[Federal Register Volume 61, Number 55 (Wednesday, March 20, 1996)]
[Notices]
[Pages 11452-11453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6636]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36961; File No. SR-CBOE-96-13]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Inc., Relating to the
Exchange's Member Death Benefit Program
March 13, 1996.
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 March 11, 1996, 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 CFR 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 Exchange proposes to revise its Member Death Benefit Program to
expand the coverage of the Program to include certain recently active
members and to establish a defined benefit under the Program of
$50,000. The text of the proposed rule change is available at the
Office of the Secretary, the Exchange, 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 Exchange included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Section (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 Exchange's Member Death Benefit Program is set forth in CBOE
Rule 3.24 and functions in the following manner. The Member Death
Benefit Program covers any natural person who is a nominee of a member
organization, a Chicago Board of Trade exerciser, a lessee of an
Exchange membership, or an owner of an Exchange membership that is not
being leased to a lessee. The Exchange refers to the foregoing
individuals as ``active members.'' Each active member designates a
beneficiary under the Program. Upon the death of an active member, the
Exchange pays a member death benefit to that member's designated
beneficiary. The amount of the benefit is equal to the number of active
members at the time of the member's death multiplied by $25. Because
this benefit is based on the number of active members, the amount of
the benefit fluctuates as the number of active members fluctuates. As
of December 31, 1995, there were 1,384 active members. Therefore, if a
benefit were to have been paid on that date, it would have been equal
to $34,600. After a member death benefit has been paid under the
Program, the Exchange bills each active member $25 in order to recoup
the cost of the benefit.
The purpose of the proposed rule change is to revise the Member
Death Benefit Program in two primary respects. First, the Exchange
proposes to
[[Page 11453]]
expand the coverage of the Member Death Benefit Program to cover any
individual who (i) was an active member within 90 days prior to the
date of his or her death and (ii) was an active member during at least
274 out of the 365 days preceding the date of his or her last
termination from active member status. This expanded coverage would be
in addition to the Program's current coverage of any individual who is
an active member at the time of his or her death. Second, the Exchange
proposes to establish a defined member death benefit under the Program
of $50,000. This $50,000 benefit would replace the current member death
benefit under the Program which is based on the number of active
members at the time of a member's death. Accordingly, instead of being
billed $25 by the Exchange after a member death benefit payout has
occurred, under the proposed rule change each active member will be
assessed an amount equal to $50,000 divided by the number of active
members at the time of the assessment.
The proposed rule change also makes two clarifications concerning
the administration of the Member Death Benefit Program. First, the
proposed rule change clarifies that in no event shall more than one
member death benefit be paid by reason of the death of an individual
who is eligible to receive the member death benefit. Second, the
proposed rule change clarifies that the active members who will be
assessed after a member death benefit has been paid by the Exchange
will be those individuals who are active members at the time of the
assessment. The actual date upon which such assessments will occur will
be at the discretion of the Exchange. Finally, the proposed rule change
makes certain editorial changes to Rule 3.24 that do not affect its
substance.
The purpose of the Member Death Benefit Program is to provide a
death benefit to the designated beneficiaries of active members. The
Exchange believes that the proposed rule change will further that
purpose and provide for a fairer and more appropriate way to provide
the member death benefit. For example, currently if an individual who
has been an active member for three quarters of the previous year
temporarily leaves his seat in order to take a short vacation, that
individual would not be covered by the Member Death Benefit Program in
the event that the individual were to pass away while on vacation. The
same is true if the individual were to temporarily leave his seat
because of an illness or accident and then were to pass away shortly
thereafter. The proposed rule change is intended to cover these types
of individuals under the Member Death Benefit Program because they have
been active members for much of the year preceding the time of their
death.
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act, in general, and furthers the objectives
of Sections 6(b)(4) and 6(b)(5) of the Act in particular, in that it is
designed to (i) provide for the equitable allocation of reasonable
dues, fees, and other charges among Exchange members and (ii) remove
impediments to and perfect the mechanism of a free and open market and
a national market system by serving to assist the Exchange in
attracting and retaining active members through the enhancement of the
financial security of their families in the event their death.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will impose no
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 findings or (ii) as to
which the Amex 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 persons, 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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the Amex. All
submissions should refer to File No. SR-CBOE-96-13 and should be
submitted by April 10, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-6636 Filed 3-19-96; 8:45 am]
BILLING CODE 8010-01-M
