[Federal Register Volume 64, Number 175 (Friday, September 10, 1999)]
[Notices]
[Pages 49255-49256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23612]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41822; File No. SR-CBOE-99-47]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. To Increase the Size of Orders Eligible for Automatic 
Execution for Certain Classes of Options

September 1, 1999.
    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 August 23, 1999, the Chicago Board Options Exchange, Inc. (``CBOE'' 
or ``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. 
On August 23, 1999, the CBOE submitted Amendment No. 1 to the proposed 
rule change.\3\ 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.
    \3\ In Amendment No. 1, the CBOE makes additional 
representations regarding trading system and market maker capacity. 
See letter from Christopher R. Hill, Attorney, CBOE, to Michael A. 
Walinskas, Associate Director, Division of Market Regulation, 
Commission, dated August 20, 1999 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE is proposing to increase the size limit of orders in 
certain classes of

[[Page 49256]]

options contracts which are eligible for entry into the CBOE's Retail 
Automatic Execution System (``RAES'') to 50 contracts, in order to 
match the size limits of orders which will be eligible for entry into 
the automatic execution system of the Philadelphia Stock Exchange 
(``Phlx'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the CBOE included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CBOE has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE Rule 6.8(e) limits the size of RAES orders to twenty or fewer 
contracts.\4\ As of August 20, 1999, options on Dell Computers (DLQ) 
are listed only on the Phlx, options on International Business Machines 
Corp. (IBM), Johnson & Johnson (JNJ), and Coca Cola (KO) are listed 
only on the CBOE, and Ford Motor Corporation (F) is dually listed on 
both the CBOE and the Phlx. However, in conformity with procedures of 
The Options Clearing Corporation (``OCC'') established under the Joint 
Exchange Options Plan (``Plan''), the Phlx recently sent notification 
to the OCC, the Commission, and the other options exchanges that it is 
seeking to multiply list options on IBM, JNJ, and KO. The CBOE has done 
likewise with respect to DLQ. As a result, on Monday, August 23, 1999, 
pursuant to OCC procedures, the Phlx plans to commence trading options 
on IBM, JNJ, and KO, and the CBOE plans to commence trading options on 
DLQ.
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    \4\ Subsequently, the Commission has approved a proposed rule 
filing by the CBOE to increase the size limit of all RAES orders to 
50 contracts. See Securities Exchange Act Release No. 41821 
(September 1, 1999) (SR-CBOE-99-17).
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    On August 19, 1999, the Phlx announced, pursuant to Rule 1080(c), 
that its order size limit for automatic execution for DLQ, IBM, JNJ, 
and KO will be 50 contracts. The current size limit for automatic 
execution of orders in F is already 50 contracts.
    Therefore, pursuant to CBOE Rule 6.8 and Interpretation and Policy 
.01, the CBOE proposes to increase the RAES order size limit in F, IBM, 
JNJ, and KO to 50 contracts, and to set the initial order size limit 
for DLQ at 50 contracts, in order to match the size limits for orders 
in these option classes which are eligible for automatic execution on 
the Phlx.
    The Exchange represents that RAES has the capacity to accommodate a 
RAES order limit size of 50 contracts in DLQ, IBM, JNJ, and KO, both in 
terms of systems capacity as well as the market-making capacity of 
market-makers participating in RAES.\5\
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    \5\ See Amendment No. 1.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act, in general, and furthers the objectives 
of Sections 6(b)(5) and 6(b)(8) of the Act in particular, in that it is 
designed to remove unnecessary burdens on competition, as well as 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, for the benefit of investors and 
the public interest.

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

    Because the foregoing rule change constitutes a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the Exchange, it 
has become effective pursuant to section 19(b)(3)(A)(i) of the Act and 
subparagraph (f)(1) of Rule 19b-4 thereunder. At any time within 60 
days of the filing of the proposed 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.

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, NW, Washington, DC 20549-0609. 
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 also will be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to File No. SR-CBOE-99-47 and should 
be submitted by October 1, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-23612 Filed 9-9-99; 8:45 am]
BILLING CODE 8010-01-M