# Self-Regulatory Organizations; Filing of Proposed Rule Change by the Chicago Board Options Exchange, Inc., Relating to Termination of Registered Representatives

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URL: https://www.frixlaw.com/law-library/documents/fr%3A94-7823

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** April 1, 1994

## Text

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33826; File No. SR-CBOE-93-56]

Self-Regulatory Organizations; Filing of Proposed Rule Change by
the Chicago Board Options Exchange, Inc., Relating to Termination of
Registered Representatives

March 28, 1994.
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
14, 1993, the Chicago Board Options Exchange, Inc. (``CBOE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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

Currently, paragraph (b), ``Termination,'' of CBOE Rule 9.3,
``Registration and Termination of Representatives,'' requires that a
member file with the CBOE's Department of Investigation a Uniform
Termination Notice for Securities Industry Registration (Form U-5)
immediately after the termination of employment for cause of a
Registered Representative. In addition, current CBOE Rule 9.3,
Interpretation and Policy .01 defines ``Termination for Cause.'' The
CBOE proposes to amend CBOE Rule 9.3(b) to require members to file with
the CBOE's Department of Compliance a termination notice for any
discharge or termination of employment of a registered person, and the
reason therefor, within 30 days of the termination. The proposal
deletes the current rule's definition of ``termination for cause'' and
adds paragraph (c), which requires members to file an amended Form U-5
with the Exchange's Department of Compliance if the member learns of
facts or circumstances which cause any information provided in the
notice to become inaccurate or incomplete. Finally, the proposal would
replace current Interpretation and Policy .01 with a new Interpretation
and Policy allowing members to fulfill CBOE Rule 9.3's filing
requirements by submitting their filings or submissions to the North
American Securities Administrators Association/National Association of
Securities Dealers, Inc. (``NASD'') Central Registration Depository
(``CRD'') within the time period allowed under CBOE Rule 9.3.
The text of the proposal 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 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 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 modify the manner in
which ``Terminations for Cause'' of employment or affiliation of any
Registered Representative are reported to the CBOE by its members.
Currently, under CBOE Rule 9.3, notices must be filed immediately with
the CBOE's Department of Investigation following the date of
termination by means of a Form U-5. However, the Department of
Investigation no longer exists at the CBOE, and a portion of the duties
previously performed by the Department of Investigation, including the
receipt of Form U-5 information, is now performed by the CBOE's
Department of Compliance. The proposal reflects this change by
requiring that filings be made with the Exchange's Department of
Compliance.
The proposal makes CBOE Rule 9.3 more encompassing by requiring
termination notices to be filed for any discharge or termination of
employment of a registered person, not just ``termination for cause.''
To that end, the CBOE proposes to eliminate the definition of the term
``Termination for Cause'' provided in current Interpretation and Policy
.01. The proposal also clarifies when termination notices must be
filed, i.e., ``immediately, but in no event later than thirty (30) days
following termination * * *.'' Finally, the proposal relieves CBOE
member organizations of the obligation to file Form U-5 information in
hard copy form and, instead, deems all CBOE Rule 9.3 filings and
submissions as made for purposes of that rule if they are filed with
the North American Securities Administrators Association/NASD CRD
within the time period set forth in CBOE Rule 9.3. The CBOE states that
this approach is possible because the Exchange's Department of
Compliance has been given direct electronic access to all Form U-5's
and amended Form U-5's filed by the CBOE's member organizations with
CRD, making the direct filing of hard copies with the CBOE no longer
necessary.
The CBOE anticipates that this rule change will reduce the costs to
members of copying, handling and mailing termination materials.
Further, the proposal will bring the CBOE's ``Termination for Cause''
reporting requirements in line with similar rules of the NASD (By-Law
Article IV, Section 3) and the New York Stock Exchange (Rule 345).
The CBOE believes that the proposed rule change is consistent with
Section 6(b) of the Act, in general, and with Section 6(b)(5), in
particular, in that it is designed to improve the CBOE's capacity to
enforce compliance with the provisions of the Act and the CBOE's rules
by enabling the Exchange to monitor more efficiently all discharges or
terminations of employment of registered persons, and, in general, to
protect investors and the public interest.

(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

Within 35 days after 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 reason for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such 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 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. 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 April 22, 1994.

For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\1\
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\1\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7823 Filed 3-31-94; 8:45 am]
BILLING CODE 8010-01-M

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-7823. Public record. Not legal advice.