[Federal Register Volume 68, Number 189 (Tuesday, September 30, 2003)]
[Notices]
[Pages 56355-56356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24751]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48525; File No. SR-CBOE-2003-38]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to the Firm Quote Rule

September 23, 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 September 12, 2003 the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') 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 make a clarifying amendment to its firm 
quote rule (CBOE Rule 8.51). The text of the rule change is available 
at the Office of the Secretary of the Exchange and at the Commission.

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 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
    CBOE Rule 8.51(d)(6)(i)(B) generally provides that a responsible 
broker or dealer (``BD'') shall not be obligated to execute a 
transaction for any listed option if at the time an order is presented, 
the responsible BD was in the process of effecting a transaction in 
``such class and/or series'' of option and immediately thereafter 
communicates a revised quotation size. Similarly, CBOE Rule 
8.51(d)(6)(ii)(B) generally provides that a responsible BD shall not be 
obligated to execute a transaction for any listed option if at the time 
an order is presented, the responsible BD was in the process of 
effecting a transaction in ``such class or series'' of option and 
immediately thereafter communicates a revised bid or offer.
    The literal language of these two rules indicates that it would be 
permissible for a responsible BD after a transaction in an option class 
to revise its quotations in all series of that class prior to effecting 
subsequent transactions pursuant to paragraph (6) of CBOE Rule 8.51(d). 
The Exchange proposes to amend these two provisions to clarify that 
transactions in one series will enable a responsible BD to avail itself 
of the exception provided in paragraph (6) of CBOE Rule 8.51(d) in that 
same series only. Accordingly, the Exchange removes the language ``such 
class or'' from these two sections.
    Despite this seemingly permissive language, the Exchange feels 
compelled to note that it has always interpreted CBOE Rule 8.51(d)(6) 
such that each series of option was deemed a separate security. As 
such, the responsible BD on CBOE was not allowed to rely on 
transactions in one series of a class to revise its quotations in a 
separate series within the same class and still avail itself of the 
paragraph (6) exception. This SEC-requested amendment brings the rule 
language into conformity with the practice on the floor.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\3\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5)\4\ 
requirements that the rules of an exchange be designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts and, in general, to protect investors and the public 
interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE believes that the proposed rule change does not 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 rule change: (i) Does not significantly 
affect the protection of investors or the public interest; (ii) does 
not impose any significant burden on competition; (iii) does not become 
operative for 30 days from the date of filing; and (iv) the Exchange 
provided the Commission with notice of its intent to file the proposed 
rule change at least five days prior to the filing date, the proposed 
rule change has become effective pursuant to Section 19(b)(3)(A) of the 
Act \5\ and Rule 19b-4(f)(6) \6\ thereunder.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
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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

[[Page 56356]]

available for inspection and copying in the Commission's Public 
Reference Room. Copies of such filing also will be available for 
inspection and copying at the principal office of the CBOE.
    All submissions should refer to File No. SR-CBOE-2003-38 and should 
be submitted by October 21. 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. 03-24751 Filed 9-29-03; 8:45 am]
BILLING CODE 8010-01-P