[Federal Register Volume 67, Number 142 (Wednesday, July 24, 2002)]
[Notices]
[Pages 48498-48499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18700]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46219; File No. SR-CHX-2002-14]


Self Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change To Delete Rule 
Provisions Relating to the Trading of Options

July 17, 2002.
    On April 26, 2002, the Chicago Stock Exchange, Inc. (``CHX'' 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 thereunder,\2\ a 
proposed rule change to delete provisions governing or relating to the 
trading of options on the CHX. Under the proposed rule change, CHX 
would delete certain provisions of its rules that govern or make 
reference

[[Page 48499]]

to the trading of options on the CHX. In 1980, the Commission approved 
changes to the Exchange's bylaws and rules that deleted most references 
to the Exchange's operation of an options market.\3\ Since that time, 
CHX has not operated an options market, but has served as an self-
regulatory organization participant on the Options Self-Regulatory 
Council (``OSRC'') for essentially informational purposes.
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    \1\15 U.S.C. 78s(b)(1).
    \2\17 CFR 240.19b-4.
    \3\See Securities Exchange Act Release No. 17075 (August 19, 
1980), 45 FR 56486 (August 25, 1980).
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    In its proposal, CHX explained that given changes in the options 
market and obligations of OSRC participants, it believes that it is no 
longer advisable, from either a regulatory or economic perspective, to 
continue serving on the OSRC.\4\ Accordingly, the proposed rule change 
deletes from the CHX rules all remaining references to the trading of 
options and handling of options orders, which in turn, excuses the 
Exchange from any obligation to serve on the OSRC.
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    \4\If the CHX were to continue to serve, it would be responsible 
for a pro rata share of OSRC member examination costs, which CHX 
states are significant. CHX believes that there is no rationale that 
supports CHX payment of examination costs attributable to exchanges 
that are actively trading options, given that CHX does not presently 
trade options and would have to propose significant rule changes 
should it elect to commence options trading in the future.
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    The proposed rule change was published for comment in the Federal 
Register on June 13, 2002.\5\ The Commission received no comments on 
the proposal.
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    \5\See Securities Exchange Act Release No. 46044 (June 6, 2002), 
67 FR 40761 (June 13, 2002).
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    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\6\ and, in 
particular, the requirements of Section 6 of the Act\7\ 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,\8\ 
which requires, among other things, that the Exchange's rules be 
designed to promote just and equitable principles of trade, to remove 
impediments and to perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest. The Commission believes that the rule change 
appropriately conforms the CHX rules to the current scope of the CHX's 
operations, which does not currently include operating an options 
market.
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    \6\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).
    \7\15 U.S.C. 78f.
    \8\15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-CHX-2002-14) be, and 
it hereby is, approved.
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    \9\15 U.S.C. 78s(b)(2).
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    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-18700 Filed 7-23-02; 8:45 am]
BILLING CODE 8010-01-P