[Federal Register: October 16, 2003 (Volume 68, Number 200)]
[Notices]
[Page 59656-59657]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc03-133]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48609; File No. SR-CBOE-2003-22]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Inc.; Order Approving Proposed Rule Change and Amendment No. 1 and
Notice of Filing and Order Granting Accelerated Approval to Amendment
No. 3 Relating to the Limitation of Liability of the Options Clearing
Corporation to Exchange Members
October 9, 2003.
I. Introduction
On May 22, 2003, the Chicago Board Options Exchange, Inc. (``CBOE''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to add an interpretation to its Rule 6.7. On
August 12, 2003, the Exchange filed Amendment No. 1 to the proposed
rule change.\3\ The proposed rule change, as amended, was published for
comment in the Federal Register on August 19, 2003.\4\ On September 10,
2003, the CBOE submitted Amendment No. 2 to the proposed rule
change.\5\ On October 6, 2003, the CBOE submitted Amendment No. 3 to
the proposed rule change.\6\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from David Doherty, Attorney, Legal Division,
CBOE to Timothy Fox, Attorney, Division of Market Regulation
(``Division''), Commission, dated August 11, 2003 (``Amendment No.
1''). In Amendment No. 1, the CBOE replaced the phrase ``persons
associated therewith'' with the phrase ``associated persons'' in
proposed Interpretation .04 to CBOE Rule 6.7.
\4\ Securities Exchange Act Release No. 48320 (August 12, 2003),
68 FR 49827.
\5\ See letter from David Doherty, Attorney, Legal Division,
CBOE to Timothy Fox, Attorney, Division, Commission, dated September
9, 2003 (``Amendment No. 2''). In Amendment No. 2, the CBOE deleted
the provisions of proposed Interpretation .04 to CBOE Rule 6.7 that
provided that the Options Intermarket Linkage (``Linkage'') is a
facility or service afforded by the Exchange for the purposes of
CBOE Rule 6.7. Further, the CBOE proposed that the Exchange would
have no liability to its members with respect to the use, non-use or
inability to use the Linkage.
\6\ See letter from David Doherty, Attorney, Legal Division,
CBOE to Jennifer Colihan, Special Counsel, Division, Commission,
dated October 3, 2003 (``Amendment No. 3''). In Amendment No. 3,
which superseded and replaced Amendment No. 2 in its entirety, CBOE
deleted the provisions of proposed Interpretation .04 to CBOE Rule
6.7 that provided that Linkage is a facility or service afforded by
the Exchange for the purposes of CBOE Rule 6.7.
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The Commission received no comments on the proposed rule change,
[[Page 59657]]
as amended. This order approves the proposed rule change, as amended,
and issues notice of, and grants accelerated approval to, Amendment No.
3.
II. Description of the Proposed Rule Change
Pursuant to the Linkage Project and Facilities Management Agreement
(``Agreement''),\7\ the Linkage Participants, including the Exchange,
are required to file a proposed rule change with the Commission to
provide the Options Clearing Corporation (``OCC'') with limited
liability with respect to the members'' use of the Linkage. The CBOE
represents that it filed this proposed rule change to fulfill its
obligation under the Agreement. The CBOE proposes to adopt
Interpretation .04 to CBOE Rule 6.7 to limit the liability for the OCC
with respect to CBOE members' use of the Linkage.
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\7\ Linkage Project and Facilities Management Agreement (January
30, 2003).
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III. Discussion
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange \8\
and, in particular, the requirements of Section 6(b) of the Act \9\ and
the rules and regulations thereunder. The Commission finds that the
proposed rule change, as amended, is consistent with Section 6(b)(5) of
the Act,\10\ which requires, among other things, that the rules of the
Exchange be designed to foster cooperation and coordination with
persons engaged in regulation, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, and are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers. The Commission believes that this proposed rule change, as
amended, should foster cooperation and should promote a relationship
between the CBOE and the OCC that is conducive to the effective
operation of the Linkage.
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\8\ In approving this proposed rule change, as amended, the
Commission notes that it has considered the proposed rule's impact
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\11\ for approving Amendment No. 3 prior to the thirtieth day
after the date of publication of notice thereof in the Federal
Register. In Amendment No. 3, the CBOE proposes to eliminate a
provision from proposed Interpretation .04 to CBOE Rule 6.7 that
characterized Linkage as a facility or service of the Exchange for
purposes of Exchange Rule 6.7. The Commission believes that removing
this provision makes the CBOE's rules consistent with the rules of some
of the other Exchanges recently approved by the Commission.\12\
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\11\ 15 U.S.C. 78s(b)(2).
\12\ See Exchange Act Release Nos. 48530 (September 24, 2003),
68 FR 56357 (September 30, 2003) (SR-ISE-2003-15), and 48531
(September 24, 2003), 68 FR 56370 (SR-Phlx-2003-43).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 3, including whether Amendment No. 3
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 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-2003-22 and should be
submitted by November 6, 2003.
V. Conclusion
It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change, as amended, (File No. SR-CBOE-
2003-22) is approved, and Amendment No. 3 is approved on an accelerated
basis.
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\13\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-26206 Filed 10-15-03; 8:45 am]
BILLING CODE 8010-01-P