19106 Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices

21See Securities Exchange Act Release No., 30944

(July 21, 1992), 57 FR 33376 (July 28, 1992).

22 15 U.S.C. 78s(b)(2) (1988).

23 17 CFR 200.30–3(a)(12) (1995).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 36961

(March 13, 1996), 61 FR 11452.

standardized option traded in the

United States.

Lastly, the Commission believes that

settling expiring Index options

(including full-value and reduced-value

long-term Index options) based on the

opening prices of component securities

is reasonable and consistent with the

Act. As has been noted previously,

valuing index options for exercise

settlement on expiration based on

opening rather than closing prices of

index component securities may help to

reduce adverse effects on markets for

such securities.21

The Commission finds good cause for

approving Amendment No. 1 to the

proposal prior to the thirtieth day after

the date of publication of the notice of

filing thereof in the Federal Register.

Specifically, Amendment No. 1

strengthens the Exchange’s proposal by

eliminating from the Index the stock of

one company which is expected to

merge with another company and

replacing one Index component which

no longer meets the Amex’s requirement

for the hedging of gold production. In

addition, Amendment No. 1 strengthens

and clarifies the proposal by indicating

that the Exchange will promptly notify

the Commission if the Index fails to

meet the maintenance criteria provided

in the proposal and representing that

the Index will be maintained so that

foreign country securities or ADRs

thereon that are not subject to

comprehensive surveillance sharing

agreements will not represent more than

20% of the weight of the Index.

Accordingly, the Commission believes

that it is consistent with Sections 6(b)(5)

and 19(b)(2) of the Act to approve

Amendment No. 1 to the proposal on an

accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1. 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. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the file number in the caption

above and should be submitted by May

21, 1996.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,22 that the

proposed rule change (SR–Amex–96–

08), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.23

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–10585 Filed 4–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37141; File No. SR–CBOE–

96–13]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change by

the Chicago Board Options Exchange,

Inc., Relating to the Exchange’s

Member Death Benefit Program

April 24, 1996.

I. Introduction

On March 11, 1996, the Chicago

Board Options Exchange, Inc. (‘‘CBOE’’

or ‘‘Exchange’’) filed a proposed rule

change 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 to revise its Member Death

Benefit Program to expand its coverage

to include certain recently active

members and to establish a defined

benefit of $50,000.

Notice of the proposal was published

for comment and appeared in the

Federal Register on March 20, 1996.3

No comment letters were received on

the proposed rule change. This order

approves the Exchange’s proposal.

II. Background

The Exchange’s Member Death

Benefit Program is set forth in CBOE

Rule 3.24 and functions in the following

manner. The Member Death Benefit

Program covers any natural person who

is a nominee of a member organization,

a Chicago Board of Trade exerciser, a

lessee of an Exchange membership, or

an owner of an Exchange membership

that is not being leased to a lessee. The

Exchange refers to the foregoing

individuals as ‘‘active members.’’ Each

active member designates a beneficiary

under the Program. Upon the death of

an active member, the Exchange pays a

member death benefit to that member’s

designated beneficiary. The amount of

the benefit is equal to the number of

active members at the time of the

member’s death multiplied by $25.

Because this benefit is based on the

number of active members, the amount

of the benefit fluctuates as the number

of active members fluctuates. As of

December 31, 1995, there were 1,384

active members. Therefore, if a benefit

were to have been paid on that date, it

would have been equal to $34,600. After

a member death benefit has been paid

under the Program, the Exchange bills

each active member $25 in order to

recoup the cost of the benefit.

III. Description of the Proposal

The Exchange proposes to revise the

Member Death Benefit Program in two

primary respects. First, the Exchange

proposes to expand the coverage of the

Member Death Benefit Program to cover

any individual who (i) was an active

member within 90 days prior to the date

of his or her death and (ii) was an active

member during at least 274 out of the

365 days preceding the date of his or her

last termination from active member

status. This expanded coverage would

be in addition to the Program’s current

coverage of any individual who is an

active member at the time of his or her

death. Second, the Exchange proposes

to establish a defined member death

benefit under the Program of $50,000.

This $50,000 benefit would replace the

current member death benefit under the

Program which is based on the number

of active members at the time of a

member’s death. Accordingly, instead of

being billed $25 by the Exchange after

a member death benefit payout has

occurred, under the proposed rule

change each active member will be

assessed an amount equal to $50,000

divided by the number of active

members at the time of the assessment.

The proposed rule change also makes

two clarifications concerning the

administration of the Member Death

Benefit Program. First, the proposed

rule change clarifies that in no event

shall more than one member death

benefit be paid by reason of the death

on an individual who is eligible to

receive the member death benefit.

Second, the proposed rule change

clarifies that the active members who

will be assessed after a member death
Federal Register / Vol. 61, No. 84 / Tuesday, April 30, 1996 / Notices 19107

4 15 U.S.C. 78f(b).

5 15 U.S.C. 78s(b)(2).

6 17 CFR 200.30–3(a)(12).

1 17 CFR 240.19b-4 and 19d-1(c)(2).

2The Exchange has submitted to the SEC

concurrently with the proposed rule change a minor

rule violation reporting plan in accordance with

Rule 19d-1(c)(2) under the Act. See Letter from

David Rusoff, Attorney, Foley & Lardner, to Glen

Barrentine, SEC, dated October 6, 1995.

3See Letter from David T. Rusoff, Attorney, Foley

& Lardner, to Glen Barrentine, SEC, dated December

8, 1995 (‘‘Amendment No. 1’’).

4See Letter from David T. Rusoff, Attorney, Foley

& Lardner, to Jon Kroeper, Attorney, SEC, dated

January 12, 1996 (‘‘Amendment No. 2’’).

5See Letter from David T. Rusoff, Attorney, Foley

& Lardner, to Glen Barrentine, SEC, dated March 3,

1996 (‘‘Amendment No. 3’’).

6See Letter from David T. Rusoff, Attorney, Foley

& Lardner, to Jon Kroeper, Attorney, SEC, dated

April 16, 1996 (‘‘Amendment No. 4’’).

7 In Securities Exchange Act Release No. 21013

(June 1, 1984), 49 FR 23828 (June 8, 1994), the SEC

adopted amendments to paragraph (c) of Rule 19d1 to allow self-regulatory organizations to submit

for SEC approval plans for the abbreviated reporting

of minor disciplinary infractions. Under the

amendments, any disciplinary action taken by a

self-regulatory organization against any person for

violation of a rule of the self-regulatory organization

that has been designated as a minor rule violation

pursuant to a plan filed with the SEC shall not be

considered ‘‘final’’ for purposes of Section 19(d)(1)

of the Act if the sanction imposed consists of a fine

not exceeding $2,500 and the sanctioned person has

not sought an adjudication, including a hearing, or

otherwise exhausted his or her administrative

remedies with respect to the matter.

The SEC has approved minor disciplinary rule

plans by virtually every stock exchange and the

National Association of Securities Dealers, Inc. See,

e.g., Securities Exchange Act Release No. 21918

(April 3, 1985), 50 FR 14068 (April 9, 1985) (File

No. 4–260) (Amex); Securities Exchange Act

Release No. 22415 (September 17, 1985), 50 FR

38600 (September 23, 1985) (File No. 4–284)

(NYSE); Securities Exchange Act Release No. 22654

(November 21, 1985), 50 FR 48853 (November 27,

1985) (File No. 4–285) (PSE).

benefit has been paid by the Exchange

will be those individuals who are active

members at the time of the assessment.

The actual date upon which such

assessments will occur will be at the

discretion of the Exchange. Finally, the

proposed rule change makes certain

editorial changes to Rule 3.24 that do

not affect its substance.

The purpose of the Member Death

Benefit Program is to provide a death

benefit to the designated beneficiaries of

active members. The Exchange believes

that the proposed rule change will

further that purpose and provide for a

fairer and more appropriate way to

provide the member death benefit. For

example, currently if an individual who

has been an active member for three

quarters of the previous year

temporarily leaves his seat in order to

take a short vacation, that individual

would not be covered by the Member

Death Benefit Program in the event that

the individual ere to pass away while on

vacation. The same is true if the

individual were to temporarily leave his

seat because of an illness or accident

and then were to pass away shortly

thereafter. The proposed rule change is

intended to cover these types of

individuals under the Member Death

Benefit Program because they have been

active members for much of the year

preceding the time of their death.

The Exchange believes that the

proposed rule change is consistent with

Section 6(b) of the Act, in general, and

furthers the objectives of Sections

6(b)(4) and 6(b)(5) of the Act in

particular, in that it is designed to (i)

provide for the equitable allocation of

reasonable dues, fees, and other charges

among Exchange members and (ii)

remove impediments to and perfect the

mechanism of a free and open market

and a national market system by serving

to assist the Exchange in attracting and

retaining active members through the

enhancement of the financial security of

their families in the event of their death.

IV. Discussion

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, and, in particular, the

requirements of Section 6(b) of the Act.4

The Commission believes that the

Exchange’s proposal is consistent with

the Section 6(b)(5) requirements that the

rules of an exchange be designed to

promote just and equitable principles of

trade, to prevent fraudulent and

manipulative acts, and, in general, to

protect investors and the public interest.

The Commission further believes that

the proposed rule change is consistent

with Section 6(b)(4) of the Act, which

requires the equitable allocation of

reasonable dues and fees among

members and persons using exchange

facilities.

The Commission believes that

proposed amended Rule 3.24 reasonably

addresses the Exchange’s interest in

providing death benefits to an active

member’s designated beneficiary. Under

proposed Rule 3.24, the Exchange

establishes a defined benefit of $50,000

to be paid to a designated beneficiary of

an ‘‘active member’’, as defined above,

upon which each active member will be

assessed an amount equal to $50,000

divided by the number of active

members at the time of assessment. The

Commission believes that the revised

Member Death Benefit Program is

reasonable and should provide

enhanced benefits to a wider range of

the Exchange’s members.

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,5 that the

proposed rule change (File No. SR–

CBOE–96–13) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–10643 Filed 4–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37140; File No. SR–CHX–

95–25]

Self-Regulatory Organizations; Notice

of Filing of Amendment Nos. 2, 3, and

4 to Proposed Rule Change by the

Chicago Stock Exchange, Incorporated

Relating to the Establishment of a

Minor Rule Violation Procedure and

Reporting Plan

April 23, 1996.

Pursuant to Sections 19 (b)(1) and

(d)(1) of the Securities Exchange Act of

1934 (‘‘Act’’), 15 U.S.C. 78s (b)(1) and

(d)(1), and Rules 19b-4 and 19d–1(c)(2)

thereunder,1 notice is hereby given that

on October 11, 1995, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) a proposed rule

change,2 and on December 8, 1995 filed

Amendment No. 1 thereto.3 The original

filing, as amended by Amendment No.

1, was published for comment in

Securities Exchange Act Release No.

36576 (December 12, 1995), 60 FR

65362 (December 19, 1995). On January

17, 1996 the Exchange submitted to the

Commission Amendment No. 2 to the

proposed rule change,4 on March 5,

1996 the Exchange submitted

Amendment No. 3 to the proposed rule

change,5 and on April 17, 1996 the

Exchange submitted Amendment No. 4

to the proposed rule change.6 The

proposed rule change, as amended, is

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, as amended, from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

In the original filing as amended by

Amendment No. 1, the Exchange

proposed to add a minor rule violation

procedure (‘‘Procedure’’) as Article XII,

Rule 9 of the Exchange’s rules, adopt a

minor violation reporting plan

(‘‘Plan’’),7 and renumber existing Article