[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2893]
[[Page Unknown]]
[Federal Register: February 9, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33570; File No. SR-CSE-92-08]
Self-Regulatory Organizations; Cincinnati Exchange, Inc.; Order
Granting Approval to Proposed Rule Change Relating to Delegation of
Securities Committee's Authority to an Exchange Officer to Approve
Designated Issues and Dealers
February 1, 1994.
On July 27, 1992, the Cincinnati Stock Exchange, Inc. (``CSE'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``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 delegate authority to an
Exchange officer to approve Designated Issues and Dealers. On October
1, 1992, the CSE submitted to the Commission Amendment No. 1 to the
proposed rule change.\3\
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\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1993).
\3\See letter from Kevin S. Fogarty, General Counsel, CSE, to
Elizabeth Cosgrove, Attorney, SEC, dated July 30, 1992. The
amendment made minor clarifying changes to the proposed rule change.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 31451 (November 13, 1992), 57 FR 54878
(November 20, 1992). No comments were received on the proposal.
The rule change amends Article VI, Section 3.1(b) of the CSE's Code
of Regulations (``By-Laws'') to expressly authorize the Securities
Committee to delegate to an Exchange officer its authority to approve
Designated Issues and Dealers.\4\ The following is the text of the rule
change (additions are italicized):
\4\The terms ``Designated Issuer'' and ``Designated Dealer'' are
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defined in the CSE Code of Regulations, Rule 11.9.
The Securities Committee shall have the authority to adopt
operating procedures necessary and appropriate for the Exchange's
automated interface with the Intermarket Trading System (ITS). The
Securities Committee also may delegate its authority in Rule 11.9 to
approve Designated Dealers and Designated Issues to an officer of
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the Exchange.
Under Rule 11.9, when the CSE lists or obtains unlisted trading
privileges on an issue, the Securities Committee may designate that
issue for inclusion in the national Securities Trading System
(``NSTS''), an electronic securities communication and execution
facility through which bids and offers of competing dealers, as well as
public orders, are consolidated for review and execution by users of
the system.\5\ The Securities Committee also approves proprietary
members of the Exchange as Designated Dealers who perform market
functions by entering bids and offers for Designated Issues into the
System.\6\
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\5\The NSTS combines the display of both the limit order file
and current quotation/last sale information to users with the
matching and execution of like-priced orders, bids and offers
according to programmed price/time and agency/principal priorities
in order to give users the ability to perform the brokerage and
market making functions performed on other exchanges. In addition,
the NSTS provides for the automatic execution of orders under
predetermined conditions. CSE Code of Regulations, Rule 11.9(a)(1).
\6\CSE Code of Regulations, Rule 11.9(c).
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The Exchange states that it adds issues quite frequently to the
NSTS, and that it is impractical to assemble the Securities Committee
to designate each issue or to approve Designated Dealers for those
issues. The Exchange notes that the rule change does not affect the
Securities Committee's authority to reassign issues in light of market
maker performance or to establish general policy; nor doe it delegate
any authority with respect to applications for membership or listing.
In addition, the officer to whom the authority is granted will prepare
a report of his or her actions on a semi-annual basis to be submitted
to the Securities Committee for ratification.\7\ The Securities
Committee retains authority to overturn any action by the Officer, and
members affected by the officer's actions will be so advised at the
time the actions are taken.\8\ Any person aggrieved by an action of the
officer has the same rights under the Exchange's rules for review as if
the Securities Committee had acted and does not have to wait for
ratification of the officer's action before pursuing those rights.\9\
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\7\See letter from Robert Ackermann, Vice President, Regulation,
CSE, to Sandra Sciole, Special Counsel, Division of Market
Regulation, SEC, dated January 25, 1994.
\8\Id.
\9\See CSE Code of Regulations, Chapter X (Adverse Action).
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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 sections 6(b).\10\ In particular,
the Commission believes the proposal is consistent with the section
6(b)(5) requirements that the rules of an exchange be designed to
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, and, in general, to protect investors and the
public, in that it promotes a more efficient administration of Exchange
business by allowing Designated Issues and Dealers to be approved by an
officer instead of requiring the Securities Committee to convene for
that purpose. In addition, persons affected by the actions of the
officer will retain any rights and remedies previously available under
the CSE's Constitution and Code of Regulations.\11\
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\10\15 U.S.C. 78f(b) (1988).
\11\See supra note 9 and accompanying text.
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It is therefore ordered, Pursuant to section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-CSE-92-08) is approved.
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\12\15 U.S.C. 78s(b)(2) (1988).
For the Commission, by the Division of market Regulation,
pursuant to delegated authority.\13\
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\13\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2893 Filed 2-8-94; 8:45 am]
BILLING CODE 8010-01-M
