February 17, 2007
Re: SR-CBOE-2006-106
I have been an owner/member of the Chicago Board Options Exchange since 1973. As such I have remembrances of hearsay comments of reasons why the Chicago Board Of Trade did not frame Chicago Board Options Exchange Charter to include owner/memberships to their members, the fact is that they did not grant such an owner/membership when they clearly could have.
In the CERTIFICATE OF INCORPORATION of CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED, paragraph (b) of Article FIFTH of the Certificate of Incorporation grants membership rights to members of the Chicago Board Of Trade
Under the Chicago Board Options Exchange Constitution, ARTICLE I Definitions: Section 1.1. Definitions: The term member does not confer, have connotations, or imply ownership. It states that a registered nominee can be a member. In the Rules of the Chicago Board Options Exchange the Membership Committee confirms that lessees are members. Surely, the Chicago Board Options Exchange Constitution did not mean to bequeath ownership to a registered nominee and lessees. Thus the word member does not mean owner.
Section 2.5. Acquisition and Transfer of Memberships of the Chicago Board Options Exchange Constitution states: Memberships acquired pursuant to paragraph (b) of Article FIFTH of the Certificate of Incorporation shall not be transferable. All other memberships may be offered for sale and transferred by the owners thereof, or under certain circumstances by the Exchange, as provided in the Rules
Therefore, when the Chicago Mercantile Exchange acquires the Chicago Board Of Trade, the Chicago Board Of Trade members will have transferred the memberships acquired pursuant to paragraph (b) of Article FIFTH of the Certificate of Incorporation thereby violating the Chicago Board Options Exchange Constitution and other agreements made between both entities.
Additionally, not being able to transfer or offer for sale the membership acquired pursuant to paragraph (b) of Article FIFTH of the Certificate of Incorporation, the Chicago Board Of Trade member by definition does not construe ownership in Chicago Board Options Exchange.
I am asking The Securities and Exchange Commission to extinguish the rights granted under paragraph (b) of Article FIFTH of the Certificate of Incorporation.
Thank you for considering my comment.
Sincerely,
Steven G. Holtz
Chicago Board Options Exchange
Owner since 1973