[Federal Register Volume 62, Number 76 (Monday, April 21, 1997)]
[Notices]
[Pages 19364-19369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10161]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38501; File No. SR-CBOE-97-17]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Incorporated Relating to 
Changes to Its Margin Rules

April 14, 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 March 21,

[[Page 19365]]

1997, the Chicago Board Options Exchange, Incorporated (``CBOE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II and III 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4).
---------------------------------------------------------------------------

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

    The CBOE proposes to make revisions to its rules governing margin 
that will: (i) Establish CBOE rules to govern areas of margin 
regulation that will no longer be addressed by Regulation T 
(``Regulation T'') of the Board of Governors of the Federal Reserve 
System (``Federal Reserve Board'' or ``Board''), (ii) conform certain 
CBOE margin rules to those of the New York Stock Exchange (``NYSE''), 
and (iii) correct or clarify current provisions of the CBOE margin 
rules. 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, Proposed Rule Change

1. Purpose
    The Exchange is proposing changes to its margin rules at this time 
because of recent amendments to the Federal Reserve Board's Regulation 
T, the regulation that covers extensions of credit by and to brokers 
and dealers.\3\ Among other things, the amendments to Regulation T will 
modify or delete certain Board rules regarding options transactions in 
favor of rules that must be adopted by the options exchanges and 
approved by the Commission. The new options provisions in Regulation T 
will not become effective until June 1, 1997. In the course of amending 
its rules to accommodate the changes necessary because of the 
Regulation T amendments, the Exchange has found it necessary for the 
sake of clarity to propose changes to the margin rules that would 
conform certain CBOE rules to the rules of the NYSE and to make 
clarifying changes to its existing provisions. The Exchange is also 
submitting concurrently separate changes to its margin rules in another 
rule filing, See SR-CBOE-97-18. That second filing will be referred to 
herein as the ``Second Margin Filing.'' This present filing will be 
referred to as the ``First Margin Filing.''
---------------------------------------------------------------------------

    \3\ See 61 FR 20386 (May 6, 1996).
---------------------------------------------------------------------------

Definition Section
    The Exchange is proposing the addition of a definition section in 
new paragraph (a) of Rule 12.3. The first definition that is being 
added is a definition of the term ``current market value,'' which is 
used throughout the Rule. The proposed definition is consistent with 
the NYSE rules \4\ and the current definition of the term contained in 
CBOE Rule 24.11, which governs margin for index options. However, the 
Exchange is also proposing to add an interpretation to Rule 12.3 
covering situations where there is no closing price or where trading 
was halted and not reopened before the normal end of the trading day or 
where the closing price was outside the last bid and offer that was 
established after the closing price. In such situations, a member 
organization may use a reasonable estimate of the market value of the 
security based upon the then current bids and offers in determining the 
``current market value'' of a security, including an option. The 
Exchange believes that this interpretation will allow member 
organizations to arrive at a more reasonable estimate of the current 
market value in general, and particularly where the underlying 
securities may be trading or quoted in other markets or in cases where 
the underlying security re-opens for trading and the options remain 
closed.
---------------------------------------------------------------------------

    \4\ See NYSE Rule 431(a)(1).
---------------------------------------------------------------------------

    The term ``escrow agreement'' is also defined in new paragraph (a) 
of Rule 12.3. The proposed definition is nearly identical to the 
definition in Regulation T except that the CBOE definition is more 
restrictive as to the entities that may issue approved escrow receipts. 
The CBOE definition requires the issuer to be a U.S. bank or trust 
company supervised and examined by state or federal authority. The 
Regulation T definition allows the issuer to be a bank or any person 
designated as a control location under paragraph (c) of Rule 15c3-3 
under the Act. The CBOE is concerned that certain control locations, 
such as transfer agents, are not appropriate issuers of escrow receipts 
and that Exchange rules should continue to limit issuers of receipts to 
entities such as banks, as currently set forth in Rule 24.11(d). The 
Exchange will, however, continue to study this issue.
    Finally, the Exchange is revising its definition of ``exempted 
security'' by adopting the Regulation T definition.\5\
---------------------------------------------------------------------------

    \5\ The Commission notes that the text of the CBOE's rule filing 
refers to the definition contained in Section 3(a)(12) of the Act 
rather than the definition contained in Regulation T.
---------------------------------------------------------------------------

Customer Margin Accounts
    The Exchange is also proposing to reorganize Rule 12.3 so that all 
provisions concerning customer margin accounts are in the same sections 
of the Rule. Currently, customer margin provisions appear throughout 
the Rule. Paragraph (b) will set forth the default margin requirements 
on long and short positions in customer margin accounts. Paragraph (c) 
will set forth the specific margin treatment for particular types of 
securities and positions held in customer margin accounts.
    The margin treatment of ``exempted securities'' is proposed to be 
moved from current paragraph (b)(3) of the Rule to new paragraph 
(c)(3), and amended so that it is consistent with the NYSE's margin 
rule, Rule 431.\6\ Specifically, the treatment for exempted securities 
is being revised so that obligations of the United States (as specified 
in the rule) will be subject to a margin requirement of from 1% to 6%, 
depending on the years to maturity for the obligation. Zero coupon 
bonds will be subject to a margin requirement of 3% for bonds with five 
years or more to maturity. All other exempted securities will be 
subject to an initial and maintenance margin requirement of 15% of the 
current market value or 7% of the principal amount, whichever amount is 
greater. Currently, the rule requires margin of 5% on obligations of 
the United States and margin of 15% of the principal amount or 25% of 
the current market value of other exempted securities, whichever amount 
is lower.
---------------------------------------------------------------------------

    \6\ See NYSE Rule 431(e).
---------------------------------------------------------------------------

    The Exchange is also adopting a margin treatment for nonconvertible 
debt securities which is consistent with the margin treatment in NYSE 
Rule 431,\7\ except that the Exchange is not adopting the special 
exemptions relating to mortgage related securities at this time because 
this provision is currently

[[Page 19366]]

the subject of discussion by an industry committee and may be changed. 
The rule will require margin to be maintained equal to 20% of the 
current market value or 7% of the principal amount of the non-
convertible debt, whichever amount is greater.
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

    The next section, labeled ``Security Offsets,'' combines two 
current provisions from Rule 12.3 that deal with the margin treatment 
of short securities offset against: (i) Long positions in a security 
exchangeable or convertible into the security held in a short position 
and (ii) long positions in the same security as the short position. The 
convertible or exchangeable provision is the same as in the current 
rule (12.3(b)(1)(A)) except that an incorrect parenthetical referring 
to options is being deleted because options cannot be and never have 
been considered convertible securities. The Exchange notes that the 
rules of the other self-regulatory-organizations (``SROs'') and 
Regulation T do not refer to options as convertible securities. The 
provision dealing with offsets between long and short positions in the 
same security is being moved from 12.3(b)(2)(D) of the current Rule, 
and the margin requirement is being revised from 10% to 5% of the 
current market value of the ``long'' securities to conform the CBOE 
rule to a similar provision in NYSE Rule 431.\8\
---------------------------------------------------------------------------

    \8\ Id.
---------------------------------------------------------------------------

    The next provision under new paragraph (c) of Rule 12.3, which 
deals with exceptions to the default margin treatment for positions in 
a customer margin account, is the treatment for a short equity call 
option position offset by a warrant to purchase the underlying 
security. The proposed treatment is new to Rule 12.3 and is consistent 
with a provision of Regulation T.\9\ The provision requires no margin 
for this position if the warrant to purchase the underlying security 
does not expire on or before the expiration date of the short call, and 
if the amount (if any) by which the exercise price of the warrant 
exceeds the exercise price of the short call is deposited in the 
account.
---------------------------------------------------------------------------

    \9\ See Regulation T, Section 220.4(b).
---------------------------------------------------------------------------

    The next provision, which requires margin to be deposited and 
maintained equal to 100% of the current market value of long positions 
in listed equity options, is consistent with current Rule 12.5 and 
Regulation T and is being added to Rule 12.3 for the sake of clarity.
    The provision detailing the margin requirements for short listed 
equity options is the same as that found in paragraph (a)(5) of the 
current Rule 12.3 with three exceptions. First, the provision has been 
moved. Second, the treatment of over-the-counter (``OTC'') options has 
been deleted from the provision because the Exchange is adopting the 
more extensive OTC margin provisions of the NYSE. Third, the Exchange 
is proposing the addition of a provision that would cap the margin on 
short puts that are out-of-the-money at a percentage of the exercise 
price of the short put. The reason for this cap is that, under the 
general rule, margin is required equal to the options market value plus 
10% of the current market value of equivalent units of the underlying 
security for an option dealt in on the exchange. However, as the market 
value of the underlying security increases above the strike price, at 
some point the put becomes farther out-of-the-money and the risk of the 
position decreases. Without the cap, the margin requirement would also 
continue to increase at the same time that the risk of the position is 
decreasing.
    The Exchange is also clarifying the margin treatment of interest 
rate put options under Rule 23.23 \10\ and the margin treatment of put 
warrants under Rule 30.53. The treatment is the same as that for short 
uncovered put options as described above.
---------------------------------------------------------------------------

    \10\ The Commission notes that the CBOE's margin rule for 
interest rate option contracts is 23.13 and not 23.12 as indicated 
in the CBOE's filing.
---------------------------------------------------------------------------

    The provisions governing margin treatment for various related 
securities positions involving listed options carried in a customer 
margin account have been revised and rearranged. This became necessary 
after various changes that were made over time rendered the provisions 
difficult to follow. The Exchange believes that the changes being 
proposed will simplify the provisions and make them easier for members 
to follow.\11\ The treatment for a covered call writing position where 
the underlying security is a convertible security is similar to that 
currently describe in 12.3(b)(1)(C) but has been revised to be 
consistent with Rule 431.\12\ The treatment for covered puts is similar 
to the treatment under current Rule 12.3; however, the language has 
been revised to conform the CBOE rule to the language in Regulation T. 
The language regarding covered calls has been reworded from what 
currently appears in paragraph (b)(1)(C)(1).
---------------------------------------------------------------------------

    \11\ Telephone conversation between Diane Malley, Supervisor, 
Department of Financial Compliance, CBOE, Timothy Thompson, Senior 
Attorney, Legal Department, CBOE, and Chester McPherson, Staff 
Attorney, Division of Market Regulation, Commission, April 10, 1997.
    \12\ See NYSE Rule 431(f)(2)(H)(i).
---------------------------------------------------------------------------

    In the case of both short calls and short puts, the amount of 
margin is reduced when a short option contract is hedged with a long 
option contract of the same type. The treatment of short option 
contracts offset by long option contracts where the long option expires 
with or after the short option is the same as that required currently 
under Rule 24.11 for index options. In the case where the long call 
option (or short put option) strike price is less than or equal to the 
exercise price of the offsetting short call option (or long put 
option), no margin is required; however, the long position must be paid 
for in full. When the exercise price of the long call option (or short 
put option) is greater than the exercise price of the offsetting short 
call option (or long put option) the amount of margin required is the 
lesser of: (1) The margin required under the general short listed 
equity option rule or (2) the difference in aggregate exercise prices.
    The treatment for a straddle (a short call option and a short put 
option the same underlying interest) requires margin on the put or 
call, whichever amount is greater, plus the current market value of the 
other option. The margin treatment for straddles is merely being moved 
from current paragraph (a)(5) of Rule 12.3.
    The rules governing the margin requirements for OTC options have 
been adopted from NYSE Rule 431 \13\ except that the Exchange has made 
a slight change to cap the minimum margin on OTC short puts. A chart 
submitted with the filing sets forth the initial and/or maintenance 
margin required for options on various types of underlying securities. 
The amount of margin required is the percentage of the current market 
value of the underlying component times the multiplier, if any, (set 
forth in the chart) plus any ``in-the-money-amount.'' The amount of the 
margin required to be maintained may be reduced for a short put or call 
by any ``out-of-the-money.'' The amount to which the margin required 
may be reduced is set forth in a separate column.
---------------------------------------------------------------------------

    \13\ See NYSE Rule 431(f)(2)(D)(iii).
---------------------------------------------------------------------------

    The Exchange is proposing to add margin treatment for related 
securities positions involving OTC options held in a customer margin 
account. The Exchange is proposing to add special margin treatment for 
covered write convertibles, covered calls/puts, spreads, and straddles 
involving OTC options. The proposed margin treatment is the same 
treatment that is set forth in NYSE Rule 431 except for the change to 
cap the minimum margin on short puts.

[[Page 19367]]

Customer Cash Account
    The Exchange is proposing to add a provision to Rule 12.3 detailing 
the circumstances under which a customer may carry short equity options 
in a cash account, i.e., an account in which no credit is extended. 
This provision is consistent with a provision in Regulation T and is 
being added so that the CBOE rule is more complete, thus enabling its 
members to rely on such rules for all aspects of margin regulation. The 
proposed rule would permit either a call option contract or a put 
option contract held in a short position to be carried in a cash 
account if the option contract is covered, i.e., if the account 
contains one of the specified offsets.
    In the case of a short call, allowable offsets include: (i) The 
underlying security, in an amount equal to or greater than that 
underlying the option, provided the option premium is held in the 
account until full cash payment for the underlying security is 
received; (ii) a security immediately convertible without the payment 
of money into an equal or greater quantity of the security underlying 
the option, if such security is held or purchased in the account, on 
the same day provided that the option premium is held in the account 
until full cash payment for the convertible security is received and 
the ability to convert does not expire before the expiration of the 
short call option; or (iii) an escrow agreement issued by a bank and 
either held in the account at the time the call is written or received 
in the account promptly thereafter.
    In the case of a short put option, allowable offsets include (i) 
Cash or cash equivalents as defined in Regulation T of not less than 
the aggregate put exercise amount; or (ii) an escrow agreement issued 
by a bank which is obligated to deliver the required cash in the event 
of assignment of the short put.
    CBOE Rule 24.11A currently permits certain debit put spreads to be 
carried in a cash account.\14\ The Exchange is proposing to move 
certain provisions from Rule 24.11A into Rule 12.3. In addition, the 
Exchange will propose the expansion of the types of strategies that may 
be carried in a cash account in the Second Margin Filing.
---------------------------------------------------------------------------

    \14\ The Commission notes that CBOE Rule 24.11A relates to debit 
put spread cash account transactions, and not Rule 24.11 as 
indicated in the rule filing.
---------------------------------------------------------------------------

Market Maker and Specialist Accounts
    The CBOE rules and the rules of the other regulatory bodies have 
always distinguished the margin treatment for market-makers and 
specialists from that applicable to customers and other broker-dealers 
because of the unique position of market-makers and specialists in 
maintaining liquid markets. The rules recognize that options market-
makers and specialists must engage in various hedging transactions to 
manage the risk involved in fulfilling their role. Specific provisions 
governing permitted offset treatment for market-makers and specialists 
are being deleted from Regulation T, which as a result will defer to 
the rules of the SROs.
    The proposed rule sets forth various permitted offset positions 
which may be cleared and carried by a member organization on behalf of 
one or more registered specialists, registered market-makers, or 
Designated Primary Market-Makers (hereinafter referred to generically 
as ``market-makers'') upon a margin basis satisfactory to the concerned 
parties. A permitted offset position will be defined to mean, in the 
case of an option in which a market-maker makes a market, a position in 
the underlying instrument or other related instrument, and in the case 
of other securities in which a market-maker makes a market, a position 
in options overlying the securities in which a market-maker makes a 
market, if the account holds the following positions: (i) A long 
position in the underlying instrument offset by a short option position 
which is ``in- or at-the-money''; (ii) a short position in the 
underlying instrument offset by a long option position which is ``in- 
or at-the-money''; (iii) a stock position resulting from the assignment 
of a market-maker short option position; (iv) a stock position 
resulting from the exercise of a market-maker long position; (v) a net 
long position in a security (other than an option) in which a market-
maker makes a market; (vi) a net short position in a security (other 
than an option) in which the market-maker makes a market; or (vii) an 
offset position as defined in SEC Rule 15c3-1.
    For purposes of the rule, ``in- or at-the-money'' means the current 
market price of the underlying security is not more than two standard 
exercise price intervals below (with respect to a call option) or above 
(with respect to a put option) the exercise price of the option. In 
determining the types of instruments which are entitled to be carried 
in a permitted offset position, reference can be made to the definition 
of ``related instrument'' which is set forth in the rule. ``Related 
instrument'' within an option class or product group is any related 
derivative product that meets the offset level requirements for product 
groups under Rule 15c3-1, including its appendices (the net capital 
rule) of the Act, or any applicable SEC staff interpretations or no-
action positions (hereinafter referred to collectively as ``SEC Rule 
15c3-1''). The term ``product group'' means two or more option classes, 
related instruments, and qualified stock baskets for which it has been 
determined that a percentage of offsetting profits may be applied to 
losses in the determination of net capital as set forth in SEC Rule 
15c3-1.
    The Exchange is also proposing to add a provision regarding trading 
in an account in a deficit. The addition generally states that nothing 
shall prohibit the carrying firm from effecting hedging transactions in 
the deficit account with the prior written approval of the carrying 
firm's SEC designated examining authority.
    The Exchange is also proposing in the Second Margin Filing to 
permit a market-maker to receive market-maker margin treatment on 
transactions in options or other derivative securities effected on an 
exchange of which that market-maker is not a member and on which that 
market-maker is not registered as a market-maker if the options or 
other derivative securities are dually listed on the exchange on which 
that market-maker is a registered market-maker, or if the transactions 
are recognized offsets as defined by Rule 15c3-1 under certain 
conditions specified in the proposed rule.
Broker-Dealer Account
    The Exchange is also proposing to add a provision that would 
provide margin relief to accounts held by non-market-maker broker-
dealers. Under the new provision, a member organization may carry the 
proprietary account of another registered broker-dealer upon a margin 
basis which is satisfactory to both parties, provided the requirements 
of Regulation T are adhered to and the account is not carried in a 
deficit equity condition. The amount of any deficiency between the 
equity maintained in the account and the margin required by the other 
provisions of this Rule shall be deducted in computing the net capital 
of the member organization under Rule 15c3-1 of the Act. This new 
provision is similar to the provision of NYSE Rule 431(e)(6), and would 
permit the proprietary accounts of all registered broker-dealers to be 
carried on a ``good faith'' margin basis for purposes of maintenance 
margin. Broker-dealers would still be subject to initial margin 
requirements under Exchange rules and Regulation T.

[[Page 19368]]

Interpretations to Rule 12.3
    The Exchange is proposing to add four interpretations to Rule 12.3. 
Also, current Interpretation .01 to Rule 12.3 is proposed to be deleted 
because the interpretation concerns SuperShares, which the Exchange no 
longer trades. The Exchange is also proposing to delete interpretation 
.07 of Rule 24.11 because it also concerns SuperShares. New 
Interpretation .01 would set forth in a chart form the margin 
requirements applicable to short positions in listed options and in 
index and foreign currency warrants. The general requirement is that 
margin is required equal to the current market value of the option/
warrant plus the applicable percentage of the underlying instrument 
(set forth in the chart). The margin required may be reduced by any 
``out-of-the money'' amount, as defined in the rule. However, the 
margin may not be reduced below the option market value plus a 
different specified percentage of the current market value of the 
underlying instrument as set forth in the chart. The determination of 
the ``out-of-the-money amount'' is also set forth in a separate chart.
    As described above, Interpretation .02 describes how a member 
organization may determine ``current market value'' in the event there 
is no closing price or trading has been halted.
    Interpretation .03 specifies that for purposes of the CBOE margin 
rules, index warrants should be treated as if they were index options 
unless the rules specify otherwise. The Exchange states that this 
interpretation is consistent with the position of the Commission and 
recognizes that the two types of products are essentially equivalent 
from a market risk standpoint.
Changes to Rule 12.11
    The Exchange is proposing a minor change to Rule 12.11. Rule 12.11 
allows a member organization that is a member of the NYSE to elect to 
be bound by the rules of the NYSE instead of the requirements set forth 
in Rules 12.3 to 12.10. The Exchange is changing Rule 12.11 to allow 
the member organization to exempt themselves from Rules 12.3 to 12.9, 
but not from 12.10. Rule 12.10 establishes that the margin requirements 
set forth in the rule are minimum requirements and authorizes the 
Exchange to impose higher margin requirements when it deems such higher 
requirements to be advisable. The Exchange has determined that it is 
necessary to clarify that the Exchange may still impose higher margin 
requirements on its members when the Exchange believes such higher 
requirements are warranted, even when those members have elected to 
generally be subject to the margin rules of the NYSE. The Exchange 
believes that because it will be in the best position to determine when 
higher margin requirements may be required for positions in Exchange-
traded products it should not allow a member to exempt itself from this 
provision. The change to Rule 12.11 also makes it clear that if a 
member organization chooses to be bound by NYSE margin rules it will be 
exempt not only from CBOE margin rules in Chapter 12, but also from 
those margin rules in other chapters of the Exchange's rules.
Changes to Rule 24.11
    The Exchange is proposing to add to Rule 24.11 (which covers margin 
requirements for index options) a provision setting forth the margin 
requirements for covered calls and covered puts that is essentially 
identical to the provision applicable to equity options.\15\ In 
addition, the Exchange is proposing to add a definition of ``qualified 
stock basket'' to Rule 24.11. This definition is used to describe 
allowable offsets in customer accounts for covered calls and covered 
puts. In addition, the Exchange makes a cross-reference to the 
provision of Rule 12.3 that governs the cash account treatment of short 
index options offset by long index options. Finally, the Exchange is 
proposing to change Interpretation .04 that defines ``cash 
equivalent.'' Instead of specifically defining cash equivalent as it is 
currently defined in the rule, the Exchange has decided to defer to the 
definition in Regulation T because the Exchange expects that the 
definition in Regulation T may change from time to time.
---------------------------------------------------------------------------

    \15\ See, e.g., NYSE Rule 431(f)(2)(H)(i).
---------------------------------------------------------------------------

2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) that an exchange have rules that are 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to protect and 
perfect the mechanism of a free and open market and a national market 
system, and in general, to protect investors and the public interest.
    The proposed rule change: (i) Establishes CBOE rules to govern 
areas of margin regulation that will no longer be addressed by 
Regulation T of the Board of Governors of the Federal Reserve System, 
(ii) conforms certain CBOE margin rules to those of the NYSE, and (iii) 
corrects or clarifies current provisions of the CBOE margin rules. The 
Exchange believes that the proposed rule change, is consistent with, 
and furthers, the objectives of Section 6(b)(5) of the Act.

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

    The 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of 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 such 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, NW., Washington, DC 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 in the 
Commission's Public Reference Room. Copies of all such filing will also 
be available for inspection and copying at the principal office of the 
CBOE. All

[[Page 19369]]

submissions should refer to the file number SR-CBOE-97-17 and should be 
submitted by May 12, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-10161 Filed 4-18-97; 8:45 am]
BILLING CODE 8010-01-M