[Federal Register Volume 63, Number 118 (Friday, June 19, 1998)]
[Notices]
[Pages 33742-33746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16349]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40085; International Series Release No. 1140; file No. 
SR-CBOE-98-17]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change and Amendment No. 1 Thereto, and Notice of Filing 
and Order Granting Accelerated Approval of Amendment No. 2 Thereto, by 
the Chicago Board Options Exchange, Incorporated Relating to Listing 
and Trading Warrants on a Narrow-Based Index

June 12, 1998.

I. Introduction

    On April 23, 1998, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ the proposed rule change to list and trade warrants on 
an equal dollar-weighted, narrow-based index (``Index''), comprised of 
15 to 20 actively traded common stocks. The Exchange submitted 
Amendment No. 1 to the filing on April 30, 1998.\3\ Notice

[[Page 33743]]

of the filing and Amendment No. 1 appeared in the Federal Register on 
May 13, 1998.\4\ No comments were received concerning the proposed rule 
change. On June 11, 1998, the Exchange submitted Amendment No. 2.\5\ 
This order approves the CBOE's proposal, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Stephanie C. Mullins, Attorney, CBOE to 
Martianne H. Duffy, Special Counsel, Division of Market Regulation 
(``Division''), SEC, dated April 30, 1998. Amendment No. 1 
clarifies, among other things, that the Index, as defined above, is 
narrow-based and will comply with the generic narrow-based margin 
requirements (CBOE Rule 30.53) and position limit requirements (CBOE 
Rule 30.35) of the Exchange.
    \4\ Securities Exchange Act Release No. 39965 (May 6, 1998) 63 
FR 26658.
    \5\ See Letter from Staphanie C. Mullins, Attorney, CBOE to 
Marianne H. Duffy, Special Counsel, Division, SEC, dated June 11, 
1998. Amendment No. 2 clarifies that the Index value will be 
disseminated every 15 seconds and will be calculated based on real-
time prices, for all of the component stocks, including those 
foreign stocks that are traded during CBOE trading hours. With 
respect to foreign stock components that trade during CBOE trading 
hours, each Index calculation will use the most recent last sale 
price from the appropriate home market. For foreign stocks that do 
not trade during CBOE trading hours, the closing price will be used 
to calculate the Index value. In addition, Amendment No. 2 clarifies 
that component securities will be replaced or supplemented only 
under the events discussed below. Absent unusual circumstances 
involving a merger or consolidation, conversion into another class 
of securities, a spin-off, or the termination of a depository 
receipt program, the Exchange will adhere to the following 
procedures; (1) in the event of a merger or consolidation (whether 
between component stocks or between one component stock and one non-
component stock), the original component stock will be replaced by 
the new security; (2) in the event of a conversion into another 
class of security, the original component stock will be replaced by 
the new security; (3) in the event of a spin-off of a subsidiary, 
both the subsidiary issue and the original parent security will be 
included in the Index, unless the subsidiary is an insignificant 
percentage of the original security, in which case the CBOE will 
consult with the SEC prior to omitting the subsidiary issuer from 
the Index; and (4) should a depositary receipt program be 
terminated, for any reason, after an American Depositary Receipt 
(``ADR'') has already been included in the Index, the CBOE in 
consultation with the SEC staff will evaluate the appropriate 
procedure to be employed to ensure continuity of the Index.
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II. Description of the Proposal

    The purpose of the proposed rule change is to permit the Exchange 
to list and trade warrants based on the Index, comprised of 15 to 20 
actively traded common stocks, no more than four of which will be 
foreign issued and traded. The remaining stocks will be listed on the 
American Stock Exchange, Incorporated (``Amex''), New York Stock 
Exchange, Incorporated (``NYSE'') or through the facilities of the 
National Association of Securities Dealers Automated Quotation 
(``Nasdaq'') system and are reported national market system securities 
(``Nasdaq/NMS'').
    The Exchange is permitted to list and trade stock index warrants 
under CBOE Rule 31.5E. The Exchange now is proposing to list and trade 
cash-settled, stock index warrants linked to the Index. At the time of 
listing and trading, the warrants will meet all of the generic criteria 
for stock index warrants as set forth in CBOE Rule 31.5E as well as the 
specific generic criteria for narrow-based index warrants discussed 
below.
    Rule 31.5E requires, among other things, that: (1) the issuer has a 
tangible net worth in excess of $150,000,000 and otherwise 
substantially exceeds earnings requirements in Rule 31.5(A) \6\ or meet 
the alternate guideline in paragraph (4) of Rule 31.5E; \7\ (2) the 
minimum public distribution of such issues shall be 1,000,000 warrants, 
together with a minimum of 400 public holders, and have an aggregate 
market value of $4,000,000; (3) the term of the warrants shall be for a 
period ranging from one to five years from date of issuance; (4) if 25% 
or more of the value of the underlying index is represented by 
securities that are traded primarily in the United States, the terms of 
the warrants provide that the opening prices of the stocks comprising 
the index will be used to determine (i) the final settlement value 
(i.e. the settlement value at expiration); and (ii) the settlement 
value for the warrants as valued on either of the two business days 
preceding the day on which the final settlement value is to be 
determined; (5) all stock index warrants must include in their terms 
provisions specifying the time by which all exercise notices must be 
submitted and that all unexercised warrants that are in the money (or 
in the money by a stated amount) will be automatically exercised on 
their expiration date or on or promptly following the date on which 
such warrants are delisted by the Exchange; (6) foreign country 
securities or ADRs that are not subject to a comprehensive surveillance 
agreement and have less than 50% of their global trading volume in 
dollar value in the United States, shall not, in the aggregate, 
represent more than 20% of the weight of an index, unless such index is 
otherwise approved for warrant or option trading; and (7) the issuer of 
the warrants will make arrangements to advise the Exchange immediately 
of any change in the number of warrants outstanding due to the early 
exercise of such warrants or will provide this information itself. If 
any change in the number of warrants occurs, notice will be filed with 
the Exchange by 3:30 p.m. Chicago time, on the date when the settlement 
value for the Warrants is determined.
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    \6\ Rule 31.5A requires that an issuer's total assets less total 
liabilities are at least $4,000,000, that pre-tax income earnings of 
at least than $750,000 in the issuer's last fiscal year or in two of 
the last three fiscal years and net income of at least $400,000.
    \7\ Paragraph (4) of CBOE Rule 31.5E states that where an issuer 
has a minimum tangible net worth in excess of $150,000,000, but less 
than $250,000,000, the Exchange shall not list stock index warrants 
of the issuer if the value of such warrants plus the aggregate 
value, based upon the original issue price, of all outstanding stock 
index, currency index and currency warrants of the issuer and its 
affiliates combined that are listed for trading on a national 
securities exchange or traded through the facilities of Nasdaq 
exceeds 25% of the issuer's net worth.
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    The generic criteria for narrow-based index warrants include, among 
other things, initial listing standards which state that: (1) each 
component security have a market capitalization of at least $75 
million, except that for each of the lowest weighted securities in the 
index that in the aggregate account for no more than 10% of the weight 
of the index, the market capitalization is at least $50 million; (2) 
the trading volume of each component security has been at least one 
million shares for each of the last six months, except that for each of 
the lowest weighted securities in the index that in the aggregate 
account for no more than 10% of the weight of the index, trading volume 
has been at least 500,000 shares for each of the last six months; (3) 
no single component security represents more than 25% of the weight of 
the Index, and the five highest weighted component securities in the 
Index do not in the aggregate account for more than 60%, for an index 
consisting of fewer than 25 component securities, of the weight of the 
Index; (4) at least 80% of the total number of component securities in 
an index satisfy the requirements of CBOE Rule 5.3 \8\ applicable to 
individual underlying securities; (5) U.S. component securities are 
``reported securities'' as defined in Rule 11Aa3-1 under the Act; (6) 
the current underlying Index value will be reported at least once every 
fifteen seconds during the time the Index warrants are traded on the 
exchange; and (7) for maintenance purposes, the total number of 
component securities in the Index may not increase or decrease by more 
than 33\1/3\% from the number of component securities in the Index at 
the time of its initial listing, and in no event may be less than nine 
component securities.\9\
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    \8\ CBOE Rule 5.3 describes, among other things, the options 
eligibility requirements for individual equity securities.
    \9\ The Commission notes that the requirement of paragraph (7) 
may not be maintained in the following limited circumstances. The 
CBOE has represented that no attempt will be made to find a 
replacement stock or to otherwise compensate for a stock which is 
extinguished due to bankruptcy or similar circumstances.

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[[Page 33744]]

A. Index Design and Stock Selection Criteria

    The Exchange represents that the Index will be categorized as 
narrow-based. The stocks to be included in the Index will be selected 
by a member firm of the Exchange and will be announced at or as close 
as possible to the time of the offering, and included in the issuer's 
offering materials. The Exchange represents that the Index and its 
component stocks will meet all the criteria of CBOE Rule 31.5E and the 
generic criteria for narrow-based index warrants, discussed above, 
prior to trading of the warrants. Particularly, the CBOE notes that 
with regard to paragraph (1) of CBOE Rule 31.5E, the net worth and 
earnings of the issuer substantially exceeds the criteria for equity 
issues of CBOE Rule 31.5A (i.e., total assets less total liabilities 
are greater than $4,000,000; pre-tax income earnings were greater than 
$750,000 in its last fiscal year; and the issuer's net income was 
greater than $400,000), and the issuer has a minimum tangible net worth 
in excess of $250,000,000. As a result, the CBOE notes that paragraph 
(4) of CBOE Rule 31.5E regarding limitations on issuance is not 
applicable. In addition, the CBOE represents that with regard to 
paragraph (3) of CBOE Rule 31.5E, the warrants will mature between two 
to three years from the date of issuance. With regard to the generic 
criteria for narrow-based index warrants discussed above, the Exchange 
represents that each component security of the Index will have a 
minimum market capitalization of $150 million except that two component 
stocks that do not in the aggregate account for more than 10% of the 
Index weight, may have a market capitalization of not less than $50 
million.

B. Calculation and Dissemination of the Index Value

    The Index will be calculated using an equal dollar-weighting 
methodology designed to ensure that each of the component securities is 
represented in an approximately equal dollar amount in the Index. To 
create the Index, a portfolio of equity securities will be established 
by a member firm of the Exchange representing an investment of $10,000 
in each component security (rounded to the nearest whole share). The 
value of the Index will equal the market value of the sum of the 
assigned number of shares of each of the component securities divided 
by an Index divisor. The Index divisor initially will be set to provide 
a benchmark value of 100 at the time that the warrants are priced for 
sale to the investing public.
    The number of shares of each component stock in the Index will 
remain fixed except in the event of certain types of corporate actions 
such as the payment of a dividend (other than an ordinary cash 
dividend), a stock distribution, stock split, reverse stock split, 
rights offering, distribution, reorganization, recapitalization, or 
similar event with respect to the component securities. The number of 
shares of each component security also may be adjusted, if necessary, 
in the event of a merger, consolidation, dissolution, or liquidation of 
an issuer or in certain other events such as the distribution of 
property by an issuer to shareholders, the expropriation or 
nationalization of a foreign issuer, or the imposition of certain 
foreign taxes on shareholders of a foreign issuer.
    The Exchange represents, that component securities will be replaced 
or supplemented only under the events discussed below. Absent unusual 
circumstances involving a merger or consolidation, conversion into 
another class of securities, a spin-off, or the termination of a 
depositary receipt program, the Exchange will adhere to the following 
procedures: (1) in the event of a merger or consolidation (whether 
between component stocks or between one component stock and one non-
component stock), the original component stock will be replaced by the 
new security; (2) in the event of a conversion into another class of 
security, the original component stock will be replaced by the new 
security; (3) in the event of a spin-off of a subsidiary, both the 
subsidiary issue and the original parent security will be included in 
the Index, unless the subsidiary is an insignificant percentage of the 
original security, in which case the CBOE will consult with the SEC 
prior to omitting the subsidiary issuer from the Index; and (4) should 
a depositary receipt program be terminated, for any reason, after an 
ADR had already been included in the Index, the CBOE in consultation 
with the SEC staff will evaluate the appropriate procedure to be 
employed to ensure continuity of the Index.\10\ If the security remains 
in the Index, the number of shares of the security may be adjusted to 
the nearest whole share to maintain the component's relative weight in 
the Index at the level immediately prior to the corporate action. In 
all cases, the divisor will be adjusted, if necessary, to ensure 
continuity of the value of the Index.
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    \10\ No attempt will be made to find a replacement stock or to 
otherwise compensate for a stock which is extinguished due to a 
bankruptcy or similar circumstances, supra note 9.
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    The CBOE also represents that after the selection of the initial 
securities has been made, the CBOE, not the broker-dealer that 
initially will select the stocks, will decide all subsequent issues 
relating to the composition of the Index and/or the component 
securities.
    Primary and backup pricing sources will be used to obtain prices 
for foreign stocks. All non-U.S. traded stocks will be valued in U.S. 
dollars using each country's cross-rate to the U.S. dollar. Bloomberg's 
composite New York rates, or comparable rates, quoted at 2:00 p.m. 
Chicago time the previous day, will be used to convert any non-U.S. 
traded stock price from the respective countries to U.S. dollars. If 
there are several quotes, the first quoted rate in that minute will be 
used to calculate the Index. In the event that there is no Bloomberg 
exchange rate for a country's currency at 2:00 p.m. the previous day, 
stocks will be valued at the first U.S. dollar cross-rate quoted before 
2:00 p.m. Chicago time the previous day.
    As previously stated, the Index value will be calculated and 
disseminated every 15 seconds and will be calculated based on real-time 
prices, for all of the component stocks, including those foreign stocks 
that are traded during CBOE trading hours. With respect to foreign 
stock components that trade during CBOE trading hours, each Index 
calculation will use the most recent last sale price from the 
appropriate home market. For foreign stocks that do not trade during 
CBOE trading hours, the closing price will be used to calculate the 
Index value.\11\
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    \11\ See Amendment No. 2, supra footnote 5.
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C. Index Warrant Trading (Exercise and Settlement)

    The warrants will be direct obligations of their issuer, subject to 
cash-settlement in U.S. dollars and will be exercisable throughout 
their life (i.e., American-Style).\12\ Upon exercise, the holder of a 
Warrant structured as a ``put'' will receive payment in U.S. dollars to 
the extent that the value of the Index has declined below a pre-stated 
cash settlement value. Conversely, upon exercise (or at the warrant 
expiration date in the case of warrants with European-style exercise), 
the holder of a Warrant structured as a ``call'' will receive payment 
in U.S. dollars to the extent that the value of the Index has increased 
above the pre-stated cash settlement value. Warrants that are ``out-

[[Page 33745]]

of-the-money'' at the time of expiration will expire worthless.
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    \12\ Telephone conversation between Stephanie C. Mullins, 
Attorney, CBOE and Marianne H. Duffy, Special Counsel, June 12, 
1998.
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D. Warrant Listing Standards and Customer Safeguards

    Sales practice rules applicable to the trading of index warrants 
are provided for in Exchange Rule 30.50 and to the extent provided by 
Rule 30.52 they are also contained in Chapter IX of the Exchange's 
Rules. Rule 30.50 governs, among other things, communications with the 
public. Rule 30.52 subjects the transaction of customer business in 
stock index warrants to many of the requirements of Chapter IX of the 
Exchange's rules dealing with public customer business, including 
suitability. For example, no member organization may accept an order 
from a customer to purchase a stock index warrant unless that 
customer's account has been approved for options transactions. The same 
suitability and use of discretion provisions that are applicable to 
transactions in options will be equally applicable to the warrants 
pursuant to CBOE rules. The listing and trading of index warrants on 
the Index will be subject to these guidelines and rules.

E. Other Applicable Exchange Rules

    As previously stated, the CBOE represents that the Index will be 
categorized as narrow-based. As such, the generic narrow-based warrant 
standards regarding margin requirements provided for under Exchange 
rule 30.53 will apply. The applicable generic narrow-based position and 
exercise limits will be determined pursuant to Exchange rule 30.35.\13\
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    \13\ See Amendment No. 1, supra note 3.
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III. Commission Findings and Conclusions

    The Commission finds that the proposed rule change by the Exchange 
is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange, 
and in particular, the requirements of Section 6(b)(5) of the Act.\14\ 
Specifically, the Commission finds that the listing and trading of 
warrants based on the Index will serve to promote the public interest 
and help to remove impediments to a free and open securities market by 
providing investors with a means to hedge exposure to market risk 
associated with a portion of the equity markets \15\ and promote 
efficiency, competition and capital formation.\16\
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    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Pursuant to Section 6(b)(5) of the Act, the Commission must 
predicate approval of any new securities product upon a finding that 
the introduction of such product is in the public interest. Such a 
finding would be difficult with respect to a warrant that served no 
hedging or other economic function, because any benefits that might 
be derived by market participants likely would be outweighed by the 
potential for manipulation, diminished public confidence in the 
integrity of the markets, and other valid regulatory concerns.
    \16\ 15 U.S.C. 78c(f).
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    Nevertheless, the trading of warrants on the Index raises several 
concerns related to the design and maintenance of the Index, customer 
protection, surveillance and market impact. The Commission believes, 
however, for the reasons discussed below, that the CBOE has adequately 
addressed these concerns.

A. Design and Maintenance of the Index

    The Commission finds that it is appropriate and consistent with the 
Act for the CBOE to apply its narrow-based index warrant listing 
standards and trading rules to the Index. First, the Index will be 
composed of 15 to 20 actively traded common stocks, no more than four 
of which will be foreign issued and traded. The remaining stocks will 
be listed on the Amex, NYSE or through the facilities of Nasdaq and are 
reported Nasdaq/NMS securities.
    The Commission notes that with respect to the maintenance of the 
Index, the CBOE has implemented several safeguards in connection with 
the listing and trading of Index warrants that will serve to ensure 
that the Index component securities are relatively highly capitalized 
and actively traded. In this regard, the CBOE represents that the Index 
and its component stocks will meet all the criteria of CBOE Rule 31.5E 
and the generic criteria for narrow-based index warrants, discussed 
above, prior to trading of the warrants. Particularly, the CBOE notes 
that with regard to paragraph (1) of CBOE Rule 31.5E, the net worth and 
earnings of the issuer substantially exceeds the criteria for equity 
issues of CBOE Rule 31.5A (i.e., total assets less total liabilities 
are greater than $4,000,000; pre-tax income earnings were greater than 
$750,000 in its last fiscal year; and the issuer's net income was 
greater than $400,000), and the issuer has a minimum tangible net worth 
in excess of $250,000,000. As a result, the CBOE notes that paragraph 
(4) of CBOE Rule 31.5E regarding limitations on issuance is not 
applicable. In addition, the CBOE represents that with regard to 
paragraph (3) of CBOE Rule 31.5E, the warrants will mature between two 
to three years from the date of issuance. With regard to the generic 
criteria for narrow-based index warrants discussed above, the Exchange 
represents that each component security of the Index will have a 
minimum market capitalization of $150 million except that two component 
stocks that do not in the aggregate account for more than 10% of the 
Index weight, may have a market capitalization of not less than $50 
million.\17\
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    \17\ The Commission notes that the proposal does not contain a 
list of the actual components of the Index. The CBOE has committed 
to provide the list to the Commission, when it becomes publicly 
available, prior to the trading of the Index warrants. See Amendment 
No. 2, supra note 5.
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B. Customer Protection

    The Commission notes that the rules and procedures of the Exchange 
adequately address the special concerns attendant to the trading of 
Index warrants. Specifically, the applicable suitability, account 
approval, disclosure and compliance requirements of the CBOE warrant 
listing standards satisfactorily address potential concerns. Moreover, 
the CBOE plans to distribute a circular to its membership calling 
attention to specific risks associated with warrants on the Index. 
Further, pursuant to the Exchange's listing guidelines, only companies 
capable of meeting the CBOE's index warrant issuer standards will be 
eligible to issue Index warrants. These standards, among other things, 
help to ensure that the issuer is sufficiently creditworthy to be able 
to meet its obligations at the expiration of the Index warrants.

C. Surveillance

    In evaluating new derivative instruments, the Commission consistent 
with the protection of investors, considers the degree to which the 
derivative exchange has the ability to obtain information necessary to 
detect and deter market manipulation and other trading abuses. It is 
for this reason that the Commission requires that there be a 
comprehensive surveillance agreement in place between an exchange 
listing or trading a derivative product and the exchanges trading the 
stocks underlying the derivative contract that specifically enables 
officials to survey trading in the derivative product and its 
underlying stocks.\18\ Such agreements facilitate the

[[Page 33746]]

availability of information needed to fully investigate a potential 
manipulation if it were to occur. For foreign stock index derivative 
products, these agreements are especially important to facilitate the 
collection of necessary regulatory, surveillance and other information 
from foreign jurisdictions. In order to address the above concerns, the 
Commission notes that the Index will be maintained in accordance with 
CBOE Rule 31.5(E)(7), which states that foreign country securities or 
ADRs that are not subject to a comprehensive surveillance agreement and 
have less than 50% of their global trading volume in dollar value in 
the United States, cannot, in the aggregate, represent more than 20% of 
the weight of an index.
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    \18\ The Commission believes that the ability to obtain relevant 
surveillance information, including, among other things, the 
identity of the ultimate purchasers and sellers of securities, is an 
essential and necessary component of a comprehensive surveillance 
agreement. A comprehensive surveillance agreement should provide the 
parties thereto with the ability to obtain information necessary to 
detect and deter market manipulation and other trading abuses. 
Consequently, the Commission generally requires that a comprehensive 
surveillance agreement require that the parties to the agreement 
provide each other, upon request, information about market trading 
activity, clearing activity and customer identity. See Securities 
Exchange Act Release No. 31529 (November 27, 1992).
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    For the reasons discussed above, the Commission finds good cause to 
approve Amendment No. 2 prior to the thirtieth day after the date of 
publication of notice of filing thereof in the Federal Register. 
Specifically, Amendment No. 2 provides that the Index value will be 
disseminated every 15 seconds and will be calculated based on real-time 
prices, for all of the component stocks, including those foreign stocks 
that are traded during CBOE trading hours. With respect to foreign 
stock components that trade during CBOE trading hours, each Index 
calculation will use the most recent last sale price from the 
appropriate home market. For foreign stocks that do not trade during 
CBOE trading hours, the closing price will be used to calculate the 
Index value. In addition, Amendment No. 2 clarifies that component 
securities will be replaced or supplemented only under the events 
discussed below. Absent unusual circumstances involving a merger or 
consolidation, conversion into another class of securities, a spin-off, 
or the termination of a depositary receipt program, the Exchange will 
adhere to the following procedures: (1) in the event of a merger or 
consolidation (whether between component stocks or between one 
component stock and one non-component stock), the original component 
stock will be replaced by the new security; (2) in the event of a 
conversion into another class of security, the original component stock 
will be replaced by the new security; (3) in the event of a spin-off of 
a subsidiary, both the subsidiary issue and the original parent 
security will be included in the Index, unless the subsidiary is an 
insignificant percentage of the original security, in which case the 
CBOE will consult with the SEC prior to omitting the subsidiary issuer 
from the Index; and (4) should a depositary receipt program be 
terminated, for any reason, after an ADR had already been included in 
the Index, the CBOE in consultation with the SEC staff will evaluate 
the appropriate procedure to be employed to ensure continuity of the 
Index. The Commission notes that no comments were received when the 
original notice of the proposed rule change was published and that no 
new regulatory issues are presented in Amendment No. 2.
    Accordingly, the Commission believes that it is consistent with 
Sections 6(b)(5) and 19(b)(2)\19\ of the Act, to find good cause exists 
to approve Amendment No. 2 on an accelerated basis.
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    \19\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 2, including whether the proposed 
rule change is consistent with the Act. 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 in the Commission's Public Reference Room, 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 CBOE. 
All submissions should refer to File No. SR-CBOE-98-17 and should be 
submitted by July 10, 1998.
    For the foregoing reasons, the Commission finds that the CBOE's 
proposal to list and trade warrants based on the Index is consistent 
with the requirements of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-CBOE-98-17), as amended, is approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-16349 Filed 6-18-98; 8:45 am]
BILLING CODE 8010-01-M