Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Board Options Exchange, Inc. Relating to Customer Communications

[Federal Register Volume 64, Number 235 (Wednesday, December 8, 1999)]
[Notices]
[Pages 68707-68708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31783]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42186; File No. SR-CBOE-99-27]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc. Relating to Customer 
Communications

November 30, 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 June 18, 1999, the Chicago Board Options Exchange, Inc. (``CBOE'' or 
``Exchange'') filed with 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to amend Exchange Rule 9.21, Communications to 
Customers, which governs communications from member firms to customers 
or members of the public. The proposed rule change would permit the use 
of non-standard worksheets, provided that such worksheets meet the 
requirements applicable to sales literature, pursuant to Exchange Rule 
9.21. 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
    Exchange Rule 9.21, Communications to Customers, governs 
communications between Exchange members and their customers and other 
members of the public. The Exchange, along with the other options 
exchanges, has published Guidelines for Options Communications 
(``Guidelines'') \3\ to explain the customer communications rules of 
the options exchanges and the interpretations of these rules. Following 
the recommendations of the Commission's Special Study of the Options 
Markets, the CBOE and other self-regulatory organizations amended their 
rules to require uniform options worksheets. \4\ The proposed rule 
change seeks to eliminate the requirement that mandates that standard 
forms of options worksheets be uniform within a member organization 
(i.e., for specific types of options and strategies).
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    \3\ See Securities Exchange Act Release No. 29682 (September 13, 
1991), 56 FR 47973 (September 23, 1991) (File No. SR-Amex-90-38; SR-
CBOE-90-27; SR-NASD-91-02; SR-NYSE-90-51; and SR-PSE-90-41).
    \4\ See Report of the Special Study of the Options Market, 
Chapter V, page 130 (December 22, 1978); Securities Exchange Act 
Release No. 15575 (Feb. 22, 1979) (Order implementing certain 
recommendations contained in the Commission's Special Study of the 
Options Market).
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    Under existing rules, worksheets are deemed sales literature. The 
proposed rule change will allow a member organization, or its 
associated person, the ability to tailor worksheets to specific 
prospective or existing clients, to utilize worksheets that may be 
commercially available, or to use Exchange or other industry developed 
worksheets. The Exchange believes that this change would expand the 
quantity and quality of options worksheets available for member use, 
thereby enhancing the member's ability to adequately describe the risks 
and benefits of options. Of course, member organizations may decide to 
require within their written supervisory procedures that options 
worksheets be standardized within their respective organizations. So 
that the Exchange could ensure that worksheets fulfill their objective, 
worksheets would continue to be subject to the content and approval 
requirements of material deemed sales literature, as required by 
existing Exchange Rule 9.21.
2. Statutory Basis
    The CBOE believes that the proposal is consistent with Section 6(b) 
of the

[[Page 68708]]

Act \5\ in general and furthers the objectives of Section 6(b)(5) \6\ 
in particular in that it is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The CBOE expects other self-regulatory organizations to make similar 
amendments to their rules.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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

    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 finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is consistent with the Act. Persons making written submissions should 
file 6 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 will also be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to File No. SR-CBOE-99-27 and should 
be submitted by December 29, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Johathan G. Katz,
Secretary.
[FR Doc. 99-31783 Filed 12-7-99; 8:45 am]
BILLING CODE 8010-01-M