[Federal Register Volume 63, Number 11 (Friday, January 16, 1998)]
[Notices]
[Pages 2708-2709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1111]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39540; File No. SR-CHX-97-26]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the Chicago
Stock Exchange, Inc. Relating to the Display of Limit Orders
January 12, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 1, 1997, the
Chicago Stock Exchange, Incorporated (``CHX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
the proposed rule change, as described in Items I and II below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons and to grant accelerated approval of the proposed
rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Article XX, Rule 7 to expressly
provide for the display of customer limit orders as contained in Rule
11Ac1-4 under the Act and other limit orders. Proposed new language is
italicized.
Article XX
Rule 7
. . . Interpretation and Policies
.05 Quotation sizes, unless otherwise specified, shall be assumed
to be for 100 shares. Where bids or offers are made at the same price
the aggregate quotation size of such equal bids or offers shall be
inputted into the quotation system. Such aggregate sizes shall remain
firm until withdrawn unless exempted under one of the conditions
specified in paragraphs .06-.09 of this Rule. With respect to limit
orders received by specialists, each specialist shall publish
immediately (i.e., as soon as practicable, which under normal market
conditions means no later than 30 seconds from time of receipt) a bid
or offer that reflects:
(i) the price and full size of each limit order that is at a price
that would improve the specialist's bid or offer in such security; and
(ii) the full size of each limit order that is priced equal to the
specialist's bid or offer for such security;
The requirements with respect to specialists' display of limit
orders shall not apply to any limit order that is:
(i) executed upon receipt of the order;
(ii) placed by a person or entity who expressly requests, either
at the time the order is placed or prior thereto pursuant to an
individually negotiated agreement with respect to such person's orders,
that the order not be displayed;
(iii) and odd-lot order;
(iv) delivered immediately upon receipt to an exchange or
association-sponsored system or an electronic communications network
that complies with the requirements of Securities and Exchange
Commission Rule 11Ac1-1(c)(5) under the Securities Exchange Act with
respect to that order;
(v) delivered immediately upon receipt to another exchange member
or over-the-counter market maker that complies with the requirements of
Securities and Exchange Commission Rule 11Ac1-4 under the Securities
Exchange Act with respect to that order; or
(vi) an ``all or none'' order.
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 Exchange 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 III below. The Exchange 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
1. Purpose
The Commission has recently adopted Rule 11Ac1-4 under the Act \2\
which, among other things, requires specialists to immediately display
the price and full size of any customer limit order that improved their
quoted bid or offer in a security. The proposed amendments to Article
XX, Rule 7 would make Rule 7 more consistent with the limit order
display requirements of SEC Rule 11Ac1-4 and Commission interpretations
thereunder.\3\
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\2\ See Securities Exchange Act Release No. 37619A (September 6,
1996), 61 FR 48290 (September 12, 1997) (``SEC Limit Order Adopting
Release'').
\3\ See letters from Richard R. Lindsey, Director, Division of
Market Regulation, SEC, to Mr. Richard Grasso, Chairman and Chief
Executive Officer, NYSE, dated November 22, 1996; to Mr. Richard G.
Ketchum, Chief Operating Officer, NASD, dated January 3, 1997; and
to Mr. James E Buck, Senior Vice President and Secretary, NYSE,
dated January 17, 1997.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b)(5) of the
Act in that it is designed to promote just and equitable principles of
trade, to remove impediments to and perfect the mechanism of a free and
open market and a national market system and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition.
[[Page 2709]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. 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 Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
CHX. All submissions should refer to File No. SR-CHX-97-26 and should
be submitted by February 6, 1998.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission believes that the Exchange's proposal to adopt a
limit order display rule is consistent with the policies behind the
Commission's own Limit Order Display rule.\4\ The Commission recognizes
that the Exchange's proposal has the additional requirements that CHX
specialists display all limit orders, not just customer limit orders,
unless a specified exception exists. In addition, a CHX specialist,
under the Exchange's proposal, must increase the size of its quote upon
receipt of a limit order even if such order creates a de minimis
increase. The Commission recognized, in adopting the Limit Order
Display Rule, that SRO's may impose more stringent standards.\5\
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\4\ See SEC's Limit Order Adopting Release.
\5\ See SEC's Limit Order Adopting Release at note 147.
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The Commission finds that the Exchange's proposal is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange. Specifically,
the Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\6\ which requires an exchange to have rules
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
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\6\ 15 U.S.C. Sec. 78f(b)(5).
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The Commission therefore finds good cause for approving the
proposed rule change (SR-CHX-97-26) prior to the thirtieth day after
date of publication of notice thereof ion the Federal Register.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change be, and hereby is, approved.
\7\ 15 U.S.C. Sec. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-1111 Filed 1-15-98; 8:45 am]
BILLING CODE 8010-01-M
