[Federal Register Volume 65, Number 175 (Friday, September 8, 2000)]
[Notices]
[Pages 54581-54582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23030]



[[Page 54581]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43227; File No. SR-CBOE-00-36]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. To Codify the CBOE's Existing Policy Prohibiting 
Harassment and Certain Other Similar Improper Trading Practices

August 30, 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 
on August 11, 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 Exchange. The 
Exchange filed the proposed rule change pursuant to section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the 
proposal effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to codify the Exchange's existing policy 
prohibiting harassment and certain other similar improper trading 
practices.
    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 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 codify the Exchange's 
existing policy prohibiting harassment and certain other similar 
improper trading practices, that has historically been set forth in 
Exchange Regulatory Circulars.\5\ These circulars, which specifically 
address issues involving collusion, harassment, and intimidation, have 
stressed to the CBOE membership that such activities are considered to 
be conduct inconsistent with just and equitable principles of trade in 
violation of Exchange Rule 4.1. Accordingly, members and those persons 
associated with members engaging in such activities are subject to 
disciplinary action by the CBOE Business Conduct Committee as 
violations of CBOE Rule 4.1. The Exchange has, in fact, successfully 
brought several disciplinary actions, in furtherance of its obligations 
as a self-regulatory organization, involving violations of this 
longstanding policy. Furthermore, the Exchange has periodically made 
this conduct the subject of mandatory member education programs.
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    \5\ See CBOE Regulatory Circulars RG 00-30 and RG 97-167.
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    The CBOE's existing policy set forth in its regulatory circulars 
provides that among the prohibited activities are agreements or 
understandings among members not expressly provided for in the 
Exchange's rules that have as their intended purpose or effect the 
lessening of competition on the Exchange, as well as any expressions or 
other acts intended to discourage a member from making competitive 
markets in a manner permitted by the Exchange's rules. There are many 
specific types of conduct that are prohibited by the Exchange's policy, 
as it has been detailed in Regulatory Circulars RG 00-30 and RG 97-167 
and which is being codified in the CBOE rules.
    Although the policy is firmly grounded within the scope and meaning 
of CBOE Rule 4.1, the Exchange believes that codifying the policy in 
the CBOE rules will serve to highlight the policy to CBOE members and 
reinforce the Exchange's prohibition on any such anti-competitive 
conduct. To this end, the Exchange is codifying the policy in new CBOE 
Rule 4.19 (Prohibition Against Harassment) to explicitly provide that 
harassment, threats, intimidation, collusion, refusals to deal, or 
retaliation that have the intended purpose or effect of discouraging a 
member or other market participant from acting, or seeking to act, 
competitively are prohibited and shall be deemed conduct inconsistent 
with just and equitable principles of trade under CBOE Rule 4.1. The 
new CBOE Rule 4.19 also provides that among the many types of conduct 
that are prohibited, and which shall be deemed conduct inconsistent 
with just and equitable principles of trade, are harassment, threats, 
intimidation, collusion, refusals to deal, or retaliation against any 
person or entity in connection with: (i) A listing proposal made by 
such person or entity to any exchange or other market; (ii) such 
person's or entity's advocacy or proposal concerning listing or trading 
on any exchange or market; and (iii) such person or entity making 
markets in or trading any option on any exchange or other market, that 
have the intended purpose or effect of discouraging such person or 
entity from acting, or seeking to act, competitively.
2. Statutory Basis
    Because the proposed rule change will codify the Exchange's long-
standing policy regarding the Exchange's prohibition against harassment 
and other similar practices, the Exchange believes that the proposed 
rule change is consistent with section 6(b) of the Act,\6\ in general, 
and furthers the objectives of section 6(b)(5) \7\ in particular, in 
that it is designed to prevent fraudulent and manipulative acts and 
practices and to promote just and equitable principles of trade.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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

    Written comments were neither solicited nor received.

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

[[Page 54582]]

Act \8\ and subparagraph (f)(1) of Rule 19b-4 thereunder.\9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 24019b-4(f)(1).
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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 therefore with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statement 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 will also be 
available for inspection and copying at the principal office of the 
Exchange.
    All submissions should refer to the File No. SR-CBOE-00-36 and 
should be submitted by September 29, 2000.

    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. 00-23030 Filed 9-7-00; 8:45 am]
BILLING CODE 8010-01-M