99-26155. Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment No. 1 to the Proposed Rule Change by the Chicago Stock Exchange, Inc., Relating to Access to an After-Hours Trading Session  

  • [Federal Register Volume 64, Number 194 (Thursday, October 7, 1999)]
    [Notices]
    [Pages 54701-54702]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-26155]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    
    [Release No. 34-41968; File No. SR-CHX-99-08]
    
    
    Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
    Change and Amendment No. 1 to the Proposed Rule Change by the Chicago 
    Stock Exchange, Inc., Relating to Access to an After-Hours Trading 
    Session
    
        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 2, 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 
    Exchange. On September 28, 1999, the Exchange filed an amendment to the 
    proposed rule change.\3\ The Commission is publishing this notice to 
    solicit comments on the proposed rule change and Amendment No. 1 from 
    interested persons.
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        \1\ 15 U.S.C. 78s(b)(1).
        \2\ 17 CFR 240.19b-4.
        \3\ See letter from Ellen J. Neely, Vice President and General 
    Counsel, CHX, to Alton S. Harvey, Chief, Office of Market Watch, 
    Division of Market Regulation, SEC, September 27, 1999 (``Amendment 
    No. 1''). In Amendment No. 1, the CHX proposes several technical 
    amendments to its filing, including substituting the term ``E-
    Session'' for the term ``night trading'' and deleting all references 
    to market makers.
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    I. Self-Regulatory Organization's Statement of the Terms of the 
    Substance of the Proposed Rule Change
    
        The Exchange proposes to add new Article I.B. to provide rules that 
    would govern access to the CHX trading floor (and related trading 
    privileges) during an after-hours trading session (``E-Session'').\4\ 
    The text of the proposed rule change and Amendment No. 1 is available 
    at the Exchange and at the Commission.
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        \4\ The Exchange is proposing these access rules at this time so 
    that they will be in place if the Exchange's filing, submitted under 
    separate cover, to initiate an E-Session, is approved by the 
    Commission. See File No. SR-CHX-99-16, currently pending with the 
    Commission.
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    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 IV 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 Exchange proposes to amend its rules to include provisions for 
    persons desiring to obtain trading privileges for an E-Session that 
    would operate after the Primary Trading Session and Post Primary 
    Trading Session. At this time, the Exchange is only proposed rules 
    relating to trading privileges and is not proposing any trading rules.
        Under the proposed rules, a person or entity may access the E-
    Session through his or its own existing Exchange membership or by 
    leasing the rights to a membership. The rights and privileges that can 
    be leased for the E-Session will be limited to access rights to the 
    trading floor during the E-Session in the capacity of a floor broker or 
    co-specialist only (``night trading privileges''). To lease the E-
    Session trading privileges of a membership, a person or entity would be 
    required to register with and be approved by the Exchange as a member 
    or member organization under the Exchange's Constitution and Rules. The 
    lessee would not be entitled to sublease the privileges and rights and 
    would not be able to vote such interest.\5\ Further, the lessee of the 
    E-Session trading privilege will be required to provide proof of an 
    agreement with a registered clearing firm that is approved by the 
    Exchange and provide evidence that such clearing firm will guarantee 
    the lessee's obligations for any and all losses incurred through his or 
    its lease of the E-Session trading privileges.\6\ The lessee will be 
    required to execute a lease agreement (which would be required to be 
    approved by the Exchange) in which the lessee must make certain 
    representations with respect to the rights and privileges acquired. The 
    lessee shall be considered a ``member'' or ``member organization'' for 
    purposes of the federal securities laws, and the Exchange's Certificate 
    of Incorporation, Constitution and Rules, except in certain 
    circumstances set forth in the rules.
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        \5\ The voting right would be retained by the person who is 
    designated as the Voting Designee on the seat.
        \6\ With respect to a person leasing a membership for the 
    Primary Trading Session, the membership is considered an asset of 
    the lessee and, therefore, the Exchange may sell the membership to 
    satisfy any debts of such person. Because the membership is viewed 
    as an asset of the person leasing the membership during the Primary 
    Trading Session, it will not be viewed as an asset of the person 
    leasing the membership during the E-Session, unless such person is 
    leasing the membership for both the Primary Trading Session and the 
    E-Session.
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        With respect to lessors, the proposed rules would require that the 
    lessor be either: (i) An Approved Lessor, as defined in Article I.A of 
    the Exchange rules; (ii) a member of member organization that leases 
    its membership privileges to a lessee for the Primary Trading Session; 
    or (iii) a member or member organization that owns a membership and 
    uses the membership for his or its own purposes during the Primary 
    Trading Session.
        Finally, the proposed rules would permit the Exchange to terminate 
    the E-Session trading privileges if the Exchange determines that it is 
    in the best interests of the Exchange.
    2. Statutory Basis
        The Exchange believes that the proposed rule change is consistent 
    with Section 6(b)(5) of the Act \7\ in that it is designed to promote 
    just and equitable principles of trade, to foster cooperation and 
    coordination with persons regulating securities transactions, 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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        \7\ 15 U.S.C. 78f(b)(5).
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    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.
    
    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.
    
    [[Page 54702]]
    
    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 CHX 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, as amended, 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-99-08 and should be submitted by October 28, 1999.
    
        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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    Jonathan G. Katz,
    Secretary.
    [FR Doc. 99-26155 Filed 10-6-99; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
10/07/1999
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
99-26155
Pages:
54701-54702 (2 pages)
Docket Numbers:
Release No. 34-41968, File No. SR-CHX-99-08
PDF File:
99-26155.pdf