60706 Federal Register / Vol. 65, No. 198 / Thursday, October 12, 2000 / Notices

3 15 U.S.C. 78f(b)(5).

4 15 U.S.C. 78k(a)(1)(B).

5 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, CBOE acknowledged that

prior to permanent approval of the proposed rule

change, the Exchange is required to submit to the

Commission a workable plan for electronic

incorporation of non-bookable orders on the

Exchange’s Rapid Opening System (‘‘ROS’’), and a

description of the methods the Exchange will

employ to surveil market-maker activities on ROS.

The Exchange also clarified that the current ROS

pilot program would be extended until the earlier

of September 30, 2001 or such time as the

Commission has approved ROS on a permanent

basis. Letter from Jaime Galvan, Attorney, CBOE, to

Terri Evans, Special Counsel, Division of Market

Regulation (‘‘Division’’), Commission, dated

September 26, 2000 (‘‘Amendment No. 1’’).

4See Amendment No. 1 effectively clarifying that

the Pilot will not be further extended beyond

September 30, 2001 without separate Commission

approval.

5Securities Exchange Act Release No. 41033

(February 9, 1999), 64 FR 8156 (February 18, 1999).

6Securities Exchange Act Release No. 42596

(March 30, 2000), 65 FR 18397 (April 7, 2000).

conducted on the floor or electronically

from remote locations, will be

considered to be executions occurring

on the Exchange.

2. Statutory Basis

The statutory basis for the proposed

rule change is Section 6(b)(5) of the

Act,3 in that it is designed to promote

just and equitable principles of trade, to

foster cooperation and coordination

with persons engaged in regulating

securities transactions, to remove

impediments, to perfect the mechanism

of a free and open market and a national

market system and, in general, to protect

investors and the public interest. In

addition, the Exchange believes that the

proposed rule change is consistent with

the provisions of Section 11A(a)(1)(B) of

the Act,4 in that it pertains to new data

processing and communications

techniques which create the opportunity

for more efficient and effective market

operations.

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 date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days if it finds such longer period to

be appropriate and publishes it reasons

for so finding or (ii) as to which the selfregulatory organization consents, the

Commission will:

(1) by order approve such proposed

rule change, or

(2) 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

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 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 abovementioned self-regulatory organization.

All submissions should refer to file

number SR–BSE–00–13 and should be

submitted by November 2, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26114 Filed 10–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43395; File No. SR–CBOE–

00–46]

Self-Regulatory Organizations; Notice

of Filing and Order Granting Partial

Accelerated Approval of Proposed

Rule Change and Amendment No. 1

thereto by the Chicago Board Options

Exchange, Inc. Relating to its Rapid

Opening System Pilot Program

September 29, 2000.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,1

notice is hereby given that on

September 7, 2000, the Chicago Board

Options Exchange (‘‘CBOE’’ 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 Exchange. On

September 27, 2000, the Exchange

submitted Amendment No. 1 to the

proposed rule change.3 The Commission

is publishing this notice and order to

solicit comments on the proposed rule

change from interested persons and to

grant partial accelerated approval to the

portion of the proposal extending the

Exchange’s ROS pilot program (‘‘Pilot’’)

until the earlier of September 30, 2001

or such time as the Commission has

approved ROS on a permanent basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to adopt ROS

on a permanent basis, as well as extend

the Pilot until the earlier of September

30, 2001 or such time as the

Commission has approved ROS on a

permanent basis.4 The text of the

proposed rule change is available at the

Exchange and 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

Exchange 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

Exchange 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

1. Purpose

On February 9, 1999, the Commission

approved the implementation of the

Pilot.5 The Pilot was extended once and

is scheduled to expire on September 30,

2000.6 ROS is a system developed by

the Exchange to open an entire options

class, all series, as a single event, based

on a single underlying value.

Federal Register / Vol. 65, No. 198 / Thursday, October 12, 2000 / Notices 60707

7 78f(b).

8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78s(b)(2).

10 In approving the extension of the Pilot, the

Commission has considered the proposed rule’s

impact on efficiency, competition, and capital

formation. 15 U.S.C. 78c(f).

11 15 U.S.C. 78s(b)(5).

12Approval of the extension of the Pilot should

not be interpreted as suggesting that the

Commission is predisposed to approving the Pilot

on a permanent basis.

13 15 U.S.C. 78s(b)(2).

The Exchange is now proposing to

make the Pilot program permanent. The

Exchange’s experience with ROS over

the past year and a half has been

positive. The Exchange believes that

ROS has successfully facilitated the

expedited openings of options classes

on the Exchange, thereby improving

market efficiency for all market

participants. By providing the

Exchange’s market-makers with the

ability to open option classes within

seconds of the opening of the

underlying security, customer orders

have been addressed in open trading in

a more timely manner. The Exchange

believes that ROS has enhanced the

quality of customer executions and has

served to protect existing order entry

priority.

The Exchange is continuing to explore

possibilities for bring non-bookable

orders into ROS in an automated

fashion. The Exchange continues to

actively study the possibility of making

changes to its limit order book to allow

for the inclusion of other order types, at

least at the opening. These changes to

the Exchange’s limit order book would

allow ROS to electronically

accommodate orders that cannot be

placed in the limit order book today.

The Exchange believes the Pilot is

operating successfully and requests

permanent approval of the proposed

rule change.

The Exchange also requests an

extension of the Pilot pending the

Commission’s consideration of the

proposal to adopt ROS on a permanent

basis. An extension of the Pilot program

would allow the Exchange and its

customers to continue to realize the

benefits of ROS pending Commission

consideration of permanent approval of

ROS.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b) of the Act 7 in general and

furthers the objectives of Section

6(b)(5) 8 in particular in that it is

designed to promote just and equitable

principles of trade and to protect

investors and the public interest.

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 not

necessary or appropriate in furtherance

of purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

The Exchange has neither solicited

nor received comments on the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

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.

The Exchange has requested that the

Commission find good cause, pursuant

to Section 19(b)(2) of the Act,9 for

approving the extension of the Pilot

through September 30, 2001 or until

such earlier time as the Commission

grants the Exchange’s request for

permanent approval of the program,

prior to the thirtieth day after

publication in the Federal Register.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule

change, as amended, is 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 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–CBOE–00–

46 and should be submitted by

November 2, 2000.

V. Commission’s Findings and Order

Granting Partial Accelerated Approval

of Proposed Rule Change

The Commission finds that the

portion of the proposed rule change

relating to the extension of the Pilot is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange.10 Specifically, the

Commission believes the proposal is

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

Act,11 which requires that the rules of

an exchange be designed to promote just

and equitable principles of trade, to

remove the impediments to and perfect

the mechanisms of a free and open

market and a national market system,

and, in general, to protect investors and

the public.

The Commission believes that

accelerating effectiveness of the

proposed extension of the Pilot will

allow the Exchange to continue to offer

the benefits of ROS without interruption

while the Commission considers the

Exchange’s proposal to adopt ROS on a

permanent basis.

The Commission finds good cause for

approving this proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. Specifically, the

Commission believes that accelerating

the effectiveness of the proposed

extension of the Pilot would benefit

investors by providing for the

continuation of expedited openings of

options classes on the Exchange

afforded by ROS.12 In addition, the

Commission believes that accelerated

approval of the Pilot would enable the

CBOE to continue uninterrupted

operation of ROS while ensuring

adequate time for the Commission to

evaluate the Exchange’s proposal.

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

extension of the Pilot by the Exchange

(File No. SR–CBOE–00–46) is approved

until the earlier of September 30, 2001

or such time as the Commission has

approved ROS on a permanent basis.

60708 Federal Register / Vol. 65, No. 198 / Thursday, October 12, 2000 / Notices

14 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from Jeffrey T. Brown, Vice President,

Regulation, and General Counsel, Exchange, to

Joseph P. Morra, Senior Counsel, Division of Market

Regulation, Commission, dated August 7, 2000

(‘‘Amendment No. 1’’).

4 15 U.S.C. 78s(b)(3)(A).

5See letter form Jeffrey T. Brown, Vice President,

Regulation, and General Counsel, Exchange, to

Joseph P. Morra, Senior Counsel, Division of Market

Regulation, Commission, dated September 22, 2000

(‘‘Amendment No. 2’’).

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4(f)(6).

8 In filing its Amendment No. 1, the Exchange

requested that the Commission waive the

requirement that the Exchange provide the

Commission with written notice of its intent to

make such filing, as well as a description of the

proposal, at least five business days prior to the

filing of the proposed rule change with the

Commission. See Rule 19b–4(f)(6)(iii). 17 CFR

240.19b–4(f)(6)(iii). The Commission agrees to

waive such requirement of prior notice.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26113 Filed 10–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43408; File No. SR–CSE–

00–01]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change and

Amendments Nos. 1 and 2 by the

Cincinnati Stock Exchange,

Incorporated, Amending Its Rules To

Accommodate the Implementation of

Decimal Pricing

October 3, 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 February

2, 2000, The Cincinnati Stock Exchange,

Incorporated (‘‘CSE’’ OR ‘‘Exchange’’),

filed with the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change to amend its rules

to permit quotations made in decimal

increments in conjunction with the

securities industry’s phased

implementation of decimal pricing

conventions. On August 7, 2000, the

CSE amended the proposed rule

change3 by requesting that the

Commission grant immediate

effectiveness to the proposal pursuant to

Section 19(b)(3)(A) of the Act.4 On

October 2, 2000, the Exchange again

amended the proposed rule change5 by

making minor technical corrections to

the proposed rule text amendments. The

proposal, as amended, is described in

Items I, II, and III below, which Items

have been prepared by the CSE. Because

the CSE filed the amended proposal

pursuant to Section 19(b)(3)(A) of the

Act,6 and Rule 19b–4(f)(6) thereunder,7

it has become effective upon filing with

the Commission.8 The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend its

rules to provide for the implementation

of decimal pricing. The CSE believes the

proposed rule change conforms to the

uniform industry approach to

implementing decimal pricing

contained in the joint submission to the

Commission by the CSE and other

interested parties dated July 24, 2000,

and entitled ‘‘Decimals Implementation

Plan for the Equities and Options

Markets’’ (‘‘Decimals Plan’’). The text of

the proposed rule change is set forth

below. Proposed new language appears

in italic; proposed deletions appear in

brackets.

* * * * *

Chapter XI Trading Rules

Rule 11.3 Price Variations

(a) Bids or offers in stocks traded on

the Exchange at or above $1.00 per share

shall not be made at a smaller variation

than 1⁄8 of $1.00 per share; in stocks

below $1.00 but at or above 1⁄2 of $1.00

per share, at a smaller variation than 1⁄16

of $1.00; in stocks below 1⁄2 of $1.00 per

share, at a smaller variation than 1⁄32 of

$1.00 per share; and in bonds at a

smaller variation than 1⁄8 of 1% of the

principal amount, except in the case of

a dually or multiply-traded security

where the principal exchange shall have

a different rule or when the Board of

Trustees of the Exchange shall provide

otherwise. (Rule 11.3(a) will be

eliminated upon completion of decimal

conversion.)

(b) Bids or offers in stocks traded on

the Exchange shall not be made at a

smaller variation than $.01 per share;

and in bonds at a smaller variation than

1⁄8 of 1% of the principal amount.

(c) Notwithstanding (b) above, bids

and offers in stocks not participating in

the decimal pilot program and not

converted to decimal pricing at or above

$1.00 per share must be made in

fractions at a minimum variation of 1⁄16

per share. The minimum variation of .01

described in (b) above is applicable to

stocks that have been converted to

decimal pricing. (Rule 11.3(c) will be

eliminated upon completion of decimal

conversion.)

* * * * *

Chapter XIV Intermarket Trading

System Plan

Rule 14.3 Pre-Opening Application

(b) * * * The ‘‘applicable price

changes’’ are:

Previous day’s

closing price

Applicable price change

(more than)

Network A:

Under $15 .. 1⁄8 point or for stocks trading

in decimals .10

$15 or

over1 [*].

1⁄4 point or for stocks trading

in decimals .25

Network B:

Under $5 .... 1⁄8 point or for stocks trading

in decimals .10

$5 or over2 1⁄4 point or for stocks trading

in decimals .25

1 [*] If the previous day’s consolidated closing price of [an] a Network A Eligible Security

exceeded $100 and the Security does not underlie an individual stock option contract listed

and currently trading on a national securities

exchange, the ‘‘applicable price change’’ is

[one point] one dollar. 2 If the previous day’s consolidated closing

price of a Network B Eligible Security exceeded $75 and the Security is not a Portfolio Deposit Receipt, Index Fund Share, or Trust

Issued Receipt, or does not underlie an individual stock option contract listed and currently trading on a national securities exchange, the ‘‘applicable price change’’ is one

dollar.

(c) A pre-opening notification shall—

(1) Be designated as a pre-opening

notification (‘‘IND’’)

(2) Identify the Exchange (‘‘C’’), the

inquiring specialist and the security

(‘‘XYZ’’)

(3) Indicate the ‘‘applicable price

range’’ by being formatted as a

standardized pre-opening

administrative message as follows:

IND C/XYZ [RANGE]

The price range shall not exceed the

‘‘applicable price range’’ shown below:

Consolidated

closing price Applicable price range $

Network A:

Under $50 1⁄2 point or for stocks trading

in decimals .50

$50 or

over3 [**]

1 point or for stocks trading

in decimals 1.00

Network B:

Under $10 1⁄2 point or, for stocks trading

in decimals, .50