11/04/2005
Members considering transferring ownership of their seats to a trust or family limited partnership should consult with their personal legal and financial advisor to determine if such a transfer will benefit your individual situation.
Please note that if a seat to be transferred to a Trust or Family Limited Partnership is subject to a lease agreement at the time of transfer, the lease will continue to its natural expiration without change to the terms or conditions of said lease agreement. Attached are the applicable rules as well as certain of the documents that will need to be submitted to request a transfer of ownership to an eligible Trust or Family Limited Partnership. In addition to the submission of the documents attached to this notice, a copy of the actual Trust/Family Limited Partnership Agreement must be submitted to the Membership Department along with a transfer fee of $500.
Rule 2.50. TRANSFER OF MEMBERSHIPS
(A) A Member, Member Firm or other entity may transfer ownership of a membership upon sale of a membership to another Member, Member Firm or Member-elect as provided in Rule 2.52.
(B) A Member may transfer ownership of his membership as a result of a bona fide gift, bequeath or bequest from the Member:
(1) To an eligible family member (i.e., a spouse, parent, child, sibling, grandparent, or grandchild);
(2) To a trust for which the Member is grantor and, if/while living and competent, a trustee of the trust; and with respect to which all beneficiaries are members of the Member’s family who would be eligible for a family transfer from the Member pursuant to paragraph (B)(1) of this Rule.
(i) The document(s) establishing and governing the trust shall at all times prohibit assignments of an interest in the trust to any person who is not an eligible family member and state that:
(a) The trust’s interest in the membership shall at all times be subject to all of the Rules of the Exchange, as may be amended;
(b) The management of the trust shall be vested exclusively in a trustee (and any successor) who, if not already a Member, shall qualify for membership by satisfying the requirements of Chapter 2 of these Rules;
(c) The Exchange’s rights with respect to the membership shall be superior to those of the beneficiaries; and
(d) The Exchange shall have no liability to the beneficiaries for any loss, damage, or expense resulting from any acts or omissions by the trustee.
(ii) The transferor and the trustee (and any successor) shall each provide, in a form acceptable to the Exchange, a certification that the trust shall/has acquire(d) the membership subject to all of the Rules of the Exchange and that the trust is in compliance with the requirements of the Exchange’s By-Laws and Rules.
(iii) Transfer of a membership pursuant to this Rule shall not relieve the transferor of any liability to the Exchange or its Members with respect to any claim arising out of an act or omission occurring prior to such transfer, and the membership will continue to be treated as the asset of the transferor for the purposes of satisfying any obligations to the Exchange and/or its Members arising out of the transferor’s use of the membership prior to the transfer to the trust, including, but not limited to, fines imposed with respect to conduct occurring prior to the transfer to the trust.
(iv) If the transferor, trustee or any subsequent trustee exercises, in his own name, the floor trading privileges associated with said membership, the membership will be treated as the asset of the transferor, trustee or any subsequent trustee for the purposes of satisfying any obligations to the Exchange or its Members arising out of the transferor’s, trustee’s or subsequent trustee’s use of the membership.
(v) A membership held in trust may not be used to confer member firm privileges.
(vi) Upon official notice to the Exchange that the trust will be or has been revoked, the membership may:
(a) Be transferred back to the transferor, if living;
(b) Be transferred to the transferor’s estate; or
(c) Be sold in accordance with and subject to the provisions of Rule 2.52.
(3) To a Family Limited Partnership (“FLP") with respect to which all partners are members of the member’s family who would be eligible for a family transfer from the member pursuant to paragraph B(1) of this Rule.
(i) The limited partnership agreement or other document(s) governing the FLP shall at all times prohibit assignments of an interest in the FLP to any person who is not an Eligible Family Member and state that:
(a) The FLP's interest in the membership shall at all times be subject to all of the Rules of the Exchange, as may be amended;
(b) The management of the FLP shall be vested exclusively in a managing general partner, who shall qualify for membership by satisfying the requirements of Chapter 2 of these Rules;
(c) The Exchange's rights with respect to the membership shall be superior to those of the partners; and
(d) The Exchange shall have no liability to the partners for any loss, damage, or expense resulting from any acts or omissions by the managing general partner.
(ii) The transferor and the managing general partner (and any successor) shall each provide, in a form acceptable to the Exchange, a certification that the FLP shall/has acquire(d) the membership subject to all of the Rules of the Exchange and that the FLP is in compliance with the requirements of the Exchange's By-Laws and Rules.
(iii) Transfer of a membership pursuant to this Rule shall not relieve the transferor of any liability to the Exchange or its Members with respect to any claim arising out of an act or omission occurring prior to such transfer, and the membership will continue to be treated as the asset of the transferor for the purposes of satisfying any obligations to the Exchange and/or its Members arising out of the transferor’s use of the membership prior to the transfer to the FLP, including, but not limited to, fines imposed with respect to conduct occurring prior to the transfer to the FLP.
(iv) If the transferor, managing general partner or any subsequent managing general partner exercises, in his own name, the floor trading privileges associated with said membership, the membership will be treated as the asset of the transferor, managing general partner or any subsequent managing general partner for the purposes of satisfying any obligations to the Exchange or its Members arising out of the transferor’s, managing general partner’s or subsequent managing general partner’s use of the membership.
(v) A membership held in a FLP may not be used to confer member firm privileges.
(vi) Upon official notice to the Exchange that the FLP will be or has been revoked, the membership may:
(a) Be transferred back to the transferor, if living;
(b) Be transferred to the transferor’s estate; or
(c) Be sold in accordance with and subject to the provisions of Rule 2.52.
(C) A Member, Member Firm or other entity may transfer ownership of a membership by operation of law;
(D) A Member may transfer ownership of a membership as a result of a sale where the seller and purchaser are members of the same family (a spouse, parent, child, sibling, grandparent, or grandchild).
(E) The transfer in ownership of a membership shall be effective upon the execution of an assignment of registration to the transferee on the membership records of the Exchange.
(F) A Member may retain ownership of his membership and transfer, via lease or ABC Agreement, those rights and obligations specifically provided for in the lease or ABC Agreement. The transfer of such rights and obligations shall be concurrent with the effective and/or termination date of the lease or ABC Agreement
(G) The Exchange shall treat the person in whose name a membership is registered on the membership records of the Exchange as the sole owner of the membership, notwithstanding the terms and conditions of an ABC Agreement, Trust Agreement or Family Limited Partnership Agreement pursuant to which the person holds such membership, and, except as otherwise provided in the By-Laws and Rules, shall not be bound to recognize any claim to, or interest in, such membership, by any other person or entity, whether or not the Exchange has notice of such purported claim or interest. (Amended October 10, 2005)