[Federal Register Volume 69, Number 37 (Wednesday, February 25, 2004)]
[Notices]
[Page 8713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4062]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49256; File No. SR-CBOE-2003-54]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Inc.; Order Granting Approval of Proposed Rule Change Relating to 
Misrepresentations and Omissions in Communications to the Exchange and 
the Options Clearing Corporation

February 13, 2004.
    On November 12, 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 amend CBOE Rule 4.6 (False 
Statements) and adopt new CBOE Rule 4.22 to distinguish willfully made 
or material misrepresentations or omissions from other 
misrepresentations or omissions. In addition, the Exchange proposed to 
amend CBOE Rule 17.50 to add Rule 4.22 to its Minor Rule Violation Plan 
and provide a summary fine schedule for violations of Rule 4.22.
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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 January 13, 2004.\3\ The Commission received no comments on 
the proposal.
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    \3\ See Securities Exchange Act Release No. 49028 (January 6, 
2004), 69 FR 2028.
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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\ In 
particular, the Commission believes that the proposed rule change is 
consistent with section 6(b)(6)\5\ of the Act because it should enable 
the Exchange to appropriately discipline its members and persons 
associated with members for violations of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. In addition, the 
Commission believes that the proposal is consistent with Rule 19d-
1(c)(2) under the Act,\6\ which governs minor rule violation plans
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    \4\ In approving this proposed rule change, the Commission 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(b)(6).
    \6\ 17 CFR 240.19d-1(c)(2).
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    In addition, the Commission believes that he proposed rule change 
is consistent with section 6(b)(5) of the Act, which requires, among 
other things, that the Exchange's rules be designed to prevent 
fraudulent and manipulative practices, to promote just and equitable 
principles of trade, and, in general to protect investors and the 
public interest. The Commission believes that the rule change should 
increase the Exchange's ability to prevent members from engaging in 
dishonest conduct with respect to their communications with the 
Exchange or the Options Clearing Corporation.
    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with the rules that the Exchange 
is adding to its minor rule violation plan rules and all other rules 
subject to the imposition of fines under that plan. The Commission 
believes that the violation of any self-regulatory organization's 
rules, as well as Commission rules, is a serious matter. However, in an 
effort to provide the Exchange with greater flexibility in addressing 
certain violations, the Exchange's minor rule violation plan provides a 
reasonable means to address rule violations that do not rise to the 
level of requiring formal disciplinary proceedings. The Commission 
expects that the CBOE will continue to conduct surveillance with due 
diligence, and make a determination based on its findings whether fines 
of more or less than the recommended amount are appropriate for 
violations of rules under the Exchange's minor rule violation plan, on 
a case by case basis, or if a violation requires formal disciplinary 
action.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-CBOE-2003-54) be, and it 
hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-4062 Filed 2-24-04; 8:45 am]
BILLING CODE 8010-01-P