[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