Federal Register / Vol. 60, No. 8 / Thursday, January 12, 1995 / Notices 3013

2Although the CBOE has stated its desire to rely

on section 19(b)(3)(A) of the Act if it should seek

to change the limit, the Commission has requested

that the CBOE provide it with additional

information to justify the appropriateness of such

reliance.

3See Securities Exchange Act Release No. 34947

(November 7, 1994), 59 FR 59262 (File No. SR–

CBOE–94–38), proposing to amend CBOE Rule

15.10(c)(2)(ii)(B). 4 17 CFR 200.30–3)(a)(12) (1993).

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

The purpose of the proposed rule

change is to revise CBOE Rule 8.3(c) to

give the Market Performance Committee

(‘‘MPC’’) authority to designate the

maximum number of trading stations at

which a single market marker’s

appointed classes of options are traded,

and to add Interpretation and Policy .02

to CBOE Rule 8.3 to state that the MPC

has designated such maximum number

as ten trading stations. CBOE Rule 8.3

currently sets a five station upper limit

on the maximum number of trading

stations that may be covered by a single

market maker’s appointment.

In light of the recent and anticipated

increases in both the number of options

classes traded on the Exchange and the

number of trading stations on the floor,

the Exchange has determined that it

needs greater flexibility to increase this

limit from time to time in order to be

able to respond promptly to any need

for greater market maker participation

that may result from such expansion. By

granting authority to fix this number to

the MPC, which already has the

authority to grant exceptions to the

current five-station limit on a case-by

case basis, the Exchange believes it will

have achieved the flexibility it needs.

When and if the MPC changes the limit

from ten stations as it is here proposing,

the new limit will be reflected in a

revision to Interpretation and Policy .02

under the Rule filed under Section

19(b)(3)(A)(i) of the Act as a stated

policy, practice, or interpretation with

respect to the meaning, administration,

or enforcement of Rule 8.3.2

The CBOE believes that the proposed

increase in the current limit under Rule

8.3(c) from five to ten stations reflects

that, in light of the expansion of the

number of options classes traded in

CBOE’s marketplace and in the number

of stations at which options are traded,

a five-station limit is unduly restrictive

and places CBOE’s market makers at a

competitive disadvantage in relation to

options market makers on other

exchanges. Currently, the five-station

maximum limits an individual market

maker’s affirmative market making

obligations to, at most, slightly more

than 9% of the trading stations on the

floor, or less than 25% of all CBOE

classes. To assure adequate market

maker coverage of all classes traded on

the CBOE, enlargement of the current

five station limit to ten stations is

needed.

In addition, CBOE believes that the

importance of maintaining

comparability among exchanges

regarding the percentage of the classes

traded in which a market maker may

hold an appointment is not limited to

general reasons of competitive fairness

and equality. Comparability is also

important because under the new short

sale rule applicable to stocks traded in

the Nasdaq market, the exception to the

short sale rule for options market

makers only applies to stocks

underlying options in which the market

maker holds an appointment. So long as

CBOE market makers limited to holding

appointments in less than 25% of the

classes traded on the Exchange, CBOE’s

market makers will be at a competitive

disadvantage in respect of their ability

to hedge their options positions

pursuant to the market maker

exemption from the NASD short sale

rule. CBOE recently filed a proposed

rule change that would amend its Rule

15.10 by eliminating the provision that

restricts the market maker exemption to

Nasdaq National Market securities

underlying options traded at no more

than three stations. Instead, the market

maker exemption would be available for

all options classes to which a market

maker holds an appointment.3

The proposed amendment is intended

to enhance the ability of the Exchange

to provide fair and orderly markets in

options and to provide for competitive

equality among exchanges, and

therefore the Exchange believes that its

proposal is consistent with the

promotion of just and equitable

principles of trade and the protection of

investors and the public interest as

required by Section 6(b)(5) of the Act.

(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

Written comments on the proposed

rule change were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

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 such 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, NW.,

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

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to File No. SR–CBOE–94–44 and

should be submitted by February 2,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–717 Filed 1–11–95; 8:45 am]

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