Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by Chicago Board Options Exchange, Inc., Relating to Parents of Member Organizations

[Federal Register Volume 60, Number 90 (Wednesday, May 10, 1995)]
[Notices]
[Pages 24936-24937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11443]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35666; File No. SR-CBOE-95-21]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by Chicago Board Options Exchange, Inc., Relating to Parents of 
Member Organizations

May 3, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April 
18, 1995, 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE proposes to rescind Rule 3.7, which requires the 
Exchange's Board to approve each country under whose laws non-U.S. 
parents of member organizations are organized. The CBOE also proposes 
to move from Rule 3.7 to Rule 3.5(a) the requirement that parents of 
member organizations must furnish certain information to the Exchange 
upon request.
    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, 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 eliminate the 
requirement that the Exchange's Board of Directors must approve each 
country under whose laws non-U.S. parents of member organizations are 
organized. The Exchange believes this requirement is not necessary for 
the effective regulation of its members and their parent organizations, 
if any. To the contrary, elimination of this requirement will 
facilitate the Exchange's review of membership applications submitted 
by member organizations that have non-U.S. parents, as well as its 
review of transactions that would result in the transfer of control of 
an existing member organization to a foreign parent.
    The Exchange has never adopted any standards to govern the Board's 
approval of individual countries for purposes of Rule 3.7, and would 
find it problematic to do so. However, since parents of member 
organizations are ``associated persons'' for purposes of Exchange 
Rules, as that term is defined in Rule 1.1(qq), the Exchange has and 
will continue to have adequate regulatory jurisdiction over U.S. and 
foreign parents of member organizations. for example, Rule 3.5 subjects 
associated persons to the Constitution and Rules of the Exchange and 
the Clearing Corporation, and requires associated persons to provide 
information to the Exchange with respect to their relationship and 
dealings with the member and to permit the Exchange to examine their 
relevant books and records. In addition, as part of this filing, CBOE 
proposes to move to Rule 3.5 the requirement currently contained in 
Rule 3.7 obligating persons who control member organizations to furnish 
to the Exchange any information reasonably related to their securities 
business that the Exchange may request. The Exchange's authority over 
parents of member organizations is further enlarged by Rule 17.1, which 
subjects persons associated with members to the disciplinary 
jurisdiction of the Exchange.
2. Statutory Basis
    In light of this broad grant of regulatory authority over persons 
who control member organizations as described above, and the fact that 
members themselves are subject to comprehensive regulation under the 
rules of the Exchange and both federal and state securities laws, the 
Exchange has concluded that the requirement is consistent with Section 
6(b) of the Securities Exchange Act of 1934 in general, and furthers 
the objectives of Section 6(b)(2) in particular, by eliminating 
restrictions on who may be associated with a member of the Exchange 
without diminishing the protection of investors and the public 
interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed rule change will impose no 
burden on competition. [[Page 24937]] 

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of CBOE. All 
submissions should refer to File No. SR-CBOE-95-21 and should be 
submitted by May 31, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\1\

    \1\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-11443 Filed 5-9-95; 8:45 am]
BILLING CODE 8010-01-M