[Federal Register Volume 62, Number 198 (Tuesday, October 14, 1997)]
[Notices]
[Pages 53358-53361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27048]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39202; File No. SR-CBOE-97-45]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Chicago 
Board Options Exchange, Inc., Relating to Certain Rules Governing 
Market-Maker Obligations With Respect to the Trading of Options on the 
DJIA

October 3, 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 September 8, 1997,\3\ 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 and II 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 
and is granting accelerated approval to the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange filed Amendment No. 1 to the proposed rule 
change, the substance of which is incorporated into this notice. See 
letter from Timothy H. Thompson, Senior Attorney, CBOE, to John 
Ayanian, Special Counsel, Market Regulation, Commission, dated 
September 16, 1997 (``Amendment No. 1'').
---------------------------------------------------------------------------

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

    The CBOE proposes to amend certain of its rules governing market-
maker obligations with respect to the trading of options on the Dow 
Jones Industrial Average (``DJIA'' or ``Index''). 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 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 III 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

1. Purpose
    The Exchange is proposing to amend certain Exchange rules governing 
market-maker obligations with respect to the trading of options on the 
DJIA (trading symbol ``DJX''). Specifically, the Exchange is proposing 
to make the following changes with respect to trading in options on the 
DJIA: (i) Amending Rule 24.17 to apply the rules governing the Retail 
Automatic Execution System (``RAES'') eligibility in options on the 
Standard & Poor's 100 Stock Index (``S&P 100'') (``OEX'') to options on 
the DJIA; (ii) amending Rule 24.17 to add an interpretation and policy 
that the provisions of paragraph (b)(v)(C) and (D) will not apply to 
DJX market makers until December 1, 1997; (iii) creating Rule 24.17A, 
RAES Operations in Options on the DJIA, which applies the RAES 
operations in OEX to DJX and states that the Exchange can determine the 
maximum order size for RAES orders for options on the DJIA up to 100 
contracts, a higher level than for OEX; (iv) amending paragraph (a)(2) 
of Rule 8.51 (and related interpretations) governing the minimum firm 
quote requirement, for a market-maker trading crowd; (v) applying the 
terms of the previously approved OEX firm quote program to the DJX 
trading crowd, and amending the fine amount under the Minor Rule Plan 
for violations of the Firm Quote Rule; (vi) amending the fine schedule 
for violations of the Firm Quote Rule for OEX; and (vii) amending Rule 
8.16, RAES Eligibility in Equity Options, to indicate that it does not 
apply to DJIA options.\4\
---------------------------------------------------------------------------

    \4\ The Exchange's OEX firm quote program was approved by the 
Commission under Section 19(b) of the Act in Securities Exchange Act 
Release No. 37388 (June 28, 1996), 61 FR 35821 (July 8, 1996).
---------------------------------------------------------------------------

    The purpose for these proposed rule changes is to enhance market-
maker obligations with respect to the trading of options on the DJIA. 
The Exchange expects these change to enhance the depth and liquidity of 
the market for options on the DJIA. The Exchange also notes that 
because option contracts on the DJIA will be based upon one-one 
hundredth of the value of the DJIA, these options contracts will 
overlie approximately one-tenth of the value that other broad-based 
index options overlie, such as options on the Standard & Poor's 500 
Stock Index (``SPX'') and on OEX. This is so because the values of the 
S&P 500 Index and the S&P 100 Index currently are approximately one-
tenth of the value of the DJIA, yet OEX and SPX are based on the full 
value of their respective underlying indexes. Consequently, the 
Exchange believes an increase in these market-maker obligations is 
necessary to ensure an appropriate level of market-maker commitment.
    Under the proposed rule change, the rules applicable to RAES in OEX 
will apply to RAES in DJX. The proposed rule change revises Rule 24.17, 
RAES Eligibility in OEX to refer to ``Option Class'' instead of OEX. 
``Option Class'' will mean either OEX or DJX, as appropriate. Also, the 
Rule will be revised to refer to the ``appropriate Committee'' which 
will mean the OEX Market Performance Committee'' the

[[Page 53359]]

case of OEX and ``the Exchange Committee to which the Exchange 
delegates the market performance function for options on the DJIA'' in 
the case of DJX. The proposed rule change also adds Interpretation and 
Policy .02 to Rule 24.17 to state that the provisions of paragraphs 
(b)(v) (C) and (D) (formerly paragraphs (a)(v) (C) and (D)) shall not 
apply to DJX market makers until December 1, 1997.\5\
---------------------------------------------------------------------------

    \5\ Rule 24.17(b)(v) (C) and (D) state that a market maker in 
RAES who wants to participate in OEX (and now DJX) must execute at 
lease seventy-five percent of his market-maker contracts for the 
preceding calendar month in OEX and execute at least seventy-five 
percent of his market maker trades for the preceding calendar month 
in OEX (and now DJX) in person.
---------------------------------------------------------------------------

    The proposed rule change also adds a new Rule 24.17A that sets 
forth the RAES Operations for Options on the DJIA, stating that RAES 
will operate the same for DJX as for OEX, including that the Exchange 
shall determine that series will be eligible for RAES in DJX. Over the 
years, the Commission has approved OEX RAES operational policies to 
Section 19(b) of the Act; however, these policies have not been 
codified in the Exchange rules. CBOE now proposes that these policies 
also extend to DJX.\6\ For example, the proposed rule change will apply 
DJX RAES the OEX RAES that allows OEX RAES orders to trade ahead of 
orders on the customer limit order book in situations where the 
displayed bid or offer is equal in price to a customer order, reflected 
in the limit order book. This is an exception to the normal protection 
afforded customer orders on the book, where RAES orders entered when a 
booked order matches the price of the disseminated bid (for a RAES 
order to sell) or offer (for a RAES order to buy) are ``kicked out'' of 
RAES and generally executed manually on the floor.\7\
---------------------------------------------------------------------------

    \6\ See letter from Timothy H. Thompson, Senior Attorney, CBOE, 
to John Ayanian, Special Counsel, Market Regulation, Commission, 
dated September 24, 1997 (``September letter''). See Securities 
Exchange Act Release Nos. 23490 (August 1, 1996), 51 FR 28788 
(August 11, 1986) (firms on the Order Routing System will 
automatically be on RAES for purposes of routing small public 
customer market or marketable limit orders into RAES; the system 
will automatically attach a price to an order when it receives the 
order, which price will be determined from this displayed quote at 
the time of the order's entry; RAES orders that match customer 
orders on the book will not be kicked out but will be executed on 
RAES against normal priority rules; participating market makers will 
be assigned to the system as contraparties on a rotating basis; 
Exchange rule shall not apply to the extent they are inconsistent 
with the terms of the program; RAES orders will count towards 
fulfillment of the in-person requirement of Rule 8.7); and 38702 
(May 30, 1997), 62 FR 31184 (June 6, 1997) (all or none, immediate 
or cancel, fill or kill, and minimum quantity contingency orders 
that are otherwise RAES eligible may be executed on RAES).
    \7\ See supra note 6 and letter from Timothy H. Thompson, Senior 
Attorney, CBOE, to Michael Walinskas, Senior Special Counsel, Market 
Regulation, Commission, dated October 2, 1997 (``October letter''). 
OEX and IBM options are the only two classes where RAES orders are 
granted priority over booked orders.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to apply this OEX RAES 
policy to DJX, based upon the way in which the Exchange expects the DJX 
trading crowd to function, the amount of protection it expects the 
``stranded'' booked orders to receive on the floor, and the operational 
difficulties associated with ``kicking out'' RAES orders for manual 
execution on the floor.\8\
---------------------------------------------------------------------------

    \8\ See October letter supra note 7. The primary purpose and 
benefit of this policy of ``kicking out'' RAES orders is to allow 
the ``kicked out'' RAES order to interact with the booked order.
---------------------------------------------------------------------------

    Specifically, CBOE has stated that it expects this portion of the 
proposed rule change to have only a nominal effect on the execution of 
booked orders because, based on information gathered from talking to 
firms and investors, it believes that DJX will attract a large order 
flow and that large market-making firms will have a presence in the 
trading crowd. The Exchange believes that this combination of active 
order flow and liquid, well-capitalized traders will result in the DJX 
trading floor operating much like the trading floors in OEX and IBM. 
The Exchange believes that in this type of trading environment where 
there is high liquidity, the likelihood that a booked order will not be 
executed after the execution of a RAES order at the same price is 
small. In addition, the CBOE notes that the likelihood of the 
``stranded'' order not being executed is diminished by the Exchange's 
existing priority rule, Rule 6.45, which ensures that no transaction 
can take place on the floor at a price equal to or better than the 
price of the booked order until the booked order has been filed.\9\ 
Finally, CBOE states that the adverse effects to customer orders that 
would result if RAES orders were ``kicked out'' to be executed on the 
trading floor, such as delayed and missed executions, outweigh the 
potential disadvantage that might result to customer limit orders on 
the book from the proposed limited exception to the normal priority 
rules.\10\
---------------------------------------------------------------------------

    \9\ The Commission notes that this does not take into account 
the market moving through the booked order before it is executed.
    \10\ The Exchange expects the number of DJX RAES orders that 
would be ``kicked out'' under the normal priority rules would be 
significant because of the fact that DJX is designed to appeal to 
retail customers who are more likely to send in small RAES eligible 
orders, the larger RAES eligible order size for DJX, and the greater 
percentage of DJX series that will be eligible for RAES in DJX (all 
series) than in OEX (only those series where the offer is $10 or 
less are currently eligible).
---------------------------------------------------------------------------

    Proposed Rule 24.17A also states that the Exchange will have the 
discretion to set the eligible order size for RAES orders up to one 
hundred (100) contracts. The Exchange believes expanding the eligible 
contract limit size for RAES will provide the benefits of: more timely 
and cost-effective executions of customer options orders to a greater 
number of orders than would be the case if no changes were made; 
enhanced audit trail; enhanced fill reporting and price reporting; 
increased customer confidence; and reduction of transactions that have 
to be executed manually on the trading floor, thereby increasing the 
efficiency in the handling of non-RAES orders. The Exchange also notes 
that Rule 24.15(e) allows the Exchange to set an eligible order size of 
up to ninety-nine contracts for SPX options. As noted, an SPX option 
covers approximately ten times the value of an option on the DJIA.
    CBOE believes that this proposed rule change will not impose any 
significant burdens on the operation, security, integrity, or capacity 
of RAES, but will increase the efficiency of the Exchange operations.
    The Exchange also is proposing to amend Rule 8.51 to allow the firm 
quote requirement for options on the DJIA to be set at a level of up to 
one hundred (100) contracts. Under Rule 8.51, a trading crowd is 
obligated to fill non-broker-dealer customer orders for up to the 
specified number of contracts at the quotes that are displayed when the 
order reaches the trading station at which the option is traded. The 
reasons specified above justifying the change in the maximum RAES order 
size--the relatively smaller dollar value of options on one-one-
hundredth of the DJIA as compared to other broad-based index options 
and the Exchange's desire to enhance the depth and liquidity of the 
market for options on the DJIA--apply equally to this proposed change 
in the firm quote requirement. The exchange is also proposing to amend 
Interpretations .01 and .03 to Rule 8.51 to make these interpretations 
consistent with the change to paragraph (a) of Rule 8.51.
    Finally, the Exchange is proposing to apply the terms of the OEX 
firm quote program to trading in DJX. Among the significant terms of 
the firm quote program are that: Floor Officials may designate one or 
more market-makers to take the contra side of a transaction if market-
makers do not voluntarily honor the trading crowd's obligation; market-
makers have the obligation to state the size of their markets if those 
markets are for less than the DJX firm quote limit; market-maker and 
broker-dealer quotes for less than the firm quote limit will

[[Page 53360]]

not be displayed; \11\ and Floor Brokers may choose one of two 
alternatives in obtaining a fill under the Firm Quote Rule, as 
described in the first circular attached as Exhibit B to the submitted 
filing.
---------------------------------------------------------------------------

    \11\ The largest possible firm quote limit will be 100 
contracts, which is approximately equal in value to 10 contracts in 
OEX. In addition, broker-dealer orders for less than the applicable 
firm quote requirement will not be disseminated.
---------------------------------------------------------------------------

    The second Firm Quote Circular, attached as Exhibit C to the 
submitted filing, sets forth a schedule of fines that may be imposed 
pursuant to the Minor Rule Violation rule for violation of the Firm 
Quote Rule. The Exchange believes that both of these circulars are 
essentially identical to the OEX firm quote program circulars except 
that they apply to trading in DJX and they accordingly have a different 
firm quote requirement. In addition, the Exchange has decided to adopt 
a policy whereby the fine for a third and fourth violation of the firm 
quote policy in both DJX and OEX would be $2,500, and for subsequent 
violations there is a mandatory referral to the Business Conduct 
Committee (``BCC'').\12\ The Exchange will reissue the OEX circular 
with the revised fine schedule. The Exchange notes that although the 
upper fine limit is being reduced, the Exchange will exercise its 
authority to commence a disciplinary proceeding pursuant to Exchange 
Rule 17.2 in egregious situations and will refer the case to the BCC 
for violations past the fourth violation. Of course, in disciplinary 
proceeding the violating member could be subject to even greater fines 
and other sanctions including suspension.
---------------------------------------------------------------------------

    \12\ The current fine schedule for violations of the firm quote 
policy for OEX states that the fine for third and subsequent 
violations is $3,000 to $5,000.
---------------------------------------------------------------------------

    The Exchange requests the Commission to find good cause, pursuant 
to Section 19(b)(2) of the Act, for approving the proposed rule change 
prior to the thirtieth day after publication in the Federal Register. 
The Exchange believes that accelerated effectiveness of the proposed 
change is appropriate because the Commission has approved other 
proposals by options exchanges allowing similar increases in the number 
of option contracts eligible for automatic execution \13\ and has 
approved an essentially identical firm quote program for OEX. In 
addition, for the same reasons, the Exchange believes an increase in 
the firm quote requirement is justified and that the increase in the 
firm quote requirement is a benefit to public customers without any 
disadvantages to public customers. Also, because options on the DJIA 
are based on one-one hundredth of the value of the Index, the value of 
the Index underlying an option on the DJIA is only approximately one-
tenth or the value of the indexes underlying certain other broad based 
indexes which have a RAES eligible order size of ten or more and a firm 
quote requirement of ten. Therefore, the Exchange believes no unique or 
novel questions are raised by this change.
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release Nos. 38169 (January 14, 
1997), 62 FR 3547 (January 23, 1997) (order approving File No. SR-
CBOE-96-72) (increasing the maximum order size eligibility for 
interest rate options); 36601 (December 18, 1995), 60 FR 66817 
(December 26, 1995) (order approving File No. SR-PHLX-95-39) 
(increasing the maximum execution order size eligibility for public 
customer orders for all equity and index options to 50 contracts); 
33476 (January 13, 1994), 59 FR 3140 (January 20, 1994) (order 
approving File No. SR-Amex-93-33) (increasing the size of Japan 
Index options orders eligible for automatic execution to 99 
contracts); and 25950 (July 28, 1988), 53 FR 29293 (August 3, 1988) 
(order approving File No. SR-Amex-87-20) (increasing the number of 
Institutional Index options eligible for automatic execution to 100 
contracts).
---------------------------------------------------------------------------

2. Statutory Basis
    By establishing market-maker obligations with respect to trading 
options on the DJIA, including a firm quote requirement and a maximum 
size for DJX orders eligible for execution through RAES, the Exchange 
believes that the proposed rule change will better serve the needs of 
CBOE's public customers and the Exchange members who make a market for 
such customers, and is consistent with and furthers the objectives of 
Section 6(b)(5) of the Act \14\ in that it is designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and to protect investors and the public interest.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange 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 either solicited or received.

III. 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 the 
Exchange. All submissions should refer to File No. SR-CBOE-97-45 and 
should be submitted by November 3, 1997.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    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. Specifically, 
the Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \15\ in that it is designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and to protect investors and the public interest.\16\
---------------------------------------------------------------------------

    \15\ U.S.C. 78f(b)(5).
    \16\ In approving this rule, the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    The Commission believes it is reasonable for the Exchange to amend 
Rule 24.17 to apply the OEX RAES eligibility requirements to DJX, and 
to apply the terms of the previously approved firm quote program for 
OEX to DJX because they are similar products that are expected to trade 
in a similar manner and it is necessary to have a RAES rule and a firm 
quote program in order to ensure efficient trading in DJX. Also, the 
Commission believes it is reasonable under the Act to exempt DJX market 
makers from the requirements in amended Rule 24.17(b)(v)(C) and (D) 
\17\ until December 1, 1997 because when options on the DJIA begin to 
trade on October 6, 1997 there will be no ``preceding month'' against 
which to measure a DJX market maker's performance.
---------------------------------------------------------------------------

    \17\ See supra note 6.
---------------------------------------------------------------------------

    The Commission also believes it is reasonable for the Exchange to 
establish

[[Page 53361]]

Rule 24.17A, RAES Operations in DJX, which will be the same for OEX 
except for the maximum contract size eligible for RAES. The maximum 
size for RAES in DJX will be up to 100 contracts, whereas the maximum 
size for OEX is 10 contracts. Similar to OEX, the Exchange will have 
the authority to choose which DJX series will be eligible for RAES.\18\
---------------------------------------------------------------------------

    \18\ The Commission requests that the CBOE distribute a Notice 
to Members discussing all RAES operations and policies that will 
apply to DJX. In addition, the Commission expects CBOE, in the near 
future, to codify RAES operations for OEX and DJX in manner similar 
to that for SPX.
---------------------------------------------------------------------------

    As a general rule, the Commission believes that customer limit 
orders in the limit order book should receive priority protection over 
other orders when the quoted market touches the limit order. 
Specifically, RAES orders generally should not be executed by market 
makers when customer limit orders are also price eligible to interact 
with the RAES orders. The Commission believes that exceptions to this 
principle are only appropriate in limited circumstances where it is 
unlikely that affected limit orders will receive an inferior execution. 
The Commission has previously approved CBOE rule changes that afforded 
such an exception in two highly liquid options classes, OEX index 
options and IMB equity options. After careful review, the Commission 
has determined that it is appropriate to allow DJX RAES orders to be 
automatically executed notwithstanding the possibility that customer 
limit orders could be priced identically to the prevailing disseminated 
best bid or offer. The Commission notes that it is basing this approval 
upon the fact that the Exchange expects DJX to be a heavily traded 
index product. As a result, it is anticipated that most limit orders 
will receive fair executions, particularly since CBOE Rule 6.45 ensures 
that no transaction can take place on the floor at a price equal to or 
better than the price of the booked order until the booked order has 
been filled. The Commission expects the Exchange to monitor the actual 
depth and liquidity of the DJCX trading floor and the treatment of 
customer orders on the limit order book that are traded behind RAES 
orders at the market.
    The Commission also believes that increasing the number of DJX 
contracts eligible for RAES and to increase the firm quote requirement 
for DJX is consistent with the Act because options on the DJIA are 
approximately one-tenth the value of options on indexes underlying 
other broad-based indexes.\19\ Therefore, increasing the RAES 
eligibility and firm quote requirements for DJX should enhance market 
maker obligations and commitments in these options, as well as help add 
depth and liquidity to the market for DJX. In addition, increasing the 
size of the RAES eligibility for DJX will provide the benefits of RAES 
execution to a larger number of customer orders and reduce the number 
of transactions to be executed manually on the floor, which could 
increase the efficiency of executing non-RAES orders.
---------------------------------------------------------------------------

    \19\ The Commission notes that this reasoning applies to an 
option contract based upon one-one-hundredth of the DJIA and that 
the same reasoning would not apply if the COE were to start trading 
an options contract based upon one-tenth of the DJIA. The Commission 
expects the CBOE to reset the RAES eligible size and the firm quote 
limit accordingly for an options contract based on one-tenth of the 
DJIA.
---------------------------------------------------------------------------

    The Commission believes it is consistent with the Act to amend the 
Minor Rule Plan fine amount for violations of the firm quote rule for 
both OEX and DJX because the amended fine schedule should still ensure 
adequate and effective enforcement of the firm quote program. The 
amended fine amount for third and fourth violations of the firm quote 
policy, which will be $2500 \20\ is a reasonable amount in order to 
help deter non-compliance with the firm quote program, and there will 
now be mandatory referral to the BCC for any violations after the 
fourth violation. In addition, the Commission notes that the Exchange 
always has the authority to commence a full disciplinary proceeding 
under Exchange Rule 17.2 under its Minor Rule Plan program for any 
violation of the firm quote program, and that the CBOE stated that it 
will exercise this authority in egregious situations.\21\
---------------------------------------------------------------------------

    \20\ The current fine schedule for violations of the firm quote 
program for OEX states that the fine for third and subsequent 
violations is $3000 to $5000.
    \21\ The Commission believes it is reasonable under the Act to 
amend Rule 8.16, RAES Eligibility in Equity Options, to indicate 
that it does not apply to DJIA options because DJX will now be 
covered by the RAES eligibility rule for OEX.
---------------------------------------------------------------------------

    The Commission finds good cause for approving the proposed rule 
change prior the thirtieth day after the date of publication of notice 
of filing thereof in the Federal Register. The Commission believes that 
accelerated approval of the proposal is appropriate because it believes 
the proposed changes to the various trading rule should become 
effective prior to the day that the CBOE begins to trade options on the 
DJIA, in order to ensure that all rules applicable to trading DJIA 
options are in place prior to when such trading commences. In addition, 
the Commission has previously approved similar increases in the number 
of options contracts eligible for automatic execution on other options 
exchanges \22\ and has previously approved the almost identical firm 
quote program for OEX.\23\ Finally, the Commission believes that the 
proposed rule change does not raise any significant regulatory issues.
---------------------------------------------------------------------------

    \22\ See supra note 4.
    \23\ See supra note 5.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) \24\ that the 
proposed rule change, as amended, is hereby approved on an accelerated 
basis.

    \24\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-27048 Filed 10-10-97; 8:45 am]
BILLING CODE 8010-01-M