[Federal Register Volume 62, Number 177 (Friday, September 12, 1997)]
[Notices]
[Pages 48123-48124]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24210]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39026; File No. SR-CBOE-97-33]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by Chicago Board Options Exchange, Incorporated Relating to 
Suspensions for Failure To Pay Debts Owed to the Exchange

September 8, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice if hereby given that on July 24, 1997, the Chicago 
Board Options Exchange, Inc. (``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 self-regulatory organization. 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).
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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 Rule 2.23, which permits the Exchange to 
suspend CBOE members and associated persons who fail to pay debts owed 
to the Exchange in a timely manner. The proposed rule change would 
clarify the application of Rule 2.23 to former CBOE members and 
associated persons. The proposed rule change would also provide for the 
reporting to the Central Registration Depository (``CRD'') operated by 
the NASD, Inc. of any suspensions or bars imposed by the CBOE pursuant 
to Rule 2.23.
    The text of the proposed rule change is as follows [new text is 
italicized; deleted text is bracketed]:

Chicago Board Options Exchange, Incorporated Rules

 * * * * *

Chapter II

Organization and Administration

Part C--Dues, Fees and Other Charges; Liability for Payment

 * * * * *
    Rule 2.23. A member or associated person that does not pay any 
dues, fees, assessments, charges, fines or other amounts due to the 
Exchange within 30 days after the same has become payable shall be 
reported to the Chairman of the Executive Committee, who may, after 
giving reasonable notice to the member or associated person of such 
arrearages, suspend the member or associated person from membership and 
association with any member until payment is made. Should payment not 
be made by a member within 6 months after payment is due, any 
memberships owned by that member [a regular membership] may be disposed 
of by the Exchange [for a special membership may be disposed of or 
cancelled by the Exchange,] in accordance with Rule 3.14(b). [A person 
associated with a member who fails to pay any fine or other amounts due 
to the Exchange within 30 days after such amount has become payable and 
after reasonable notice of such arrearages, may be suspended from 
association with a member until payment is made.] A former member or 
associated person that does not pay any dues, fees, assessments, 
charges, fines or other amounts due to the Exchange within 30 days 
after the same has become payable shall be reported to the Chairman of 
the Executive Committee, who may, after giving reasonable notice to the 
former member or associated person of such arrearages, bar the former 
member or associated person from becoming a member and associated 
person until payment is made.
    * * * Interpretations and Policies:
    .01  Reasonable notice under Rule 2.23 shall include, but is not 
limited to, service on a member or associated person's address as it 
appears on the books and records of the Exchange either by: (1) Hand 
delivery or (2) deposit in the United States post office, postage 
prepaid via registered or certified mail.
    .02  The Exchange shall report to the Central Registration 
Depository operated by the National Association of Securities Dealers, 
Inc. (``CRD'') any suspension or bar imposed pursuant to this Rule.

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 self-regulatory organization 
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 self-regulatory organization 
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, the Proposed Rule Change

1. Purpose
    Rule 2.23 is designed to provide procedures to ensure that debts 
owed to the Exchange are paid promptly. Presently, Rule 2.23 provides 
the members or associated persons who fail to pay any debts owed to the 
Exchange within 30 days after they become due may be suspended from 
membership or association with a member by the Chairman of the 
Executive Committee until payment is made. The purpose of the proposed 
rule change is to clarify that pursuant to Rule 2.23, former members 
and associated persons who fail to pay debts owed to the Exchange may 
be barred from becoming a member and associated person by the Chairman 
of the Executive Committee until payment is made.
    It is not unusual for an Exchange member or associated person to 
terminate membership with the Exchange without having paid a fine or 
other debt owed to the Exchange. By clarifying that the Chairman of the 
Executive Committee may bar former members and associated persons for 
failing to pay debts owed to the Exchange until payment is made, the

[[Page 48124]]

Exchange will be better able to ensure that all debts are paid 
promptly.
    The Exchange also proposes to add new Interpretation .02 to provide 
that the Exchange will report any suspension or bar imposed pursuant to 
Rule 2.23 to CRD. This new paragraph is similar to CBOE Rule 17.14 
which provides for the reporting by the Exchange to CRD of information 
concerning pending formal Exchange disciplinary proceedings. Thus, the 
proposed rule change would expand the information available to the 
public concerning suspensions or bars imposed by the CBOE upon its 
members and associated persons.
    The Exchange proposes to delete references to a regular membership 
and special membership in the current Rule 2.23, as CBOE no longer has 
any special memberships, and to add language clarifying that if a 
member fails to pay an Exchange debt within 6 months, the Chairman of 
the Executive Committee may dispose of any memberships owned by that 
member in accordance with Rule 3.14(b).
    Finally the proposed rule change includes several nonsubstantive 
language changes.
2. Statutory Basis
    The Exchange anticipates that this rule change will improve the 
CBOE's ability to ensure that debts owed to the Exchange by members and 
associated persons are paid in a timely manner. The Exchange believes 
that the proposed rule change is consistent with Section 6(b) of the 
Act, in general, and furthers the objectives of Section 6(b)(5) in 
particular, in that it is designed to promote just and equitable 
principles of trade, and to protect investors and the public interest 
by enhancing the public's access to information regarding suspensions 
and bars imposed by the CBOE upon its members and associated persons.

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 either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the 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 the 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Room. Copies of the filing will also 
be available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CBOE-97-33 and 
should be submitted by October 3, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-24210 Filed 9-11-97; 8:45 am]
BILLING CODE 8010-01-M