Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices 52601

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3The amendment revised the text of the proposed

supplementary material to Section 3 of Chapter 1

of the Exchange Rules to clarify that it only applies

to the trading of issues listed solely on the

Exchange and that the proposal also applies to stop

limit orders. See letter from Karen A. Aluise,

Assistant Vice President, BSE, to Michael

Walinskas, Senior Special Counsel, Division of

Market Regulation, Commission (Sept. 15, 1997)

(‘‘Amendment No. 1’’).

4 Generally, the Exchange’s solely listed issues

trade on the Nasdaq SmallCap Market. Here,

however, the exchange uses the term ‘‘Nasdaq

market’’ to include both Nasdaq SmallCap and OTC

Bulletin Board. Telephone Conversation between

Karen Aluise, Assistant Vice President, BSE, and

Christine Richardson, Law Clerk, Division of

Market Regulation, Commission, on September 23,

1997. 5 15 U.S.C. § 78f(b).

Exchange Commission, 450 Fifth Street,

N.W., Washington, D.C. 20549, facts

bearing upon whether the application

has been made in accordance with the

rules of the exchange and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–26574 Filed 10–7–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39187; File No. SR–BSE–

97–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Boston Stock Exchange, Inc., Relating

to Stop Orders and Stop Limit Orders

in Solely Listed Issues

October 1, 1997.

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

September 4, 1997, the Boston Stock

Exchange, Inc. (‘‘BSE’’ or ‘‘Exchange’’)

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 selfregulatory organization. On September

15, 1997, the Exchange submitted to the

Commission an amendment to the

proposed rule change.31 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange seeks to adopt a new

Supplementary Material to Section 3 of

Chapter 1 of the Exchange Rules to

govern the activation criteria for stop

orders and stop limit orders in sole

listed issues where reported executions

occur away from the Exchange.

The text of the proposed rule change

is available at the Office of the

Secretary, BSE and at the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization 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 self-regulatory organization has

prepared summaries, set forth in

Sections A, B, C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to guide Exchange specialists

and customers in the appropriate

activation of stop orders and stop limit

orders in sole listed issues. Due to the

frequency with which the Exchange’s

sole listed issues trade in the Nasdaq

market,4 it is likely that transactions

will occur in that market at prices

which would activate Exchange resident

stop orders and stop limit orders, were

such transactions to occur in the

Exchange’s market. At such times

customers may look for an execution

report based on trading that occurs in

Nasdaq market. In these circumstances,

Exchange specialists may be placed at

significant market risk if a customer is

permitted to determine after the fact that

a stop order or stop limit order in a

solely listed issue was, or was not, due

based on a sale reported in the Nasdaq

market. The proposed interpretation

will remove any ambiguity regarding the

appropriate activation of stop orders

and stop limit orders in solely listed

issues by necessitating the inclusion of

reported regular way round-lot sales in

the Nasdaq market in determining the

activation of Exchange resident stop

orders and stop limit orders in solely

listed issues.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section with Section (6)(b)(5) of the

Act 5 in that it is designed to promote

just and equitable principles of trade; to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities; to

remove implements 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; and is not designed to

permit unfair discrimination between

customers, issuers, brokers or dealers.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition that is 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

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of

this notice in the Federal Register or

within such longer period (i) as the

Commission may designate up to 90

days of such date if it finds such longer

period to be appropriate and publishes

its reasons for so finding or (ii) as to

which the self-regulatory organization

consents, the Commission will:

(A) by order approve the proposed

rule change, or

(B) institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the
52602 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1).

2The procedures for the administration of the

OTP lease pool were filed with the Commission in

SR–CBOE–97–14. SR–CBOE–97–14 provided for

the issuance of OTPs in connection with the

transfer of the options business of the New York

Stock Exchange, Inc. to CBOE and defined the

rights and obligations associated with OTPs. SR–

CBOE–97–14 was approved by the Commission in

Securities Exchange Act Release No. 38541 (April

23, 1997), 62 FR 23516 (April 30, 1997).

3 It should be noted that a current OTP lease pool

lessee may not submit an OTP bid during the six

month OTP lease cycle (except for a bid that is in

connection with the next bi-annual OTP lease pool

auction). This is the case because in order for a

person to submit an OTP bid, that person must be

immediately eligible to become an OTP lease pool

lessee. A current OTP lease pool lessee is not

immediately eligible to become an OTP lease pool

lessee for another OTP because that person is

already leasing an OTP from the lease pool, and a

person can only lease one OTP from the lease pool

at a time.

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–BSE–97–04 and should be

submitted by October 29, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–26648 Filed 10–7–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39179; File No. SR–CBOE–

97–47]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange,

Incorporated Relating to Option

Trading Permit Bid Fee

October 1, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’)1, notice is hereby given that on

September 18, 1997, the Chicago Board

Options Exchange, Incorporated

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by the CBOE. The Commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE is proposing to amend the

manner in which it assesses the

Exchange fee that is charged when a

person submits a bid to receive an

Option Trading Permit (‘‘OTP’’) from

the OTP lease pool.

The text of the proposed rule change

is available at the Office of the

Secretary, CBOE and at the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CBOE 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 CBOE has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

CBOE Rule 3.27(a)(3) provides for the

creation of an OTP lease pool to be

administered by the Exchange. The

procedures for the administration of this

lease pool were previously filed with

and approved by the Commission.2

Under these procedures, the Exchange

conducts an auction every six months

during which members and nonmembers who have qualified for

membership may submit bids equal to

the monthly rent that the bidder is

willing to pay for a month-to-month

OTP lease. Upon the close of the

bidding period, OTPs in the pool are

awarded to the highest bidders in a

number equal to the total number of

OTPs in the lease pool at that time. The

monthly rent to be paid by a lessee is

the dollar value of the bid submitted by

that lessee. Following each auction, the

Exchange continues to accept bids for

OTP leases. Should any OTP lessee

desire to give up that lessee’s OTP prior

to the next auction, the OTP is

transferred to the highest bidder at a

monthly lease price equal to the new

lessee’s bid for the remainder of the six

month auction cycle.

The procedures for the administration

of the OTP lease pool also provide that

a non-refundable $500 fee will be

assessed by the Exchange any time an

OTP bid is submitted. This fee is

intended to cover Exchange costs in

connection with its administration of

the OTP lease pool.

The Exchange proposes to amend the

manner in which it assesses the $500

OTP bid fee. Specifically, the Exchange

proposes not to charge the fee to any

current OTP lease pool lessee who

submits a bid in connection with one of

the Exchange’s bi-annual OTP lease

pool auctions. The $500 OTP bid fee

would continue to be assessed to

anyone who submits a bid in connection

with one of the Exchange’s bi-annual

OTP lease pool auctions and is not

currently an OTP lease pool lessee. In

addition, the $500 OTP bid fee would

continue to be assessed to anyone who

is not currently an OTP lease pool lessee

and submits an OTP bid during a six

month OTP lease cycle and not in

connection with one of the Exchange’s

bi-annual OTP lease pool auctions.

The Exchange has determined that it

is not necessary to assess a $500 OTP

bid fee to a current OTP lease pool

lessee in connection with a bi-annual

OPT lease auction because that person

will have already paid a $500 OTP bid

fee to the Exchange.3

The Exchange also proposes to amend

the procedures for the administration of

the OTP lease pool to clarify that the

$500 OTP bid fee is not assessed when

a bid is canceled or replaced with

another bid. The Exchange is not

waiving the $500 OTP bid fee for an

OTP lease pool lessee who terminates

his or her OTP lease and later submits

another bid for an OTP in the lease pool

because there is administrative work

involved in processing a change in OTP

lessees.

The proposed rule change is

consistent with Section 6(b) of the Act,

in general, and furthers the objectives of

Section 6(b)(4) of the Act in particular,

in that it is designed to provide for the

equitable allocation of reasonable dues,

fees, and other charges.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition.