regulatory organizations; proposed rule changes: Chicago Board Options Exchange, Inc.,

[Federal Register: February 4, 2002 (Volume 67, Number 23)]

[Notices]

[Page 5137-5138]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr04fe02-76]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45336; File No. SR-CBOE-2002-04]

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Inc. To Extend Its Participation in the Interim Intermarket Linkage Program

January 25, 2002.

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 January 17, 2002, the Chicago Board Options Exchange, Inc. (``CBOE'' or ``Exchange'') filedwith the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the CBOE. The Exchange filedthe proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

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

\2\ 17 CFR 240.19b-4.

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

\4\ 17 CFR 240.19b-4(f)(6). The CBOE requested that the Commission waive the rule's requirements of a 30-day operative delay and a five-day pre-filing notice.

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   The CBOE proposes to extend its participation in the interim intermarket linkage program to the earlier of January 31, 2003, or the complete implementation of the permanent intermarket linkage in the options market.\5\

   \5\ The Commission approved the Plan for the Purpose of Creating and Operating an Intermarket Options Linkage (``Linkage Plan'') in July 2000. See Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000).

2. 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 parts of such statements.

   1. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

      1. Purpose

      On January 30, 2001, the Commission approved a rule change by the CBOE proposing to implement certain aspects of an intermarket options linkage on an interim basis.\6\ The interim linkage was approved on a pilot basis until January 31, 2002. The Exchange now seeks to extend the interim linkage pilot until the earlier of: (a) January 31, 2003; or (b) the implementation of the ``full'' options linkage contemplated by the Linkage Plan.

      \6\ See Securities Exchange Act Release No. 43904 (January 30, 2001), 66 FR 9112 (February 6, 2001) (File No. SR-CBOE-00-58).

      As the CBOE and the other options exchanges continue to work towards the full implementation of the Linkage Plan, the Exchange believes it would be beneficial to continue to operate the interim linkage. The CBOE notes that the interim linkage uses existing market infrastructure to route orders between market makers on the participating

      [[Page 5138]]

      exchanges. Thus, the CBOE believes continuing the operation of the interim linkage would have no adverse effect on the implementation progress of the full linkage. Moreover, the CBOE believes the full benefits of the interim linkage are yet to be fully realized because only recently have all of the options exchanges begun participating in the interim linkage. The CBOE believes that as the list of option classes trading under the interim linkage program expands, the program will benefit a greater number of investors until the implementation of the full linkage. 2. Statutory Basis

      The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act,\7\ in general, and furthers the objectives of Section 6(b)(5),\8\ in particular, because it should promote just and equitable principles of trade, serve to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest.

      \7\ 15 U.S.C. 78f(b).

      \8\ 15 U.S.C. 78f(b)(5).

   2. 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.

   3. 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.

3. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

   Because the foregoing proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest; provided that the self-regulatory organization has 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 days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder.

   \9\ 15 U.S.C. 78s(b)(3)(A).

   \10\ 17 CFR 240.19b-4(f)(6).

   A proposed rule change filedunder Rule 19b-4(f)(6) \11\ does not become operative prior to 30 days after the date of filing or such shorter time as the Commission may designate if such action is consistent with the protection of investors and the public interest. The CBOE has requested, in order to permit the uninterrupted operation of the interim linkage, that the Commission accelerate the implementation of the proposed rule change so that it may take effect prior to the 30 days specified in Rule 19b-4(f)(6)(iii).\12\ The Commission finds that the proposed rule change is consistent with the protection of investors and the public interest and, therefore, has determined to make the proposed rule change operative as of the date of this notice.

   \11\ 17 CFR 240.19b-4(f)(6).

   \12\ 17 CFR 240.19b-4(f)(6)(iii).

   A proposed rule change filedunder Rule 19b-4(f)(6) \13\ normally requires that a self-regulatory organization give the Commission 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 filing of the proposed rule change. However, Rule 19b-4(6)(iii) \14\ permits the Commission to designate a shorter time. The CBOE seeks to have the five-business-day pre-filing requirement waived with respect to the proposed rule change. The Commission has determined to waive the five-business-day pre-filing requirement.

   \13\ 17 CFR 240.19b-4(f)(6).

   \14\ 17 CFR 240.19b-4(f)(6)(iii).

   At any time within 60 days of the filing of the 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.

4. Solicitation of Comments

   Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change 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 filedwith 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 Room. 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 Number SR-CBOE-2002-04 and should be submitted by February 25, 2002.

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\15\

   \15\ 17 CFR 200.30-3(a)(12).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 02-2557Filed2-1-02; 8:45 am]

   BILLING CODE 8010-01-P