[Federal Register Volume 62, Number 114 (Friday, June 13, 1997)]
[Notices]
[Pages 32393-32394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15465]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38723; File No. SR-CBOE-97-24]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the Chicago Board Options Exchange, 
Incorporated Relating to a Reduction of the Quorum Requirements in 
Uncontested Elections

June 6, 1997.
    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 May 21, 1997, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the CBOE. On June 4, 1997, the CBOE submitted Amendment No. 1 to the 
proposed rule change.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Debora E. Barnes, Senior Attorney, CBOE, to 
Debra Flynn, Attorney, SEC (June 3, 1997). In Amendment No. 1, the 
CBOE replaced all references to ``Constitution'' change with 
``Rule'' change, clarified the definition of ``uncontested 
elections'' by deleting the phrase ``for example,'' and clarified 
the language in Sections 3.6 and 3.7 of the Constitution.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to amend its Constitution to reduce the quorum 
required in uncontested elections from a majority to one-third (\1/3\) 
of the members entitled to vote. The Exchange is also making a change 
to clarify Section 3.7 of the Constitution. The text of the proposed 
amendment to the Constitution 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, 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to reduce the quorum requirement in 
uncontested elections by revising Section 3.6 of the Exchange's 
Constitution, thereby increasing the efficiency of Exchange elections 
when an election is uncontested. The Exchange also proposes to revise 
Section 3.7 of the Constitution to make it clear that this Section 
governs voting by members on issues other than elections. The quorum 
requirement will remain a majority of the members entitled to vote on 
issues arising pursuant to Section 3.7.
    The Exchange conducts an annual election and special meetings of 
its membership.\4\ Currently, at all meetings of Exchange members, 
including elections, a majority of the membership entitled to vote 
constitutes a quorum. The Exchange is proposing to reduce the quorum 
requirement, in uncontested elections only, from a majority to one-
third of the members entitled to vote.\5\ Uncontested elections are 
elections in which each candidate is running for office unopposed. If 
any candidate for office is opposed, the entire election

[[Page 32394]]

would be considered contested, and would require a majority for a 
quorum.
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    \4\ At annual election meetings, the CBOE membership votes for a 
slate of candidates proposed by the Nominating Committee for 
expiring terms and vacancies on the Board of Directors and certain 
other Exchange Committees, such as the Nominating and Modified 
Trading System Committees.
    \5\ In connection with the proposed amendment to the 
Constitution, the Election Committee stated that its policy under 
the reduced quorum proposal, if approved, would be to collect 
ballots and proxies in-person for three trading sessions prior to 
any meeting at which a vote would be conducted. Any change to this 
Election Committee policy would need to be approved by the Board of 
Directors and submitted to the Commission pursuant to Rule 19b-4.
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    The Exchange notes that, in certain uncontested elections, it has 
taken a considerable amount of time to obtain a quorum under the 
current majority requirement. As a result, significant Exchange staff 
time and resources were expended in order to obtain a quorum. The 
Exchange believes that the proposed rule change, as amended, will 
maximize the use of Exchange resources and provide an incentive for 
members to vote earlier.
2. Statutory Basis
    The Exchange believes that reducing the quorum required in 
uncontested elections to one-third of the members entitled to vote will 
improve the efficiency of the CBOE election process as well as the 
allocation of CBOE resources. As such, the Exchange believes that the 
Constitution proposal is consistent with and furthers the objectives of 
Section 6(b)(5) of the Act \6\ in that it is designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule change, as 
amended, 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

    The CBOE membership voted on the quorum reduction at the Annual 
Election Meeting held on December 11, 1996. The proposed rule change 
was approved by the CBOE membership by a vote of 637 for, 73 against 
and 15 abstained.

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 finding or (ii) as to 
which the self-regulatory organization 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 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 coping at the principal office of CBOE. All 
submissions should refer to File No. SR-CBOE-97-24 and should be 
submitted by July 7, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-15465 Filed 6-12-97; 8:45 am]
BILLING CODE 8010-01-M