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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35035; File No. SR-CBOE-94-39]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the Chicago Board Options Exchange, Inc., Relating to

Obligations to Furnish Information

December 1, 1994.

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 November

7, 1994, 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 self-

regulatory organization. The Commission is 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 CBOE proposes to amend its rules to delineate the obligation of

CBOE members and persons associated with CBOE members to furnish

information in connection with inquiries arising from regulatory

agreements that the Exchange has entered into with other regulatory and

market institutions even in cases where the Exchange has not otherwise

initiated an investigation. Specifically, the CBOE proposes to amend

CBOE Rule 15.9, ``Regulatory Cooperation,'' to provide that as long as

a CBOE member or person associated with a CBOE member is subject to the

CBOE's jurisdiction, the CBOE member or person associated with a CBOE

member is obligated to furnish testimony, documentary evidence or other

information to the full extent provided in CBOE Rule 17.2(b), ``Conduct

of Investigation,'' whether or not the Exchange has initiated the

investigation, if the information is requested by the Exchange in

connection with any inquiry resulting from an agreement entered into by

the Exchange with a domestic or foreign self-regulatory organization or

regulator pursuant to CBOE Rule 15.9.

In addition, the CBOE proposes to amend CBOE Rule 17.2, ``Complaint

and Investigation,'' to state clearly that each CBOE member and person

associated with a CBOE member is obligated upon the Exchange's request

to testify, respond in writing to interrogatories, and furnish

documentary materials and other information requested by the Exchange

in connection with an investigation initiated pursuant to CBOE Rule

17.2(a), ``Initiation of Investigation,'' a hearing or appeal conducted

pursuant to CBOE Chapter 17, ``Discipline,'' or an inquiry resulting

from an agreement entered into by the Exchange pursuant to CBOE 15.9.

The CBOE also proposes to amend Interpretation and Policy .01 to CBOE

Rule 17.2 to provide that the failure to furnish testimony, documentary

evidence, or other information requested by the CBOE in the course of

an Exchange inquiry within the time period specified by the Exchange

shall be deemed to be a violation of CBOE Rule 17.2.

The text of the proposal 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 self-regulatory organization

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 self-regulatory organization

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

The CBOE states that the purpose of the proposal is to delineate

the obligation of CBOE members and persons associated with CBOE members

to furnish information in connection with inquiries arising from

regulatory agreements that the CBOE has entered into with other

regulatory and market institutions even in cases where the CBOE has not

otherwise initiated an investigation. The proposal also delineates more

clearly the obligation of CBOE members and persons associated with CBOE

members to furnish information in connection with an investigation

initiated by the CBOE itself, including information requested in

connection with a hearing or appeal or the Exchange's preparation or a

hearing or appeal.

The CBOE states that over the past several years, the CBOE and

other regulatory and market organizations have entered into agreements

providing for the exchange of information for surveillance,

investigative, enforcement, and other regulatory purposes. The CBOE's

existing rules, however, do not clearly delineate the obligation of

CBOE members or persons associated with CBOE members to furnish

information when the provision of information is required in connection

with these regulatory agreements in cases where the CBOE has not itself

initiated an investigation. The proposal clearly establishes that the

obligation to furnish information requested by the CBOE pursuant to

these regulatory agreements is coextensive with the obligation to

furnish information pursuant to an investigation initiated by the CBOE.

The CBOE proposes to add paragraph (b) to CBOE Rule 15.9 to state

clearly that pursuant to regulatory agreements entered into under CBOE

Rule 15.9(a),\1\ the CBOE may require CBOE members and persons

associated with CBOE members to provide the same information that must

be provided under investigations initiated by the CBOE under CBOE Rule

17.2(a). In addition, the CBOE proposes to amend CBOE Rule 17.2(b),

``Requirement to Furnish Information,'' to clarify the obligation of

CBOE members and persons associated with CBOE members to furnish

information and to state that obligation clearly with respect to both

investigations initiated by the CBOE and inquiries pursuant to

regulatory agreements.

---------------------------------------------------------------------------

\1\ CBOE Rule 15.9(a) allows the Exchange to ``enter into

agreements with domestic and foreign self-regulatory organizations,

associations and contract markets and the regulators of such markets

which provide for the exchange of information and other forms of

mutual assistance for market surveillance, investigative,

enforcement and other regulatory purposes.''

---------------------------------------------------------------------------

The CBOE states that the Exchange has long required CBOE members or

persons associated with CBOE members to furnish testimony, documentary

evidence, or other information requested in connection with an

investigation initiated by the CBOE pursuant to CBOE Rule 17.2(a).

Insofar as the proposed amendment to CBOE Rule 17.2(b) or

Interpretation and Policy .01 to CBOE Rule 17.2 adds or alters language

relating to the obligation to furnish information in connection with a

CBOE investigation, hearing or appeal, or the preparation therefor, the

new language is intended simply as a statement of the CBOE's

longstanding interpretation of existing CBOE rules.

The CBOE believes that the proposed rule change is consistent with

Section 6(b) of the Act, in general, and furthers the objectives of

Section 6(b)(5), in particular, in that it is designed to prevent

fraudulent and manipulative acts and practices and to foster

cooperation and coordination with persons engaged in regulating

transactions in securities.

(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

Within 35 days after the 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 reason 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. 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.

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 at the

Commission's Public Reference Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing will also be available for

inspection and copying at the principal office of the above-mentioned

self-regulatory organization. All submissions should refer to the file

number in the caption above and should be submitted by December 29,

1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\2\

---------------------------------------------------------------------------

\2\17 CFR 200.30-3(a)(12) (1993).

---------------------------------------------------------------------------

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-30136 Filed 12-7-94; 8:45 am]

BILLING CODE 8010-01-M