[Federal Register Volume 60, Number 222 (Friday, November 17, 1995)]
[Notices]
[Pages 57727-57728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28400]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36475; File No. SR-CBOE-95-61]
November 9, 1995.
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by Chicago Board Options
Exchange, Incorporated Relating to Arbitration Rules
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on October 31,
1995, the Chicago Board Options Exchange, Incorporated (`'CBOE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the CBOE. The Exchange has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (e)(6) of Rule 19b-4 under
the Act which renders the proposal effective upon receipt of this
filing by the Commission.\1\ The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
\1\ The CBOE has represented that this proposed rule change: (i)
will not significantly affect the protection of investors or the
public interest; (ii) will not impose any significant burden on
competition, and (iii) will not become operative for 30 days after
the date of this filing. The CBOE also has provided at least five
business days notice to the Commission of its intent to file this
proposed rule change, as required by Rule 19b-4(e)(6) under the Act.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend certain provisions in Chapter XVIII,
``Arbitration,'' of the Rules of the CBOE.\2\ Below is the text of the
proposed rule change. Proposed new language is italicized; proposed
deletions are in brackets.
\2\ CBOE Guide, Rules, Chapter XVIII (CCH) Paras. 2513-2540D.
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Chicago Board Options Exchange Inc.--Rules
* * * * *
Chapter XVIII--Arbitration
* * * * *
Procedure in Member Controversies
Rule 18.2 The following procedures shall apply in any dispute,
claim or controversy between parties who are members or persons
associated with a member which is submitted for arbitration pursuant to
Rule 18.1(a):
(a) Selection of Arbitrators. The arbitration panel shall be
selected by the [Chairman of the Arbitration Committee] Director of
Arbitration and shall consist of not less than three members of the
Arbitration Committee.
(b) [Peremptory] Challenges. Each party to the dispute may
peremptorily challenge any person appointed to the arbitration panel.
There shall be no fixed limit on the number of peremptory challenges by
a party; however, no party may assert an unreasonable number of
challenges. [The Chairman of the Arbitration Committee] The Director of
Arbitration shall deny peremptory challenges if both [he and] the
Director of Arbitration and the Chairman of the Arbitration Committee
agree that the number of such challenges by a party has been
unreasonable. Unless extended by the Director of Arbitration, a party
wishing to exercise a peremptory challenge must do so by notifying the
Director of Arbitration in writing within five (5) business days of
notification of the identity of the person(s) named under Rule 18.11 or
Rule 18.22 (d) or (e), whichever comes first. There shall be unlimited
challenges for cause.
[(c) The minimum filing deposit and fee shall be $75.00. If the
claim would require a higher filing deposit and fee under Rule 18.33,
the higher amount shall be required. In the event that a matter is
resolved prior to the hearing, a minimum of $50.00 of the filing
deposit will be retained by the Exchange.]
[(d) (c) [Additional provisions relating to member controversies
are set forth [beginning at] in Rule 18.34] In any arbitration
concerning the alleged failure to pay for floor brokerage services, the
following additional provisions shall apply:
(1) In order to commence such a proceeding, the claimant shall
include with his statement of claim the following: (1) Copies of
billing copies of order tickets relating to the unpaid brokerage; (ii)
copies of monthly bills reflecting the unpaid brokerage; (iii) copies
of evidence reflecting the claimant's post-billing efforts to collect
the unpaid brokerage; and (iv) a certification of any efforts, not
reflected in writing, made to collect the unpaid brokerage.
(2) If the arbitrators find that the respondent knowingly and
purposefully failed to pay for floor brokerage services, and such
failure was without sufficient justification or excuse, then the
arbitrators have the authority to award up to two times the amount of
the brokerage bill, in addition to whatever determinations the
arbitrators may ordinarily make concerning arbitration fees, interest,
and attorney's fees or other expenses.
[(e)] (d) General. Subject to the foregoing [exceptions] provisions
of this Rule the [provisions] other Rules of [the Uniform Arbitration
Code contained in Rules 18.5 through 18.33] Chapter 18 shall apply to
arbitrations between members except for those provisions specifically
applicable to arbitrations [except insofar as such provisions
specifically apply to matters] involving public customers.
* * * * *
[Payment for Floor Brokerage Services]
[Rule 18.34 In any arbitration between parties who are members or
persons associated with a member concerning the alleged failure to pay
for floor brokerage services, Chapter XVIII shall be supplemented by
the following provisions:
(a) In order to commence such a proceeding, the claimant shall
include with his statement of claim the following: (1) Copies of
billing copies of order tickets relating to the unpaid brokerage; (2)
copies of monthly bills reflecting the unpaid brokerage; (3) copies of
evidence reflecting the claimant's post-billing efforts to collect the
unpaid brokerage; and (4) a certification of any efforts, not reflected
in writing, made to collect the unpaid brokerage.
(b) If the arbitrators find that the respondent knowingly and
purposefully failed to pay for floor brokerage services,
[[Page 57728]]
and such failure was without sufficient justification or excuse, then
the arbitrators have the authority to award up to two times the amount
of the brokerage bill, in addition, to whatever determinations the
arbitrators may ordinarily make concerning arbitration fees, interest,
and attorney's fees or other expenses.]
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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, Proposed Rule Change
The purpose of this rule change is to revise certain Exchange rules
governing arbitration procedures. First, the authority of the Director
of Arbitration to appoint the arbitration panels in disputes between
members will be codified. Currently, paragraph (a) of CBOE Rule 18.2
specifies that the Chairman of the Arbitration Committee shall appoint
the arbitration panel. However, in practice, the Chairman of the
Arbitration Committee delegates the authority to select the panel to
the Director of Arbitration, the Exchange employee charged with
administering CBOE's arbitration forum. Therefore, this change would
conform the rule to current practice. It should also be noted that in
disputes between non-members and members or persons associated with
members, the Director of Arbitration is authorized, under Exchange
Rules 18.4 and 18.10, to appoint a sole arbitrator and the members of
an arbitration panel. Thus, this rule change will make the rules
governing the selection of arbitrators consistent.
A second change would more closely conform Rule 18.2 with a rule
governing arbitrations in non-member disputes. Rule 18.12, Challenges,
authorizes the Director of Arbitration to award additional peremptory
challenges and to extend the time for exercising peremptory challenges.
Paragraph (b) of Rule 18.2 would be changed to grant the Director of
Arbitration the right to deny peremptory challenges in member disputes,
if both the Director and the Chairman of the Arbitration Committee
agree that the number of such challenges has been unreasonable. In
addition, paragraph (b) would set a five business day time limit for
notifying the Director of Arbitration concerning peremptory challenges.
Paragraph (b) would also state that there may be unlimited challenges
for cause, consistent with Rule 18.12.
Existing paragraph (c) of Rule 18.2 is proposed to be deleted
because the fees are already more completely governed by Rule 18.33,
Schedule of Fees. In addition, the second sentence of existing
paragraph (c) of Rule 18.2, which concerns the retention of $50 of the
filing deposit, is superseded by and inconsistent with paragraph (a) of
Rule 18.33 which states that the filing fee is non-refundable.
Rule 18.34 will be deleted, and its provisions will be incorporated
into Rule 18.2 as new paragraph (c). This change will combine in a
single rule, related provisions governing procedures in member
controversies.
Finally, a few editorial revisions, for clarification purposes, are
proposed to be made to current paragraph (e), and that paragraph will
be re-lettered as paragraph (d).
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 promote just and equitable
principles of trade and the protection of investors and the public
interest by improving the administration of an impartial arbitration
forum for the resolution of disputes between members, persons
associated with members and public investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
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
This proposed rule filing has been filed by the Exchange as a
``noncontroversial'' rule change pursuant to paragraph (e)(6) of Rule
19b-4. Consequently, the rule change will become operative thirty days
after the filing of this rule proposal.
At any time within 60 days of the filing of such rule change, the
Commission may summarily abrogate such rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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 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 the filing will also be
available for inspection and copying at the principal office of CBOE.
All submissions should refer to file number SR-CBOE-95-61 and should be
submitted by December 8, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-28400 Filed 11-16-95; 8:45 am]
BILLING CODE 8010-01-M
