Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Notices 23309

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.

3See Letter from Stephanie C. Mullins, Attorney,

CBOE to David Sieradzki, Attorney, SEC dated

March 23, 1998 (‘‘Amendment No. 2’’). In

Amendment No. 2, the Exchange adds option class

and series to the definition of ‘‘Terms and

Conditions of an Order.’’ In addition, the Exchange

adds language to the rule that indicates that the

class of the option would be deemed disclosed if

it is apparent that the crowd is aware of which

option class is being traded.

4Securities Exchange Act Release No. 39308

(Nov. 6, 1997), 62 FR 61419 (Nov. 17, 1997). 5 15 U.S.C. 78f(b).

OTC Bulletin Board. The Commission

also notes that no comments were

received on the original BSE proposal,

which was subject to the full 21-day

comment period. Therefore, the

Commission believes that is consistent

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

approve Amendment No. 2 to the

proposed rule change on an accelerated

basis.

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2 to the proposed rule change, including

whether the amendment is consistent

with the Act. 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. 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 May 19, 1998.

For the foregoing reasons, the

Commission finds that BSE’s proposal,

as amended, is consistent with the

requirements of the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

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

proposed rule change (SR–BSE–97–04)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–11167 Filed 4–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39891; File No. SR–CBOE–

97–40]

Self-Regulatory Organizations;

Chicago Board Options Exchange,

Inc.; Order Granting Approval to

Proposed Rule Change and Notice of

Filing and Order Granting Accelerated

Approval to Amendment No. 2 to the

Proposed Rule Change Relating to the

‘‘Terms and Conditions of an Order’’

for Purposes of the Exchange’s Rules

on Solicited Trades and Crossed

Trades

April 21, 1998.

I. Introduction

On August 25, 1997, the Chicago

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

or ‘‘Exchange’’) submitted to 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 define the phrase ‘‘Terms and

Conditions of an Order’’ for purposes of

the Exchange’s rules on solicited trades

and crossed trades. On March 23, 1998,

the Exchange filed Amendment No. 2 to

the proposed rule change with the

Commission.3

The proposed rule change, and

Amendment No. 1 thereto were

published for comment in the Federal

Register on November 17, 1997.4 No

comments were received on the

proposal. This order approves the

proposal as amended.

II. Description of the Proposal

The purpose of the proposed rule

change is to define and clarify the

meaning of the phrase ‘‘terms and

conditions’’ of an order as used in

Exchange Rules 6.9 and 6.74. Pursuant

to Rule 6.9, Solicited Transactions, a

member or member organization

representing an order respecting an

option traded on the Exchange (an

‘‘original order’’), including a spread,

combination, or straddle order as

defined in Rule 6.53 and a stock-option

order as defined in Rule 1.1(ii), may

solicit a member or member

organization or a non-member customer

or broker-dealer (the ‘‘solicited person’’)

to transact in-person or by order (a

‘‘solicited order’’) with the original

order.

Pursuant to Rule 6.74(b), a floor

broker may effect a cross of a customer

order and a facilitation order subject to

satisfaction of certain conditions,

including disclosure on an order ticket

for the public customer order which is

subject to facilitation, all of the terms of

such order, including any contingency

involving, and all related transactions

in, either options or underlying or

related securities. A facilitation order is

defined in Rule 6.53(m) as an order

which is only to be executed in whole

or in part in a cross transaction with an

order for a public customer of the

member organization and which is

clearly designated as a facilitation order.

The rules relating to both facilitation

‘‘solicited’’ and ‘‘crossing’’ transactions

are designed to ensure that all market

participants have an equal opportunity

to participate in trades, fostering the

objective of open outcry in a

competitive market. The proposed rule

amendment defines what is meant by

the phrase ‘‘terms and conditions’’ as

used in these two rules: the class; the

series; the volume; the price; and

contingencies; and any components

related to the order. Components are

related stock, options, futures or any

other instruments or interests. A

contingency order is a limit or market

order to buy or sell that is contingent

upon a condition being satisfied while

the order is at the post. Contingent

orders include: market-if-touched

orders; market-on-close-orders; stop

(stop-loss) orders; and stop-limit orders.

The Exchange believes that the

proposed Interpretations will enable

those who solicit and those who wish to

effect ‘‘facilitation’’ crosses to

understand and abide by their

disclosure obligations. In addition, the

proposed change will aid in achieving

uniformity with regard to trading crowd

expectations, as well as to the type and

amount of information disclosed on

crossed and solicited orders.

III. Discussion

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 the

requirements of Section 6(b).5

Specifically, the Commission believes
23310 Federal Register / Vol. 63, No. 81 /Tuesday, April 28, 1998 / Notices

6 15 U.S.C. 78f(b)(5).

7 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

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

8Securities Exchange Act Release No. 34959

(November 9, 1994), 59 FR 59446 (November 17,

1994).

9Telephone conversation between Stephanie C.

Mullins, Attorney, CBOE and David Sieradzki,

Attorney, SEC on February 18, 1998.

10 15 U.S.C. 78s(b)(2).

11 17 CFR 200.30–3(a)(12).

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

2The Commission has modified parts of these

statements.

3See Securities Exchange Act Release Nos. 24818

(August 19, 1987), 52 FR 31833; 25948 (July 27,

1988), 53 FR 29294; 30625 (April 23, 1992), 57 FR

18534; and 35649 (April 26, 1995), 60 FR 21576.

the proposal is consistent with the

Section 6(b)(5) 6 requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public

interest.7

The Exchange represents that the

proposal will enable those who solicit

and those who wish to effect

‘‘facilitation’’ crosses to understand and

abide by their disclosure obligations. In

addition, the Exchange represents that

the proposed change will aid in

achieving uniformity with regard to

trading crowd expectations, as well as to

the type and amount of information

disclosed on crossed and solicited

orders. The Commission supports the

Exchange’s efforts to review and clarify

its rules relating to disclosure

obligations of market participants. This

is particularly true where, as here, the

rule being clarified addresses priority

accorded to orders on the floor of the

Exchange. The Commission believes

that the proposed rule change will help

specify what information must be

disclosed on crossed and solicited

orders.

In November, 1994, when the

Exchange adopted Rule 6.9, Solicited

Transactions, the Exchange recognized

the importance of fully disclosing the

orders that comprise a solicited

transaction to the trading crowd. The

Exchange stated that if orders

comprising a solicited transaction were

not suitably exposed to the trading

crowd ‘‘the execution of such orders

would be inconsistent with the open

auction market principles governing the

execution of orders on the CBOE’s

floor.’’ 8 By clarifying disclosure

requirements with respect to solicited

transactions, the current proposal

should improve the ability of the

Exchange to ensure that customer orders

receive full consideration by the trading

crowd.

The Commission finds good cause for

approving Amendment No. 2 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Amendment No. 2

adds option class and series to the

definition of ‘‘Terms and Conditions.’’

The Exchange has represented that this

merely codifies the practice on the

options trading floor to disclose an

option’s class and series in effecting a

‘‘facilitation’’ cross or solicited

transaction.9 Further, the Commission

notes that the original proposal was

published for the full 21-day comment

period and no comments were received

by the Commission. Accordingly, the

Commission believes it is appropriate to

approve Amendment No. 2 to the

Exchange’s proposal on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

2 including whether the proposed rule

change is consistent with the Act.

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 provision

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 No.

SR–CBOE–97–40 and should be

submitted by May 19, 1998.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–CBOE–97–

40) is approved as amended.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–11165 Filed 4–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39894; File No. SR–DTC–

97–23]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

a Proposed Rule Change Modifying

Issue Eligibility Requirements

April 21, 1998.

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

Securities Exchange Act of 1934

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

January 5, 1998, The Depository Trust

Company (‘‘DTC’’) 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 primarily by DTC. 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 proposed rule change modifies

DTC’s existing operational arrangements

necessary for a securities issue to

become eligible for the services of DTC.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DTC 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. DTC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

DTC’s operational arrangements 3

currently incorporate the guidelines for

income, reorganization, and redemption

payments (‘‘principal and income

payments’’) established by the Same

Day Funds Payment Task Force of the

U.S. Working Committee, Group of

Thirty Clearance and Settlement Project