[Federal Register: September 20, 1999 (Volume 64, Number 181)] [Notices] [Page 50847-50848] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr20se99-109] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-41854; File No. SR-CBOE-99-50] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Inc. To Increase the Size of Orders Eligible for Automatic Execution for Certain Classes of Options September 10, 1999. 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 August 31, 1999, 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 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. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CBOE is proposing to increase the size limit of orders in certain classes of options contracts which are eligible for entry into the CBOE's Retail Automatic Execution System (``RAES'') in order to match the size limits of orders which will be eligible for entry into the automatic execution system of the Philadelphia Stock Exchange (``Phlx''). 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 receive 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 [[Page 50848]] 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 CBOE Rule 6.8(e) generally limits the size of RAES orders to twenty or fewer contracts. On August 31, 1999, options on Oracle Corporation (ORQ), Eastman Kodak Company (EK), EMC Corporation (EMC), Merck & Company, Inc. (MRK), Hewlett Packard Company (HWP), Texas Instruments, Inc. (TXN), and Exxon Corporation (XON) were dually listed on the CBOE and the Phlx. Before August 31, each of these option classes was listed solely on the CBOE. The Phlx has announced that the automatic execution size limit for each of these seven option classes is 50 contracts pursuant to Phlx Rule 1080(c). Therefore, pursuant to CBOE Rule 6.8 and Interpretation and Policy .01, the CBOE proposes to increase the RAES eligible order size limit in ORQ, EK, EMC, MRK, HWP, TXN, and XON to 50 contracts, to match the eligible order size on the automatic execution system of the Phlx, effective August 31, 1999.\3\ --------------------------------------------------------------------------- \3\ Subsequently, the Commission approved a proposed rule filing by the CBOE to increase the size limit of RAES orders in most options classes to 50 contracts. See Securities Exchange Act Release No. 41821 (September 1, 1999) (SR-CBOE-99-17). --------------------------------------------------------------------------- The Exchange represents that RAES has the capacity to accommodate at RAES order limit size of up 50 contracts in ORQ, EK, EMC, MRK, HWP, TXN, and XON, both in terms of systems capacity as well as the market- making capacity of market-makes participating in RAES. 2. Statutory Basis The exchange believes that the proposed rule change is consistent with Section 6(b) of the Act in general, and furthers the objectives of sections 6(b)(5) and 6(b)(8) of the Act in particular, in that it is designed to remove unnecessary burdens on competition, as well as remove impediments to and perfect the mechanism of a free and open market and a national market system, for the benefit of 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. 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 Because the foregoing rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the Exchange, it has become effective pursuant to Section (19)(b)(3)(A)(i) of the Act and subparagraph (f)(1) of Rule 19b-4 thereunder. 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. IV. 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, N.W., Washington, D.C. 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 in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. All submissions should refer to File No. SR-CBOE-99-50 and should be submitted October 12, 1999. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\4\ --------------------------------------------------------------------------- \4\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-24357 Filed 9-17-99; 8:45 am] BILLING CODE 8010-01-M