[Federal Register Volume 67, Number 125 (Friday, June 28, 2002)]
[Notices]
[Pages 43692-43693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16349]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46102; File No. SR-CBOE-2002-33]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to the Identification of Market Maker and 
Specialist Orders

June 21, 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 June 12, 2002, the Chicago Board Options Exchange, Inc. (``CBOE'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
the CBOE has prepared. 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. 78(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 an order identification rule for market 
maker and specialist orders. The text of the proposed rule change is 
available at the 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 had 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 parts of such statements.

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

1. Purpose
    The CBOE proposes to adopt an order identification rule virtually 
identical to the rule currently in place at the Pacific Exchange, Inc. 
PCX Rule 6.66(b) and (c) requires floor brokers holding orders for the 
accounts of market makers or broker-dealers to verbally identify the 
orders as such before consummating a transaction. The CBOE proposes to 
adopt new CBOE Rule 6.73(d), which would require floor brokers holding 
orders for the account of a market maker or specialist to verbally 
identify the orders as such prior to requesting a quote. The purpose of 
this rule is to ensure that market maker and specialist orders are not 
inadvertently represented as public customer orders.
    The CBOE notes that orders submitted electronically are already 
required to contain an account origin code. An origin code identifies 
the type of order so that the CBOE can route it to the proper location. 
For example, a ``C'' designation stands for public customer orders, 
which are eligible for routing to RAES. An ``M'' designation, on the 
other hand, indicates that the order emanates from a CBOE market 
maker.\3\ ``M'' orders are not eligible for routing to RAES and instead 
are routed to a crowd printer. Origin codes also assist the CBOE and 
The Options Clearing Corporation in the clearing of trades. The CBOE 
notes that the instant proposal simply extends the origin code 
requirement to the open outcry environment by requiring that market 
maker and specialist orders be identified as such.
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    \3\ Origin codes identify the nature of the account, not the 
actual holder of the account.
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2. Basis
    The CBOE believes that the proposed rule change is consistent with 
section 6 of the Act,\4\ particularly section 6(b)(5) of the Act,\5\ in 
that it is designed to facilitate transactions in securities, promote 
just and equitable principles of trade, and protect investors and the 
public interest. By making members of the trading crowd aware of the 
nature of orders being represented on the floor, the proposal will 
facilitate transactions in options contracts by ensuring that market 
maker and specialist orders will not be represented as public customer 
orders.
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    \4\ 15 U.S.C. 78f.
    \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

    The CBOE neither solicited nor received written comments with 
respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The CBOE provided the Commission with written notice of its 
intention to file the proposed rule change at least five business days 
before its filing. Moreover, the CBOE has designated the proposed rule 
change as one that: (i) Does not significantly affect the protection of 
investors or the public interest; (ii) does not impose any significant 
burden on competition; and (iii) does not become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate. Therefore, the foregoing rule change has 
become effective pursuant to section 19(b)(3)(A) of the Act \6\ and 
Rule 19b-4(f)(6) thereunder.\7\ At any time within 60 days of the 
filing of the proposed rule change,

[[Page 43693]]

the Commission may summarily abrogate the rule change if it appears to 
the Commission that the action is necessary or appropriate in the 
public interest, for the protection of investors, or would otherwise 
further the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
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    Pursuant to Rule 19b-4(f)(6)(iii) under the Act,\8\ the proposal 
does not become operative for 30 days after the date of its filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest. The CBOE has 
requested that the Commission waive the 30-day operative date so that 
the CBOE can implement the proposed rule change as quickly as possible. 
The Commission, consistent with the protection of investors and the 
public interest, has determined to waive the 30-day operative 
period.\9\
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    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ For purposes 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 person 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 CBOE. 
All submissions should refer to SR-CBOE-2002-33 and should be submitted 
by July 19, 2002.

    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. 02-16349 Filed 6-27-02; 8:45 am]
BILLING CODE 8010-01-P