[Federal Register Volume 67, Number 194 (Monday, October 7, 2002)]
[Notices]
[Pages 62508-62510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25363]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46572; File No. SR-CBOE-2002-58]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Proposing To Extend the Rapid Opening System Pilot 
Program

September 30, 2002.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 62509]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 25, 2002, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to extend the Rapid Opening System (``ROS'') pilot 
program until March 31, 2003 or such time as the Commission has 
approved ROS on a permanent basis.\3\ The text of the proposed rule 
change appears below. New text is in italics. Deleted text is in 
brackets.
---------------------------------------------------------------------------

    \3\ The request to permanently approve ROS is being considered 
separately under SR-CBOE-2002-55. Telephone conversation between 
Jamie Galvan, Attorney, CBOE, and Christopher Solgan, Attorney, 
Division of Market Regulation, Commission, on September 24, 2002.
---------------------------------------------------------------------------

* * * * *

Rapid Opening System

Rule 6.2A

    (a)-(c) No change.
    (d) Pilot Program.
    This Rule (and the sentences in Rule 6.2 and Rule 6.45 referring to 
this Rule) will be in effect until [September 30, 2002] March 31, 2003 
on a pilot basis.

Interpretation and Policies

    .01-.02 Unchanged.
* * * * *

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 Exchange 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 Exchange 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
    On February 9, 1999, the Commission approved, on a pilot basis, the 
implementation of the ROS.\4\ ROS is a system developed by CBOE to open 
an entire options class, all series, as a single event, based on a 
single underlying value. The ROS pilot program is due to expire on 
September 30, 2002.\5\ The Exchange proposes to extend the ROS pilot 
until March 31, 2003 or such time as the Commission has approved ROS on 
a permanent basis.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 41033 (February 9, 
1999), 64 FR 8156 (February 18, 1999) (approving SR-CBOE-98-48). ROS 
is governed by CBOE Rule 6.2A.
    \5\ The Commission has extended the ROS pilot program three 
times. See Securities Exchange Act Release Nos. 42596 (March 30, 
2000), 65 FR 18397 (April 7, 2000) (extending the pilot until 
September 30, 2000), 43395 (September 29, 2000), 65 FR 60706 
(October 12, 2000) (extending the pilot until September 30, 2001), 
and 44891 (October 1, 2001), 66 FR 51483 (October 9, 2001) 
(extending the pilot until September 30, 2002).
---------------------------------------------------------------------------

    The Exchange recently submitted a proposed rule filing to the 
Commission proposing permanent approval of ROS as well as an extension 
of the ROS pilot.\6\ This proposed rule change replaces and supersedes 
that portion of SR-CBOE-2002-55 that proposes an extension of the ROS 
pilot. CBOE proposes an extension of the ROS pilot so that the pilot 
may continue to operate while the Commission considers the Exchange's 
request for permanent approval.\7\ CBOE believes that ROS has operated 
successfully over the past three years, and on that basis, the Exchange 
believes an extension of the pilot is warranted.
---------------------------------------------------------------------------

    \6\ See SR-CBOE-2002-55.
    \7\ The Pacific Exchange, Inc.'s Automatic Opening Rotations 
pilot program has recently been extended until September 30, 2003. 
See Securities Exchange Act Release No. 46055 (June 10, 2002), 67 FR 
41288 (June 17, 2002).
---------------------------------------------------------------------------

2. Statutory Basis
    The CBOE believes that ROS has improved market efficiency for all 
market participants by successfully facilitating expedited openings of 
options classes on the Exchange during the pilot period. Therefore, 
CBOE believes that the proposed rule change is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(5),\9\ in particular, in that it is designed to promote just and 
equitable principles of trade and to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    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 Exchange 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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and subparagraph (f)(6) of Rule 19b-4 \11\ 
thereunder because the Exchange has designated the proposed rule change 
as one that does not: (i) significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; (iii) become operative for 30 days from the date on which 
it was filed, or such shorter time as the Commission may designate; and 
the Exchange has given the Commission written notice of its intention 
to file the proposed rule change at least five business days prior to 
filing. At any time within 60 days of the filing of such 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    Under Rule 19b-4(f)(6)(iii) of the Act,\12\ 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 and the Exchange is 
required to give the Commission written notice of its intention to file 
the proposed rule change at least five business days prior to filing. 
The Exchange has given the Commission written notice of its intention 
to file the proposed rule change at least five business days prior to 
filing. The Exchange has requested that the Commission accelerate the 
operative

[[Page 62510]]

date of the proposal to September 30, 2002 so that the ROS pilot 
program may continue without interruption after it would have otherwise 
expired on September 30, 2002. For this reason, the Commission, 
consistent with the protection of investors and the public interest, 
has determined to accelerate the operative date of the proposal to 
September 30, 2002.\13\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of accelerating the operative period for 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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 will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CBOE-2002-58 and 
should be submitted by October 28, 2002.
    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-25363 Filed 10-4-02; 8:45 am]
BILLING CODE 8010-01-P