milan Exchange, which is an unincorporated association and is not able
under Italian law to enter into such an arrangement. Therefore, the
purpose of the proposed rule change is to enable the CBOE to carry out
its market surveillance and enforcement functions for derivative
products containing Italian component securities by seeking the
necessary information about activity on the Italian securities markets
from the SEC per the latter's MOU with the CONSOB. The Exchange's
proposed policy details the circumstances and conditions under which
the Exchange may obtain access to such information from the SEC. By
adopting this policy, therefore, the Exchange believes it will be in a
position to list derivative products containing Italian component
securities because it will be able to have access to information on the
underlying securities which it may need for enforcement or market
surveillance purposes.
The Exchange's proposed policy provides that the Exchange will
advise the SEC of information it needs regarding activity on the
Italian securities markets for market surveillance and enforcement
purposes. The SEC, in turn, may request the CONSOB's assistance,
pursuant to the MOU, in gaining access to such information. The
Exchange will use such information it may receive from the SEC only for
the purposes of conducting market surveillance and enforcement
proceedings. The Exchange will limit distribution of such information
to officers and directors of the Exchange and other employees directly
responsible for conducting market surveillance and enforcement
proceedings relating to the matter in connection with which the SEC
provided the information to the CBOE. The Exchange also will undertake
to maintain the confidentiality of the information and to take
appropriate disciplinary action in the event it learns of a breach of
such confidentiality, including referral to the SEC for any action the
SEC deems necessary or appropriate.
By adopting a policy that provides access to information on the
underlying securities for market surveillance and enforcement purposes,
the Exchange will be able to list options and other derivative products
containing Italian component securities, provided that all other
applicable product listing standards are met.\3\ Therefore, the
Exchange believes that the proposed rule change could potentially
provide investors with the opportunity to invest in such products and
hedge their exposure to the Italian securities market. The Exchange
also believes that the proposed rule change, therefore, is consistent
with and furthers the objectives of Section 6(b)(5) of the Act, in that
it is designed to perfect the mechanisms of a free and open market
[[Page 8475]]
and to protect investors and the public interest.\4\
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\3\ This filing only addresses trading requirements relating to
necessary surveillance sharing procedures.
\4\ In approving the rule, the Commission has considered the
proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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B. Self-Regulatory Organization's Statement on Burden on Competition
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. Commission's Findings and Order Granting Accelerated Approval
of Proposed Rule Change
The Exchange has requested that the proposed rule change be given
accelerated effectiveness pursuant to Section 19(b)(2) of the Act. 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, in that the proposal is
consistent with Section 6(b) of the Act, in general and, Section
6(b)(5),\5\ in particular, as it is designed to facilitate transactions
in securities, to promote just and equitable principles of trade, and
to protect investors and the public interest.
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\5\ 15 U.S.C. 78f(b) and 78f(b)(5).
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Specifically, the Commission believes that, since the CBOE does not
and cannot have a surveillance sharing agreement with the Milan
Exchange, the CBOE's adoption of the proposed policy will enable the
Exchange to carry out its market surveillance and enforcement functions
for derivative products containing Italian component securities by
seeking the necessary information about activity on the Italian
securities markets from the SEC per the latter's MOU with the CONSOB.
The Commission believes that the Exchange's proposed policy adequately
details the circumstances and conditions under which the Exchange may
obtain access to such information from the SEC.
The Commission believes that, under the Exchange's proposed policy,
the Exchange will advise the SEC of information it needs regarding
activity on the Italian securities markets for market surveillance and
enforcement purposes. The Commission, in turn, may request the CONSOB's
assistance, pursuant to the MOU, in gaining access to such information.
The Commission notes that the Exchange will use such information it may
receive from the SEC only for the purposes of conducting market
surveillance and enforcement proceedings. The Commission also notes
that the Exchange will limit distribution of such information to
officers and directors of the Exchange and other employees directly
responsible for conducting market surveillance and enforcement
proceedings relating to the matter in connection with which the SEC
provided the information to the CBOE. In view of the importance of
maintaining the confidentiality of this information, the SEC believes
that the officers and/or directors overseeing the exchange employees
conducting the relevant market surveillance and enforcement proceedings
would be responsible for ensuring the confidentiality of the
information provided by the SEC pursuant to the MOU with the CONSOB and
should take reasonable measures to ensure that the information does not
become available to unauthorized persons. Thus, the Commission believes
that the Exchange will undertake to maintain the confidentiality of
such information and to take appropriate disciplinary action in the
event it learns of a breach of such confidentiality, including referral
to the SEC for any action the SEC deems necessary or appropriate.
The Commission believes that the CBOE, by adopting a policy that
provides access to information on the underlying securities for market
surveillance and enforcement purposes, will be in a position to list
options and other derivative products containing Italian component
securities, provided that all other applicable product listing
standards are met. Therefore, the Exchange's proposed rule change could
potentially provide investors with the opportunity to invest in such
products and hedge their exposure to the Italian securities market.
Accordingly, the Commission believes that the proposed rule change is
consistent with and furthers the objectives of Section 6(b)(5) of the
Act, in that it is designed to perfect the mechanisms of a free and
open market and to protect investors and the public interest.
The Commission notes that a substantially identical proposal was
published by the American Stock Exchange (``AMEX'') for the full 21 day
comment period without any comments being received by the Commission.
The Commission therefore believes that approving the CBOE policy on an
accelerated basis will allow the Exchange to pursue trading in options
and other derivative products containing Italian component securities
without further delay. Accordingly, the Commission finds that,
consistent with Section 6(b)(5) of the Act, good cause exists to
approve CBOE's proposed rule change on an accelerated basis prior to
the thirtieth day after the date of publication thereof in the Federal
Register.
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 Room. Copies of such filing will also be
available for inspection and copying at the principal office of CBOE.
All submissions should refer to File No. SR-CBOE-96-77 and should be
submitted by March 18, 1997.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (SR-CBOE-96-77) is hereby
approved on an accelerated basis.
\6\ 15 U.S.C. 78s(b)(2).
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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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4605 Filed 2-24-97; 8:45 am]
BILLING CODE 8010-01-M