[Federal Register Volume 63, Number 114 (Monday, June 15, 1998)]
[Notices]
[Page 32688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15780]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40075; File No. SR-CBOE-98-07]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Chicago Board Options Exchange, Incorporated Relating to 
the Committee Responsible for Governing RAES Participation in SPX

June 4, 1998.
    On February 20, 1998, the Chicago Board Options Exchange, 
Incorporated (``CBOE'' of the ``Exchange'') filed with Securities and 
Exchange Commission (``Commission'') the proposed rule change pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ to change the Committee 
responsible for governing RAES eligibility in options on the Standard & 
Poor's 500 Index (``SPX'') from the appropriate Floor Procedure 
Committee to the appropriate Market Performance Committee. CBOE filed 
an amendment on April 15, 1998, requesting that the filing be handled 
as a regular way filing under Section 19(b)(2) of the Act.\3\ The 
Commission published notice of the proposed rule change in the Federal 
Register on April 30, 1998.\4\ No comment letters were received. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4
    \3\ See, letter from Timothy H. Thompson, Director, Regulatory 
Affairs, Legal Department, CBOE to Victoria Berberi-Doumar, Special 
Counsel, Division of Market Regulation, SEC, dated April 15, 1998.
    \4\ Securities Exchange Act Release No. 39911 (April 24, 1998), 
63 FR 23820 (April 30, 1998).
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I. Description of the Proposal

    The Exchange proposes to change the Committee responsible for 
governing RAES eligibility in options on the SPX from the appropriate 
Floor Procedure Committee to the appropriate Market Performance 
Committee. Currently, SPX is the only options class in which the issues 
concerning the eligibility of market-makers to participate in RAES is 
governed by a Floor Procedure Committee instead of by a Market 
Performance Committee. Rule 8.16 (in the case of option classes other 
than OEX \5\, SPX, and DJC \6\) and Rule 24.17 (in the case of OEX and 
DJX option classes) provide that the appropriate Market Performance 
Committee will govern the RAES market-maker eligibility issues. This 
change, therefore, will make the regulation of SPX RAES eligibility 
consistent with that of the other option classes traded on the 
Exchange. The governance of eligibility issues for SPX RAES will 
initially be delegated to the newly formed Index Market Performance 
Committee.
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    \5\ OEX stands for options on the Standard & Poor's 100 Index.
    \6\ DJX stands for options on the Dow Jones Industrial Average.
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    As with the other options classes, the Index Market Performance 
Committee will have authority to exempt market-makers the requirement 
that the market-maker be present in the crowd to log onto or remain on 
RAES (Rule 24.16(a)(iii), the requirement that the market-maker must 
log onto RAES at any time during an expiration month when he is present 
in the crowd and when he has logged on previously during that 
expiration month (Rule 24.16(d)), certain requirements concerning the 
participation of joint accounts (Rule 24.16(c)), and certain 
requirements concerning the participation of member organizations with 
multiple nominees (Rule 24.16(d)). The Index Market Performance 
Committee will also take over the broader authority of the SPX Floor 
Procedure Committee to set the maximum number of RAES participants in 
RAES groups, to disallow the participation of certain RAES groups (Rule 
24.16(e)), to require market-makers of the trading crowd to log onto 
RAES if there is inadequate participation (Rule 24.16(f)), and to take 
other remedial action as appropriate (Rule 24.16(g)).

II. 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, the requirements of Sections 6(b)(5) \7\ of the Act in that 
it is designed to prevent fraudulent and manipulative acts and 
practices and to promote just and equitable principles of trade, and to 
remove impediments to and protect the mechanism of a free and open 
market.\8\
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    \7\ 15 U.S.C. 78f(b)(5).
    \8\ In approving this rule, the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation, 15 U.S.C. 78c(f).
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    Specifically, the Commission believes that changing the Committee 
that oversees the eligibility of market makers to participate in RAES 
for the trading of SPX will ensure that the regulation of SPX RAES 
eligibility will be consistent with that of the other options classes 
traded on the Exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\9\ that the proposed rule change SR-CBOE-98-07) is approved.

    \9\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 98-15780 Filed 6-12-98; 8:45 am]
BILLING CODE 8010-01-M