[Federal Register Volume 64, Number 189 (Thursday, September 30, 1999)]
[Notices]
[Pages 52815-52816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25386]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41900; File No. SR-CBOE-99-28]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Amending Exchange Rule 9.21 and Issuing a Regulatory 
Circular To Interpret Rules Relating to Customer Communications

September 22, 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 25, 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 CBOE.\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\ The CBOE originally submitted the proposal on June 18, 1999. 
On August 25 1999, the CBOE submitted a letter from Timothy 
Thompson, Director, Regulatory Affairs, CBOE, to Nancy Sanow, Senior 
Special Counsel, Division of Market Regulation, Commission 
(``Amendment No. 1''). In Amendment No. 1, the CBOE proposes to 
amend Exchange Rule 9.21 to provide member firms with notice on how 
these firms can comply with the requirement of providing customers 
or members of the public with the current options disclosure 
document(s). Because this filing was filed pursuant to Section 
19(b)(3)(A) of the Act, it must be complete at the time it is filed. 
Therefore, the date of filing of Amendment No. 1 is the date of the 
filing of the proposal.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to amend Exchange Rule 9.21, Communications to 
Customers, and to issue a Regulatory Circular to its membership setting 
forth a clarifying interpretation to Exchange Rule 9.21, which governs 
communications from member firms to customers or members of the public. 
The text of the rule change and the Regulatory Circular are 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
    Rule 9.21, Communications to Customers, governs communications 
between Exchange members and their customers and other members of the 
public. In addition, the Exchange, along with the other options 
exchanges, has published Guidelines for Options Communications 
(``Guidelines'').\4\ The Guidelines explain the customer communications 
rules of the options exchanges and the interpretations of these rules.
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    \4\ Securities Exchange Act Release No. 29682 (Sept. 13, 1991), 
56 FR 47973 (Sept. 23, 1991) (File No. SR-CBOE-90-27).
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    The Exchange proposes to amend Exchange Rule 9.21 and issue a 
Regulatory Circular to formally install the clarifying interpretation 
concerning the manner in which a member or member organization may 
satisfy the requirement of Exchange Rule 9.21, Interpretations and 
Policies .02 and .03(v), which currently require that the name and 
address of a person from whom an Options Disclosure Document (``ODD'') 
may be obtained be disclosed on Advertisements and Educational 
Materials. The Exchange believes that, given the varied marketing 
programs that members and member organizations utilize, the existing 
requirement unnecessarily excludes other reasonable methods for request 
an ODD. To allow flexibility without diminishing the effectiveness of 
the disclosure requirement, the Exchange is proposing that other 
reasonably specific disclosures about how to obtain an ODD be deemed to 
satisfy the requirements of Rule 9.21, Interpretations and Policies .02 
and .03(v). Examples of alternative means of disclosure may include the 
use of one or more toll-free telephone numbers or directing existing 
clients to contact their registered representative. A member or member 
organization may utilize an internet address; however, such an address 
must be accompanied by either a telephone number or address for use by 
those investors who do not have access to the internet. A member or 
member organization may choose to continue to identify the name and 
address of a person from whom an ODD may be obtained.
2. Statutory Basis
    The amendment to Exchange Rule 9.21 and the Regulatory Circular 
interpretations of Exchange Rule 9.21 are consistent with Section 6(b) 
of the Act \5\ in general and further the objectives of Section 6(b)(5) 
\6\ in particular in that they are designed to promote just and 
equitable principles of trade and to protect investors and the public 
interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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.

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, it has become 
effective pursuant to Section 19(b)(3)(A)(i) of the Act \7\ and 
subparagraph (f)(1) of Rule 19b-4 thereunder.\8\ 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(i).
    \8\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning for foregoing, including whether the proposed rule 
change is consistent with the Act.\9\ 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

[[Page 52816]]

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 at 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-99-28 and should be 
submitted by October 21, 1999.

    \9\ In reviewing this proposal, the Commission has considered 
its potential impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-25386 Filed 9-29-99; 8:45 am]
BILLING CODE 8010-01-M