67022 Federal Register / Vol. 65, No. 217 / Wednesday, November 8, 2000 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 43194

(August 22, 2000), 65 FR 52457 (August 29, 2000).

4Equity trading posts are all trading posts that are

under the jurisdiction of the Equity Floor Procedure

Committee (all trading posts except DJX, NDX, OEX

and SPX), including Designated Primary Market

maker crowds.

5See Securities Exchange Act Release No. 33701

(March 2, 1994), approving SR–CBOE–93–24.

6RG 97–92, the latest Regulatory Circular

reflecting CBOE’s current equity telephone policy,

was approved by the Commission in Securities

Exchange Act Release No. 37876, 61 FR 56728

(November 4, 1996), and modified in Securities

Exchange Act Release No, 39331, 62 FR 62650

(November 24, 1997).

7 In adopting this change, the CBOE wants to

provide more immediate access into its trading

crowds to its customers. The Exchange believes that

this expansion in access is necessary to allow the

CBOE to continue to satisfy is customers in an

increasingly competitive environment.

8The OEX pit telephone policy is set forth in

CBOE’s Regulatory Circular, RG–98–09, which was

approved in Securities Exchange Act Release No.

39435, 62 FR 66157 (December 17, 1997), CBOE’s

current proposal for the equity option post differs

somewhat from its OEX policy contained in the

above-noted Regulatory Circular. RG–98–09 allows

floor brokers to take telephone orders using their

dedicated telephone lines at the OEX pit, while the

current proposal would allow all members to

receive telephone orders (with the outgoing call

limitation) over the equity option post general

telephone lines, with members using PIN access

codes to access the lines. CBOE represents that

space limitations at the equity option post would

prohibit the use of dedicated lines. Further, CBOE

represents that, in contract to the OEX post, ordertaking at the equity option post is not limited to

floor brokers, as Designated Primary Market Makers

(‘‘DPM’’) can also act as floor brokers pursuant to

existing CBOE rules. Telephone call from Timothy

Thompson, Director, Regulatory Affairs, CBOE and

Angelo Evangelou, Attorney, CBOE to Geoffrey

Pemble, Attorney, Division of Market Regulation,

SEC (October 26, 2000).

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

Purchase and Savings Plan; (3) the

Cinergy Corp. Stock Option Plan; (4) the

Cinergy Corp. Directors’ Deferred

Compensation Plan; (5) the Cinergy

Corp. Long-Term Incentive

Compensation Plan; (6) the Cinergy

Corp. Union Employees’ 401(k) Plan; (7)

the Cinergy Corp. Union Employees’

Savings Incentive Plan; and (8) the

Cinergy Corp. Non-Union Employees’

401(k) Plan. Shares of Common Stock

issued under the Plans from time to

time over the Authorization Period may

be authorized and previously unissued

shares or previously issued shares

reacquired by Cinergy in open market

transactions. In addition, under the

Stock Option Plan and the Long-Term

Incentive Compensation Plan, plan

participants may purchase shares of

Common Stock under certain

circumstances by, among other means,

exchanging shares of Common Stock,

and accordingly, Cinergy also requests

authorization, to the extent required

under the Act, to acquire shares of

Common Stock from plan participants.

Cinergy proposes to apply proceeds of

any shares sold for cash to general

corporate purposes, including

repayment of outstanding indebtedness

and investments in subsidiaries.

However, without further authorization

from the Commission, Cinergy will not

apply any proceeds to acquire exempt

wholesale generators as defined in

section 32 of the Act, or foreign utility

companies as defined in section 33 of

the Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–28592 Filed 11–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43493; File No. SR–CBOE–

00–04]

Self-Regulatory Organizations;

Chicago Board Options Exchange,

Inc.; Order Granting Approval to

Proposed Rule Change to Amend and

Codify Equity Options Post Telephone

Policy

October 30, 2000.

I. Introduction

On February 25, 2000, the Chicago

Board Options Exchange, Inc. (‘‘CBOE’’

or ‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘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

expand the existing CBOE policy

governing the use of telephones at

equity option trading posts to conform

it to the CBOE’s current index option

trading post telephone policy by

allowing for the receipt of orders over

outside telephone lines, from any

source, directly at equity trading posts.

On August 29, 2000, the Commission

published the proposed rule change in

the Federal Register.3 The Commission

received no comments on the proposal.

This order approves the proposed rule

change.

II. Description of the Proposal

In this proposed rule change, CBOE

seeks to expand its existing policy

governing the use of telephones at

equity option trading posts4 to make it

more consistent with the CBOE’s

current index option trading post

telephone policy by allowing for the

receipt of orders over outside telephone

lines, from any source, directly at equity

trading posts, and to incorporate that

policy into the Exchange’s rules. The

proposed rule change is more limited

than the current telephone policy for the

index option post, however, in that it

would generally allow for the receipt of

orders directly at the post over outside

telephone lines only when the order(s)

are placed during outgoing telephone

calls. The Exchange seeks to codify and

amend its current equity option post

telephone policy to make clear to

member and member organizations the

Exchange’s position with respect to the

use of telephones at equity option posts.

The proposed policy would supercede

previous policies concerning the use of

telephones at equity option trading

posts set forth in CBOE Regulatory

Circulars.

Regarding the history of CBOE’s

equity option trading post telephone

policy, the CBOE first proposed a

telephone policy for equity option posts

in 1993.5 That initial policy prohibited

any orders from being transmitted over

the outside telephone lines to the equity

option posts, but allowed for orders to

be transmitted via intra-floor lines from

one point on the Exchange floor to

another. In 1996, the Exchange modified

its telephone policy at equity posts to

allow orders of CBOE market makers to

be received over the outside telephone

lines directly at the trading posts, which

remains the current policy.6 The

proposed rule change would expand

this policy by permitting the receipt of

off-floor orders from any source (i.e.,

members, broker-dealers, non-brokerdealer, or public customers) over

outside telephone lines directly at the

equity trading posts during outgoing

telephone calls, but would limit the

orders to those transmitted to the equity

posts pursuant to a telephone call

initiated at the post (i.e., an outgoing

call).7 According to CBOE, the proposed

rule change would make the CBOE’s

telephone policy for equity option posts

more consistent with the current policy

at the OEX post in place since 1998.8

III. Discussion

After careful review, 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 and, in particular,

with Sections 6(b)(5) and 6(b)(8) of the

Act.9 Section 6(b)(5) requires, among

other things, that the rules of an

exchange be designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, to facilitate

Federal Register / Vol. 65, No. 217 / Wednesday, November 8, 2000 / Notices 67023

10 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. See

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

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

12 15 U.S.C. 78f(6)(8).

13According to CBOE, responsibility for

accepting orders from a wide range of customers

will be borne by the member firms. Floor brokers

accepting orders in this manner would be required

to be qualified pursuant to Exchange Rule 91. As

is the case with brokers accepting orders of public

customers over OEX post telephones, any broker

speaking directly with a public customer is required

to be Series 7 qualified and registered with the

Exchange by a member organization approved to

conduct non-member customer business.

14 15 U.S.C. 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

transactions in securities, to remove

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 interest.10 Section 6(b)(5) also

requires that those rules not be designed

to permit unfair discrimination between

customers, issuers, brokers, or dealers.

Section 6(b)(8) of the Act requires that

the rules of an exchange not impose any

burden on competition not necessary or

appropriate in furtherance of the

purpose of the Act.

Under the current policy, the only

orders for equity options that may be

received at the post directly via

telephone lines from off-floor locations

are off-floor orders of CBOE market

makers. The proposed rule change

would expand this policy by permitting

the receipt of off-floor orders from any

source (i.e., members, broker-dealers,

non-broker-dealers, or public customers)

over outside telephone lines directly at

the equity trading posts during outgoing

telephone calls. The proposed rule

change would only allow for such

orders to be transmitted to the equity

posts pursuant to a telephone call

initiated at the post (an outgoing call),

while permitting CBOE market makers

to continue to transmit orders over the

telephone lines from off the floor

directly to the equity trading posts (via

incoming calls).

The Commission finds that the

proposed rule is consist with, and

furthers the objectives of, Section

6(b)(5) 11 of the Act in that it is designed

to improve communication to and from

the Exchange’s trading floor in a manner

that promotes just and equitable

principles of trade, prevents fraudulent

and manipulative acts and practices,

and maintains fair and orderly markets.

Specifically, the Commission notes that

the limits on telephone use proposed by

the CBOE are consistent with the goals

of the Act. In this regard, the

commission believes that it is

reasonable for CBOE to codify its

current policy permitting CBOE market

makers to send orders to the trading

floor via incoming calls (a benefit that

is not enjoyed by other types of

members and public customers). This

policy allows CBOE market makers to

transmit their orders more efficiently at

those times when they are required to be

off the floor. In the Commission’s view,

it is also reasonable for the Exchange to

now allow orders from any other source

to go directly to the post as long as those

orders are placed in outgoing calls only.

The Commission further believes that

the proposed rule change modifies the

Exchange’s communication system in a

way that provides for equitable access to

the Exchange floor among members,

broker-dealers, non-broker-dealers, and

public customers (both institutional and

retail) alike. Accordingly, the

Commission finds that the proposal is

consistent with the requirement of

Section 6(b)(8) 12 of the Act, which

requires that the proposed rule change

not impose any burden on competition

not necessary or appropriate in

furtherance of the Act’s purposes.

The Exchange has indicated that it

intends to police compliance with the

conditions applicable to the use of

telephones at the equity trading posts

(including the requirement that any

member or associated person receiving

orders over outside telephone lines be

properly qualified pursuant to CBOE

rules to do so) through complaints from

Exchange members at the post, as well

as observations of Floor Officials and

Exchange staff. The Exchange has

further indicated that CBOE’s Equity

Floor Procedure Committee will be

responsible for implementing this

policy in conformity with Exchange

Rules and provisions of the Act,

including approving access and the

phone technology, and will decide any

other issues relating to this policy.13

Finally, the CBOE Department of

Financial and Sales Practice

Compliance will be required to review

and approve all applications relating to

the policy to ensure that the applicant

is intending to transact business which

the applicant is authorized to transact.

The Commission believes that proper

surveillance is an essential component

of any policy telephone access to an

exchange’s trading floor. Especially

important in this case is ensuring that

the CBOE’s surveillance efforts prevent

individuals who are not properly

qualified to take public orders for

securities (i.e. non-Series 7 qualified

Exchange employees) from interacting

with the public. The Commission finds

that the safeguards proposed above by

the CBOE are consistent with the

prevention of fraudulent and

manipulative acts and practices, as

required under Section 6(b)(5).

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,14 that the

proposed rule change (SR–CBOE–00–

04) is approved.

For the Commission, by the Division of

Market Regulations, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–28594 Filed 11–7–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43499; File No. SR–CBOE–

00–50]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by Chicago

Board Options Exchange, Inc. To

Extend the Pilot Period Relating to the

Processing of Live Ammo Orders Until

December 15, 2000

October 31, 2000.

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

Securities Exchange Act of 1934

(‘‘Act’’) 1 Rule 19b–4 2 thereunder,

notice is hereby given that on October

26, 2000, the Chicago Board Options

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

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

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 proposes to extend until

December 15, 2000, the pilot program

that allows an Order Book Official

(‘‘OBO’’) or a Designated Primary

Market-Maker (‘‘DPM’’) to designate

certain booked orders to be

electronically executed (‘‘Live Ammo to

RAES’’). The text of the proposed rule

change is available at the Office of the

Secretary, CBOE and at the Commission.