[Federal Register Volume 60, Number 121 (Friday, June 23, 1995)]
[Notices]
[Pages 32720-32721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15312]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35855; File No. SR-CBOE-95-30]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Board Options
Exchange, incorporated Relating to Membership Fees
June 16, 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 June 6,
1995, the Chicago Board Options Exchange, Incorporated (``CBOE'' or
Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the CBOE.
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 hereby gives notice that it is proposing to amend the
Exchange Regulatory Circular which sets forth the membership fees
imposed by the Exchange (``Membership Fee Circular'').
The text of the Membership Fee Circular as proposed to be amended
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 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 proposed rule change is to amend the Membership
Fee Circular in five respects.\1\
\1\ The Membership Fee Circular was first filed with the
Commission in 1990. See Securities Exchange Act Release No. 27898
(April 12, 1990), 55 FR 14887 (April 19, 1990) (notice of filing and
immediate effectiveness of File No. SR-CBOE-90-05). All of the fees
initially contained in the Membership Fee Circular had been
previously filed with the Commission, and the purpose of the
Membership Fee Circular was to enumerate these fees in a single
document which could be distributed to the Exchange's membership.
The Membership Fee Circular has been amended twice since 1990. See
Securities Exchange Act Release No. 29747 (September 27, 1991), 56
FR 50600 (October 7, 1991) (notice of filing and immediate
effectiveness of File No. SR-CBOE-91-31) and Securities Exchange Act
Release No. 30901 (July 8, 1992), 57 FR 31546 (July 16, 1992)
(notice of filing and immediate effectiveness of File No. SR-CBOE-
92-12).
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First, the Membership Fee Circular is proposed to be amended to
reflect a new $500 fee to be paid to the Exchange by every Exchange
member who makes application to the Exchange to transfer his or her
membership into trust pursuant to recently adopted CBOE Rule 3.25
(``Transfer of Individual Membership in Trust''). The Exchange is
establishing this fee pursuant to CBOE Rule 2.22 (``Other Fees or
Charges'') in order to cover the administrative costs associated with
processing applications under CBOE Rule 3.25. This fee will go into
effect on June 1, 1995.
Second, the Membership Fee Circular is proposed to be amended to
add to the Circular an existing Exchange fee which is payable quarterly
by Exchange member firms for each inactive nominee status that such
firms wish to maintain. This inactive nominee status maintenance fee is
provided for by CBOE Rule 3.8 (``Nominees''), section (b)(1), and the
amount of the fee is equal to the amount of the Exchange's quarterly
membership dues. In addition, the Membership Fee Circular will reflect
the policy of the Exchange that this fee is payable regardless of any
waiver of membership dues which might be applicable. \2\ This fee was
originally filed with the Commission in 1990 \3\ but is not currently
included in the Membership Fee Circular.
\2\ According to the Exchange, this policy has been in effect
since the fee was first filed with the Commission in 1990. The
Exchange believes that because the fee is a separate, independent
fee, authorized by Rule 3.8(b)(1), the waiver of membership dues
would have no bearing on the fee. Telephone conversation between
Michael L. Meyer, Attorney, Schiff Hardin & Waite, and James T.
McHale, Attorney, Office of Market Supervision, Division of Market
Regulation, Commission, on June 15, 1995.
\3\ See Securities Exchange Act Release No. 28092 (June 4,
1990), 55 FR 23621 (June 11, 1990) (order approving File No. SR-
CBOE-90-09).
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Third, the Membership Fee Circular is proposed to be amended to
explicitly reflect the membership fees that are applicable to limited
liability companies (``LLCs''). CBOE Rule 3.3 (``Qualifications of
Member Organizations''), Interpretation and Policy .01 provides that
for the purposes of eligibility for Exchange membership an entity
organized as an LLC shall be deemed a corporation. Pursuant to this
rule, LLCs that are applicants for Exchange membership are charged the
same fee that is charged to corporations that are applicants for
Exchange membership (i.e., $250). Similarly, LLC managers and members
are charged the same fee that is charged to executive officers and
principal shareholders of corporations (i.e., $250).
Fourth, the Membership Fee Circular is proposed to be amended to
delete the reference to ``Stock Execution Business'' contained therein
and to replace it with a reference to ``Order Service Firm.'' At the
time that the Membership Fee Circular was last amended in 1992, CBOE
Rule 6.77 (``Stock Execution Services'') provided that stock services
could register with the Exchange for the purpose of providing market-
makers on the Exchange's trading floor with order handling services
related to stock transactions. In 1994, CBOE Rule 6.77 was amended to
replace the term ``stock service'' with the term ``order service firm''
and to expand the scope of activities that can be engaged in by such
firms on the Exchange's trading floor to include order handling
services related to commodity transactions. Accordingly, the reference
in the Membership Fee Circular to the membership fee that is applicable
to such firms is amended to reflect this change in terminology.
Fifth, the Membership Fee Circular is proposed to be amended to
provide that the $250 fee payable by persons who are shareholders or
limited partners of firms applying to be members or who become
shareholders or limited partners of member firms is payable by such
persons whose ownership percentage of the organization is 5% or more.
Similarly, the proposed rule change makes express that a similar fee
requirement applies to members of an LLC whose ownership percentage is
5% or more. This is consistent with the Exchange's membership
application materials which request information concerning
shareholders, limited partners, and LLC members that have an ownership
percentage that is 5% or greater and with Schedule A of SEC
[[Page 32721]] Form BD \4\ which does the same with respect to broker-
dealer applicants.
\4\ 17 CFR 249.501 (1992).
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Finally, the proposed rule change makes certain editorial changes
to clarify the Membership Fee Circular without affecting its substance.
The CBOE represents that the proposed rule change is consistent
with Section 6 of the Act, in general, and furthers the objectives of
Section 6(b)(4) of the Act in particular, in that it is designed to
provide for the equitable allocation of reasonable dues, fees, and
other changes among CBOE members.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any inappropriate 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
Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by the Exchange, it has become effective
pursuant to Section 19(b)(3)(A) of the Act and subparagraph (e) of Rule
19b-4 thereunder. At any time within 60 days of the filing of the
proposed 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, 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 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 CBOE. All
submissions should refer to the File No. SR-CBOE-95-30 and should be
submitted by July 13, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
\5\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-15312 Filed 6-21-95; 8:45 am]
BILLING CODE 8010-01-M
