[Federal Register Volume 62, Number 204 (Wednesday, October 22, 1997)]
[Notices]
[Pages 54891-54892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27904]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39240; File No. SR-CBOE-97-54]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to Routing of Firm and Broker-Dealer 
Orders to the Par Workstations in the DJX Trading Crowd

October 14, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 3, 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.
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    \1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Chicago Board Options Exchange, Incorporated (``CBOE'' or the 
``Exchange'') will enable its order routing system (``ORS'') to route 
broker-dealer and firm orders to the trading crowd for options based on 
the Dow Jones Industrial Average (``DIX'').\2\
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    \2\ The text of the proposed rule change is available at the 
Office of the Secretary, CBOE and in the Public Reference Room at 
the Commission.
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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

    On May 30, 1997, the Securities and Exchange Commission (``SEC'' or 
``Commission'') approved a proposed rule change of the CBOE which 
sought permanent approval of a pilot program concerning certain 
enhancements to the Exchange's electronic order routing system.\3\
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    \3\ SR-CBOE-97-22, approved in Securities Exchange Act Release 
No. 38702 (May 30, 1997), 62 FR 31184 (June 6, 1997).
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    The changes instituted in the pilot program, now approved on a 
permanent basis, included the electronic routing and processing of 
contingency and discretionary orders,\4\ the recognition by ORS of firm 
and broker-dealer orders, the routing of firm and broker-dealer orders 
to the Public Automated Routing (``PAR'') system workstations in the 
OEX crowd, and the execution of certain contingency orders on the 
Exchange's Retail Automatic Execution System. In addition, the Exchange 
enabled the system to route firm and broker-dealer orders 
electronically to the PAR workstations in the trading crowd for options 
on the Standard & Poor's 100 Index (``OEX''), but not to PAR stations 
in any other trading crowd. The Exchange has now enabled its systems to 
route firm and broker-dealer orders electronically to the PAR stations 
in the trading crowd for DJX, which is scheduled to commence trading on 
the Exchange on October 6, 1997. The Exchange intends to study further 
whether it should enable the system to route such orders to equity and 
SPX crowds at some future date. All other enhancements to the ORS which 
were recently approved by the Commission will apply equally to trading 
in DJX as

[[Page 54892]]

they do at all other trading crowds on the floor.
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    \4\ The systems enhancements specifically have allowed for the 
routing of the following types of contingency and discretionary 
orders: All or None orders (AON), Immediate or Cancel orders (IOC), 
Fill or Kill orders (FOK), Minimum Quantity orders (MIN), Stop 
orders (STP), Stop Loss orders (STP LOSS), Opening Only orders 
(OPG), Market on Close Orders (MOC), Closing Only orders (CLO), 
Market if Touched orders (MIT), Not held orders (NH), and With 
Discretion orders. Due to systems and administrative limitations, 
ORS has continued to be unavailable for stop limit orders as well as 
spreads, straddles, combos, and other multi-part orders.
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    The Exchange believes the proposed system change is consistent with 
and furthers the objectives of Section 6(b)(5) \5\ of the Act in that 
it would foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, and processing information with respect 
to, and facilitating transactions in securities, and would remove 
impediments to and perfect the mechanism of a free and open market in a 
manner consistent with the protection of investors and the public 
interest.
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    \5\ 15 U.S.C. Sec. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule change will impose 
any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing rule change has been designated by the 
Exchange as a policy effecting a change in an existing order-entry 
system of the Exchange that (i) does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) does not have the 
effect of limiting access to or availability of the system, it has 
become effective pursuant to Section 19(b)(3)(A) \6\ of the Act and 
Rule 196-4(e)(2) \7\ thereunder. At any time within 60 days of the 
filing of a rule change, the Commission may summarily abrogate the 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 proposes of the Act.
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    \6\ 15 U.S.C. Sec. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(e)(2).
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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 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. Sec. 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 
CBOE. All submissions should refer to File No. SR-CBOE-97-54 and should 
be submitted by November 12, 1997.

    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. 97-27904 Filed 10-21-97; 8:45 am]
BILLING CODE 8010-01-M