9702 Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / Notices

Accordingly, the Commission has

determined that, pursuant to 10 CFR

50.12(a), an exemption is authorized by

law, will not endanger life or property

or common defense and security, and is,

otherwise, in the public interest.

Therefore, the Commission hereby

grants an exemption from the

requirements of 10 CFR 50.60 such that

in determining the setpoint for LTOP

events, the appendix G curves for P/T

limits are not exceeded by more than 10

percent in order to be in compliance

with these regulations. This exemption

is applicable only to LTOP conditions

during normal operation.

Pursuant to 10 CFR 51.32, the

Commission has determined that the

granting of this exemption will not have

a significant effect on the quality of the

human environment (60 FR 7804).

This exemption is effective upon

issuance.

Dated at Rockville, Maryland, this 13th day

of February 1995.

For the Nuclear Regulatory Commission.

Steven A. Varga,

Director, Division of Reactor Projects—I/II

Office of Nuclear Reaction Regulation.

[FR Doc. 95–4170 Filed 2–17–95; 8:45 am]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–35369; File No. SR–CBOE–

95–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Changes by

the Chicago Board Options Exchange,

Incorporated, Amending Its Rules

Relating to Certain Procedures

Regarding Trading Rotations and

Opening Procedures

February 14, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on January 18, 1995,

the Chicago Board Options Exchange,

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

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule changes as described in

Items I, II, and III below, which Items

have been prepared by the Exchange.

The Commission is publishing this

notice to solicit comments on the

proposed rule changes from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Changes

The Chicago Board Options Exchange,

Incorporated (‘‘CBOE’’ or the

‘‘Exchange’’) proposes to amend its

rules relating to certain procedures

regarding trading rotations and opening

procedures. These amendments would:

(i) Amend Rule 6.2; (ii) amend

Interpretations .02 and .03 to Rule 6.2;

(iii) add an Interpretation to Rule 6.2;

(iv) amend Rule 24.13; and (v) amend

Interpretation .03 to Rule 24.13.

The text of the proposed rule changes

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

Changes

In its filing with the Commission,

CBOE included statements concerning

the purpose of and the basis for the

proposed rule changes and discussed

any comments it received on the

proposed rule changes. 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 parts of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Changes

The purpose of the proposed rule

changes is first to grant two Floor

Officials the authority to call for a

trading rotation and to delay the

commencement of an opening rotation if

the Floor Officials believe this will aid

in producing a fair and orderly market.

The rule changes further allow the

Order Book Official to deviate from the

rotation order and manner which the

Floor Procedures Committee may have

established, as long as two Floor

Officials first approve such a deviation.

If the appropriate Floor Procedures

Committee has not established the

rotation order and manner for the

options under its purview in a

particular situation, then the Order

Book Official may determine the order

and manner of the rotation.

Trading Rotations

Specifically, the proposal would

amend Rule 6.2 to grant two Floor

Officials discretion to direct that one or

more trading rotations be employed on

any business day. Presently, pursuant to

Rule 6.2, only the Floor Procedures

Committee has this discretion.

Consequently, if circumstances arose

during the day that made an additional

rotation appropriate, such as either a

rotation following a trading halt or a

closing rotation, then the Floor

Procedures Committee would have to

assemble to make the decision to

employ a rotation. CBOE believes it is

impractical to assemble the entire Floor

Procedures Committee for such an intraday decision. Furthermore, under Rule

6.6(b)(iii), two Floor Officials already

have the discretion to direct that one or

more trading rotations be employed on

any business day, but only when a fast

market has been declared. CBOE

believes that this discretion should not

be limited only to fast market

conditions. By amending Rule 6.2, two

Floor Officials would have the

discretion to direct that one or more

trading rotations be employed, and this

discretion would not be limited to a fast

market situation.

The proposed rule would further

amend Rule 6.2 to grant Order Book

Officials more discretion regarding the

rotation order and manner. This

discretion may be exercised before the

rotation begins as well as during a

rotation. Presently Rule 6.2 provides

that the Floor Procedures Committee

shall specify both the particular option

contracts to be included in each rotation

and the sequence of such option

contracts in that rotation. Under the

proposed amendment to Rule 6.2, the

‘‘appropriate’’ Floor Procedures

Committee, meaning the Floor

Procedures Committee that makes

policy regarding the particular class of

options in question, would still have

authority to set policy regarding the

rotation order and manner. However, if

the appropriate Floor Procedures

Committee has not acted to establish

any policy applicable to a particular

situation, then the Order Book Official

would be authorized to determine the

appropriate order and manner for

conducting the rotation. CBOE believes

that the proposed amended Rule 6.2

would allow Order Book Officials to

respond to particular circumstances the

Floor Procedures Committee has not

considered and to conduct the rotation

as is appropriate under those

circumstances.

In addition, pursuant to amended

Rule 6.2, the Order Book Official, with

the approval of two Floor Officials,

would be permitted to deviate from a

rotation policy or procedure previously

established by the appropriate Floor

Procedures Committee. In certain

circumstances, it may be appropriate to

deviate from the established procedure,

but, as stated above, it would be

impractical to assemble the Floor

Procedures Committee for an intra-day

decision allowing such a deviation.

Instead of assembling the entire

committee, two Floor Officials could act

for the entire committee and approve or

disapprove an Order Book Official’s
Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / Notices 9703

1CBOE believes that a system malfunction or a

major announcement in the markets late in the

trading days, among other things, may require a

closing rotation for expiring series of index options

in order to accommodate any order flow problems

resulting from such occurrences. Telephone

conversation between Edward Joyce, CBOE,

Michael Meyer, Attorney, Schiff, Hardin, and

Waite, Michael Walinskas, Branch Chief, Office of

Market Supervision (‘‘OMS’’), Division of Market

Regulation (‘‘Division’’), Commission, and John

Ayanian, Attorney, OMS, Division, Commission, on

Monday, February 13, 1995.

proposed deviation from the previously

established rotation policy or procedure.

Presently, pursuant to Interpretation

.01(b) to Rule 6.2, with the approval of

two Floor Officials or the Floor

Procedures Committee, the opening

rotation may be conducted in a manner

other than that set forth in Interpretation

.01(b). Therefore, the proposed

amendment would extend this existing

policy to all rotations. The proposal

would further amend Rule 6.2 so that

the Order Book Official, rather than the

committee, may prescribe that two or

more trading rotations be employed

simultaneously. CBOE believes that it

would be impractical to assemble the

Floor Procedures Committee for an

intra-day decision regarding

simultaneous trading rotations.

The proposal would further add

Interpretation .04 to Rule 6.2 to specify

that the decision to conduct an

abbreviated rotation is one of the

deviations from rotation policy or

procedure and one of the modifications

of rotation order and manner that is

permitted under the amended rule. This

change provides only an example of a

type of rotation modifications or

deviations that may be employed.

The proposal would further amend

Rule 6.2 to give two Floor Officials the

discretion to delay commencement of

the opening rotation in any class of

options in the interests of a fair and

orderly market. It is CBOE’s practice to

allow Floor Officials to delay an

opening, but no rule explicitly states

this practice. CBOE believes that the

rules should grant Floor Officials the

power to react to market conditions and

circumstances by delaying an opening

rotation when it is in the interests of a

fair and orderly market to do so, for the

same reasons that the rules need to grant

Floor Officials authority to modify the

rotation order or manner. As explained

above, pursuant to Interpretation .01(b)

to Rule 6.2, two Floor Officials now

have the authority to conduct the

rotation in a manner other than that set

forth in the Rule, but the Rule does not

expressly state that the Floor Officials

also may delay the opening rotation.

Interpretation .02 to Rule 6.2 lists

reasons why it is permissible to conduct

a rotation after the end of normal

trading hours. CBOE believes that the

proposed amendment to Interpretation

.02 would clarify both that the reasons

listed are not the exclusive reasons why

a trading rotation may be employed after

the close and that two Floor Officials

have the discretion to conduct a rotation

after the close for a number of reasons.

The proposed amendment also would

permit the commencement of more than

one trading rotation after 3:10 p.m.

(central time), but would make it clear

that, in general, no more than one

trading rotation will be commenced

after 3:10 p.m. (central time). Again,

CBOE believes that it is in the interests

of a fair and orderly market to allow two

Floor Officials to exercise their

judgment in response to market

conditions or circumstances and that

not all of these conditions or

circumstances can be enumerated in

advance. Nonetheless, the proposal

would amend Interpretation .02 to state

the current practice of employing a

trading rotation after the end of normal

trading hours if it is in connection with

a year-end rotation or due to the restart

of a rotation which is already in

progress. In these circumstances, CBOE

believes it may be necessary to continue

the rotation after the normal close of

trading in order to complete the

rotation.

Index Options Trading Rotations

Presently, Interpretation .03 to Rule

6.2 provides that ‘‘a closing rotation for

an expiring series of index options shall

not be employed.’’ (Emphasis added).

This limitation is not in Interpretation

.02 to Rule 6.2 as it is presently written

or in the proposed amendment to

Interpretation .02. Although closing

rotations are not ordinarily employed in

expiring series of index options, CBOE

believes it is inappropriate to absolutely

prohibit closing rotations for such

series. CBOE believes the use of the

word ‘‘shall’’ could be interpreted to

prohibit closing rotations for expiring

series of index options in all

circumstances. CBOE, therefore,

proposes to amend the interpretation to

state that a closing rotation for such

expiring series is not ordinarily

employed. CBOE believes the proposed

amendment to Interpretation .03 is

necessary to clarify that, unlike the case

with equity options, closing rotations

are not ordinarily conducted in expiring

series of index options, but that such

closing rotations are not absolutely

prohibited.1 In addition, Interpretation

.03 to rule 6.2 would be amended to

give two Floor Officials the ability to

deviate from the procedures for closing

rotations if they determine such

deviation is in the interests of a fair and

orderly market. Again, CBOE believes

that it is in the interests of a fair and

orderly market to allow two Floor

Officials to exercise their judgment in

response to market conditions or

circumstances.

Consistent with the above changes to

Rule 6.2 regarding the order and manner

of the rotation, the proposal would

amend Rule 24.13 to give the Order

Book Official the same discretion to

determine the appropriate order and

manner for conducting the rotation for

index options when the appropriate

Floor Procedures Committees not acted

to establish a policy applicable to a

particular situation. Just as in amended

Rule 6.2, the Floor Procedures

Committee that make policy for index

options would have the authority to set

policy regarding the order and manner

of the opening rotation. However, if a

Floor Procedures Committee has not

acted to establish a policy applicable to

a particular situation, then the Order

Book Official would be permitted to

determine the appropriate order and

manner for conducting the opening

rotation.

Consistent with the underlying

reasoning for amended Rule 6.2, Rule

24.13 would also be amended by

deleting the two sentences that provide

that the Order Book Official shall open

the nearest expiration series first and

thereafter shall open the remaining

series in a manner he deems

appropriate. CBOE believes that the

word ‘‘shall’’ could be interpreted as

requiring the Order Book Official to

open with the nearest expiration series

even if a different order would be

appropriate under the circumstances.

Again, just as amended Rule 6.2

provides, the proposal would further

amend Rule 24.13 so that Order Book

Officials could deviate from the

appropriate Floor Procedures

Committee’s established procedure

regarding the order and manner of the

opening rotation so long as two Floor

Officials approved such deviation.

CBOE believes that it would be

impractical to assemble a Floor

Procedures Committee for an intra-day

decision allowing a deviation from

establish opening rotation policy or

procedure. CBOE proposes to allow two

Floor Officials to act for the entire

committee and approve or disapprove of

such deviation.

Presently, under Interpretation .03 to

Rule 24.13, two Floor Officials may

delay the commencement of the opening

rotation in an index option for one or

more five (5) minute intervals under

certain specified unusual market

conditions. The proposal would amend
9704 Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / Notices

2 17 CFR 200.30–3(a)(12)(1994).

1 15 U.S.C. 78s(b)(1) (1988).

2See Securities Exchange Act Release No. 33377

(Dec. 23, 1993), 58 FR 69419 (Dec. 30, 1993)

(‘‘Interim SOES Rules Approval Order’’).

3See Securities Exchange Act Release No. 35275

(Jan. 25, 1995), 60 FR 6327 (Feb. 1, 1995) (‘‘Interim

SOES Rules Extension Order’’).

Interpretation .03 to Rule 24.13 to delete

the requirement that any delays in the

opening rotation must be in five (5)

minute intervals and to give two Floor

Officials greater discretion to delay the

commencement of the opening rotation.

Rather than limiting the circumstances

under which two Floor Officials may

delay the opening, amended

Interpretation .03 would permit Floor

Officials to delay the opening rotation at

their discretion in the interests of a fair

and orderly market. The circumstances

outlined in current Interpretation .03 to

Rule 24.13, under which two Floor

Officials may delay the opening, would

remain as factors that Floor Officials

may consider in deciding whether to

delay the opening rotation. CBOE

believes that these amendments to

Interpretation .03 are consistent with

the amendment proposed for Rule 6.2,

which grants two Floor Officials the

authority to delay the opening rotation

in any class of options in the interests

of a fair and orderly market. Current

Interpretation .01 to Rule 24.13 provides

that the procedures for modification of

a rotation and other aspects of the

rotation set forth in Rule 6.2 are

applicable to index options. CBOE

believes that the authority regarding

delays in opening contained in Rule 6.2

should therefore apply to index options,

so that Floor Officials’ discretion to

delay the opening is not more restricted

in the case of index options.

The present requirement that the

delay in the opening rotation for index

options may only be in five (5) minute

intervals would be deleted because

CBOE believes the interests of a fair and

orderly market are better served if the

Floor Officials may end the delay and

commence the opening when it is

appropriate to do so, without having to

wait until the prescribed five minutes

has lapsed. In addition, CBOE believes

that for lengthy delays, it is impractical

to require two Floor Officials to remain

at the index options post for the sole

purpose of declaring successive five

minute delays.

Conclusion

The proposed rule changes are

intended to give Order Book Officials,

with the approval of two Floor Officials,

the discretion to conduct a trading

rotation during the day and to structure

the order and manner of the rotation as

they consider appropriate under the

circumstances. The rule changes would

further allow any two Floor Officials to

delay the opening rotation if it is in the

interests of a fair and orderly market to

do so. CBOE believes that the proposed

rule changes are consistent with and

further the objectives of section 6(b)(5)

of the Act, in that the rule changes are

designed to perfect the mechanism of

free and open market and to protect

investors and the public interest by

enabling Floor Officials and Order Book

Officials to evaluate and consider

market conditions and circumstances in

determining the appropriate order and

manner of the rotation and whether to

delay the opening rotation.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

CBOE does not believe that the

proposed rule changes will impose any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Changes Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule changes.

III. Date of Effectiveness of the

Proposed Rule Changes 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 funding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

(A) By order approve such proposed

rule changes, or

(B) institute proceedings to determine

whether the proposed rule changes

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, DC 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

changes that are filed with the

Commission, and all written

communications relating to the

proposed rule changes 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 NW.,

Washington, DC 20549. 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–95–

04 and should be submitted by March

14, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.2

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4161 Filed 2–17–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35364; File No. SR–NASD–

95–8]

Self-Regulatory Organizations; Notice

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc., Relating to a Six Month

Extension of the SOES Minimum

Exposure Limit Rule and the SOES

Automated Quotation Update Feature

February 13, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

February 10, 1995, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) filed with

the Securities and Exchange

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

the proposed rule change as described

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

have been prepared by the NASD. The

Commission in 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 NASD proposed to extend, until

October 2, 1995, the effectiveness of

certain rules governing the operation of

The Nasdaq Stock Market, Inc.’s

(‘‘Nasdaq’’) Small Order Execution

System (‘‘SOES’’). Specifically, these

SOES rules, which were previously

approved by the Commission on a pilot

basis on December 23, 1993 2 and

recently extended through March 27,

1995,3 provide for: (1) a reduction in the

minimum exposure limit for

unpreferenced SOES orders from five

times the maximum order size to two

times the maximum order size, and for

the elimination of exposure limits for

preferenced orders (‘‘SOES Minimum