[Federal Register Volume 64, Number 181 (Monday, September 20, 1999)]
[Notices]
[Pages 50846-50847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24356]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41848; File No. SR-CBOE-99-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Regarding the Extension of the Pilot Program Eliminating 
Position and Exercise Limits in FLEX Equity Options

September 9, 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 September 8, 1999, 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, II, 
and III below, which Items have been prepared by the DBOE. The Exchange 
has designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of rule 19b-4 under 
the Act \3\ which renders the proposal effective upon receipt of this 
filing by the Commission.\4\ The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested persons 
and to accelerate the operative date of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
    \4\ The Exchange has represented that the proposed rule change: 
(i) Will not significantly affect the protection of investors or the 
public interest; (ii) will not impose any significant burden on 
competition; and (iii) will not become operative for 30 days after 
the date of this filing, unless otherwise accelerated by the 
Commission. The Commission is waiving the minimum five business day 
notice requirement as permitted by rule 19b-4(f)(6) under the Act. 
Id. The Commission notes that the Exchange has requested that the 
Commission accelerate the operative date of the rule change to 
permit uninterrupted operation of the pilot program.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to extend the pilot period for the elimination of 
position and exercise limits on FLEX Equity options for three months, 
or until December 9, 1999.
    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 Exchange 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 Exchange 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 purpose of the proposed rule change is to extend the pilot 
program allowing for the elimination of position and exercise limits in 
FLEX Equity options for another three months. On September 9, 1997, the 
Commission approved separate proposals by the CBOE, the American Stock 
Exchange, and the Pacific Exchange (the ``Exchanges'') to eliminate 
position and exercise limits for FLEX Equity options under a two-year 
pilot program.\5\
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    \5\ Securities Exchange Act Release No. 39032 (September 9, 
1997), 62 FR 48683 (September 16, 1997) approving SR-CBOE-96-79, SR-
Amex-96-19, and SR-PCX-97-09. (``Approval Order'')
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    The Approval Order required the Exchanges to report to the 
Commission on the status of the program so that the Commission could 
use this information to evaluate the consequences of the program and to 
determine whether to approve the elimination of position and exercise 
limits for these products on a permanent basis. The CBOE submitted the 
required report to the Commission on June 2, 1999. It is our 
understanding, however, that the Commission staff is still evaluating 
the CBOE's report and those of the other Exchanges and thus, will not 
be prepared to approve the elimination of position and exercise limits 
for these products on a permanent basis by the end of the pilot program 
period on September 9, 1999.\6\ Consequently, the CBOE requests that 
the pilot program be extended for another three months, until December 
9, 1999, so that the Commission staff may

[[Page 50847]]

have the appropriate time to consider the information it has been 
provided.
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    \6\ The Commission notes that the report required pursuant to 
the current pilot program was due in March 1999. The Commission did 
not receive the CBOE's report until June 1999. The Commission also 
notes that it did not receive a rule filing relating to this program 
until September 1999.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 \7\ of the Act in general and in particular with Section 
6(b)(5) \8\ in that it is designed to promote just and equitable 
principles of trade, as well as to protect investors and the public 
interest, by allowing for the continuation of a pilot program that has 
enabled more business to be transacted on the exchanges that might 
otherwise have been transacted in the OTC market without the benefit of 
Exchange transparency and the guarantee of The Options Clearing 
Corporation.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments 
with respect to the proposed rule change.

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

    This proposed rule filing has been filed by the Exchange as a 
``non-controversial'' rule change pursuant to Section 19(b)(3)(A) of 
the Act \9\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\10\ 
Because the foregoing proposed rule change: (1) does not significantly 
affect the protection of investors or the public interest, (2) does not 
impose any significant burden on competition, (3) by its terms does not 
become operative for 30 days after the date of filing, or such shorter 
time as the Commission may designate, and because (4) the Commission is 
waiving the required written notice of intent to file the proposed rule 
change at least five days prior to the filing date, it has become 
effective, for a pilot period until December 9, 1999, pursuant to 
Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\17 CFR 240.19b-4(f)(6).
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    The Commission has determined, consistent with the protection of 
investors and the public interest, to make the proposed rule change 
operative upon filing, pursuant to Section 19(b)(3)(A) of the Act \13\ 
and Rule 19b-4(f)(6)(iii).\14\ Under rule 19b-4(f)(6)(iii), a proposed 
``non-controversial'' rule change does not become operative for 30 days 
after the date of filing, unless the Commission designates a shorter 
time.\15\ The Commission believes that because the two-year pilot 
program is scheduled to expire on September 9, 1999, and the three 
month extension is based on the same terms and conditions of the 
original pilot, it is consistent with the protection of investors and 
the public interest to make the proposed rule change operative upon 
filing.
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    \13\ 15 U.S.C. 78s (b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ Id.
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    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 the furtherance of the purposes of the Act.\16\
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    \16\ 15 U.S.C. 78s(b)(3)(C).
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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 
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. 20549-0609. 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 Section, 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 the CBOE. All 
submissions should refer to file number SR-CBOE-99-53 and should be 
submitted by October 12, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-24356 Filed 9-17-99; 8:45 am]
BILLING CODE 8010-01-M