[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