[Federal Register Volume 69, Number 35 (Monday, February 23, 2004)]
[Notices]
[Pages 8249-8250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3776]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49241; File No. SR-CBOE-2003-56]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Chicago Board Options Exchange, Inc. Relating to the Exemption of 
Standardized Options From the Securities Act of 1933 and Provisions of 
the Securities Exchange Act of 1934

February 12, 2004.
    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 December 3, 2003, the Chicago Board Options Exchange, Inc. 
(``Exchange'' or ``CBOE'') 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 
Exchange. The proposed rule change has been filed by CBOE under Rule 
19b-4(f)(6) under the Act.\3\ On January 2, 2004, CBOE filed Amendment 
No. 1 to the proposed rule change.\4\ 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\ 17 CFR 240.19b-4(f)(6).
    \4\ See letter from David Doherty, Attorney, Legal Division, 
CBOE, to Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, December 30, 2003 
(``Amendment No. 1''). In Amendment No. 1, CBOE deleted proposed 
revisions to CBOE Rule 9.21(a)(iv) and its description.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CBOE proposes to amend its rules to reflect the Commission's recent 
adoption of Rule 238 under the Securities Act of 1933 (the ``Securities 
Act'') \5\ and Rule 12a-9 under the Act,\6\ which together exempt 
standardized options issued by a registered clearing agency and traded 
on a registered national securities exchange or on a registered 
national securities association from most of the provisions of the 
Securities Act and from the registration requirements of Section 12 of 
the Act.\7\ The text of the proposed rule change is available at the 
Exchange and at the Commission.
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    \5\ 17 CFR 230.238.
    \6\ 17 CFR 240.12a-9.
    \7\ 15 U.S.C. 78l. See also Exemption for Standardized Options 
From Provisions of the Securities Act of 1933 and From the 
Registration Requirements of the Securities Exchange Act of 1934, 
Securities Act Release No. 8171 and Securities Exchange Act Release 
No. 47082 (December 23, 2002), 68 FR 188 (January 2, 2003) 
(``Commission Release'').
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I. 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.

[[Page 8250]]

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

1. Purpose
    On January 2, 2003, final rules of the Commission became effective 
which exempt standardized options issued by a registered clearing 
agency and traded on a registered national securities exchange or a 
registered national securities association from all provisions of the 
Securities Act, other than the anti-fraud provisions of section 17 of 
the Securities Act,\8\ and from the registration requirements of 
section 12(a) of the Act.\9\ CBOE is proposing to revise its rules that 
contain references to a prospectus in connection with options trading, 
because, as a registered national securities exchange, CBOE represents 
that all of its listed options fall within the scope of the exemptions 
provided by these rules.
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    \8\ 15 U.S.C. 77q.
    \9\ 15 U.S.C. 78l(a).
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    Specifically, CBOE proposes to delete the phrase ``and Prospectus'' 
from the title of current CBOE Rule 9.15 (``Delivery of Current Options 
Disclosure Documents and Prospectus'') and from the reference to the 
title of current CBOE Rule 9.15 in Interpretation and Policy .04 to 
CBOE Rule 9.7.\10\ CBOE is also proposing to delete current CBOE Rule 
9.15(b), which essentially restates the prospectus delivery 
requirements of the Securities Act. Likewise, the proposed rule change 
deletes references to the prospectus from CBOE Rules 21.19A and 26.10.
    CBOE is currently in the process of reviewing its rules to 
determine if more substantive changes to the CBOE rules should be made 
in light of the Commission Release.\11\
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    \10\ CBOE is also correcting the reference to the title of 
current CBOE Rule 9.15 in Interpretation and Policy .04 to CBOE Rule 
9.7 by adding the term ``Options Disclosure Document.'' Telephone 
conversation between David Doherty, Attorney, Legal Division, CBOE, 
and Frank N. Genco, Division, Commission, on December 22, 2003.
    \11\ See supra note 7.
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2. Statutory Basis
    The Exchange asserts that because the proposed rule change reflects 
final rules of the Commission, which exempt standardized options that 
are issued by registered clearing agencies and traded on a registered 
national securities exchange or a registered national securities 
association from all provisions of the Securities Act (except for 
section 17 of the Securities Act) \12\ and the registration provisions 
of the Act, it is therefore consistent with section 6(b) of the 
Act,\13\ in general, and furthers the objectives of section 6(b)(5) of 
the Act,\14\ in particular, in that 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 a national market system, and, 
in general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 77q.
    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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

    CBOE neither solicited nor received written comments 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 (1) does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative until 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, and the Exchange provided the Commission with written notice 
of its intent to file the proposed rule change at least five business 
days prior to the date of filing of the proposed rule change,\15\ it 
has become effective pursuant to section 19(b)(3)(A) of the Act \16\ 
and Rule 19b-4(f)(6) thereunder.\17\
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    \15\ On October 17, 2003, CBOE provided the Commission with 
written notice of its intent to file the proposed rule change. See 
letter from David Doherty, Attorney, Legal Division, CBOE, to Nancy 
Sanow, Assistant Director, Division, Commission, October 17, 2003.
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
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    At any time within sixty days of the filing of Amendment No. 1 to 
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.\18\
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    \18\ For purposes of calculating the sixty-day abrogation 
period, the Commission considers the abrogation period to have begun 
on January 2, 2004, the date on which the Commission received 
Amendment No. 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-CBOE-2003-56. This file number should be included on the 
subject line if e-mail is used. To help us process and review comments 
more efficiently, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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 Section. Copies of such filing will also be available for 
inspection and copying at the principal office of CBOE. All submissions 
should be submitted by March 15, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-3776 Filed 2-20-04; 8:45 am]
BILLING CODE 8010-01-P