[Federal Register Volume 63, Number 47 (Wednesday, March 11, 1998)]
[Notices]
[Pages 11942-11943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6173]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39720; File No. SR-CSE-97-13]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 by The Cincinnati Stock Exchange, Inc.
Relating to Market Order Exposure Requirements
March 4, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ notice is hereby given that on November 13, 1997, The
Cincinnati Stock Exchange, Inc. (``CSE'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') a proposed rule
change relating to market order exposure requirements. On February 25,
1998, the CSE filed
[[Page 11943]]
Amendment No. 1 to the proposed rule change.\2\ The proposal, as
amended, is described in Items I and II below, which Items have been
prepared by the CSE. 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. Sec. 78s(b)(1).
\2\ See letter from Adam W. Gurwitz, Vice President Legal and
Corporate Secretary, CSE, to Richard Strasser, Assistant Director,
Division of Market Regulation, Commission, dated February 25, 1998.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CSE proposes to amend Rule 11.9(u), Interpretation .01,
concerning customer market order exposure requirements. Proposed new
text is in italics; deleted text is in brackets.
Rule 11.9 National Securities Trading System
(a) through (u) No Change.
Interpretations and Policies
.01 [Price Improvement Opportunity] Market Order Exposure Requirement
Consistent with his or her agency responsibility to exercise due
diligence, a member must comply with the following procedures which
provide the opportunity for public agency buy/sell market orders to
receive a price lower/higher than the disseminated national best
offer/bid.
[(a) Market Order Exposure--] Except under unusual market
conditions or if it is not in the best interests of the customer,
when the spread between the national best bid and offer is greater
than the minimum price variation, a member must either immediately
execute the market order at an improved price or expose the market
order on the Exchange for a minimum of [thirty] fifteen seconds in
an attempt to improve the price.
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 CSE included statements
concerning the purpose of, and statutory 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 CSE has prepared summaries, set forth
in sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On June 17, 1997, the Exchange issued Regulatory Circular 97-07
which, among other things, clarified a Member's obligations under Rule
11.9 in light of the securities industry's move to finer trading
increments (i.e., \1/16\ point). The Exchange has now determined, based
on its experience with specialists quoting and trading in finer
increments, that exposing a market order for thirty seconds creates
additional risks to the specialists. The Exchange believes that a
fifteen second exposure will balance the risks to specialists and the
need to provide customers a meaningful opportunity for price
improvement.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act in general,\3\ and furthers the objectives
of Section 6(b)(5) \4\ in particular. The proposed rule change is
designed to balance certain risks to specialists thereby promoting just
and equitable principles of trade. In addition, the proposal will
provide customers an opportunity for price improvement thereby
furthering the mechanism of a free and open market and a national
market system.
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\3\ 15 U.S.C. Sec. 78f.
\4\ 15 U.S.C. Sec. 78f(b)(5).
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B. Regulatory Organization's Statement on Burden on Competition
The CSE does not believe that the proposed rule change will impose
any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Comments were neither solicited nor received in connection with the
proposed rule change.
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 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, including whether the proposed rule
change 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 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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Room. Copies of such filings will
also be available for inspection and copying at the principal office of
the CSE. All submissions should refer to the File No. SR-CSE-97-13 and
should be submitted by April 1, 1998.
For the Commission by the Division of Market Regulation,
pursuant to the delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-6173 Filed 3-10-98; 8:45 am]
BILLING CODE 8010-01-M
