[Federal Register Volume 68, Number 221 (Monday, November 17, 2003)]
[Notices]
[Page 64940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28598]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48754; File No. SR-CBOE-2003-34]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change by the Chicago Board Options Exchange, Inc. 
Relating To Modifying the Designated Primary Market-Maker Membership 
Ownership Requirement

November 6, 2003.
    On August 11, 2003, 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 of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to modify the Designated Primary 
Market-Maker (``DPM'') membership ownership requirement. Specifically, 
the proposed rule change would add new Commentary .04 to CBOE Rule 8.85 
to allow a senior principal's ownership of a membership to satisfy the 
requirement on behalf of the DPM organization if the senior principal 
is a natural person owner of the DPM organization who: (i) Owns at 
least 45% equity interest in the DPM organization; (ii) maintains at 
least a 45% profit participation in the DPM organization; (iii) is 
actively involved in the management of the DPM operation; and (iv) 
maintains a constant presence on the Exchange floor as a DPM designee 
of the DPM organization.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for notice and comment in 
the Federal Register on September 30, 2003.\3\ The Commission received 
no comments. This order approves the proposed rule change.
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    \3\ See Securities Exchange Act Release No. 48524 (September 23, 
2003), 68 FR 56356 (September 30, 2003).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange \4\ and, in 
particular, the requirements of section 6 of the Act \5\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change is consistent with section 6(b)(5) of the Act \6\ 
because it is designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanism of a free and 
open market, and to protect investors and the public interest. The 
Commission notes that the proposed rule change will permit individuals 
who have significant involvement in the day-to-day operation of a DPM 
and significant financial stake, as well as an Exchange membership, to 
satisfy the DPM membership requirements of CBOE Rule 8.85(e). The 
Commission believes that the proposed amendment to the DPM seat 
ownership requirement should provide incentives to DPMs that are 
allocated existing CBOE options, or seeking allocations in established 
option classes, to maintain sufficient capital to operate as a DPM. The 
proposal could further CBOE's interest in securing long-term 
commitments to the Exchange.\7\
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    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ See Securities Exchange Act Release No. 47333 (February, 10, 
2003), 68 FR 7634 (February 14, 2003) (SR-CBOE-2002-18).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-CBOE-2003-34) be, 
and it hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland.
Deputy Secretary.
[FR Doc. 03-28598 Filed 11-14-03; 8:45 am]
BILLING CODE 8010-01-P