[Federal Register Volume 68, Number 122 (Wednesday, June 25, 2003)]
[Notices]
[Pages 37884-37885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16010]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48059; File No. SR-CBOE-2003-21]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Chicago Board Options 
Exchange, Inc. Relating to Disclaimers for Index Option Reporting 
Authorities

June 18, 2003.
    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 May 16, 2003, 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, 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 Exchange proposes to clarify the effect of certain disclaimers 
provided by the Exchange on behalf of index reporting authorities under 
CBOE Rule 24.14 (``Disclaimers''). Below is the text of the proposed 
rule change. Proposed new language is italicized; proposed deletions 
are in brackets.
* * * * *

Chapter XXIV

Index Options
Rule 24.14. Disclaimers
    No reporting authority with respect to any index underlying an 
option traded on the Exchange, no affiliate of such reporting authority 
(each such reporting authority and its affiliates are referred to 
collectively as the ``Reporting Authority''), and no other entity 
identified in this Rule makes any warranty, express or implied, as to 
the results to be obtained by any person or entity from the use of such 
index, any opening, intra-day or closing value therefor, or any data 
included therein or relating thereto, in connection with the trading of 
any option contract based thereon or for any other purpose. The 
Reporting Authority or any other entity identified in this Rule shall 
obtain information for inclusion in, or for use in the calculation of, 
such index from sources it believes to be reliable, but the Reporting 
Authority or any other entity identified in this Rule does not 
guarantee the accuracy or completeness of such index, and opening, 
intra-day or closing value therefor, or any data included therein or 
related thereto. The Reporting Authority or any other entity identified 
in this Rule hereby disclaims all warranties of merchantability or 
fitness for a particular purpose or use with respect to such index, any 
opening, intra-day, or closing value therefor, any data included 
therein or relating thereto, or any option contract based thereon. The 
Reporting Authority or any other entity identified in this Rule shall 
have no liability for any damages, claims, losses (including any 
indirect or consequential losses), expenses, or delays, whether direct 
or indirect, foreseen or unforeseen, suffered by any person arising out 
of any circumstance or occurrence relating to the person's use of such 
index, any opening, intra-day or closing value therefor, any data 
included therein or relating thereto, or any option contract based 
thereon or arising out of any errors or delays in calculating or 
disseminating such index. The foregoing disclaimers shall apply to 
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. 
(``S&P'') in respect to the S&P Indexes, [S&P and Barra, Inc. in 
respect to the S&P 500/Barra Growth Index and the S&P 500/Barra Value 
Index, ]Frank Russell Company in respect to the Russell Indexes [2000 
Index], [LIFFE Administration and Management in respect to the FT-SE 
100 Index, ]The NASDAQ Stock Market, Inc. in respect to the Nasdaq [100 
]Indexes, Morgan Stanley Dean Witter & Co. Incorporated in respect of 
the Morgan Stanley [Multinational Company ]Indexes, Dow Jones and 
Company, Inc. in respect to the Dow Jones Averages and any other[the] 
Dow Jones [Equity REIT ]Indexes, [Lipper Analytical Services, Inc., 
Salomon Brothers, Inc. in respect to the Lipper-Salomon Indexes, and 
]Goldman, Sachs & Co. in respect to the Goldman Sachs Indexes 
[Technology Indexes,]; to the foregoing Reporting Authorities in 
respect to any other indexes for which they act as the designated 
Reporting Authority; [,] to the Exchange in respect to the indexes

[[Page 37885]]

for which it is the designated R[r]eporting A[a]uthority;[,] and to any 
other [index] R[r]eporting A[a]uthority in respect to any index for 
which it acts as such.
* * * * *

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 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 currently lists and trades options on various indexes. 
Each index has a designated reporting authority, which is the 
institution or reporting service designated by the Exchange as the 
official source for routinely calculating the level of each respective 
index.\3\ CBOE Rule 24.14 (the ``Rule'') sets forth certain disclaimers 
that are applicable to each reporting authority and its affiliates 
(collectively ``Reporting Authority'') with regard to those index 
options that are listed on or traded at the CBOE. For example, the Rule 
provides that no Reporting Authority makes any warranty, express or 
implied, as to the results to be obtained by any person or entity from 
the use of such index, any opening, intra-day or closing value 
therefor, or any data included therein or relating thereto, in 
connection with the trading of any option contract based thereon or for 
any other purpose.
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    \3\ See CBOE Rule 24.1(h) (defining Reporting Authority).
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    Under CBOE Rule 24.14, certain indexes and their respective 
Reporting Authorities are specified by name as being covered by the 
disclaimer. However, the specification of certain Reporting Authorities 
or certain indexes within the Rule does not imply that a Reporting 
Authority or an index must be specified in the Rule to be covered by 
the disclaimer. The Rule currently contains a provision that makes the 
Rule applicable to all Reporting Authorities in respect to any index 
for which it acts as such, whether or not that Reporting Authority or 
the index is specified in the Rule. Specifically, the Rule provides in 
part that it applies to any other index Reporting Authority in respect 
to any index for which it acts as such.
    The CBOE proposes to clarify the Rule by providing language that 
expressly states that, where a Reporting Authority is specified in the 
Rule in relation to a specified index or indexes that is traded on the 
Exchange, the Rule also applies to that Reporting Authority in relation 
to indexes that are not specified in the Rule. The Exchange believes 
that this should clarify the purpose and effect of CBOE Rule 24.14.
    Specifically, the proposed rule change will provide that the 
disclaimer will also apply to designated Reporting Authorities not 
mentioned in the Rule with respect to any other indexes that are traded 
on the Exchange. This added provision does not preclude the Exchange 
from adding specific Reporting Authorities or specific indexes to CBOE 
Rule 24.14 in the future.
    Additionally, the CBOE proposes to delete references to certain 
indexes that are no longer traded on the CBOE, to update changes in 
company names where appropriate, and to refer to all indexes related to 
certain Reporting Authorities that are specified within the rule text 
and that trade on the CBOE; specifically, by referencing the S&P 
indexes, Russell indexes, Morgan Stanley Dean Witter indexes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with and furthers the objectives of section 6(b)(5) of the Act,\4\ in 
that it is designed to perfect the mechanism of a free and open market 
and to protect investors and the public interest.
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    \4\ 15 U.S.C. 78s(f)(b).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is 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

    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 proposed rule change constitutes a stated 
policy, practice, or interpretation with respect to the 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 \5\ 
and Rule 19b-4 (f)(1) thereunder.\6\ 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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    \5\ 15 U.S.C. 78s(b)(3)(A)(i).
    \6\ 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 will also be available for inspection and 
copying at the principal office of the CBOE.
    All submissions should refer to the File No. SR-CBOE-2003-21 and 
should be submitted by July 16, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-16010 Filed 6-24-03; 8:45 am]
BILLING CODE 8010-01-P