[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Notices]
[Pages 26808-26809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12355]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41389; File No. SR-CBOE-99-18]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated, To Terminate its Lease Deposit Fee Program

May 11, 1999.
    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 April 26, 1999, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange''), filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') 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. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CBOE proposes to terminate its $500 lease deposit fee 
requirement. The requirement is currently set forth in CBOE's 
Membership Fee Circular and would be deleted from that Circular under 
this proposal.

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, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to terminate CBOE's 
lease deposit fee program. Under this program, every CBOE member that 
is a lessee of a CBOE membership, a member organization nominee on a 
leased CBOE membership, or a Chicago Board of Trade (``CBOT'') 
Exerciser member of CBOE who is leasing a CBOT membership (a CBOT 
delegate) is required to submit a $500 lease deposit fee to the 
Exchange. The Exchange uses this lease deposit fee to satisfy any debts 
owed by the member to the Exchange upon the member's termination from 
membership. Upon the completion of the membership termination process, 
the Exchange returns to the lessee, nominee, or delegate, without 
interest, any portion of the lease deposit fee remaining after payment 
of any Exchange debts owed by the lessee, nominee, or delegate.
    The original purpose of the lease deposit fee program was to 
provide the Exchange with a source of collateral in the event a lessee, 
nominee, or delegate owed money to the Exchange. The Exchange is now 
proposing to eliminate the program because the costs of administering 
the program have been exceeding the benefits derived from the program. 
Additionally, the Exchange has other means of collecting monies owed to 
the Exchange by members, including lessees, nominees, and delegates. 
These include CBOE's Integrated Billing System under CBOE Rule 3.23 
pursuant to which a member's Exchange fees are drafted by the Exchange 
against a CBOE Clearing Member designated by the member, the 
requirement under CBOE Rule 3.8(a)(2) that a member organization 
guarantee its nominees' obligations to the Exchange, and the authority 
of the Chairman of the Exchange's Executive Committee to suspend a 
current member (or bar a former member) until payment of past due 
amounts owed to the Exchange is made.
2. Statutory Basis
    The CBOE believes the proposed rule change is consistent with 
Section 6(b) of the Act,\3\ in general, furthers the objectives of 
Section 6(b)(4) of the Act,\4\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among CBOE members.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
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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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act\5\ and subparagraph (f) of 
Rule 19b-4 thereunder.\6\ At any time within 60 days of the filing of 
the proposed rule change, the Commission may summarily abrogate such 
rule change if it appears to the Commission that such action is 
necessary or appropriate such rule change if it appears to the 
Commission that such action is necessary or appropriate in the 
protection of investors, or otherwise in furtherance of the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act.\7\ Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549-0609. 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the CBOE. All submissions should refer to File No. 
SR-CBOE-99-18 and should be submitted by June 7, 1999.

    \7\ In reviewing the proposed rule change, the Commission 
considered its potential impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

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[[Page 26809]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-12355 Filed 5-14-99; 8:45 am]
BILLING CODE 8010-01-M