The Chicago Board Options Exchange (CBOE) has filed with the Securities and Exchange Commission a proposal to amend CBOE Rule 9.21 (“Communications with Customers”) aimed in part at removing the rule’s provisions regarding the Securities Act of 1933 (Securities Act). Since options traded on the CBOE consist solely of standardized options issued by the Options Clearing Corporation (OCC), they are exempt from all provisions of the Securities Act with the exception of the antifraud provisions. Therefore, for example, the CBOE has proposed to delete all references to a “prospectus” from Rule 9.21 since prospectuses are no longer required for standardized options and the OCC has ceased publication of prospectuses.
Moreover, the CBOE’s proposal aims to amend the provision found in Rule 9.21(c) which requires members to obtain prior approval for every advertisement and all educational material from the CBOE’s Department of Compliance. Proposed Rule 9.21(c) will require approval by the CBOE solely with respect to options communications used prior to the delivery of a current options disclosure statement. The proposed rule modifications are similar to amendments filed with the SEC by the Financial Industry Regulatory Authority and the New York Stock Exchange. Thus, if the proposal is adopted, it will provide a more uniform approach to communications to customers regarding standardized options.