[Federal Register Volume 68, Number 160 (Tuesday, August 19, 2003)]
[Notices]
[Pages 49827-49828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21175]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48320; File No. SR-CBOE-2003-22]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change, and Amendment No. 1 Thereto, by the Chicago Board Options 
Exchange, Inc. Relating to Options Clearing Corporation Liability

August 12, 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 22, 2003, the Chicago Board Options Exchange, Inc. (``CBOE'' or 
``Exchange'') submitted to 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. On August 
11, 2003, the CBOE submitted Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from David Doherty, Attorney, Legal Division, 
CBOE to Tim Fox, Attorney, Division of Market Regulation 
(``Division''), Commission, dated August 11, 2003 (``Amendment No. 
1''). In Amendment No. 1, the CBOE replaced the phrase ``persons 
associated therewith'' with the phrase ``associated persons.''
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    In connection with the implementation of the Intermarket Options 
Linkage (the ``Linkage''), the CBOE hereby proposes to add an 
interpretation to CBOE Rule 6.7.
    The text of the proposed rule change, as amended, is below.\4\ 
Proposed additions are in italics.
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    \4\ The text of the proposed rule change appearing below 
incorporates a technical correction to the rule text of CBOE Rule 
6.7(a) that was filed with the Commission. Telephone conversation 
between David Doherty, Attorney, Legal Division, CBOE and Tim Fox, 
Attorney, Commission, on July 30, 2003.
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Chicago Board Options Exchange, Incorporated Rules

* * * * *

Rule 6.7 Exchange Liability

    (a) Except to the extent provided in paragraph (b) of this Rule, 
and except as otherwise expressly provided in the Rules, neither the 
Exchange nor its directors, officers, committee members, employees or 
agents shall be liable to the members of the Exchange or to persons 
associated therewith for any loss, expense, damages or claims that 
arise out of the use or enjoyment of the facilities or services 
afforded by the Exchange, any interruption in or failure or 
unavailability of any such facilities or services, or any action taken 
or omitted to be taken in respect to the business of the Exchange 
except to the extent such loss, expense, damages or claims are 
attributable to the willful misconduct, gross negligence, bad faith or 
fraudulent or criminal acts of the Exchange or its officers, employees 
or agents acting within the scope of their authority. Without limiting 
the generality of the foregoing and subject to the same exception, the 
Exchange shall have no liability to any person for any loss, expense, 
damages or claims that result from any error, omission or delay in 
calculating or disseminating any current or closing index value, any 
current or closing value of interest rate options, or any reports of 
transactions in or quotations for options or other securities, 
including underlying securities. The Exchange makes no warranty, 
express or implied, as to results to be obtained by any person or 
entity from the use of any data transmitted or disseminated by or on 
behalf of the Exchange or any reporting authority designated by the 
Exchange, including but not limited to reports of transactions in or 
quotations for securities traded on the Exchange or underlying 
securities, or reports of interest rate measures or index values or 
related data, and the Exchange makes no express or implied warranties 
of merchantability or fitness for a particular purpose or use with 
respect to any such data. The foregoing limitations of liability and 
disclaimers shall be in addition to, and not in limitation of, the 
provisions of Article Thirteenth of the Exchange's Certificate of 
Incorporation.
* * * * *

* * * Interpretations and Policies

    .01-.03 (No change.)
    .04 The Intermarket Options Linkage (the ``Linkage''), as used to 
send orders and other information to or from the Exchange, is a 
facility or service afforded by the Exchange for purposes of Rule 6.7, 
and the Clearing Corporation shall have no liability to members of the 
Exchange or to

[[Page 49828]]

associated persons with respect to the use, non-use or inability to use 
the Linkage, including, without limitation, the content of orders, 
trades, or other business facilitated through the Linkage, the truth or 
accuracy of the content of messages or other information transmitted 
through the Linkage, or otherwise.
* * * * *

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 aspects of such statements.

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

1. Purpose
    In connection with the implementation of the Linkage, the Exchange 
proposes to add an interpretation to CBOE Rule 6.7. The proposed 
Interpretation .04 would provide that the Linkage, as used to send 
orders and other information to or from the Exchange, is a facility or 
service afforded by the Exchange for purposes of CBOE Rule 6.7, and 
that the Options Clearing Corporation (``Clearing Corporation'') shall 
have no liability to members of the Exchange or to associated persons 
of the members with respect to the use, non-use or inability to use the 
Linkage, including, without limitation, the content of orders, trades, 
or other business facilitated through the Linkage, the truth or 
accuracy of the content of messages or other information transmitted 
through the Linkage, or otherwise.
2. Statutory Basis
    The CBOE believes that its proposal is consistent with Section 6(b) 
of the Act \5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \6\ in particular, in that by limiting certain types 
of liability against the Exchange and Clearing Corporation with respect 
to the Linkage, Clearing Corporation will have the capability to 
continue to develop and enhance the Linkage, thereby facilitating 
transactions in securities, removing impediments to and perfecting the 
mechanism of a free and open market and a national market system and 
protecting investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 concerning 
the proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the CBOE consents, the Commission will:
    (A) by order approve such proposed rule change, as amended; or
    (B) institute proceedings to determine whether the proposed rule 
change, as amended, should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 
filings will also be available for inspection and copying at the 
principal office of the CBOE. All submissions should refer to File No. 
SR-CBOE-2003-22 and should be submitted by September 9, 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. 03-21175 Filed 8-18-03; 8:45 am]
BILLING CODE 8010-01-P