[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Notices]
[Pages 3888-3890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1282]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35220; File No. SR-CBOE/94-48]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc.; Relating to the
Placement of CBOE Memberships in Trust
January 11, 1995.
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 December
1, 1994, 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 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 adopt a new Rule 3.25 that would enable an
individual CBOE member to place his membership in trust for estate
planning purposes, subject to certain conditions and requirements.
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 self-regulatory organization
included statements concerning the purpose of an 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 purpose of the proposed rule change is to include in CBOE's
membership rules a new Rule 3.25 that would enable any individual
member to place his membership in trust, subject to various conditions
and requirements set forth in the rule. Rule 3.25 is designed to make
the membership transfer process simple for members and for the Exchange
and is structured to correlate the substance and mechanics of the new
rule with CBOE's existing rules, including, for example, CBOE's rules
respecting sales and leases of memberships and transfers of memberships
to family members.
The Exchange believes that the proposed rule change will provide
members with useful, but appropriately controlled, estate planning
flexibility. For example, the proposal will permit a member who has
placed his membership in trust to provide for the appointment of a
successor trustee in the event of the member's disability. The
successor trustee would then hold the membership for the benefit of the
member during the disability period, provided the membership is leased
during that period in accordance with CBOE's membership lease rules.
Specifically, the proposed rule change would provide that an
individual member in good standing may, during his lifetime, transfer
his membership to a trust for which he is the sole trustee and sole
present beneficiary. Under paragraph (c) of proposed Rule 3.25 a member
who has placed his membership in trust (``Trust Member'') may transfer
his membership, in accordance with the provisions of Rule 3.14(c)(1),
to an eligible family member who is approved for Exchange membership,
or, in accordance with Rule 3.14(c)(3), to a member organization. Any
such transfer must conform to the collateral deposit requirements of
the final sentence in Rule 3.14(c). In addition, the proposed rule
change provides that a Trust Member may transfer his membership from
the trust to himself to be held directly.
Paragraph (b) of the proposed rule change would authorized a Trust
Member to provide in his trust agreement for the appointment of a
successor trustee in the event the Trust Member dies, is declared
legally incompetent, or becomes disabled. A successor trustee could be
so appointed for one of two purposes only--either to effect a transfer
of the membership after the member's death in accordance with the
Exchange's membership transfer rules, or, to retain the membership in
trust for the benefit of an incompetent or disable Trust Member,
provided the membership is leased in accordance with Exchange Rule
3.16(b) (``Leased Memberships'').
Any transfer of a membership into trust would be subject to
Exchange review. Under paragraph (d) of proposed Rule 3.25, a member
seeking to effect such a transfer must furnish the Exchange with a copy
of the trust agreement together with an attorney's certification that
the agreement conforms to the requirements of the new rule. The
Exchange may disapprove a transfer by written notice to the member if
the Exchange finds that the trust agreement does not so conform. In
addition, the new rule specifies that, notwithstanding a transfer into
trust, the membership must remain subject to all Exchange rules, and
the Trust Member must remain personally responsible for all obligations
and liabilities associated with use of the membership.
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act and with Section 6(b)(1) of the Act in
particular in that it is designed to enable the Exchange to enforce
members' compliance with Exchange rules and to protect investors and
the public interest.
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
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such other 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 the 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 NW., Washington, DC 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
[[Page 3890]]
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 NW., Washington, DC 20549. Copies
of such filing will also be available for inspection and copying at the
principal office of the CBOE. All submissions should refer to the file
number in the caption above and should be submitted by February 9,
1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\1\
\1\17 CFR 200.3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-1282 Filed 1-18-95; 8:45 am]
BILLING CODE 8010-01-M
