[Federal Register Volume 65, Number 154 (Wednesday, August 9, 2000)]
[Notices]
[Pages 48770-48771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20095]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43108; File No. SR-CBOE-00-26]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Amending the Exchange's Flexible Exchange 
Options Rules

August 2, 2000.
    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 
as amended on July 27, 2000, 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\ On July 27, 2000, the CBOE filed an amendment to the 
proposed rule change (``Amendment No. 1''). See Letter to Heather 
Traeger, Attorney, Division of Market Regulation, Commission, from 
Jaime Galvan, Attorney, Legal Division, CBOE, dated July 26, 2000. 
In Amendment No. 1, the CBOE represents that when it files a 
proposed rule change to list a trade a new Non-FLEX index option, it 
will also proposed to list and trade the FLEX index options in the 
same file.
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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 24A.4 to specifically 
provide for the listing and trading of Flexible Exchange options 
(``FLEX Option'') on all of the indices, both broad-based and narrow-
based indices, on which the Exchange lists and trades Non-FLEX options. 
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 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 for in sections

[[Page 48771]]

A, B, and C below, of the most significant parts 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 specifically provide 
in Rule 24A.4 for the listing and trading of FLEX Options on all 
indices, both broad-based and narrow-based on which the Exchange lists 
and trades on all Non-FLEX options or warrants. On February 24, 1993, 
the Commission approved the Exchange's FLEX \TM\ Options framework \4\ 
and has since approved rule changes permitting the Exchange to list and 
trade FLEX Options based on the Russell 2000 Index, the Nasdaq 
 100 Index, the S&P 100 and the S&P 500 indices, the NYSE 
Composite Index, the Dow Jones Industrial Average, and the Dow Jones 
Transportation Average. The Exchange now proposes to provide for the 
trading of FLEX Options on all indices traded on the CBOE. \5\
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    \4\ See Securities Exchange Act Release No. 31920, 58 FR 12280 
(March 3, 1993).
    \5\ Rules on trading FLEX Options are set forth under CBOE Rule 
24A.
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    All of the Exchange's rules now applicable to FLEX Index Options 
will apply to the additional FLEX Indices. The Exchange is proposing to 
expand the trading of FLEX options because the Exchange believes this 
will provide trading opportunities which currently are not available on 
the CBOE. Additionally, it will increase the Exchange's competitiveness 
with the over-the-counter market place and other exchanges which have 
expanded FLEX Options trading on indices.\6\
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    \6\ On April 28, 1998, the Commission approved the American 
Stock Exchange's (``Amex'') proposal to list and trade Flex options 
on all Amex indices. See Securities and Exchange Release No. 39928 
(April 28, 1998), 63 FR 25130 (May 6, 1998). On January 14, 1998, 
the Commission approved the Philadelphia Stock Exchange's (``Phlx'') 
proposal to establish Phlx Rule 1079 providing for the trading of 
FLEX Options on equities and narrow-based and broad-based indices. 
See Securities Exchange Act Release No. 39549 (January 14, 1998), 63 
FR 3601 (January 23, 1998).
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    The Exchange is deleting the list of index options set forth in 
Rule 24A.4(b)(1) and is replacing it with a statement that the Exchange 
may trade FLEX options on any index that has been approved for Non-FLEX 
options trading or warrant trading on the Exchange. This change is 
consistent with Amex Rule 903G(a)(1). The Exchange is likewise deleting 
the list of index options set forth in Rule 24A.4(a)(2)(i). This change 
is consistent with Amex Rule 903G(a)(2)(i) and Phlx Rule 1079(a)(1). 
When the CBOE files a proposed rule change to list and trade a new Non-
FLEX index option product, it will also propose to list and trade the 
FLEX index options in the same filing.\7\
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    \7\ The Commission notes that in any proposal to trade a new 
FLEX Index Option, the CBOE must propose the position and exercise 
limits that will apply in accordance with CBOE Rules 24A.7 and 
24A.8.
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2. Statutory Basis
    Because the proposal to expand the trading of FLEX options to all 
Exchange Indices will provide trading opportunities which currently are 
not available on the Exchange, the CBOE believes that the proposed rule 
change is consistent with the provision of Section 6(b) of the 
Securities Exchange Act of 1934,\8\ in general, and Section 6(b)(5) \9\ 
in particular, in that it is designed to facilitate transactions in 
securities, to protect investors and the public interest, and to remove 
impediments to and perfect the mechanism of a free and open market.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 a 
burden on competition that is not necessary or appropriate in 
furtherance of purposes of the Act.

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 foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder 
\11\ because the 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; and (3) does not become 
operative for 30 days from the date of filing, or such shorter time 
that the Commission may designate if consistent with the protection of 
investors and the public interest. Any time within 60 days of the 
filing of the amended 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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 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 
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 will also be 
available for inspection and copying at the principal office of CBOE. 
All submissions should refer to SR-CBOE-00-26 and should be submitted 
by August 30, 2000.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Jonathan G. Katz,
Secretary.
[FR Doc. 00-20095 Filed 8-8-00; 8:45 am]
BILLING CODE 8010-01-M