Federal Register / Vol. 60, No. 13 / Friday, January 20, 1995 / Notices 4209

2CBOE is the DEA for Gill and Co. which is not

a member of the NASD or the New York Stock

Exchange, both of which have comprehensive short

stock reporting rules. Gill and Co. clears stock

transactions at the Midwest Clearing Corporation.

member is not otherwise required to

report its short stock positions to either

the National Association of Securities

Dealers, Inc. (the ‘‘NASD’’) or to a stock

exchange as a result of being a member

of such organization. The short stock

positions would be required to be

furnished to either a stock exchange or

to the NASD, as the Exchange may

designate. The form, manner, and time

of such report shall be specified by the

appropriate exchange or the NASD.

The text of the proposed rule change

is available at he Office of the Secretary,

CBOE and at 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

self-regulatory organization 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 self-regulatory organization 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 purpose of the proposed rule

change is to assure that all brokerdealers who clear stock report their

short stock positions to the appropriate

regulatory authority, whether it be the

NASD or an exchange on which the

security is listed or of which the brokerdealer is a member. Reports of short

stock interest are an important tool of

regulators in monitoring activity in

stocks and in detecting possible cases of

insider trading or manipulation.

Further, some members’ customers use

the publicly reported short interest

information when making investment

decisions.

Although the CBOE does not list or

trade stock, it is the DEA for at least one

member who clears stock transactions.

Under current rules of the other self

regulatory organizations, the member is

not required to report its short stock

positions.2 Consequently, in an effort to

assure that no broker-dealer can avoid

the responsibility to report short stock

interest, the CBOE is adding

interpretation .02 to its Rule 15.1,

Maintenance, Retention and Furnishing

of Books, Records and Other

Information. This interpretation would

require members for which the CBOE is

the DEA to report short stock positions

to either a stock exchange or to the

NASD, as the CBOE may designate. The

specifics of the reporting would be

dictated by the entity to which the

report would be sent. Because the CBOE

does not have as great an interest in

reviewing the short stock data as the

exchange on which the stock is listed

and because there is currently only one

member who would be required to

report its short stock positions under

this interpretation, the CBOE believes it

is more practical to have another self

regulatory organization receive the short

interest report.

The CBOE will enter into an

agreement with any self regulatory

organization that is to receive a short

interest report of our member,

specifying that entity’s agreement to

receive this report. That organization

will then use the data, along with the

short interest data it receives from its

members, for appropriate regulatory

purposes.

2. Statutory Basis

The CBOE believes that the proposed

rule change is consistent with Section 6

of the Act in general and Section 6(b)(5)

in particular in that it is designed to

prevent fraudulent and manipulative

acts and practices, to promote fair and

equitable principles of trade, and, in

general, to protect investors and the

public interest. The proposed rule

change provides for the public

disclosure and dissemination of short

interest data which is not currently

disclosed, thereby augmenting market

transparency for the subject securities

and enabling investors to make more

informed investment decisions. As

mentioned above, the proposed rule also

assists regulatory efforts in discovering

manipulation.

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.

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. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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.

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, 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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–94–

55 and should be submitted by February

10, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–1494 Filed 1–19–95; 8:45 am]

BILLING CODE 8010–01–M