[Federal Register Volume 66, Number 113 (Tuesday, June 12, 2001)]
[Notices]
[Pages 31726-31727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14737]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44394; File No. SR-CBOE-00-43]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Inc.; Order Granting Approval and Notice of Filing and Order Granting 
Accelerated Approval to Amendment Nos. 1 and 2 to Proposed Rule Change 
Relating to Participation Rights in Crossing Transactions

June 6, 2001.

I. Introduction

    On august 29, 2000, the Chicago Board Options Exchange, 
Inc.(``CBOE'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend CBOE Rule 6.74(d), which currently 
entitles a floor broker representing a member firm to cross a certain 
percentage of each customer order the firm sends to the floor against 
another order on behalf of the same firm.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change would: (a) Make clear that Rule 6.74(d) 
includes the situation where a floor broker is seeking to cross a 
solicited order against the original customer order; and (b) expand 
Rule 6.74(d) to allow the floor broker representing the original 
customer order to solicit the order to trade against it even if that 
floor broker is not a nominee of the originating firm.
    The proposed rule change was published for comment in the Federal 
Register on November 21, 2000.\3\ The Commission received no comments 
on the proposal. The CBOE filed Amendment Nos. 1 and 2 to the proposed 
rule change with the Commission on February 12, 2001, and May 23, 2001, 
respectively.\4\ This order approves the proposed rule change, 
accelerates approval of Amendment Nos. 1 and 2, and solicits comments 
from interested persons on those amendments.
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    \3\ See Securities Exchange Act Release No. 43537 (November 9, 
2000), 65 FR 69977.
    \4\ The substance of Amendment Nos. 1 and 2 is discussed below.
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II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange \5\ and, in 
particular, the requirements of section 6 of the Act \6\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change, as amended, is consistent with section 6(b)(5) of 
the Act \7\ because it establishes the ability of firms and floor 
brokers to solicit orders to supply the contra side for customer orders 
in a manner that matches or improves the price available from the crowd 
while conforming to the principles and limitations set forth by the 
Commission in its original approval of Rule 6.74(d) concerning 
participation rights in crossing transactions.\8\
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    \5\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ See Securities Exchange Act Release No. 42835 (May 26, 
2000), 65 FR 35683 (June 5, 2000).
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    Amendment No. 1 to the proposed rule change would add 
Interpretation .07 to Rule 6.74 to make clear that a floor broker may 
not cross an order that he is holding with an order from a market maker 
that is then in the trading crowd. Amendment No. 2 would clarify that 
the proposed change to CBOE Rule 6.74 is intended to supersede the 
provisions of paragraph (d) of CBOE Rule 6.9, ``Solicited 
Transactions,'' when the conditions specified in CBOE Rule 6.74 are 
met. The Commission finds that Amendment Nos. 1 and 2 are

[[Page 31727]]

appropriate clarifications of the proposed rule change and are 
consistent with section 6(b)(5) of the Act. In addition, because these 
amendments clarify the intent of the proposed rule change and thereby 
strengthen the proposal, the Commission finds good cause for approving 
their provisions prior to the thirtieth day after the date of 
publication of notice of filing thereof in the Federal Register.

III. Solicitation of Comment

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment Nos. 1 and 2, including whether these 
amendments are 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-00-43 and should be submitted by July 3, 2001.

IV. Conclusion

    For the reasons discussed above, the Commission finds that the 
proposal, as amended, is consistent with the Act and the rules and 
regulations thereunder.
    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-CBOE-00-43), as 
amended, be, and hereby it is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    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. 01-14737 Filed 6-11-01; 8:45 am]
BILLING CODE 8010-01-M