[Federal Register Volume 62, Number 114 (Friday, June 13, 1997)]
[Notices]
[Pages 32394-32395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15466]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38725; File No. SR-CBOE-97-21]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Board Options Exchange, Incorporated Relating to
Membership Application Submission Deadlines
June 6, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 15, 1997, the Chicago
Board Options Exchange, Incorporated (``CBOE'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') 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.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
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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 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, which in no event
will exceed 90 days prior to the date that the application will be
considered for approval.
The text of the proposed rule change 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
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. The Membership Committee's
present practice is to hold this meeting 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.
The Exchange has found that the current application submission
deadline makes it extremely difficult for the Exchange to complete the
processing of certain types of membership
[[Page 32395]]
applications in time for consideration by the Membership Committee at
its monthly meeting. For example, the processing of membership
applications submitted by new membership applicants involves a number
of time-consuming components. Among other things, such an application
cannot be acted upon until: (1) the Membership Department receives from
an outside investigative service an investigate report concerning the
applicant; (2) the applicant's name has been posted on the Exchange's
Bulletin Board for 14 calendar days; (3) the Membership Department has
reviewed the application materials and the contents of the investigate
report; (4) a File Review Subcommittee of the Membership Committee has
reviewed the application materials and the investigative report; and
(5) the Membership Department has received from the applicant any
clarifications or additional information requested from the applicant
concerning the application materials or investigative report.
Similarly, it is also time-consuming for the Exchange to process
applications of member organizations requesting approval from the
Membership Committee to transact business with the public pursuant to
CBOE Rule 9.1 or to act as an order service firm pursuant to CBOE Rule
6.77.
On the other hand, the Exchange is typically able to process other
types of membership applications more quickly. For example, the
application of an existing member to change his or her membership
status is less involved and does not involve an investigation by an
outside investigative service. The same is true of an application of a
former individual member who is reapplying for membership within 6
months after his or her membership termination date.
The purpose of the proposed rule change is to eliminate the current
general membership application submission deadline, and instead, to
provide in Rule 3.9(a) that the Membership Committee shall establish
separate submission deadlines for each type of membership application.
This 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 it with the amount of time that the Exchange is generally
taking to process that type of application. The Membership Committee
will disseminate these submission deadlines to the Exchange's
membership in a regulatory circular that will be published in the
Exchange's Regulatory Bulletin and will include the circular in the
membership information packets that the Membership Department provides
to prospective membership applicants. However, in no event will the
Membership Committee be permitted to establish a submission deadline
for any type of membership application which is in excess of 90 days
prior to the date that such an application will be considered for
approval. Additionally, 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.
Once the Membership Committee has established the submission
deadline for a particular type of membership application, each such
membership application will be required to be submitted to the
Membership Department in accordance with the deadline in order to be
eligible to be considered for approval.
Finally, it should be noted that this rule change is not intended
to limit the Membership Committee's ability to table its consideration
of a membership application in accordance with Rule 3.9(c)(1) or Rule
3.9(e) in order 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.
The proposed rule change is consistent with Section 6(b) of the
Act, in general, and furthers the objectives of 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The CBOE does not believe that the proposed rule change 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
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
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 CBOE 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, NW, Washington, DC 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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Room. Copies of such filing will also
be available for inspection and copying at the principal office of the
CBOE. All submissions should refer to File No. SR-CBOE-97-21 and should
be submitted by July 7, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\2\
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\2\ 17 CFR 200.30-3(a)(12)(1991).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-15466 Filed 6-12-97; 8:45 am]
BILLING CODE 8010-01-M