From: Michael J. Post
Ms. Elizabeth K. King
Dear Ms. King:
The issues presented to you by the above CBOE rule filing appear to be:
Should the SEC have jurisdiction over the corporate structure of the CBOE?
JURISDICTION: When the framers of the Chicago Board Options Exchange chose their structure they had choices, one of which was to simply give equity status outright to the Chicago Board of Trade members. One of the reasonís they didnít do so, was to avoid being under SEC jurisdiction. Repeatedly now, the CBT has tested the question of Federal preemption and your jurisdiction over CBOE matters, and repeatedly the concept has prevailed as it should. The precedent that would be set, by allowing fundamental corporate structure issues of a national securities exchange to be litigated in state courts, as opposed to using the uniform standard of the Exchange Act for all marketplaces would be devastating. The potential for inconsistent regulations based on differing state laws is not a tolerable option.
RIGHTS AND OBLIGATIONS: There are two types of rights in this world:
Inalienable rights that only God can bestow on us, which require no action on the recipientís part,
In my opinion, the members of The Chicago Board of Trade have confused the two. The history of litigation, negotiation, and clarification between the CBOE and the BOT since 1973 has one theme. The Board of Trade members have repeatedly initiated attempts to dilute or diminish their obligations to the CBOE while attempting to expand the nature of their right. Actions on the part of the CBOE have always been defensive in nature and consistent in theme.
Essentially, the CBOE position, as written in the constitution, asserts the CBT member only has a trading right IF:
A. they retain all the characteristics of the 1973 ownership undiluted and
B. are not trading or renting at the CBT.
The current attempt by The Chicago Board of Trade members to prevent the SEC from doing itís job as regulator, diminish the CBTís ďobligationĒ to even exist as an entity, and assert their ďInalienableĒ right to full equity in the CBOE, something never stated or intended by the framers, seems indefensible on all levels.
Michael J. Post