[Federal Register Volume 63, Number 223 (Thursday, November 19, 1998)]
[Notices]
[Pages 64299-64303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30950]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40655; File No. SR-CHX-97-19]
Self-Regulatory Organizations; Chicago Stock Exchange,
Incorporated; Order Granting Approval to Proposed Rule Change and
Notice of Filing and Order Granting Accelerated Approval of Amendment
Nos. 1 and 2 to Proposed Rule Change Establishing Rules Relating to
Market-at-the-Close Orders
November 10, 1998.
I. Introduction
On September 12, 1997, the Chicago Stock Exchange, Incorporated
(``Exchange'' or ``CHX'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to establish rules and procedures
governing market-at-the-close (``MOC'') orders.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 39252 (Oct. 17, 1997), 62 FR 55444 (Oct. 24,
1997). The Commission did not receive any comments on the proposal. The
Exchange filed with the Commission Amendment No. 1 to the proposed rule
change on November 3, 1997,\3\ and Amendment No. 2 on September 29,
1998.\4\ This order approves the proposed rule change including, on an
accelerated basis, Amendment Nos. 1 and 2.
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\3\ Amendment No. 1 revised the proposed rule change by
redefining a term used in the rule text. See Letter from Charles R.
Haywood, Foley & Lardner, to Katherine England, Assistant Director,
Division of Market Regulation, Commission, dated October 31, 1997
(``Amendment No. 1'').
\4\ Amendment No. 2 eliminates the proposed requirements that
the Exchange publish an independent list of MOC order imbalances
that occur on the Exchange. In addition, Amendment No. 2 revises the
proposal to establish identical procedures for MOC orders entered on
expiration and non-expiration days. Finally, Amendment No. 2
provides that MOC orders may be entered on the Exchange after 2:40
P.M., Central Standard Time, only if the specialist determines that
such MOC order could have been entered on the primary market. See
Letter from David T. Rusoff, Foley & Lardner, to Michael Loftus,
Attorney, Division of Market Regulation, Commission, dated September
28, 1998 (``Amendment No. 2'').
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II. Description of the Proposal
The Exchange does not currently maintain formal rules governing the
entry or execution of MOC orders on the Exchange.\5\ The Exchange
therefore seeks to adopt Article XX, Exchange Rule 44, ``Market-at-the-
Close Orders,'' to establish formal procedures and better define the
rights and obligations of Exchange members and customers with respect
to MOC orders. As defined in the proposed rule change, the term ``MOC
order'' means a market order which is to be executed in its entirety at
the closing price on the primary market of the stock named in the
order, and if not so executed, is to be treated as canceled.\6\
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\5\ However, the Exchange does not prohibit the use of MOC
orders. Generally, an Exchange specialist will voluntarily accept an
MOC order if the specialist believes such order could be accepted on
the New York Stock Exchange. Telephone conversation between David T.
Rusoff, Attorney, Foley and Lardner; Daniel J. Liberti, Attorney,
Exchange; and Michael L. Loftus, Attorney, Division of Market
Regulation, Commission (October 16, 1997).
\6\ The Exchange's proposed MOC rule and procedures would apply
to all securities listed on the Exchange (whether by exclusive
listing or dual listing) and all securities traded on the Exchange
pursuant to unlisted trading privileges. Electronic mail message
from David T. Tusoff, Attorney, Foley and Lardner, to Michael L.
Loftus, Attorney, Division of Market Regulation, Commission
(November 9, 1998).
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The Exchange proposes to adopt procedures that mirror those used by
the New York Stock Exchange (``NYSE'') and the American Stock Exchange
(``Amex''). The similarity is intended to ensure that MOC orders sent
to the Exchange will receive treatment comparable to MOC orders sent to
the NYSE and the Amex. The Exchange has expressed concern that unless
its MOC rules are functionally equivalent to those of the NYSE and the
Amex, market participants may attempt to execute certain MOC orders on
the Exchange that would otherwise be prohibited under the MOC rules of
the NYSE and the Amex.
In its original form, the Exchange's proposal contemplated
procedures and requirements for MOC orders entered on expiration days
(i.e., last trading day before monthly expiration of standardized
contracts in derivative products and last trading day before expiration
of quarterly index options) that differed from those for MOC orders
entered on nonexpiration days. Amendment No. 2 eliminates the disparity
and proposes a uniform version of the Exchange's MOC rules that would
apply to all MOC orders irrespective of the date of entry.
[[Page 64300]]
Under the amended proposal, no MOC order may be entered after 2:40
P.M., Central Standard Time, in any stock. Floor brokers representing
MOC orders must indicate their irrevocable MOC interest to the
specialist by 2:40 P.M. After 2:40 P.M., MOC orders may generally be
entered only if the specialist determines that such MOC order could
have been entered on the primary market. In order for specialists to
determine whether MOC orders could have been entered on the primary
market, specialist must monitor the publication of MOC order imbalances
on the primary market through third-party vendors. If a specialist
accepts an MOC order after 2:40 P.M., the specialist is required to
document evidence that such MOC order could have been entered on the
primary market.
Notwithstanding the above, the proposal prohibits the use of MOC
orders entered after 2:40 P.M. for the liquidation of positions
relating to a strategy involving any stock index options. The proposal
further provides that no MOC order in any stock may be canceled or
reduced in size after 2:40 P.M. Cancellations to correct a legitimate
error, however, will continue to be permitted after 2:40 P.M.
An Exchange specialist only will be obligated to accept and
guarantee execution of those MOC orders that are of a size and type
that a specialist would otherwise be required to accept and guarantee
execution of, if the orders did not have an MOC designation.\7\
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\7\ The execution parameters governing the Exchange's Guaranteed
Execution System (``BEST System'') require a specialist to accept
and guarantee execution on all agency orders in Dual Trading System
Issues from 100 up to and including 2,099 shares. Therefore, an
Exchange specialist likewise would be required to accept and
guarantee execution of an MOC order from 100 up to and including
2,099 shares. See Article XX, Exchange Rule 37(a)(1).
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The proposed rule change specifies the manner in which an Exchange
specialist is required to executive MOC orders. When there is an
imbalance between the buy and sell MOC orders on the Exchange, the
specialist shall, at the close of the Primary Trading Sessions \8\ on
that day, execute the imbalance for its own account at the closing
price on the primary market of the stock. The specialist shall then
stop the remaining buy and sell MOC orders against each other and pair
them off at the closing price on the primary market of the stock. The
``pair off'' transaction shall be reported to the consolidated last
sale reporting system as ``stopped stock.'' Where the aggregate size of
the buy MOC orders on the Exchange equals the aggregate size of the
sell MOC orders on the Exchange, the buy and sell MOC orders shall be
stopped against each other and paired off at the closing price on the
primary market of the stock. The transaction shall be reported to the
consolidated last sale reporting system as ``stopped stock.''
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\8\ The term ``Primary Trading Session'' is defined in Article
IX, Exchange Rule 10(b), as being (i) the same hours the security is
traded on its primary market, if the Exchange is not the primary
market for such security (however, no later than 3:00 P.M. Central
Standard Time for a security primarily listed on the Pacific
Exchange), or (ii) from 8:30 A.M. to 3:00 P.M., Central Standard
Time, Monday through Friday, if the Exchange is the primary market
for such security.
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Finally, the proposed rule change would include Interpretations and
Policies, Section .01, ``G Orders,'' as part of the new Exchange Rule
44. Under the provision, proprietary orders represented pursuant to
Section 11(a)(1)(G) of the Act \9\ (``G Orders'') must be announced as
such\10\ and yield priority, parity, and precedence to any order which
is for the account of a person who is not a member, member
organization, or associated person thereof. Market orders to sell short
at-the-close represented as G Orders must yield priority, parity, and
precedence to limit orders not represented pursuant to Section
11(a)(1)(G) of the Act. For example, in executing paired-off MOC
orders, a G Order to sell short at-the-market would yield to sell
orders limited at the closing price that are not represented as G
Orders. This will be the policy even if the G Order to sell short at-
the-market theoretically could have been executed at a better price
(and still satisfy the short sale rule in terms of a ``plus'' or ``zero
plus'' tick) had their not been a pair-off on the transaction. This
would not be applicable if the order was a market order to sell
``long'' or a market order to buy.
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\9\ 15 U.S.C. 78k(a)(1)(G).
\10\ In addition, the Exchange currently requires that orders to
be executed pursuant to Section 11(a)(1)(G) of the Act and Rule
11a1-1(T) must bear an identifying notation that will enable the
executing member to disclose to other members that the order is
subject to such provisions. See Article XX, Exchange Rule 24,
``Record of Orders,'' Interpretations and Policies, .01.
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III. Discussion
For the reasons discussed below, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange, and, in particular, with the requirements of
Section 6(b).\11\ Specifically, the Commission believes the proposed
rule change is consistent with the Section 6(b)(5) requirements that
the rules of an exchange market be 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.\12\
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\11\ 15 U.S.C. 78f(b).
\12\ In approving the proposed rule change, the Commission has
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
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MOC procedures were first developed for expiration days because
many trading strategies that involve stock index derivatives require
the unwinding of positions in the component stocks at the closing price
on expiration days. The Commission recognizes, however, that
institutional investors have developed an increasing number of
composite-asset trading techniques and strategies that call for a
single closing price on a daily basis, not just expiration days. As a
result, there is a demonstrated interest in establishing greater price
certainty at the close of trading each day.
Moreover, the national securities exchanges and broker-dealers have
developed products to facilitate the trading of portfolios of
securities. The Exchange's proposal represents an effort to accommodate
the increased use of index-related trading by customers and member
firms, and provide additional flexibility in order execution. The
proposal also constitutes an attempt to minimize the excess market
volatility that may emanate from the liquidation of stock positions
related to trading strategies involving index derivative products. The
Commission believes, based in part on the experience of other exchange
markets, that MOC procedures may help reduce market volatility and may
result in more orderly markets at the close of trading, especially on
expiration days.
The proposal requires market participants to enter their MOC orders
by 2:40 P.M., Central Standard Time, every trading day. In addition,
floor brokers representing MOC orders must indicate their irrevocable
MOC interest to the specialist by 2:40 P.M. every trading day. No MOC
order in any stock may be canceled or reduced in size after 2:40 P.M.
The Commission believes the 2:40 P.M. deadline for the entry of MOC
orders on all trading days will allow Exchange specialists to make
timely and reliable assessments of MOC order flow and evaluate the
potential impact on closing prices. The Commission notes that because
the MOC orders will be irrevocable, and because of other restrictions
on MOC order entry after
[[Page 64301]]
2:40 P.M., MOC orders entered should reflect actual investor interest.
In addition, because the MOC order entry deadline is twenty minutes in
advance of the closing, the procedures should ameliorate the problem of
significant shifts in MOC imbalances near the close of trading. The
Commission therefore believes the 2:40 P.M. deadline for the entry of
MOC orders should help effectuate more orderly closings on a daily
basis and assist Exchange specialists in obtaining an accurate view of
the buying and selling in MOC orders.
The Exchange's proposal states that no MOC order may be entered on
the Exchange after 2:40 P.M. in any stock unless the specialist
determines that such MOC order could have been entered on the primary
market (i.e., the NYSE or the Amex). Therefore, the MOC rules and
procedures of the primary market will control a specialist's
determination of whether an MOC order could be entered on the primary
market. Consistent with the MOC rules and procedures of the primary
markets, an MOC order generally may be entered on the Exchange after
2:40 P.M., if the primary market has disseminated notice of an MOC
order imbalance for that particular stock, and the MOC order to be
entered on the Exchange would serve to offset that disseminated MOC
order imbalance (e.g., the MOC order to be entered is on the contra-
side of the imbalance).
Specifically, as soon as practicable after 3:40 P.M., Eastern
Standard Time (2:40 P.M., Central Standard Time), every trading day,
the NYSE (a ``primary market'') disseminates notice of MOC order
imbalances of 50,000 shares or more in all NYSE-listed stocks.\13\ The
NYSE also disseminates MOC order imbalances of less than 50,000 shares
if permission is obtained from an NYSE Floor Official,\14\ or if the
underlying stock was the subject of an informational imbalance
dissemination made between 3:00 and 3:40 P.M., Eastern Standard
Time.\15\ It should be noted that the MOC order imbalances disseminated
by the NYSE include ``marketable'' limit-at-the-close (``LOC'')
orders.\16\ The NYSE also requires that an additional dissemination be
made at 3:50 P.M., Eastern Standard Time, for any stock which was the
subject of an imbalance dissemination at 3:40 P.M. Specifically, if at
3:50 P.M. the MOC order imbalance remains 50,000 shares or more, the
3:50 P.M. update must include the size and side of the imbalance.\17\
If at 3:50 P.M. the MOC order imbalance is less than 50,000 shares, the
3:50 P.M. update must include a ``no imbalance'' message, or
alternatively the size and side of the imbalance may be disseminated
with Floor Official approval.
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\13\ See NYSE Rule 116, Supplementary Material .40, ``
`Stopping' stock on market-at-the-close orders.'' NYSE Information
Memo No. 98-20 (June 22, 1998) also provides information pertaining
to MOC orders entered on the NYSE. The Commission recently approved
revisions to the NYSE procedures that govern MOC orders. See
Securities Exchange Act Release No. 40094 (June 15, 1998), 63 FR
33975 (June 22, 1998).
\14\ This provision permits, but does not require, the
publication of an MOC order imbalance which, although less than
50,000 shares, may be significantly greater than average daily
volume in a particular stock.
\15\ Between 3:00 and 3:40 P.M., imbalances of any size may be
disseminated with Floor Official approval. These disseminations are
informational only and do not limit MOC order entry before 3:40 P.M.
\16\ This means that LOC orders to buy at a higher price than
the last sale price would be included with the buy MOC orders, and
LOC orders to sell at a lower price than the last sale price would
be included with the sell MOC orders. LOC orders with a limit equal
to the last sale price would not be included in the disseminated
imbalance. LOC orders are entered for execution at the closing
price, provided the closing price is at or within the limit
specified.
\17\ If the 3:50 P.M. imbalance dissemination reverses the 3:40
P.M. imbalance dissemination (i.e., MOC order imbalance switches
from buy side to sell side, and vice versa), only MOC orders which
offset the 3:50 P.M. imbalance would be permitted to be entered
thereafter.
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In addition, as soon as practicable after 3:40 P.M., Eastern
Standard Time (2:40 P.M., Central Standard Time), every trading day,
the Amex (a ``primary market'') disseminates notice of MOC order
imbalances of 25,000 shares or more in all Amex-listed stocks, other
than those that trade in units of less than 100 shares.\18\ In certain
instances, the Amex permits the dissemination of MOC order imbalances
of less than 25,000 shares if permission is obtained from an Amex Floor
Official.\19\ Unlike the MOC procedures of the NYSE, the MOC order
imbalances disseminated by the Amex do not include marketable LOC
orders, and the Amex does not disseminate a supplementary update at
3:50 P.M.
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\18\ See Amex Rule 109, `` `Stopping' Stock.'' The Commission
approved amendments to the Amex rules and procedures governing MOC
orders on June 24, 1998. See Securities Exchange Act Release No.
40123 (June 24, 1998), 63 FR 36280 (July 2, 1998).
\19\ The Amex permits the dissemination of MOC order imbalances
of less than 25,000 shares if the specialist (i) anticipates that
the execution price of the MOC orders on the book will exceed the
price change parameters of Amex Rule 154, Commentary .08, or (ii)
believes that an order imbalance should otherwise be planned.
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To determine whether MOC orders may be entered on the primary
market, the proposal requires specialists to monitor the publication of
MOC order imbalances on the primary market through third-party vendors.
For example, if through Bloomberg the NYSE disseminated notice of an
MOC order imbalance of 100,000 shares for stock XYZ on the buy side,
the Exchange specialist in stock XYZ could accept MOC orders on the
sell side after 2:40 P.M., provided the MOC orders were for less than
100,000 shares. The Commission believes it is reasonable for the
Exchange to require its specialists to monitor MOC order imbalances
through third party vendors (e.g., Bloomberg, Dow Jones, Reuters). An
Exchange specialist may accept MOC orders on the contra-side of a
disseminated MOC order imbalance only during a narrow period of time.
Therefore, it is critical that Exchange specialists be immediately
informed whether a particular stock is the subject of an MOC order
imbalance. The Commission believes the proposal will ensure that
Exchange specialists stay abreast of MOC order imbalances in a timely
manner and accept MOC orders in conformance with the Exchange's rules.
Furthermore, if an Exchange specialist does accept an MOC order after
2:40 P.M., the specialist must document evidence indicating that such
MOC order could have been entered on the primary market.
While the Commission believes it is reasonable for the Exchange to
restrict the entry of MOC orders after 2:40 P.M., the Commission also
believes the Exchange's proposal makes adequate provision for the entry
of certain corrective orders after the 2:40 P.M., deadline. In
particular, the proposal allows specialists to accept the cancellation
of an MOC order after 2:40 P.M. if the cancellation was done to correct
a legitimate error. The Commission believes this measure will provide
market participants with the flexibility necessary to rectify bona fide
errors involving MOC orders.
The Commission also believes it is reasonable for the Exchange to
prohibit the use of MOC orders entered after 2:40 P.M. for the
liquidation of positions relating to a strategy involving any stock
index options. The proposal restricts the entry of MOC orders after
2:40 P.M. to instances where there is an MOC order imbalance on the
primary market. This restriction will help to ensure that the 2:40 P.M.
deadline is concrete and enforceable and that only a limited class of
orders will be excepted from the deadline. The Commission believes the
Exchange has properly excluded from the excepted class any MOC order
that relates to a strategy involving index options. The Commission
notes that MOC procedures are principally
[[Page 64302]]
intended to reduce volatility at the close. The Commission believes the
ban on the use of index options-related MOC orders after 2:40 P.M. will
serve to reduce volatility at the close and in doing so will create
greater price certainty.
The Commission believes it is appropriate for the Exchange to
require all proprietary MOC orders that are represented pursuant to
Section 11(a)(1)(G) of the Act,\20\ including market orders to sell
short at-the-close, to yield priority, parity, and precedence to any
non-member MOC order. This requirement is consistent with Section 11(a)
of the Act \21\ in that it will help ensure the primacy of non-member
MOC orders. Furthermore, because G Orders must be marked to indicate
their status and must be disclosed to the Exchange's trading floor, the
Commission is confident that Exchange specialists will execute members'
proprietary MOC orders in accordance with the priority principles set
forth in Section 11(a) of the Act and the rules thereunder.
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\20\ 15 U.S.C. 78k(a)(1)(G).
\21\ 15 U.S.C. 78k(a).
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As previously mentioned, Amendment No. 2 eliminates the requirement
that the Exchange independently publish MOC order imbalances that occur
on the Exchange. The Commission believes this revision is appropriate
for several reasons. First, the public dissemination of multiple MOC
order imbalances for the same stock by the primary market and the
Exchange could prove confusing. Next, the modification remedies the
anomalous situation that might arise if the Exchange's MOC order
imbalance for a particular stock differed from the primary market's MOC
order imbalance, and MOC orders could have been accepted on the
Exchange after 2:40 P.M. but not the primary market, and vice versa.
Finally, the Exchange has represented that a substantial MOC order
imbalance (i.e., 50,000 shares or more) has never occurred on the
Exchange. Furthermore, because Exchange specialists only are obligated
to accept and guarantee execution of relatively small MOC orders (100-
2,099 shares), the specialist may decline to accept and guarantee
execution of large MOC orders that would cause a substantial MOC order
imbalance. The Commission believes that in the aggregate, these factors
outweigh the benefits of publicly disseminating MOC order
imbalances.\22\
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\22\ The Commission previously has indicated its view that the
dissemination of MOC order imbalances allows specialists to
determine the buying and selling interest in MOC orders and, if
there is a substantial imbalance on one side of the market, provides
the investing public with timely and reliable notice of the
imbalance and with an opportunity to make appropriate investment
decisions in response. See e.g., Securities Exchange Act Release No.
40123 (June 24, 1998), 63 FR 36280 (July 2, 1998).
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The Exchange's proposal is substantially similar to the MOC rules
currently in place at the NYSE,\23\ the Amex,\24\ and the Boston Stock
Exchange (``BSE'').\25\ The similarity between the proposal and the MOC
rules maintained by other national securities exchange will ensure that
the Exchange does not become a haven for MOC orders that are prohibited
on the other exchange markets. In addition, the standardization of
rules will result in Exchange MOC orders being treated the same as MOC
orders sent to the NYSE, Amex, and BSE.
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\23\ See supra note 13.
\24\ See supra note 18.
\25\ See BSE Rules of Board, Chapter II, Section 22,
``Procedures for Handling Market-On-Close (``MOC'') Orders.'' The
Commission permanently approved the BSE's rules and procedures
governing MOC orders on October 9, 1998. See Securities Exchange Act
Release No. 40538 (Oct. 9, 1998), 63 FR 55661 (Oct. 16, 1998).
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The Commission understands that in the highly competitive markets
of today, it is possible that a regional exchange which trades NYSE-
and Amex-listed stocks, but does not have comparable closing
procedures, could be utilized by market participants to enter MOC
orders prohibited on such primary markets. Although the Commission has
no reason to believe that the Exchange has become a significant
alternative market to enter otherwise prohibited MOC orders, the
Commission agrees with the Exchange that if this possibility were
realized, it could have a negative impact on the fairness and
orderliness of the national market system. Accordingly, the Commission
believes that it is reasonable for the Exchange to adopt procedures for
the handling of MOC orders that mirror those of the NYSE, Amex, and
BSE. The adoption of consistent rules and procedures will help ensure
the equal treatment of MOC orders among exchange markets and, in the
event of unusual market conditions, offer the Exchange the same
benefits in terms of potentially reducing volatility.
The Commission notes that prior to receiving parmanent approval for
their MOC rules, the NYSE, Amex, and the BSE were required to first
implement their MOC rules on a pilot basis. However, in consideration
of the demonstrated benefits of MOC rules and procedures, the
Commission believes there is no compelling reason to approve the
Exchange's proposal on a pilot basis rather than permanently. The
Commission also is confident that the Exchange will surveil the closing
procedures to ensure against potential manipulations of the close
through MOC transactions.
Finally, the Commission believes the structure of proposed Exchange
Rule 44 will enable members and other market participants to locate and
apply the Exchange's MOC guidelines without difficulty. Some exchange
markets maintain their MOC rules and procedures in several sources,
including rule books and informational memos to members. In contrast to
such a decentralized approach, the Exchange's proposal presents all
relevant information in one comprehensive rule. Furthermore, because
the MOC procedures for expiration days are the same as those for non-
expiration days, Exchange members and member organizations will follow
identical procedures at the close on all trading days.
The Commission finds good cause for approving proposed Amendment
Nos. 1 and 2 prior to the thirtieth day after the date of publication
of notice of filing thereof in the Federal Register. Amendment No. 1
revised the proposed rule change by redefining a term used in the rule
text. The modification was intended to ensure that the proposed rule
change remained consistent with current exchange market practice and
did not include incorrect and obsolete terminology. The Commission
notes that the modification proposed by Amendment No. 1 has been
superseded by the revisions proposed by Amendment No. 2 and that the
approval of Amendment No. 1 therefore will have no import on the
proposed rule change.
Amendment No. 2 modifies the proposed rule change by eliminating
the requirement that the Exchange independently publish MOC order
imbalances that occur on the Exchange. Instead, the Exchange will rely
on the primary market's dissemination of MOC order imbalances.
Amendment No. 2 also specifies that Exchange specialists may accept MOC
orders after 2:40 P.M. only if such orders could have been entered on
the primary market. As a result, Amendment No. 2 addresses the
anomalous situation that might arise if the Exchange's MOC order
imbalance differed from the primary market's MOC order imbalance, and
MOC orders could have been accepted on the Exchange after 2:40 P.M. but
not the primary market, and vice versa. The Commission believes
Amendment No. 2 makes the proposal consistent with the Exchange's goal
of establishing MOC procedures that are uniform with those of the
primary markets. Furthermore, the use
[[Page 64303]]
of the primary market's MOC order imbalance will simplify MOC
procedures for market participants and specialists, and will eliminate
possible mix-ups that might have occurred due to the dissemination of
multiple MOC order imbalances for the same securities. Finally
Amendment No. 2 revises the proposal to establish identical procedures
for MOC orders entered on expiration and non-expiration days. The
Commission believes the adoption of uniform MOC procedures that do not
vary from day-to-day will create certainty among market participants
and will eliminate the confusion that may have arisen from procedural
requirements that differed for expiration and non-expiration days.
Accordingly, the Commission believes there is good cause, consistent
with Sections 6(b)(5) and 19(b) of the Act,\26\ to approve Amendment
Nos. 1 and 2 to the proposed rule change on an accelerated basis.
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\26\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78s(b).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning Amendment Nos. 1 and 2 to the proposed rule
change, including whether the proposed rule change, as modified by
Amendment Nos. 1 and 2, is consistent with the Act. Persons making
written submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of the submissions, 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 persons, 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 Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of such filing will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-CHX-97-19 and
should be submitted by December 21, 1998.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\27\ that the proposed rule change (SR-CHX-97-19), as amended, is
approved.
\27\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-30950 Filed 11-18-98; 8:45 am]
BILLING CODE 8010-01-M
