Federal Register / Vol. 65, No. 108 / Monday, June 5, 2000 / Notices 35683

17Telephone conversation between Kevin An,

Attorney, Schiff, Hardin & Waite, and Heather

Traeger, Attorney, Division, Commission; Susie

Cho, Attorney, Division, Commission, on May 22,

2000.

18See supra notes 3 and 4.

19 15 U.S.C. 78s(b)

20 15 U.S.C. 78s(b)(2).

21 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 41609

(July 8, 1999), 64 FR 38494.

4See Section III below for a description of the

comment letters.

5The substantive modifications made by these

amendments are incorporated in the description of

the proposal in Section II below, and are further

discussed in Section IV.

6Under the CBOE’s rules, facilitation orders may

be provided only to cross the orders of public

customers. See CBOE Rule 6.74(b). This same

stipulation is retained under the proposed rule

change.

7 In the case where the floor broker is proposing

to cross two customer orders, the crowd may take

all or part of either customer order. In the case

where the floor broker is seeking to effect a

facilitation cross, the crowd may take all or part of

the customer order.

maintenance of a fair and orderly

market are present.

In addition, the Commission believes

that the IPSs proposal contains several

provisions that will ensure that

investors are adequately apprised of the

terms, characteristics, and risks of

trading IPSs. All investors in IPSs will

receive a prospectus prior to or

concurrently with the confirmation of a

transaction therein, including investors

purchasing in secondary market

transactions on the Exchange. The

prospectus should address the special

terms and characteristics of the

particular IPSs Fund, including a

statement regarding their redeemability

and method of creation, and a statement

that the trading prices of IPSs on the

Exchange may differ in varying degrees

from their daily NAVs and can be

affected by market forces such as supply

and demand, economic conditions, and

other factors.17

Furthermore, the Commission notes

that prior to the commencement of

trading of a series of IPSs, the Exchange

will distribute to Exchange members an

Information Circular calling attention to

characteristics of the specific Fund and

to applicable Exchange rules, such as

trading halt rules. The circular will

inform members of their responsibilities

with respect to transactions in such IPSs

and of their responsibility to deliver a

prospectus to all investors purchasing

IPSs. The circular will also note that

IPSs are not individually redeemable,

but must be redeemed in Creation Units

only.

The Commission is approving in

general the CBOE’s proposed listing

standards for IPSs, and, specifically, the

listing of IPSs of a Fund based on the

S&P 100. The Commission specifically

notes that, notwithstanding approval of

the listing standards for IPSs, other

similarly structured products, including

IPSs based on other indices, will require

review by the Commission prior to

being traded on the Exchange.

Additional series cannot be listed prior

to contacting Division staff. In addition,

the CBOE may be required to submit a

rule filing prior to trading a new issue

or series on the Exchange.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. The Commission notes

that the proposed rule change is based

on Amex Rule 1000A et seq. and is

similar to CBOE rules relating to IPRs,

both of which the Commission

approved in the past.18 The Commission

also observes that the proposed rule

change concerns issues that previously

have been the subject of a full comment

period pursuant to section 19(b) of the

Act.19 The Commission does not believe

that the proposed rule change raises

novel regulatory issues that were not

addressed in the previous filings. In

view of these factors, the Commission

believes it is appropriate to permit

investors to benefit from the flexibility

afforded by these new instruments by

trading them as soon as possible.

Accordingly, the Commission finds that

there is good cause, consistent with

section 6(b)(5) of the Act, to approve the

proposal today.

V. Conclusion

It is Therefore Ordered, pursuant to

section 19(b)(2) of the Act,20 that the

proposed rule change (SR–CBOE–00–

11) is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.21

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–13954 Filed 6–2–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42835; File No. SR–CBOE–

99–10]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendment

Nos. 1, 2, and 3 to the Proposed Rule

Change by the Chicago Board Options

Exchange, Inc., Relating to

Participation Rights for Firms Crossing

Orders.

May 26, 2000.

I. Introduction

On March 18, 1999, 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 its rule governing the crossing of

equity option orders by floor brokers, to

give the member firm from which an

order originates (‘‘originating firm’’ a

participation right in trades that are

proposed to be crossed in certain

circumstances. Notice of the proposed

rule change was published for comment

in the FEDERAL REGISTER on July 16,

1999.3 The Commission received four

comment letters regarding the

proposal.4 On October 4, 1999, April 11,

2000, and May 25, 2000, the CBOE filed

Amendment Nos. 1, 2, and 3,

respectively, to the proposal.5 This

order approves the proposed rule

change, accelerates approval of

Amendment Nos. 1, 2, and 3, and

solicits comments from interested

persons on those amendments.

II. Description of the Proposal

CBOE Rule 6.74 sets forth the

procedures by which a floor broker

holding a customer order (‘‘original

order’’) may cross it with either: (i)

Another customer order or orders from

the same originating firm: or (ii) a contra

side order provided by the originating

firm from its own proprietary account

(‘‘facilitation order’’).6

Under CBOE Rules 6.74(a) and (b), a

floor broker seeking to cross buy and

sell orders for the same options series

must first bring the transaction to the

trading floor and request a market from

the trading crowd. After receiving bids

and offers from the crowd, the floor

broker must propose a price at which to

cross the original order that improves

upon the price provided by the crowd.

However, before the floor broker can

effect the cross, the market makers in

the crowd are given the opportunity to

take all or part of the transaction at the

proposed price.7

Under these rules, if the crowd does

not want to participate in the trade, the

floor broker may proceed with the cross.

If the crowd wants to take part of the

order, however, the crowd has

precedence and the floor broker may

cross only that amount remaining after

35684 Federal Register / Vol. 65, No. 108 / Monday, June 5, 2000 / Notices

8The CBOE has also filed a related rule change

regarding facilitation crosses in index options. See

Securities Exchange Act Release No. 41743 (August

13, 1999), 64 FR 45578 (August 20, 1999)(File No.

SR–DBOE–99–35).

9See Amendment No. 2 to the proposed rule

change, concerning proposed paragraph 1 of Rule

6.74(d). The original proposal would have restricted

the eligible order size to 500 contracts or more.

10See Amendment No. 3, concerning subsection

6.74(d)(ii).

11See Amendment No. 2, concerning proposed

subsection 6.74(d)(i).

12See Amendment No. 2, concerning proposed

subsection 6.74(d)(iv).

13The same provision would apply if the

originating firm or the DPM or both are nominees

of the same member organization. Telephone

conversation between Timothy Thompson,

Assistant General Counsel, Legal Department,

CBOE, and Gordon Fuller, Special Counsel, and Ira

Brandriss, Attorney, Division of Market Regulation

(‘‘Division’’), the Commission, on May 22, 2000.

14See CBOE Rule 8.80(c)(7); Securities Exchange

Act Release No. 42190 (December 1, 1999), 64 FR

68706 (December 8, 1999) (establishing the DPM

guarantee at 30% when the trade occurs at the

DPM’s principal bid or offer).

15Thus, if the original order was for 1,000

contracts, and the originating firm, crossing at the

best bid or offer price given by the crowd, took its

full share of 200 contacts (20%)—assuming no

public customer orders were represented in the

book or in the crowd—the DPM would be entitled

to 200 contracts (25% of the remaining 800) and the

total combined participation guarantees of the

originating firm and the DPM would be limited to

400 contracts, or 40% of the original order.

16See Amendment No. 2, concerning proposed

subsection 6.74(d)(v).

17 Id., concerning proposed subsection

6.74(d)(vii).

18 Id., concerning proposed subsection 6.74(d)(v).

Thus, the DPM participation right is not a concern

where the originating firm receives a 40% crossing

right, because that right is granted only when the

trade occurs between the best bid and offer given

by the crowd, which is by definition at a price other

than the DPM’s principal bid or offer.

the crowd has taken its portion. If the

crowd wants to take the entire order, the

floor broker will not be able to cross or

facilitate any part of the order.

The proposed rule change, adding

new paragraph (d) of Rule 6.74, will

apply to transactions in equity options,8

and will pertain to orders of a certain

minimum size. The qualifying size of

orders eligible for the proposal’s new

rule will be determined by the

appropriate Floor Procedure Committee

of the Exchange, but cannot be less than

50 contracts.9 The proposed rule change

will entitle the floor broker, under

certain conditions, to cross a specified

percentage of the original order on

behalf of the originating firm, before

market makers in the crowd can

participate in the transaction. The

percentage of the floor broker’s

guarantee will depend upon whether

the price at which the order is

ultimately traded is at the crowd’s best

bid or offer in response to the broker’s

initial request or at an improved price.

First, in contrast to the provisions of

current rule 6.74, the floor broker will

be granted a right to cross even at a

price that does not improve upon the

best bid or offer provided by the crowd

in response to his initial request for a

market. The proposed rule change

provides that where the trade takes

place at the market provided by the

crowd, all public customer orders in the

book and those represented in the

trading crowd at the time the market

was established 10 must first be satisfied.

Once these public customer orders are

satisfied, the floor broker will be

entitled to cross 20% of the contracts

remaining in the original order.

The proposed rule change further

provides that if the original order is

traded at a price between the best bid

and offer provided by the crowd in

response to the floor broker’s initial

request for a market—i.e., where the

floor broker proposes the cross at a price

that improves the crowd’s market, and

the crowd then wants to take part or all

of the order at the improved price—the

floor broker will be entitled to priority

over the crowd to cross 40% of the

contracts.

As under existing procedures codified

in paragraphs (a) and (b) of Rule 6.74,

the floor broker seeking to execute a

cross under proposed paragraph (d) will

be required, when initially asking for a

market in the option series, to make all

persons in the trading crowd, including

the Order Book Official, aware of his

request.

Proposed paragraph (d)(i) provides, in

addition, that once the trading crowd

has provided a market, that market will

remain in effect until (a) a reasonable

amount of time has passed; (b) a

significant change has occurred in the

price of the underlying security of the

option; or (c) the market is improved.11

In case of a dispute, ‘‘significant

change’’ will be determined on a caseby-case basis by two Floor Officials,

based upon the extent of recent trading

in the option and the underlying

security and any other relevant factor.

In the case of a multi-part or spread

order, one leg alone of the order will

need to meet the eligible size

requirement to qualify for the provisions

of the proposed rule change.

In the case of a facilitation cross, the

facilitating firm will be required to

disclose on the order ticket for the

public customer order all terms of the

order, including any contingency

involving, and all related transactions

in, either options or underlying or

related securities. The floor broker will

be required to disclose all securities that

are components of the public customer

order before requesting bids and offers

for the execution of all components of

the order.12

If the same member organization of

the Exchange is both the originating

firm and the Designated Primary Market

Maker (‘‘DPM’’) for the class of options

in which the transaction takes place,13

and the floor broker acting on behalf of

the firm takes advantage of the crossing

right provided by the proposed rule

change, the firm will not be entitled to

any participated in the trade on the

guaranteed percentage ordinarily

granted to DPMs pursuant to CBOE Rule

8.80 (‘‘DPM participation rate’’).14 In

this instance the firm will be limited to

its guaranteed participation under Rule

6.74.

If the DPM in the options class is not

the same member organization as the

originating firm, and the trade takes

place at the DPM’s principal bid or

offer, the DPM will be entitled to

participate in a percentage of the

contracts remaining after relevant public

customer orders have been filled and

the originating firm’s crossing rights

have been exercised. The percentage

that the DPM will receive is determined

by reference to the established DPM

participation rate—subject to limitation.

If the floor broker crosses the full 20%

of the originating firm’s entitlement, the

number of contracts guaranteed to the

DPM may not exceed 25% of the

remaindere of the order after the

originating firm has taken its share.15 If

the floor broker does not cross 20%, the

DPM may be entitled to more, but in no

case will the DPM be guaranteed a

percentage that, when combined with

the percentage crossed by the floor

broker, exceeds 40% of the original

order (after relevant public customer

orders have been satisfied).16

The proposed rule change makes

clear, however, that it is not intended to

prohibit either a floor broker or DPM

from trading more than their percentage

entitlements if the other members of the

trading crowd do not choose to trade

with the remainder of the order.17

The proposal further makes clear, in

accordance with Rule 8.80, that if the

trade takes place at a price other than

that of the DPM’s principal bid or offer,

the DPM would not be entitled to any

guaranteed participation.18

The proposed rule change also

provides that the members of the crowd

who establish the market in response to

the floor broker’s initial request will

have priority over all other orders that

were not represented in the crowd at the

time that market was established, except

for orders that improve upon those

Federal Register / Vol. 65, No. 108 / Monday, June 5, 2000 / Notices 35685

19See Amendment Nos. 2 and 3, concerning

proposed subsection 6.74(d)(vi).

20Letter from Daniel Mintz, Chairman, Amex

Option Market Makers Association, to the Securities

and Exchange Commission, dated May 28, 1999

(resubmitted with technical clarification, August

19, 1999).

21Letter from Robin Roger, Principal and Legal

Counsel, Morgan Stanley & Co., to Jonathan G. Katz,

Secretary, Commission, dated August 9, 1999.

22Letter from Mark A. Zurack, Managing Director,

Goldman, Sachs & Co., to Jonathan G. Katz,

Secretary, Commission, dated August 27, 1999.

23Letter from Raymond J. Dorado, Director and

Counsel, Legal and Compliance Department, Credit

Suisse First Boston Corporation, to Jonathan G.

Katz, Secretary, Commission, dated September 30,

1999.

24 15 U.S.C. 78f(b)(5). Section 6(b)(5) requires that

the rules of a national securities exchange be

designed to, among other things, promote just and

equitable principles of trade, remove impediments

to and perfect the mechanism of a free and open

market, and, in general, to protect investors and the

public interest. It also requires that those rules not

be designed to permit unfair discrimination

between customers, issuers, brokers, or dealers.

25 15 U.S.C. 78f(b)(8). Section 6(b)(8) requires that

the rules of the exchange do not impose any burden

on competition not necessary or appropriate in

furtherance of the purposes of the Act.

26 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).

27See Securities Exchange Act Release No. 42455

(February 24, 2000), 65 FR 11388 (March 2, 2000).

quotes. Further, a floor broker holding a

customer order and either a facilitation

order or a solicited order and who

makes a request for a market will be

deemed to be representing both the

customer order and either the

facilitation order or solicited order, so

that the customer order and the other

order will also have priority over all

other orders that were not being

represented in the trading crowd at the

time the market was established.19

III. Summary of Comments

The Commission received four

comment letters regarding the proposed

rule change. One commenter, the Amex

Options Market Maker Association

(‘‘OMMA’’),20 opposed the proposal.

Three commenters—Morgan Stanley &

Co. (‘‘Morgan Stanley’’),21 Goldman,

Sachs & Co. (‘‘Goldman Sachs’’),22 and

Credit Suisse First Boston Corporation

(‘‘CSFB’’) 23—supported it.

The OMMA stated that the proposed

rule change would harm investors

because when floor brokers representing

customer orders are guaranteed the right

to cross a fixed percentage of those

orders, they will no longer attempt to

seek the best price possible for those

orders. The OMMA further maintained

that the auction market would be cut

short under the proposed rule change,

and that the participation guarantees

granted to upstairs firms will remove

the incentive for market makers to

improve prices.

CSFB and Morgan Stanley stated that

the proposal would contribute to more

efficient markets and the narrowing of

spreads for listed options. The

guaranteed participation, they

maintained, would provide an incentive

for originating firms to find contraparty

customers or to commit their own

capital at a price between the spread.

They also argue that it would correct an

inequity under current rules that allows

market makers to take 100% of a

proposed cross away from an originating

firm.

Goldman Sachs adds that, under the

proposal, the crossing price would of

necessity be fair to the customer,

because the originating firm is

guaranteed a participation right only for

a cross at or better than the quoted

market. Moreover, it noted, firms would

have an incentive to bring liquidity to

the market and market makers would

have an incentive to quote tighter

markets in order to increase their

participation.

The commenters who supported the

proposal also maintained that it would

enable the CBOE to compete effectively

with other exchanges.

The CBOE responded to OMMA’s

comments in Amendment No. 1 to the

proposal. The CBOE stated that,

contrary to suggestions made by the

OMMA, market makers would always

have an opportunity to improve the

market under the proposed rule change,

and a cross could never be executed

outside the best quoted market.

IV. Discussion

After careful review, the Commission

finds that the proposed rule change is

consistent with the provisions of the Act

applicable to a national securities

exchange, particularly those of section

6(b)(5) 24 and section 6(b)(8) 25 of the

Act, and the rules and regulations

thereunder.26 The Commission believes

that the proposal will enable the CBOE

to better compete with other options

exchanges in attracting the order flow of

broker-dealer firms seeking to cross and

facilitate customer orders, without

adversely impacting the prices those

orders receive.

The Commission finds that the

CBOE’s proposal to grant participation

rights, under certain conditions, to

member firms that execute crossing

transactions on the Exchange is

reasonable. Currently, CBOE market

makers have priority rights for the full

size of a customer order over the firm

that brings a crossing transaction to the

CBOE floor, as long as the market

makers are willing to trade at the

proposed price.

While the proposal entitles the

originating firm to a specified

percentage of a crossing transaction

when executed at the trading crowd’s

best bid or offer, it does not eliminate

the crowd’s ability to trade with a

portion of the order proposed to be

crossed, or even so substantially reduce

that ability so as to raise serious concern

that the proposal would reduce price

competition by the crowd. Moreover,

the Commission believes that the

proposal may contribute to better prices

for crossing transactions. Specifically, it

provides an incentive for upstairs firms

to improve on the prices quoted by the

crowd by offering these firms a greater

participation in the trade when they

better the crowd’s price. In addition, as

the CBOE represents, market makers

will always have an opportunity to

improve the market and compete for a

greater portion of the trade.

In evaluating the proposed rule

change, the Commission considered,

among other matters, whether the

CBOE’s proposal to guarantee that an

originating firm could cross up to 40%

of an order would reduce the incentive

of crowds to compete for orders, and

thus impair the price discovery

mechanism of the Exchange’s market.

In its recent approval of the

application of the International

Securities Exchange (‘‘ISE’’) for

registration as a national securities

exchange, the Commission discussed

the same concern with respect to the

ISE’s proposed ‘‘facilitation

mechanism,’’ a system designed to effect

a type of facilitation guarantee in an

electronic context. The Commission

wrote:

It is difficult to assess the precise level at

which guarantees may begin to erode

competitive market maker participation and

potential price competition within a given

market. In the future, after the Commission

has studied the impact of guarantees, the

Commission may need to reassess the level

of these guarantees. For the immediate term,

the Commission believes that 40% is not

clearly inconsistent with the statutory

standards of competition and free and open

markets.27

By the same token, the Commission

believes that the CBOE’s proposed rule

change, which allocates no more than

40% of an order to the firm seeking to

effect a cross, is not inconsistent with

the statutory standard. The Commission

notes, moreover, that for those crossing

transactions in which a DPM is entitled

to an allocation in addition to the

proposed allocation for the originating

firm, the CBOE has included a provision

35686 Federal Register / Vol. 65, No. 108 / Monday, June 5, 2000 / Notices

28The change was intended to clarify when the

provisions of subparagraphs (a) and (b) of CBOE

Rule 6.74 apply, and when new paragraph (d)

applies. The language was subsequently modified

further to the same end by Amendment No. 2.

29See Securities Exchange Act Release No. 42455

(February 24, 2000), 65 FR 11388 (March 2, 2000).

30Although the ISE mechanism operates only for

facilitation crosses, the Commission’s grounds for

approving the ISE’s facilitation cross guarantee

apply equally to the CBOE’s proposal, which

applies to both customer-to-customer and

facilitation crosses.

31See text accompanying note 9, supra.

32 15 U.S.C. 78f(b)(5).

33 15 U.S.C. 78s(b)(2).

34 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

to limit the combined allocations

awarded to the originating firm and the

DPM an aggregate of no more than 40%

of the order.

The Commission finds good cause for

approving Amendment Nos. 1, 2, and 3

to the proposal prior to the thirtieth day

after the date of publication of notice of

filing thereof in the Federal Register.

Amendment No. 1 provides additional

representations concerning the

operation of the proposal and its

rationale, and responds to concerns

raised by the OMMA. Amendment No.

1 made only a minor change in the text

of the proposed rule change for

purposes of clarification.28

Amendment No. 2, among other

things, modifies the proposed rule

change by reducing the minimum size

of orders to which it will be applicable,

from 500 to 50 contracts. The

Commission has already approved the

facilitation mechanism of the ISE,

which guarantees 40% of orders to

facilitating firms for order sizes of 50 or

more contracts.29 Thus, the reduction in

the size requirement in the CBOE

proposal raises no new regulatory

issues. Further, it will benefit options

market participants by allowing for

substantially consistent treatment of

crossing mechanisms under the rules of

the ISE and the CBOE, and will allow

the CBOE to compete without

disadvantage for facilitation orders.30

Amendment No. 2 further adds the

stipulation that the combined

guarantees of the firm and the DPM may

not exceed 40% of the order, thus

limiting allocations to a percentage that

the Commission has previously found

consistent with the Act.

Amendment No. 2 also clarifies the

period that the market established by

the crowd in response to the floor

broker’s initial request will remain in

effect.31 It further established the

priority of crowd members who

responded to the initial request for a

quotation over orders that were not

represented in the crowd at the time the

market was established (unless those

orders improve the price), as well as the

priority of any unfilled portion of the

crossing order held by the floor broker.

These aspects of the amendment

constitute appropriate and necessary

clarifications of procedures and priority

rights under the proposed rule change.

Amendment No. 2 further adds

disclosure requirements for facilitation

crosses transacted under the proposed

rule change, consistent with disclosure

requirements for facilitation crosses

transacted under current rules. These

provisions strengthen the proposed rule

change and raise no new regulatory

issues.

Amendment Nos. 2 and 3 set forth

explicitly that the crossing guarantee

applies only after all public customer

orders on the limit order book and those

represented in the trading crowd at the

time the market was established have

been satisfied. This aspect of the

amendment thus limits the new

entitlement granted to floor brokers

under the proposed rule change,

preserving priority for public customer

orders.

Amendment No. 3 additionally adds

language to the proposed rule text to

clarify that public customer orders on

the limit order book will always have

priority over members of the trading

crowd who established the market; that

those members of the crowd will have

priority over non-customer orders as

well as public customer orders on the

floor that were not represented at the

time the market was established; and

that the crowd will not have priority

over any order—customer or noncustomer—that improves the market.

These changes were made for the

purposes of clarity and consistency and

thus strengthen the proposed rule

change.

Amendment No. 3 also provides that

the Floor Procedure Committee will

determine the size requirement for

orders to be subject to the crossing

guarantee on a class by class basis. In

the Commission’s view, this provision

will afford the Exchange greater

flexibility in determining when it is

appropriate to provide participation

rights to firms seeking to cross orders,

and thus strengthens the proposed rule

change.

Accordingly, the Commission finds

good cause, consistent with Sections

6(b)(5) 32 and 19(b)(2) 33 of the Act to

accelerate approval of Amendments No.

1, 2, and 3 to the proposed rule change.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment Nos.

1, 2, and 3, including whether

Amendment Nos. 1, 2, and 3 are

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. 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

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the CBOE. All

submissions should refer to File No.

SR–CBOE–99–10 and should be

submitted by June 26, 2000.

VI. Conclusion

For the reasons discussed above, the

Commission finds that the proposal is

consistent with the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (SR–CBOE–99–

10), as amended, be and hereby is

approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.34

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–13955 Filed 6–2–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42823; File No. SR–ISE–

00–05]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the International

Securities Exchange LLC Relating to

Authority to Grant Exemptions From

ISE Rule 805

May 25, 2000.

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 May 24,

2000, the International Securities

Exchange LLC (‘‘ISE’’ or ‘‘Exchange’’)