[Federal Register Volume 61, Number 225 (Wednesday, November 20, 1996)]
[Notices]
[Pages 59124-59125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29614]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37947; File No. SR-CHX-96-26]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change and Amendment No. 1 to
Proposed Rule Change Relating to Enhanced SuperMAX and Timed Enhanced
SuperMAX
November 13, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ notice is hereby given that on October 9, 1996, the
Chicago Stock Exchange, Incorporated (``CHX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change and an amendment \2\ to the proposed rule change
as described in Items I, II, and III below, which Items have been
prepared by the self-regulatory organization. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ On November 8, 1996 the CHX submitted an amendment
(``Amendment No. 1'') to the proposed rule change. Letter from David
Rusoff, Esq., Foley & Lardner, to Janet W. Russell-Hunter, Special
Counsel, Division of Market Regulation, Commission, dated November
7, 1996. In Amendment No. 1, the CHX replaced the text of the
proposed rule change originally filed with rule text changed to
reflect previously inadvertently omitted language.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Pursuant to Rule 19b-4 of the Act \3\ the Exchange requests
permanent approval of its Enhanced SuperMAX and Timed Enhanced SuperMAX
pilot program, located in subsections (e) and (f) of Rule 37 of Article
XX.
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\3\ 17 CFR 240.19b-4.
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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 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 places 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 22, 1995, the Commission approved a proposed rule change of
the CHX that allows specialists on the Exchange, through the Exchange's
MAX system, to provide order execution guarantees that are more
favorable than those required under CHX Rule 37(a), Article XX.\4\ That
approval order contemplated that the CHX would file with the Commission
specific modifications to the parameters of MAX that are required to
implement various options available under this new rule.
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\4\ See Securities Exchange Act Release No. 35753 (May 22,
1995), 60 FR 28007.
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On July 27, 1995, the Commission approved a proposed rule change of
the CHX that implemented two options available under this new rule.\5\
These two new options, Enhanced SuperMAX and Timed Enhanced SuperMAX
were approved on a pilot basis until July 31, 1996. The Commission
extended the pilot program until December 31, 1996 and requested that
the CHX provide a report to the Commission, by August 31, 1996,\6\
describing its experience with the pilot program. On August 30, 1996,
the CHX submitted the report.
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\5\ See Securities Exchange Act Release No. 36027 (July 27,
1995), 60 FR 39465.
\6\ See Securities Exchange Act Release No. 37491 (July 29,
1996), 61 FR 40690.
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The purpose of the proposed rule change is to request permanent
approval of the pilot program. As stated above, the two options
available in the pilot program are Enhanced SuperMAX and Timed Enhanced
SuperMAX. Enhanced SuperMAX is merely a reactivation of the Exchange's
Enhanced SuperMAX program, a program originally approved by the
Commission on a pilot basis in 1991.\7\ The proposed Enhanced SuperMAX
program differs from the original pilot program approved in 1991 in
that it is available starting at 8:45 a.m. instead of 9:00 a.m. This
program also differs from the Exchange's SuperMAX program in that under
this program, certain orders are ``stopped'' at the consolidated best
bid or offer and are executed with reference to the next primary market
sale instead of the previous primary market sale. Timed Enhanced
SuperMAX is a slight variation on the Enhanced SuperMAX program. It
executes orders in the same manner as the Enhanced SuperMAX program
except that if there are no executions in the primary market after the
order has been stopped for a designated time period, the order is
executed at the stopped price at the end of such period. Such period,
known as a time out period, is pre-selected by a specialist on a stock-
by-stock basis based on the size of the order, may be changed by a
specialist no more frequently than once a month, and may be no less
than 30 seconds.
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\7\ See Securities Exchange Act Release No. 30058 (December 10,
1991), 56 FR 65765.
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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 and to 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 a burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 15 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W.,
[[Page 59125]]
Washington, D.C. 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 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-96-26 and should be submitted by December 11, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-29614 Filed 11-19-96; 8:45 am]
BILLING CODE 8010-01-M
