[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
