[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