[Federal Register Volume 63, Number 164 (Tuesday, August 25, 1998)]
[Notices]
[Pages 45275-45276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22704]
[[Page 45275]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40334; File No. SR-CBOE-98-34]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by Chicago Board Options
Exchange, Incorporated to Amend Policy Regarding Exercise Procedures
and Requirements for American-Style Cash-Settled Index Options
August 18, 1998.
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 July 27, 1998, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by CBOE. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
CBOE proposes to set forth in an Exchange Regulatory Circular
(``Exercise Procedures Circular'') its policies regarding exercise
procedures and requirements for American-style cash-settled index
options. The text of the Exercise Procedures Circular 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, 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. CBOE has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exercise Procedures Circular, which supersedes a prior circular
on the same subject, is intended to update and clarify the explanation
of the operation of Exchange rules governing the procedures applicable
to the exercise of American-style cash-settled index options. The
Exchange is filing the Exercise Procedures Circular as a rule change in
order to give it the status of a rule for enforcement purposes.
Exchange Rule 11.1 sets forth the requirements for the exercise of
outstanding option contracts. Exchange Rule 11.1.03 sets forth certain
procedures that Exchange members must follow when exercising American-
style cash-settled index option contracts. The Exercise Procedures
Circular reminds members of these procedures and also provides members
with a more complete description of the steps they must follow when
exercising such option contracts.
For example, the Exercise Procedures Circular reminds members that
the submission of an ``exercise advice'' to the Exchange does not
initiate an exercise at the Options Clearing Corporation and that
members must also submit an exercise instruction memorandum to their
clearing firm. Also, the Exercise Procedures Circular reminds members
that submission of an ``exercise advice'' or ``exercise advice
cancellation'' after the 3:20 p.m. (CT) cut-off time set forth in
Exchange Rule 11.1.03 will constitute a violation of Exchange Rule
11.1. Further, members are reminded of the exercise procedures that the
Exchange follows when there is a delayed opening, a trading halt, a
modification in trading hours, or a closing rotation. These, among
other provisions contained in the Exercise Procedures Circular, are
intended to spell out more clearly what the requirements of Exchange
Rule 11.1.03 are and how the provisions of Exchange Rule 11.1.03 are
implemented by the Exchange.
2. Statutory Basis
The Exchange believes the procedures set forth in the Exercise
Procedures Circular are consistent with and further the objectives of
Section 6(b)(5) of the Act \3\ in that they are designed to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, and processing information regarding the exercise
of outstanding option contracts.
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\3\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The proposed rule change will become effective upon filing pursuant
to Section 19(b)(3)(A)(i) of the Act,\4\ and Rule 19b-4(e)(1) \5\
thereunder, in that it is designated by the Exchange as constituting a
stated policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule. At any time within
60 days of the filing of such rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.\6\
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\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(e)(1).
\6\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, 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. Copies of such filing will also be
available for inspection and copying at
[[Page 45276]]
the principal office of CBOE. All submissions should refer to the File
No. SR-CBOE-98-34 and should be submitted by September 15, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
Exhibit A
Italicing indicates additions to, and [brackets] indicate
deletions from, CBOE Rules currently in effect and as proposed to be
amended.
* * * * *
CHAPTER XXIV
Index Options
* * * * *
Definitions
RULE 24.1
(a)--(t) No change.
* * *Interpretations and Policies:
.01 The reporting authorities designated by the Exchange in
respect of each index underlying an index option contract traded on
the Exchange are as follows:
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Index Reporting Authority
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[Add the following to the current list]
CBOE Telebras Index........................ CBOE.
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* * * * *
Terms of Index Option Contracts
RULE 24.9
(a) General.
(1) No change.
(2) No change.
(3) ``European-Style Exercise.'' The following European-style
index options, some of which are A.M.-settled as provided in
paragraph (a)(4), are approved for trading on the Exchange:
[Add the following to the current list.]
CBOE Telebras Index.
(4) No change.
(5) No change.
(b) Long-Term Index Options Series (``LEAPS'')
(1) No change.
(2) Reduced-Value LEAPS.
(A) Reduced-value LEAPS on the following stock indices are
approved for trading on the Exchange:
[Add the following to the current list.]
CBOE Telebras Index.
(B) No change.
(c) No change.
* * * Interpretations and Policies:
.01 The procedures for adding and deleting strike prices for
index options are provided in Rule 5.5 and Interpretations and
Policies related thereto, as otherwise generally provided by Rule
24.9, and include the following:
(a) The interval between strike prices will be no less than
$5.00; provided, that in the case of the following classes of index
options, the interval between strike prices will be no less than
$2.50:
[add the following to the list]
CBOE Telebras Index for strike prices below $50
[FR Doc. 98-22704 Filed 8-24-98; 8:45 am]
BILLING CODE 8010-01-M