[Federal Register Volume 62, Number 140 (Tuesday, July 22, 1997)]
[Notices]
[Pages 39292-39293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19195]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38840; File No. SR-CBOE-97-21]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by the Chicago Board Options Exchange, Incorporated Relating to
Membership Application Submission Deadlines
July 16, 1997.
On May 15, 1997, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ the proposed rule change
to amend CBOE Rule 3.9 to give the Exchange's Membership Committee the
authority to establish deadlines for the submission of each type of
membership application. Notice of the proposed rule change, together
with the substance of the proposal, was published in the Federal
Register.\2\ No comment letters were received. This order approves the
proposed rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Securities Exchange Act Release No. 38725 (June 6, 1997), 62
FR 32394 (June 13, 1997).
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I. Background
CBOE Rule 3.9(a) currently requires every individual or
organization applying to become an Exchange member and every individual
applying to become a nominee of an Exchange member organization to file
an application with the Exchange's Membership Department no later than
the first business day of the month during which the application will
be considered by the Exchange's Membership Committee. The Membership
Committee generally meets once a month on the Thursday of the third
week of the month. Depending on the particular month, the current
membership application submission deadline can provide the Exchange
with as few as 10 business days to process a membership application
prior to the Membership Committee's consideration of the application at
its monthly meeting.
According to the Exchange, the current application submission
deadline makes it extremely difficult for the Exchange to complete the
processing of new membership applications in time for consideration by
the Membership Committee at its monthly meeting. On the other hand, the
Exchange is typically able to process more quickly the application of
an existing member to change his or her membership status or the
application of a former individual member who is reapplying for
membership within 6 months after his or her membership termination
date.
The proposed rule change will eliminate the current general
membership application submission deadline, and instead, provide in
Rule 3.9(a) that the Membership Committee shall establish separate
submission deadlines for each type of membership application. Once the
Membership Committee has established the submission deadline for a
particular type of membership application, each type of membership
application will be required to be submitted to the Membership
Department in accordance with the deadline to be eligible to be
considered for approval.
II. Discussion
The proposed rule change is consistent with Section 6(b) of the
Act, in general, and Sections 6(b)(5) and 6(b)(7), in particular, in
that it is designed to protect investors and the public interest and to
provide a fair procedure for the consideration of Exchange membership
applications by ensuring that the Exchange has adequate time in which
to review membership applications.\3\ The proposed rule change will
permit the Membership Committee to tailor a particular submission
deadline to the type of membership application involved and to
periodically shorten or lengthen the deadline, if appropriate, to
correlate the submission deadline with the amount of time that the
Exchange is generally taking to process that type of application.
Furthermore, the proposed rule change will not restrict the Membership
Committee's ability to table its consideration of a membership
application pursuant to CBOE Rule 3.9(c)(1) of Rule 3.9(e) to obtain
additional information concerning an applicant or pursuant to CBOE Rule
3.4(d) when an applicant is subject to an investigation being conducted
by a self-regulatory organization or government agency involving the
applicant's fitness for membership.
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\3\ The Commission has considered the effect of the proposed
rule change on the promotion of efficiency, competition and capital
formation. 15 U.S.C. Sec. 78(c).
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[[Page 39293]]
The Commission also believes that the proposed rule change provides
a fair procedure to members who apply for membership or to change their
membership status because the Membership Committee must establish
submission deadlines that are not in excess of 90 days prior to the
date that such an application will be considered for approval.
Furthermore, the Membership Committee will provide adequate notice of
the particular submission deadlines to its membership. The Membership
Committee will not alter any membership application submission deadline
without first giving at least 60 days prior notice in the form of a
regulatory circular that a new deadline will be going into effect. The
Membership Committee will disseminate these submission deadlines in a
regulatory circular published in the Exchange's Regulatory Bulletin and
will include the regulatory circular in the membership information
packets provided to prospective membership applicants.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change, SR-CBOE-97-21, be, and hereby is,
approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-19195 Filed 7-21-97; 8:45 am]
BILLING CODE 8010-01-M
