[Federal Register Volume 67, Number 80 (Thursday, April 25, 2002)]
[Notices]
[Pages 20561-20562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10150]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45774; File No. SR-CBOE-2002-15]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to CBOE Rule 8.51

April 17, 2002.
    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 April 15, 2002, the Chicago Board Options Exchange, Inc. (``CBOE'' 
or ``Exchange'') 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 adopt a new interpretation and policy under 
CBOE Rule 8.51. Below is the text of the proposed rule change. 
Additions are italicized.

Rule 8.51  Trading Crowd Firm Disseminated Market Quotes

    (a)-(b) No change.
* * * Interpretations and Policies:
    .01-.08 No change.
    .10  For purposes of determining when the firm quote obligations 
under Rule 8.51 attach in respect of orders received at a PAR 
workstation in a DPM trading crowd and how the exemptions to that 
obligation provided in paragraph (e) of that Rule apply, the 
responsible broker or dealer shall be deemed to receive an order, and 
an order shall be deemed to be presented to the responsible broker or 
dealer, at the time the order is received on the DPM's PAR workstation.

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 proposed rule change provides an interpretation of CBOE Rule 
8.51 to clarify when the firm quotation obligation of the trading crowd 
under that rule arises in the case of orders received at PAR 
workstations in DPM trading crowds, and to interpret how the exemptions 
from that obligation apply in the case of such orders. CBOE Rule 
8.51(b)(1) obligates ``the responsible broker or dealer to sell (buy) 
at least the established number of contracts at the offer (bid) which 
is displayed when the responsible broker or dealer receives a buy 
(sell) order at the trading station where the reported security is 
located for trading.'' Paragraph (e) of CBOE Rule 8.51 provides certain 
exemptions from the firm quote obligation that are tied to when an 
order is ``presented.'' For purposes of CBOE Rule 8.51 ``the 
responsible broker or dealer'' is defined as the trading crowd in a 
series or class of option.\3\ This proposed rule change adds 
Interpretation and Policy .10 to make it clear that for the purposes of 
CBOE Rule 8.51 in respect of orders received at a PAR workstation in a 
DPM trading crowd, the responsible broker or dealer is deemed to 
receive an order, and an order is deemed to be presented to the 
responsible broker or dealer, at the time the order is received on the 
DPM's PAR workstation.\4\
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    \3\ The Commission noted in the approval order of SR-CBOE-2002-
07 that ``any member of the trading crowd who submits a manual quote 
that improves the Exchange's disseminated quote would be considered 
to be the responsible broker or dealer pursuant to Rule 11Ac1-1(c) 
under the Act.'' Exchange Act Release No. 45677 (March 29, 2002), 67 
FR 16476, 16477 (April 5, 2002).
    \4\ In SR-CBOE-01-67 filed with the Commission in December 2001, 
the Exchange proposed an Interpretation and Policy .09, which makes 
clear that a trading crowd may voluntarily agree to honor its 
disseminated quotes for a larger number of contracts than required 
by rule.
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2. Statutory Basis
    By clarifying the time when firm quote obligations attach under 
CBOE Rule 8.51 in respect of orders received over PAR workstations in 
DPM trading crowds, the Exchange believes that the proposed rule change 
will promote just and equitable principles of trade, remove impediments 
to and perfect the mechanism of a free and open market and protect 
investors and the public interest, and will not permit unfair 
discrimination between customers, issuers, brokers or dealers, in 
furtherance of the objectives of Section 6(b)(5) of the Exchange 
Act.\5\
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    \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.

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 rule change constitutes a stated policy, 
practice, or interpretation with respect to the

[[Page 20562]]

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 Act \6\ and subparagraph (f)(1) of Rule 19b-4 \7\ thereunder. 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-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 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 also will be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to File No. SR-CBOE-2002-15 and 
should be submitted by May 16, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-10150 Filed 4-24-02; 8:45 am]
BILLING CODE 8010-01-P