Federal Register / Vol. 63, No. 102 /Thursday, May 28, 1998 / Notices 29275

7 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

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 by order approve such proposed

rule change, or 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,

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, NW.,

Washington, DC 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 in

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–98–11 and should be

submitted by June 18, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14022 Filed 5–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40021; File No. SR–CBOE–

98–12]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Board

Options Exchange, Incorporated

Relating to Exchange Mandated

Education Training

May 21, 1998.

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

Securities Exchange Act of 1934,1 notice

is hereby given that on April 20, 1998,

the Chicago Board Options Exchange,

Incorporated (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II 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 and to

grant accelerated approval on the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE proposes to add a

provision of Exchange Rule 6.20

Admission to and Conduct on the

Trading Floor, Member Education, to

require that Exchange members and

persons associated with Exchange

members attend mandatory continuing

education classes as directed by the

Exchange. Proposed new language is in

italics.

Chicago Board Options Exchange, Inc.

Rules

* * * * *

CHAPTER VI

Doing Business on the Exchange Floor

Section B: Member Activities on the

Floor

Admission to and Conduct on the

Trading Floor: Member Education

Rule 6.20(a)—(c) No change.

(d) Education Classes. Members and

persons associated with members are

required to attend such educational

classes as the Exchange may require

from time to time. Failure to attend

Exchange mandated continuing

educational classes may subject

members and persons associated with

members to sanctions pursuant to the

Exchange’s Minor Rule Violation

provided in Exchange Rule 17.50. Any

action taken by Floor Officials

thereunder shall not preclude further

disciplinary action by the Business

Conduct Committee under Chapter XVII

of the Rules, except as otherwise

provided in Rule 17.50.

. . . Interpretations and Policies:

.01–.09 No change.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

CBOE included statements concerning

the purpose of, and statutory 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 III 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

1. Purpose

The Exchange is proposing to add a

provision to Exchange Rule 6.20,

Admission to and Conduct on the

Trading Floor; Member Education, to

require that Exchange members and

persons associated with Exchange

members attend mandatory continuing

education classes as directed by the

Exchange. The Exchange believes it is

necessary from time to time to require

mandatory participation in certain

educational training classes by its

members and persons associated with

its members for a variety of reasons,

including to promote professional

behavior and decorum on the trading

floor, or to explain the operation of new

technology. For example, the Exchange

intends to implement a harassment

awareness training and ethics program

for its members and persons associated

with its members who are present on

the trading floor.

Without this rule change, the

Exchange would not have the ability to

mandate attendance. The Exchange is

also proposing to amend its Minor Rule

Violation fine schedule pursuant to

Exchange Rule 17.50(g)(6). Floor

Officials are allowed, pursuant to Rule

17.50(g)(6), to fine members and

associated persons for violations of

trading conduct and decorum policies.

For failure to attend an Exchange

mandated continuing educational class,

the Exchange proposes a fine of $500 for

a first offense, $750 for a second offense
29276 Federal Register / Vol. 63, No. 102 /Thursday, May 28, 1998 / Notices

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

3 15 U.S.C. 78f(b)(5) requires, among other things,

that the rules of an exchange be designed to

promote just and equitable principles of trade and,

in general, to protect investors and the public

interest.

4 In approving this rule, the Commission notes

that it has also considered the proposed rule’s

impact on efficiency, competition, and capital

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

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

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 39822

(March 31, 1998), 63 FR 17248 (April 8, 1998).

4The Board of Governors of the Federal Reserve

System is authorized, pursuant to Section 7 of the

Act, to establish initial margin requirements and

credit restrictions on margin financing. 12 CFR 220

and 221. Generally, Regulation T limits to 50% the

amount of financing extended to or by a brokerdealer to finance a securities position. 12 CFR

220.18. Bona fide market making activity, however,

may be exempt from these credit restrictions.

and $1,000 for subsequent offenses. The

Exchange believes the amount of the

fines will be sufficient to ensure

attendance. However, in the event

members refuse to attend even after

being assessed a fine, as with all Minor

Rule violations, the Exchange has the

discretion to refer violations to the

Business Conduct Committee pursuant

to Chapter XVII of the Exchange’s Rules.

2. Statutory Basis

The proposed rule change will give

the Exchange the ability to provide for

a more professional and informed

membership and is therefore consistent

with and furthers the objectives of

Section 6(b)(5) of the Act 2 in that it is

designed to promote just and equitable

principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system, and to

protect investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

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. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

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

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of CBOE. All

submissions should refer to the file

number (SR–CBOE–98–12) and should

be submitted by June 18, 1998.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds that the

CBOE’s proposal is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange.

Specifically, the Commission finds that,

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

Act,3 requiring members and those

associated with members to attend

continuing education classes on such

topics as professional conduct and the

operation of new technology will both

promote just and equitable principles of

trade and benefit investors. Moreover,

the Commission finds that mandating

continuing education training for

members and persons associated with

members is consistent with the

provisions of Section 6(c)(3)(B) of the

Act, which makes it the responsibility of

an exchange to prescribe standards of

training, experience, and competence

for persons associated with selfregulatory organization members.

The Commission therefor finds good

cause for approving the proposed rule

change prior to the thirtieth day after

date of publication of notice of filing

thereof in the Federal Register.4

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,5 that the

proposed rule change (SR–CBOE–98–

12) be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

[FR Doc. 98–14115 Filed 5–27–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40016; File No. SR–CHX–

98–5]

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change by the Chicago Stock

Exchange, Inc. Relating to the

Utilization of Exempt Credit by Market

Makers

May 20, 1998.

I. Introduction

On February 18, 1998, the Chicago

Stock Exchange, Inc. (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

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

rule change pursuant to Section 19(b)(1)

of the Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder.2

In the filing, the CHX proposed

amendments to an interpretation to

Article XXXIV, Rule 16 relating to

registered market makers’ utilization of

exempt credit. Notice of the proposed

rule change was published in the

Federal Register on April 8, 1998.3 The

Commission received no comments on

the proposal.

II. Description of the Proposal

Interpretation .01 to Article XXXIV,

Rule 16 notes that ‘‘[e]xchange members

registered as equity market makers are

members registered as specialists for

purposes of [the Act] and as such they

are entitled to obtain exempt credit for

financing their market maker

transactions.’’ 4 The Interpretation also

sets forth certain parameters that market

makers must satisfy to obtain such

exempt credit. The Interpretation

specifies that 50% of the quarterly share

volume that creates or increases a

position in a market maker account

must result from transactions

consummated on the Exchange or sent

from the Exchange floor for execution in

another market via the Intermarket

Trading System (‘‘ITS’’). The proposed

rule change modifies this Interpretation

by eliminating the reference to ‘‘creating

or increasing a position,’’ thereby

including all transactions consummated