[Federal Register Volume 66, Number 209 (Monday, October 29, 2001)]
[Notices]
[Pages 54559-54560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27130]



[[Page 54559]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44964; File No. SR-CBOE-2001-29]


Self-Regulatory Organizations; Chicago Board Options Exchange 
Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto 
and Notice of Filing and Order Granting Accelerated Approval to 
Amendment No. 2 to the Proposed Rule Change Relating to the Exchange's 
Delisting Criteria

October 19, 2001.

I. Introduction

    On May 29, 2001, the Chicago Board Options Exchange, Inc. (``CBOE'' 
or ``Exchange'') 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 \2\ thereunder, a 
proposed rule change amending the Exchange's delisting criteria. On 
August 3, 2001, the CBOE submitted Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change was published for comment in the 
Federal Register on August 21, 2001.\4\ The Commission received no 
comments on the proposal. On October 5, 2001, the CBOE submitted 
Amendment No. 2 to the proposed rule change.\5\ This order approves the 
proposed rule change, as amended. In addition, the Commission solicits 
comments on Amendment No. 2 from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Patrick Sexton, Assistant General Counsel, 
CBOE, to Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated August 1, 2001 
(``Amendment No. 1'').
    \4\ See Securities Exchange Act Release No. 44693 (August 13, 
2001), 66 FR 43937.
    \5\ See letter from Patrick Sexton, Assistant General Counsel, 
CBOE, to Nancy Sanow, Assistant Director, Division, Commission, 
dated October 4, 2001 (``Amendment No. 2''). In Amendment No. 2, the 
CBOE clarified in Interpretation .01 and Interpretation .02 to CBOE 
Rule 5.4 that it will look to the primary market in which the 
underlying security trades in determining whether the underlying 
security satisfies the price requirements for adding additional 
series of option contracts.
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II. Description of the Proposal

    The proposed rule change, as amended, would modify Interpretation 
.01 to CBOE Rule 5.4, which governs the withdrawal of approval for 
securities underlying options traded on the Exchange, by reducing from 
$5 to $3 the guideline price used to determine whether an underlying 
security previously approved for Exchange options transactions 
continues to meet the exchange's listing requirements.\6\ The proposed 
rule change would also amend Interpretation .02 to CBOE Rule 5.4 to 
reduce from $5 to $3 the price above which an underlying security must 
be traded before the Exchange may add additional series of options 
intra-day.\7\ In addition, the proposed rule change would modify 
Interpretation .01 and Interpretation .02 to CBOE Rule 5.4, by reducing 
from six calendar months to one day, the amount of time the CBOE would 
be required to look back at the closing market price of the underlying 
security when determining if an underlying security previously approved 
for options transactions no longer meets the requirements for the 
continuance of such approval. Lastly, the proposed rule change would 
eliminate Interpretation .04 to CBOE Rule 5.4, which will no longer be 
needed in light of the above mentioned changes the instant proposed 
rule change would implement.
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    \6\ The Exchange will use the closing price per share in the 
primary market in which the underlying security trades for purposes 
of determining the guideline price. See Amendment No. 2, supra note 
5.
    \7\ The Exchange will use the closing price per share in the 
primary market in which the underlying security trades and the price 
per share of the last reported trade in the primary market in which 
the underlying security trades at the time the Exchange determines 
to add the series intra-day. Id.
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III. 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 \8\ and, in 
particular, the requirements of section 6 of the Act \9\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change is consistent with section 6(b)(5) of the Act,\10\ 
which requires, among other things, that the rules of an exchange be 
designed to promote just and equitable principles of trade, facilitate 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest. The Commission 
believes that by limiting the determination of the closing price to 
trades occurring on the primary market and requiring that the stock 
price meet the minimum price on the primary market both at the close 
the day before and at the time the Exchange determines to add an intra-
day series, the delisting criteria should continue to ensure that 
options traded on the CBOE are based on securities of companies that 
are financially sound and are still subject to adequate minimum 
standards. Therefore, the Commission believes that the CBOE's proposed 
rule change, as amended, should serve to protect investors and the 
public interest.
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    \8\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the proposal and Amendment No. 1 were 
noticed for the full 21-day comment period and the Commission received 
no comments regarding the proposal, as amended. The Commission further 
notes that Amendment No. 2 made technical changes to the proposed rule 
change; accordingly, the Commission finds good cause pursuant to 
section 19(b)(2) of the Act \11\ to accelerate approval of Amendment 
No. 2 prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register.
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    \11\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2, including whether Amendment No. 2 
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, as 
amended, 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 filings will also be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to File No. SR-CBOE-2001-29 and 
should be submitted by November 19, 2001.

V. Conclusion

    For the foregoing reasons, the Commission finds that the proposal 
is consistent with the requirements of the Act and rules and 
regulations thereunder.

[[Page 54560]]

    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change, as amended, (File No. SR-CBOE-
2001-29), is approved.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-27130 Filed 10-26-01; 8:45 am]
BILLING CODE 8010-01-M