[Federal Register Volume 64, Number 205 (Monday, October 25, 1999)]
[Notices]
[Pages 57504-57505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27714]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[(Release No. 34-42025; File No. SR-CHX-99-12)]
Self-Regulatory Organizations; Notice of Filing Proposed Rule
Change by the Chicago Stock Exchange, Inc. To Modify the Recommended
Fine Schedule for the Submission of Late Financial and Operational
Reports
October 18, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 30, 1999, the Chicago Stock Exchange, Inc. (``CHX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the CHX.
On October 5, 1999, the CHX submitted Amendment No. 1 to the proposed
rule change.\3\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Angelo Evangelo, Senior Attorney, Market
Regulation, CHX, to John Roeser, Attorney, Division of Market
Regulation, Commission, dated October 1, 1999 (``Amendment No. 1'').
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to eliminate the fixed fine schedule in
Exchange Article XI, Rule 4,
Interpretation and Policy .02 (``IP.02''), regarding the submission
of late financial and operational reports and subject violations under
the rule to the CHX Minor Rule Violation Plan's standard recommended
fine schedule. The text of the proposed rule change is available at the
Office of the Secretary, the CHX and at the Commission.
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 CHX 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 plates specified in
Item IV below. The CHX 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
On May 30, 1996 the Commission approved a proposed rule change that
established a CHX minor rule violation plan (``MRVP'' or ``Plan'').\4\
Under the Plan, the failure to file required financial and operational
reports in a timely manner subjects members to a sanction. However, for
such violations, the Plan's recommended fine schedule mirrors the fine
schedule contained in IP .02. That fine schedule subjects members to
late filing charges as follows:
---------------------------------------------------------------------------
\4\ Rule 19d-1(c)(2) under the Act authorizes national
securities exchanges to adopt minor rule violation plans for the
summary discipline and abbreviated reporting of minor rule
violations by exchange members and member organizations. See
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR
23828 (June 8, 1984) (approving amendments to paragraph (c)(2) of
Rule 19d-1 under the Act). The CHX's Plan was approved by the
Commission in 1996. See Securities Exchange Act Release No. 37255
(May 30, 1996), 61 FR 28918 (June 6, 1996) (approving File No. SR-
CHX-95-25).
---------------------------------------------------------------------------
Days Late/Amount
1-30--$100
31-60--$200
61-90--$400
The Exchange is now proposing to eliminate the fixed fine schedule
in IP .02, and to subject violations under the rule to the recommended
fine schedule applicable to most other violations handled under the
Plan. The recommended fine schedule provides that a $100 fine be
imposed for the first violation within a rolling twelve month period
and a $500 fine and $1000 fine be imposed for the second and third such
violations. The Exchange believes that the proposed change would allow
the MRVP panel to levy higher fines for the late submission of
financial and operational reports.\5\
---------------------------------------------------------------------------
\5\ With respect to the issue of how the MRVP panel would handle
violations that differ in terms of the length of time submissions
are overdue, the Exchange believes that the MRVP panel, in such
instances, would use its discretion in determining appropriate fine
amounts. Although the proposed new fine schedule would not expressly
state that higher fine amounts are appropriate for overly late
submissions, the Exchange indicates that the MRVP panel likely would
exercise its discretion to sanction members in accordance with the
number of days a report was late. See Amendment No. 1, supra note 3.
---------------------------------------------------------------------------
2. Statutory Basis
The proposed rule change is consistent with the requirements of the
Act and the rules and regulations under that Act which are applicable
to a national securities exchange, and, in particular, with the
requirements of Sections 6(b)(1), 6(b)(6), 6(b)(7), 6(d)(1) and 19(d)
of the Act. The proposal is consistent with the Section 6(b)(6)
requirement that the rules of an exchange provide that its members and
persons associated with its members shall be disciplined appropriately
for violations of the rules of the exchange.
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 57505]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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 in 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-99-12 and should
be submitted November 15, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-27714 Filed 10-22-99; 8:45 am]
BILLING CODE 8010-01-M
