[Federal Register Volume 68, Number 238 (Thursday, December 11, 2003)]
[Notices]
[Pages 69096-69097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30702]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48879; File No. SR-CBOE-2003-36]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Chicago Board Options Exchange, Inc., Relating to Trading 
Crowd Space Dispute Resolution Procedures

 December 4, 2003.

I. Introduction

    On October 20, 2003, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC''), 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 adopt new CBOE Rule 24.21, 
``Index Crowd Space Dispute Resolution Procedures,'' which establishes 
guidelines and procedures for resolving disputes among CBOE members 
concerning the ability to occupy a space in an index option trading 
crowd.
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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 comment in the Federal 
Register on October 31, 2003.\3\ The Commission received no comments 
regarding the proposal. This order approves the proposed rule change.
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    \3\ See Securities Exchange Act Release No. 48702 (October 27, 
2003), 68 FR 62122.
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II. Discussion

    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. Specifically, 
the Commission believes that the proposal is consistent with Section 
6(b)(5) of the Act,\4\ which requires, among other things, that the 
rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.\5\ The 
proposal is also consistent with Section 6(b)(4) of the Act,\6\ which 
requires, among other things, the equitable allocation of reasonable 
dues, fees and

[[Page 69097]]

other charges among members. The Commission believes that the 
procedures established by the proposal are designed to provide a fair 
and impartial process for resolving trading crowd space disputes among 
CBOE members. According to the CBOE, the recent increase in trading 
volume and size of trading crowds for certain index options has created 
a lack of trading spots in certain trading pits.\7\ The proposal 
permits any CBOE member to request the CBOE's assistance in resolving 
an index option trading crowd space dispute.\8\ The proposal is 
designed to encourage mediated resolutions by requiring the parties to 
a trading crowd space dispute to cooperate with the Chairman of the FPC 
in his efforts to mediate before they may request a hearing. In 
addition, the Hearing Fee, which escalates under certain circumstances 
set forth in CBOE Rule 24.21(e), should further encourage parties to 
resolve trading crowd space disputes through mediation rather than 
through the hearing process.
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    \4\ 15 U.S.C. 78f(b)(5).
    \5\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ The proposal will apply only to CBOE members who trade OEX, 
SPX, DJX, and DIA options on the floor of the CBOE or who trade any 
other index options not located at a station shared with equity 
options, as determined by the appropriate floor procedure Committee 
(``FPC'').
    \8\ Id.
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    If a dispute is not resolved through mediation, a CBOE member may 
request a hearing. The Commission believes that the proposal 
establishes procedures for selecting impartial Hearing Panels and that 
the written guidelines in CBOE Rule 24.21(j) should provide the Hearing 
Panels with guidance in rendering decisions. In addition, the 
Commission notes that any party may appeal the decision of a Hearing 
Panel under Chapter XIX of the CBOE's rules.

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CBOE-2003-36) is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-30702 Filed 12-10-03; 8:45 am]
BILLING CODE 8010-10-P