From: Allen Mitzenmacher |
Securities and Exchange Commission Attn: Nancy M. Morris, Secretary Re: File No. SR-CBOE-2006-106 Gentlemen - My name is Allen Mitzenmacher. I am a 30 + year member of the Chicago Board of Trade (CBOT). As a matter of background, the CBOT is in the process of a merger with the Chicago Mercantile Exchange (CME), another Chicago commodities exchange, which merger is scheduled to proceed in mid 2007. The Chicago Board Options Exchange (the Options Exchange) and the CBOT and their members have a long standing relationship which is codified in the Options Exchange’s certificate of incorporation, their rules and numerous agreements entered into between these parties over time. This relationship includes the right of CBOT members under certain defined circumstances, to become regular members of the Options Exchange without having to purchase a membership. The relationship has been observed by both parties since the Options Exchange was created by the CBOT membership in the decade of the 1970’s. The Options Exchange is now attempting to most significantly change that relationship, by an Options Exchange rule change. The change attempts to negate the right of a CBOT member to become an Options Exchange member, by declaring by rule that the CBOT/CME merger would terminate that right. The termination of that right is being attempted, not by agreement and not by getting a finding by a court of law as to what the rights of the parties are. Instead, the Options Exchange attempts this change by enacting rules changes and applying to a regulatory body to endorse them. It is my understanding that the role of the SEC is mainly to protect investors in our country’s markets. Here, the SEC is being asked to administer a contractual relationship, not in any significant way related to investor security. It is unfortunate that the Options Exchange (one party to what amounts to a contract dispute), has asked the SEC to become involved so that the Options Exchange can somehow avoid a determination by the courts (where this dispute should be decided). It is respectfully requested that the SEC decline approval of this rule change. Allen Mitzenmacher |