[Federal Register Volume 64, Number 181 (Monday, September 20, 1999)]
[Notices]
[Pages 50847-50848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24357]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41854; File No. SR-CBOE-99-50]


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 10, 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 31, 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. 
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

    The CBOE is proposing to increase the size limit of orders in 
certain classes of options contracts which are eligible for entry into 
the CBOE's Retail Automatic Execution System (``RAES'') 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 receive 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

[[Page 50848]]

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) generally limits the size of RAES orders to twenty 
or fewer contracts. On August 31, 1999, options on Oracle Corporation 
(ORQ), Eastman Kodak Company (EK), EMC Corporation (EMC), Merck & 
Company, Inc. (MRK), Hewlett Packard Company (HWP), Texas Instruments, 
Inc. (TXN), and Exxon Corporation (XON) were dually listed on the CBOE 
and the Phlx. Before August 31, each of these option classes was listed 
solely on the CBOE. The Phlx has announced that the automatic execution 
size limit for each of these seven option classes is 50 contracts 
pursuant to Phlx Rule 1080(c).
    Therefore, pursuant to CBOE Rule 6.8 and Interpretation and Policy 
.01, the CBOE proposes to increase the RAES eligible order size limit 
in ORQ, EK, EMC, MRK, HWP, TXN, and XON to 50 contracts, to match the 
eligible order size on the automatic execution system of the Phlx, 
effective August 31, 1999.\3\
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    \3\ Subsequently, the Commission approved a proposed rule filing 
by the CBOE to increase the size limit of RAES orders in most 
options classes to 50 contracts. See Securities Exchange Act Release 
No. 41821 (September 1, 1999) (SR-CBOE-99-17).
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    The Exchange represents that RAES has the capacity to accommodate 
at RAES order limit size of up 50 contracts in ORQ, EK, EMC, MRK, HWP, 
TXN, and XON, both in terms of systems capacity as well as the market-
making capacity of market-makes participating in RAES.
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, 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 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-99-50 and should 
be submitted October 12, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-24357 Filed 9-17-99; 8:45 am]
BILLING CODE 8010-01-M