[Federal Register Volume 67, Number 154 (Friday, August 9, 2002)]
[Notices]
[Pages 51905-51906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20183]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46308; File No. SR-CBOE-2001-66]


Self-Regulatory Organizations; Order Granting Approval to a 
Proposed Rule Change by the Chicago Board Options Exchange, Inc. 
Relating to Registration Filing Requirements of Associated Persons of 
Member Organizations

August 2, 2002.

I. Introduction

    On December 17, 2001, the Chicago Board Options Exchange, Inc. 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend the CBOE Fee Schedule 
and CBOE Rules 2.22 (Other Fees or Charges), 3.6A (Qualification and 
Registration of Certain Associated Persons), 9.2 (Registration of 
Options Principals), and 9.3 (Registration and Termination of 
Representatives) relating to the registration filing requirements of 
associated persons of member organizations. The Exchange filed an 
amendment to its proposal on April 22, 2002.\3\ The Exchange filed a 
second amendment to its proposal on May 29, 2002.\4\ The proposed rule 
change and Amendments Nos. 1 and 2 were published for comment in the 
Federal Register on June 18, 2002.\5\ The Commission did not receive 
any comment letters regarding the proposal. This order approves the 
proposed rule change, as amended, and sets an effective date for the 
proposed rule change of September 20, 2002.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Nancy L. Nielsen, Director of Arbitration 
and Assistant Secretary, CBOE, to Nancy Sanow, Assistant Director, 
Division of Market Regulation, Commission (April 19, 2002) 
(``Amendment No. 1'').
    \4\ See letter from Christopher R. Hill, Attorney II, Legal 
Department, CBOE, to Nancy Sanow, Assistant Director, Division of 
Market Regulation, Commission (May 29, 2002) (``Amendment No. 2'').
    \5\ See Securities Exchange Act Release No. 46062 (June 11, 
2002), 67 FR 41552.
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II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to allow for associated 
persons of CBOE member firms that are not members of NASD to register 
their qualification status electronically via NASD's Web CRD System 
(``Web CRD''). Currently, the Exchange requires those associated 
persons of member

[[Page 51906]]

organizations that are members of the CBOE, but are not NASD members, 
to manually register for a qualification status by filing a hard copy 
Form U-4. In addition, a hard copy Form U-5 must be filed with the 
Exchange within 30 days of the registered person's termination or 
within 30 days after the member organization learns of any facts or 
circumstances that would give rise to an amendment.
    The CBOE has established an arrangement with NASD to allow CBOE 
members that are not NASD members to register associated persons 
electronically with the CBOE through Web CRD. The CBOE believes that 
this revision to the current registration process will benefit those 
persons seeking and/or maintaining registrations with the CBOE in that 
hard copy filings will no longer need to be sent to the Exchange. In 
addition, all registration and disclosure data will be consolidated 
into one database, Web CRD, thus allowing members and member 
organizations access to the member's associated persons' records. 
Processing associated persons of these non-NASD member firms in Web CRD 
should make information about them more readily available to regulators 
and allow for closer monitoring of these firms and their associated 
persons. In addition, this arrangement will establish a method to allow 
registered persons to be notified and satisfy the Continuing Education 
Regulatory Requirement pursuant to CBOE Rule 9.3A.
    The proposed rule change also implements fees to be imposed upon 
non-NASD Exchange members and member organizations, which members will 
be instructed to pay directly to NASD through the Web CRD system at the 
time the Exchange member/member organization effects a registration 
transaction through Web CRD. These fees include: (a) A Non-Member 
Processing Fee of $85.00; (b) a Disclosure Processing Fee of $95.00; 
(c) an Annual System Processing Fee of $30.00; and (d) Fingerprint 
Processing Fees.
    Once the transition to the Web CRD is completed, all Exchange 
members and member organizations that are not members of the NASD will 
be subject to these Web CRD fees, which will be set forth on the 
Exchange Fee Schedule. In addition, all registered persons will 
continue to be assessed CBOE registration fees as outlined in CBOE Rule 
2.22(b)--Other Fees or Charges, (Registration Fees).
    The proposed rule change amends Rule 9.3(a) to eliminate obsolete 
language, and to clarify the requirements for registration by 
associated persons of members of other national securities exchanges, 
by deleting language that will no longer be applicable when such 
associated persons effect their registration via Web CRD. In addition, 
the proposed rule change eliminates Interpretations .01 and .02 to Rule 
9.3, as the appropriate portions have been incorporated into Rule 9.3 
itself.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\6\ 
In particular, the Commission finds that the proposed rule change is 
consistent with section 6 of the Act.\7\ Specifically, the Commission 
finds that the proposed rule change is consistent with section 6(b)(4) 
of the Act,\8\ which requires that the rules of an Exchange provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members. In addition, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act,\9\ which 
requires, among other things, that the Exchange's rules be designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons regulating transactions in securities, 
and, in general, to protect investors and the public interest. The 
Commission believes that the proposed rule change should enhance the 
ability of regulators to monitor broker-dealers and their associated 
persons.
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    \6\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposal 
is consistent with the requirements of the Act and rules and 
regulations thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-CBOE-2001-66) is approved 
and shall become effective on September 20, 2002.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-20183 Filed 8-8-02; 8:45 am]
BILLING CODE 8010-01-P