[Federal Register Volume 69, Number 177 (Tuesday, September 14, 2004)]
[Notices]
[Page 55482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2182]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50327; File No. SR-CBOE-2004-12]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Chicago Board Options Exchange, Incorporated To Require 
Members To Use and Maintain a Back-up Autoquote System in Hybrid 
Classes

September 7, 2004.
    On February 23, 2004, the Chicago Board Options Exchange, 
Incorporated (``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 adopt CBOE Rule 8.85(a)(xii) 
which would require CBOE members to use and maintain a back-up 
autoquote system in Hybrid classes. The proposed rule change was 
published for comment in the Federal Register on July 30, 2004.\3\ The 
Commission received no comments regarding the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50055 (July 21, 
2004), 69 FR 45860.
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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\ 
Specifically, the Commission finds that the proposed rule change is 
consistent with requirements of section 6(b)(6) of the Act.\5\ The 
Commission believes that requiring CBOE members to use and maintain a 
back-up autoquote system in Hybrid classes is reasonable and that 
including this requirement in the Exchange's Minor Rule Violation Plan 
(``MRVP'') will strengthen the ability of the Exchange to carry out its 
oversight and enforcement responsibilities as a self-regulatory 
organization.
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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. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(6).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with CBOE Rule 8.85(a)(xii) and 
all other rules subject to the imposition of fines under the Exchange's 
MRVP. The Commission believes that the violation of any self-regulatory 
organization's rules, as well as Commission rules, is a serious matter. 
However, the Exchange's MRVP provides a reasonable means of addressing 
rule violations that do not rise to the level of requiring formal 
disciplinary proceedings, while providing greater flexibility in 
handling certain violations. The Commission expects that 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 under the MRVP, 
on a case by case basis, or a violation requires formal disciplinary 
action.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-CBOE-2004-12) be, and it 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    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. E4-2182 Filed 9-13-04; 8:45 am]
BILLING CODE 8010-01-P