[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Notices]
[Pages 3888-3890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1282]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35220; File No. SR-CBOE/94-48]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Board Options Exchange, Inc.; Relating to the 
Placement of CBOE Memberships in Trust

January 11, 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 December 
1, 1994, 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 adopt a new Rule 3.25 that would enable an 
individual CBOE member to place his membership in trust for estate 
planning purposes, subject to certain conditions and requirements.
    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, the self-regulatory organization 
included statements concerning the purpose of an 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

    The purpose of the proposed rule change is to include in CBOE's 
membership rules a new Rule 3.25 that would enable any individual 
member to place his membership in trust, subject to various conditions 
and requirements set forth in the rule. Rule 3.25 is designed to make 
the membership transfer process simple for members and for the Exchange 
and is structured to correlate the substance and mechanics of the new 
rule with CBOE's existing rules, including, for example, CBOE's rules 
respecting sales and leases of memberships and transfers of memberships 
to family members.
    The Exchange believes that the proposed rule change will provide 
members with useful, but appropriately controlled, estate planning 
flexibility. For example, the proposal will permit a member who has 
placed his membership in trust to provide for the appointment of a 
successor trustee in the event of the member's disability. The 
successor trustee would then hold the membership for the benefit of the 
member during the disability period, provided the membership is leased 
during that period in accordance with CBOE's membership lease rules.
    Specifically, the proposed rule change would provide that an 
individual member in good standing may, during his lifetime, transfer 
his membership to a trust for which he is the sole trustee and sole 
present beneficiary. Under paragraph (c) of proposed Rule 3.25 a member 
who has placed his membership in trust (``Trust Member'') may transfer 
his membership, in accordance with the provisions of Rule 3.14(c)(1), 
to an eligible family member who is approved for Exchange membership, 
or, in accordance with Rule 3.14(c)(3), to a member organization. Any 
such transfer must conform to the collateral deposit requirements of 
the final sentence in Rule 3.14(c). In addition, the proposed rule 
change provides that a Trust Member may transfer his membership from 
the trust to himself to be held directly.
    Paragraph (b) of the proposed rule change would authorized a Trust 
Member to provide in his trust agreement for the appointment of a 
successor trustee in the event the Trust Member dies, is declared 
legally incompetent, or becomes disabled. A successor trustee could be 
so appointed for one of two purposes only--either to effect a transfer 
of the membership after the member's death in accordance with the 
Exchange's membership transfer rules, or, to retain the membership in 
trust for the benefit of an incompetent or disable Trust Member, 
provided the membership is leased in accordance with Exchange Rule 
3.16(b) (``Leased Memberships'').
    Any transfer of a membership into trust would be subject to 
Exchange review. Under paragraph (d) of proposed Rule 3.25, a member 
seeking to effect such a transfer must furnish the Exchange with a copy 
of the trust agreement together with an attorney's certification that 
the agreement conforms to the requirements of the new rule. The 
Exchange may disapprove a transfer by written notice to the member if 
the Exchange finds that the trust agreement does not so conform. In 
addition, the new rule specifies that, notwithstanding a transfer into 
trust, the membership must remain subject to all Exchange rules, and 
the Trust Member must remain personally responsible for all obligations 
and liabilities associated with use of the membership.
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act and with Section 6(b)(1) of the Act in 
particular in that it is designed to enable the Exchange to enforce 
members' compliance with Exchange rules and to protect investors and 
the public interest.

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

    The Exchange 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

    Comments were neither solicited nor 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 other 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 NW., Washington, DC 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 

[[Page 3890]]
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 at the Commission's Public 
Reference Section, 450 Fifth Street NW., Washington, DC 20549. Copies 
of such filing will also be available for inspection and copying at the 
principal office of the CBOE. All submissions should refer to the file 
number in the caption above and should be submitted by February 9, 
1995.

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

    \1\17 CFR 200.3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-1282 Filed 1-18-95; 8:45 am]
BILLING CODE 8010-01-M