[Federal Register Volume 60, Number 99 (Tuesday, May 23, 1995)]
[Notices]
[Pages 27357-27358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12518]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35711; File No. SR-CHX-95-12]
Self-Regulatory Organizations; Chicago Stock Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Regarding
Depository Eligibility Requirements
May 12, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 26, 1995, the
Chicago Stock Exchange, Incorporated (``CHX'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which items have
been prepared primarily by CHX. The Commission is publishing this
notice to solicit comments from interested persons.
\1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CHX proposes to amend Rule 7 of Article XXVIII of its rules
relating to the depository eligibility requirements for issuers that
desire to list their securities on CHX.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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 self-regulatory organization has prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.\2\
\2\ The Commission has modified the language in these sections.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Under the proposed rule change, CHX will adopt a uniform depository
eligibility rule for issuers that desire to list their securities on
the CHX. The uniform rule has been developed by the Legal and
Regulatory Subgroup of the U.S. Working Committee of the Group of
Thirty in coordination with each of the national securities exchange
and the National Association of Securities Dealers (``NASD''). It is
anticipated that each national securities exchange and the NASD will
file rule changes proposing adoption of depository eligibility
standards substantially similar to CHX's proposed rule and will seek to
make such changes effective contemporaneously with the effective date
of the transition from a five-day (``T+5'') to a three-day (``T+3'')
settlement cycle. The transition is set to occur June 7, 19995.\3\
\3\ Securities Exchange Act Release Nos. 33023 (October 6,
1993), 58 FR 52891 (adoption of Rule 15c6-1) and 34952 (November 9,
1994), 59 FR 59137 (change of effective date of Rule 15c6-1 from
June 1, 1995 to June 7, 1995).
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The proposed rule change will require issuers to ensure that
securities to be listed on CHX have been included in the file of
eligible issues maintained by a securities depository registered as a
clearing agency under Section 17A of the Securities Exchange Act of
1934.\4\ This requirement will not apply to a security if the terms of
such security cannot be reasonably modified to meet the criteria for
depository eligibility at all securities depositories.
\4\ 15 U.S.C. 78q-1 (1988).
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The proposed rule change sets forth additional requirements that
must be met before a security will be deemed to be ``depository
eligible,'' as such term is used in Article XXII, Rule 37 of the CHX
rules (``Book-Entry Settlement [[Page 27358]] Requirements'').\5\ The
proposed rule specifies different requirements for depository
eligibility depending upon whether a new issue is distributed by an
underwriting syndicate before or after the date a securities depository
system is available for monitoring repurchases of the distributed
shares by syndicate members (``flipping tracking system'').
\5\ Pursuant to Article XXII, Rule 37 of the CHX rules, trades
by a member in depository eligible securities generally must be
settled by book-entry through a securities depository.
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Currently, a flipping tracking system is being developed that will
include a securities depository service that (i) can be activated upon
the request of the managing underwriter for a period of time that the
managing underwriter specifies, (ii) in certain circumstances, will
require the delivering participant to provide to the depository
information sufficient to identify the seller of such shares as a
precondition to the processing of book-entry delivery instructions for
distributed shares, and (iii) will report to the managing underwriter
the identity of any other syndicate member or selling group member
whose customer(s) sold distributed shares (but will not report to the
managing underwriter the identity of such customer[s]) and, in certain
circumstances, will report to such syndicate member or selling group
member the identity of such customer(s). Prior to the availability of a
flipping tracking system, the managing underwriter may delay the date a
security is deemed ``depository eligible'' for up to three months after
trading has commenced in the security. After the availability of a
flipping tracking system, a new issue will be deemed to be depository
eligible upon commencement of trading on CHX.
The proposed rule change is consistent with Section 6(b)(5) of the
Act \6\ in that it is designed to promote just and equitable principals
of trade.
\6\ 15 U.S.C. 78f(b)(5) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
CHX believes that no burden will be placed on competition as a
result of the proposed rule change.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants or Others
No written comments have been solicited or received. CHX will
notify the Commission of any written comments received by CHX.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five 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 ninety 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 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.
CHX has requested accelerated effectiveness of the proposed rule
change in order that the rule can become effective on June 7, 1995.\7\
\7\ Supra note 3 and accompanying text.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submission
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 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 Section, 450 5th Street, N.W.,
Washington, D.C. 20549. Copies of such filings will also be available
for inspection and copying at the principal office of CHX. All
submissions should refer to the file number SR-CHX-95-12 and should be
submitted by June 13, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-12518 Filed 5-22-95; 8:45 am]
BILLING CODE 8010-01-M
