[Federal Register Volume 67, Number 177 (Thursday, September 12, 2002)]
[Notices]
[Pages 57858-57859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23236]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46463; File No. SR-CBOE-2002-32]


Self-Regulatory Organizations; Order Granting Approval of a 
Proposed Rule Change and Amendment No. 1 Thereto by the Chicago Board 
Options Exchange, Inc. Relating to the Time and Manner in Which the 
Allocation Committee May Reallocate a Security

September 5, 2002.
    On June 11, 2002, 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

[[Page 57859]]

of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to amend CBOE Rule 8.95, Allocation of Securities and Location 
of Trading Crowds and DPMs, to extend from six months to one year, the 
time in which the Allocation Committee may reallocate a security if the 
trading crowd or Designated Primary Market-Maker (``DPM'') to which the 
security had been allocated fails to adhere to any market performance 
commitments made by the trading crowd or DPM in connection with 
receiving the allocation. Notice of the proposed rule change appeared 
in the Federal Register on July 19, 2002.\3\ The Commission received no 
comments on the proposed rule change. On August 28, 2002, the CBOE 
filed an amendment to the proposed rule change.\4\ This order approves 
the proposed rule change, as amended.
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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. 46183 (July 11, 
2002), 67 FR 47584.
    \4\ See letter to Lisa N. Jones, Attorney, Division of Market 
Regulation, Commission, from Patrick Sexton, Assistant General 
Counsel, Legal Division, CBOE (``Amendment No. 1''). Amendment No. 1 
corrects an inadvertently deleted word (``and'') in the proposed 
rule text. This is a technical amendment and therefore is not 
subject to notice and comment.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of section 6 of the Act \5\ in general, and the 
rules and regulations thereunder.\6\ In particular, the Commission 
believes that the proposal is consistent with section 6(b)(5) of the 
Act,\7\ which requires, among other things, that an exchange's rule be 
designed to promote just and equitable principles of trade, and in 
general, to protect investors and the public interest. The Commission 
believes that CBOE's proposal to extend the initial review period from 
six months to one year should give the Allocation Committee a 
sufficient amount of time to monitor the trading patterns of DPMs and 
trading crowds while considering other relevant factors such as current 
market conditions, and if necessary, reallocate a security if the DPM 
or trading crowd fails to adhere to any market performance commitments 
in connection with receiving the allocation.\8\
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    \5\ 15 U.S.C. 78f.
    \6\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ The CBOE noted that market performance commitments may 
relate to pledges to keep bid-ask spreads within a particular width, 
or pledges to make every effort possible to become the exchange of 
choice in a particular option class, as measured during the initial 
months of trading by consistently achieving a certain market share 
if the class is listed on more than one options exchange.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CBOE-2002-32), as amended, is 
approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to the 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. 02-23236 Filed 9-11-02; 8:45 am]
BILLING CODE 8010-01-P