[Federal Register Volume 66, Number 163 (Wednesday, August 22, 2001)]
[Notices]
[Pages 44190-44191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21162]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44710; File No. SR-CBOE-2001-45]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by Chicago Board Options 
Exchange, Incorporated Relating to Exercise Prices for FLEX Equity 
Options

August 16, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 there under,\2\ notice is hereby given 
that on August 14, 2001, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') 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 proposal pursuant to Section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6)\4\ thereunder, which 
renders the proposal effective upon filing with the Commission.\5\ The 
Commissiion 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 250.19b-4(f)(6).
    \5\ The Exchange provided the Commission with written notice of 
its intent to file the proposal on August 6, 2001, pursuant to Rule 
19b-4(f)(6). 17 CFR 204.19b-4(f)(6). See August 3, 2001 letter from 
Jamie Galvan, Attorney, CBOE to Nancy Sanow, Division of Market 
Regulation, SEC.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposal

    The Exchange proposes to amend CBOE Rule 24A.4 to provide that 
exercise prices for Flexible Exchange options (``FLEX Options'') on 
specified equity securities (``FLEX Equity Options'') may be stated in 
fractional or decimal form. The text of the proposed rule change is 
below. Additions are in italics.

CHAPTER XXIVA

Flexible Exchange Options

    Rule 24A.4  Terms of FLEX Options
    (a)-(b) Unchanged.
    (c)
    (1) Unchanged.
    (2) Exercise prices and premiums may be stated in dollar amount or 
percentage of the price of the underlying security, rounded to the 
nearest minimum tick or, in the case of exercise prices, to the nearest 
$.10 or one-eighth of a dollar;
    (3)-(4) Unchanged.
    Interpretations and Policies:
    .01  Unchanged.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
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 amend Rule 24A.4, 
Terms of FLEX Options, to provide that exercise prices for FLEX Equity 
Options may be stated in fractional or decimal form. Specifically, the 
Exchange proposes to amend paragraph (c)(2) of Rule 24A.4 to state that 
exercise prices for FLEX Equity Options may be rounded to the nearest 
$.10, as well as to the nearest one-eighth of a dollar. The proposed 
rule change would enable market participation to state both exercise 
prices and premiums for FLEX Equity Options in decimal form, thereby 
facilitating transactions in FLEX Equity Options.\6\
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    \6\ The proposed rule change is based upon the rules of other 
securities exchanges, specifically AMEX Rule 903G(c), PCX Rule 
8.102(f) and PHLX Rule 1079(a).
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2. Statutory Basis
    CBOE believes the proposed rule change is consistent with the 
provisions of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5)\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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 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 does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission accelerate the 
operative date. The Commission finds good cause to designate the 
proposal to become operative upon filing with the Commission because 
such designation is consistent with the protection of investors and the 
public interest. Acceleration of the operative date will allow CBOE to 
better compete with the over-the-counter market and those options 
exchanges that have already adopted rules to permit offering FLEX 
Equity Options strike prices in $.10 increments. For these reasons, the 
Commission finds good cause to designate that the proposal is both 
effective and operative upon filing with the Commission.\11\
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    \11\ 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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[[Page 44191]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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 CBOE. All submissions 
should refer to file number SR-CBOE-2001-45 and should be submitted by 
September 12, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-21162 Filed 8-21-01; 8:45 am]
BILLING CODE 8010-01-M