[Federal Register Volume 66, Number 37 (Friday, February 23, 2001)]
[Notices]
[Pages 11341-11342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4498]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43969; File No. SR-CBOE-01-02]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated To Amend Its Rules To Allow for $0.50 Strike 
Price Intervals for Options Based on Certain Index Portfolio Shares

February 15, 2001.
    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 January 31, 2001, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') 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 proposes to amend its rules to allow for $0.50 strike 
price intervals for options based on certain Index Portfolio Shares 
(``IPSs'').
    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 Exchange is proposing to establish $0.50 strike price intervals 
for options based on certain IPSs. More specifically, the Exchange 
intends to list options on the iShares S&P 100 Index Fund (ticker 
symbol ``OEF''), an IPS which currently trades on the Exchange. OEF is 
an exchange-traded fund that represents ownership in an open-end 
management company established to hold a portfolio of stocks 
replicating the S&P Index (``Index'' or ``S&P 100''). It holds 
substantially all of the securities of the Index in approximately the 
same proportions as reflected in the Index.
    The Exchange will list options on OEF pursuant to the criteria set 
forth in Interpretations and Policies .06 under CBOE Rule 5.3.\3\ 
However, the Exchange believes that it is appropriate to amend CBOE 
Rule 5.5, by adding Interpretations and Policies .06, to provide that 
options on OEF be set to $0.50 or greater strike price intervals. These 
\1/2\ point increments would correspond favorably to the 5-point 
increments in certain broad-based index options traded on the Exchange, 
such as the S&P 100 (``OEX'') and S&P 500 (``SPX''), because the size 
of the OEF-based contract will be approximately one-tenth of the size 
of the option contracts on the OEX. Accordingly, the Exchange believes 
that to effectively compliment existing CBOE products and to help 
ensure efficient trading of OEF options, adopting $0.50 strike price 
intervals for OEF options is necessary.
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    \3\ CBOE Rule 5.3 describes the criteria for underlying 
securities. Specifically, Interpretations and Policies .06 under 
CBOE Rule 5.3 indicates which securities are deemed appropriate for 
options trading.
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    The Exchange recognizes that adding series of options for trading 
under the proposed rule change may result in a slight increase in 
message traffic; however, the Exchange represents that it has the 
necessary systems capacity to support any additional series of options 
that may be added under the proposed rule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \4\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \5\ in particular, in that it 
will permit trading in options based on OEF pursuant to strike 
intervals designed to promote just and equitable principles of trade, 
and thereby will provide investors with the ability to invest in 
options based on an additional CBOE product.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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 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

    No written comments were either 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 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 as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) \6\ of the 
Act and Rule 19b-4(f)(6) \7\ thereunder.\8\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ Under Rule 19b-4(f)(6)(iii), the Exchange must given written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing the rule change, or 
such shorter time as designated by the Commission. As required, the 
Exchange has provided the Commission with written notice of its 
intent to file the proposed rule change.
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    A proposed rule change filed under Rule 19b-4(f)(6) may not become 
operative prior to 30 days after the date of filing. However, Rule 19b-
4(f)(6)(iii) permits the Commission to designate a shorter time if such 
action is consistent with the protection of investors and the public 
interest. The Exchange seeks to have the proposed rule change become 
operative on January 31, 2001, to allow

[[Page 11342]]

it to implement these $0.50 strike price intervals immediately.
    The Commission believes that it is consistent with the protection 
of investors and the public interest that the proposed rule change 
become operative immediately as of January 31, 2001.\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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    \9\ For purposes only of accelerating the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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, NW., Washington, DC 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 the 
CBOE. All submissions should refer to File No. SR-CBOE-01-02 and should 
be submitted by March 16, 2001.

    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-4498 Filed 2-22-01; 8:45 am]
BILLING CODE 8010-01-M