Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices 33589

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

2 17 CFR 240.19b–4.

3 17 CFR 240.19b–4(f)(6).

4QQQ options are options overlying the Nasdaq100 Index Tracking Stock, an exchange-traded fund

designed to track the performance of the Nasdaq100 Index. The CBOE has determined to treat

options on exchange-traded fund shares like index

options and to generally apply to exchange-traded

fund shares the same rules that are applicable to

index options.

5The Commission approved the Circular on

September 10, 1992. See Securities Exchange Act

Release No. 31174 (September 10, 1992), 57 FR

42789 (September 16, 1992) (order approving File

No. SR–CBOE–91–40). The CBOE updated the

Circular to allow more than one SPX participant to

participate on a trade on behalf of the joint account.

See Securities Exchange Act Release No. 35579

(April 7, 1995), 60 FR 18867 (April 13, 1995) (notice

of filing and immediate effectiveness of File No.

SR–CBOE–95–17). In addition, the CBOE updated

the Circular to apply the terms of the Circular to

trading in DJX options. See Securities Exchange Act

Release No. 39092 (September 18, 1997), 62 FR

50412 (September 25, 1997) (notice of filing and

immediate effectiveness of File No. SR–CBOE–97–

44). The CBOE also updated the Circular to allow

certain transactions between joint accounts that

have common participants. See Securities Exchange

Act Release No. 44152 (April 5, 2001), 66 FR 19262

(April 13, 2001) (order approving File No. SR–

CBOE–00–13).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44433; File No. SR–CBOE–

2001–30]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange,

Inc., Relating to Joint Account Trading

in Certain Broad-Based Index Options

and Options on Exchange-Traded

Fund Shares

June 15, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on May 30,

2001, he Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the CBOE. The

proposed rule change has been filed by

the CBOE as a ‘‘non-controversial’’ rule

change under Rule 19b–4(f)(6) of the

Act.3 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 CBOE’s OEX/SPX/DJX Joint

Account Circular (‘‘Circular’’) currently

applies to the trading activities of joint

account participants in Standard &

Poor’s (‘‘S&P’’) 100 Index options

(‘‘OEX’’), S&P 500 Index options

(‘‘SPX’’), and Dow Jones Industrial

Average options (‘‘DJX’’). The CBOE

proposes to amend the Circular to apply

its terms to trading in options on the

Mini-NDX Index (‘‘MNXSM’’), the

Nasdaq-100 Index (‘‘NDX’’), and the

Nasdaq-100 Tracking Stock (‘‘QQQ’’).4

The text of the proposed rule change

is available at the 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

CBOE 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 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

The Circular currently applies to the

trading activities of joint account

participants in OEX, SPX, and DJX

options. The CBOE proposes to apply

the terms of the Circular to trading in

certain additional broad-based index

options and options on exchange-traded

fund shares.5 Specifically, the CBOE

proposes to amend the Circular to apply

its terms to trading in MNX, NDX, and

QQQ options. The CBOE does not

propose to modify any of the joint

account trading policies or procedures

set forth in the Circular.

The Circular provides that joint

accounts may be represented in the

crowd by participants trading in-person

for he joint account. In addition, the

Circular provides that joint account

participants who are not trading inperson in the crowd may enter orders

for the joint account with floor brokers

even if other participants are trading the

same joint account in-person. The joint

account circular applicable to equity

options does not allow a joint account

participant to enter orders while another

joint account participant is trading inperson on behalf of the joint account.

The Exchange believes the OEX/SPX/

DJX model is more appropriate for

MNX, NDX, and QQQ options because

these trading crowds are comparable in

size to the OEX, SPX, and DJX trading

crowds.

The Exchange believes that options on

exchange-traded fund shares derived

from broad-based indexes, such as the

QQQ options, share trading

characteristics similar to the trading

characteristics of broad-based index

options. Accordingly, the CBOE believes

that the same rules should apply to

options on exchange-traded fund shares

derived from broad-based indexes. The

CBOE states that QQQ options can be

used as a hedge against broad-based

index options such as MNX and NDX

because the QQQ contract derives its

value from the Nasdaq-100 Index.

According to the CBOE, joint account

participants who trade MNX, NDX, and

other broad-based index options may

want to place hedging trades in QQQ

options into their joint accounts. For

these reasons, the Exchange believes the

joint account trading procedures in the

Circular should also apply to joint

account trading in QQQ options.

The Exchange believes that applying

the terms of Circular to MNX, NDX, and

QQQ options will inform the CBOE’s

members that the existing Exchange

policies and procedures regarding

permissible joint account trading in

OEX, SPX, and DJX Index options will

now apply also to trading in MNX,

NDX, and QQQ options. The Circular

profits market-makers from trading with

their joint account and prohibits trades

in which the buyer and seller represent

the same joint account and are on

opposite sides of the transaction. The

CBOE’s Department of Market

Regulation will conduct surveillance of

joint account trading in MNX, NDX, and

QQQ options by applying existing

surveillance procedures that are

designed to detect and deter abusive

trading by joint account participants.

The CBOE believes that the proposed

rule change is consistent with and

furthers the objectives of Section 6(b)(5)

of the Act in that it is designed to

promote just and equitable principles of

trade, to remove impediments to and

perfect the mechanisms of a free and

open market and a national system and

to protect investors and the public

interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act.

33590 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4(f)(6).

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 17 CFR 240.19b–4(f)(6).

4See Securities Exchange Act Release No. 37693

(September 17, 1996), 61 FR 50362 (September 25,

1996) (order approving File No. SR–CBOE–96–43).

5See Securities Exchange Act Release No. 37696

(September 17, 1996), 61 FR 50358 (September 25,

1996) (order approving File No. SR–CBOE–96–44)

(‘‘Sub-Index Order’’). The six Sub-Indexes include:

the GSTI Hardware Index, the GSTI Internet Index,

the GSTI Semiconductor Index, the GSTI Software

Index, the GSTI Services Index, and the GSTI

Multimedia Networking Index.

(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

The CBOE has filed the proposed rule

change as a ‘‘non-controversial’’ rule

change pursuant to Section 19(b)(3)(A)

of the Act 6 and subparagraph (f)(6) of

Rule 19b–4 thereunder.7 Because the

foregoing proposed rule change: (1)

Does not significantly affect the

protection of investors or the public

interest; (2) does not impose any

significant burden on competition; and

(3) by its terms, does not become

operative for 30 days after the date of

the filing, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act and Rule 19b–4(f)(6). The CBOE

also provided the Commission with

written notice of its intent to file the

proposed rule change, along with a brief

description and text of the proposed

rule change, at least five business days

prior to the date of the filling of the

proposed rule change. At any time

within 60 days of the filing of such

proposed rule change, the Commission

may summarily abrogate such rule

change if it appears to the Commission

that such action is necessary or

appropriate in the public interest, for

the protection of investors, or otherwise

in furtherance of the purposes of the

Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether it 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–

0609. 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. 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–2001–30 and should

be submitted by July 13, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Marget H. McFarland,

Deputy Secretary.

[FR Doc. 01–15679 Filed 6–21–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44435; File No. SR–CBOE–

2001–34]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange,

Inc., Relating to the Goldman, Sachs

Technology Composite Index (‘‘GSTI’’)

and the GSTI Sub-Indexes

June 15, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on June 14,

2001, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the CBOE. The

proposed rule change has been filed by

the CBOE as a ‘‘non-controversial’’ rule

change under Rule 19b–4(f)(6) of the

Act.3 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 CBOE currently lists and trades

European-style, cash-settled options on

the Goldman Sachs Technology

Composite Index (‘‘GSTI Composite

Index’’ or ‘‘Index’’) 4 and on six GSTI

Sub-indexes (‘‘Sub-Indexes’’).5 Pursuant

to determinations by Goldman, Sachs &

Co. (‘‘Goldman Sachs’’), the CBOE

proposes to: (1) Revise the guidelines

governing the selection of stocks in the

GSTI Composite Index to allow

Goldman Sachs to exclude from the

GSTI Composite Index companies that

Goldman Sachs believes are classified

inappropriately as technology

companies despite their Standard

Industrial Classification (‘‘SIC’’)/Russell

code; (2) revise the weighting criteria for

the six Sub-Indexes so that all

components will be subject to a

maximum weight cap of 8.5% of the

total capitalization of any Sub-Index;

and (3) change the dates of the semiannual rebalancing for the GSTI

Composite Index and the six SubIndexes from the third Friday in January

and July of each year to the third Friday

in December and June of each year. The

CBOE seeks continued approval to list

and trade options on the GSTI

Composite Index and on the SubIndexes after the proposed revisions

become effective after the close of

trading on June 15, 2001. In addition,

the CBOE proposes to amend CBOE rule

24.14, ‘‘Disclaimers,’’ to include a

specific reference to Goldman Sachs as

entitled to the benefit of the disclaimer

of liability with respect to the GSTI

Composite Index and the six SubIndexes.

The text of the proposed rule change

is available at the 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

CBOE 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 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 CBOE currently lists and trades

European-style, cash-settled options on