[Federal Register Volume 59, Number 86 (Thursday, May 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10750]
[[Page Unknown]]
[Federal Register: May 5, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33975; File No. SR-CSE-94-03]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendment No.
1 To Extend the Pilot of The Cincinnati Stock Exchange, Inc., Relating
to the Preferencing of Public Agency Market and Marketable Limit Orders
by Approved Dealers and Other Proprietary Members
April 28, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on April 25,
1994, the Cincinnati Stock Exchange, Incorporated (``CSE or Exchange'')
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 by the CSE. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons and to grant accelerated approval of the proposed rule change.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Cincinnati Stock Exchange, Inc. (``CSE'' or ``Exchange'')
hereby proposes to extend for an additional 90 days, ending August 6,
1994, the CSE's pilot program regarding preferencing. The pilot was
initially approved by the Commission on February 7, 1994.\1\ The
exchange requests, in Amendment No. 1, that the Commission find good
cause, pursuant to section 19(b)(2) of the Act, for approving the
proposed rule change prior to the thirtieth day after publication in
the Federal Register.\2\
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\1\Securities Exchange Act Release No. 28866 (February 13,
1991), 56 FR 5854.
\2\See letter from Robert Ackermann, Vice President, Regulation,
Cincinnati Stock Exchange to Jill Ostergaard, Attorney, Division of
Market Regulation, SEC, dated April 26, 1994 (``Amendment No. 1'').
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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 CSE 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 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
The purpose of the rule filing is to extend for 90 days the
Exchange's pilot program governing preferenced trading. The Commission
originally approved the pilot in February 1991, and subsequently
extended the pilot several times. The pilot is currently approved
through May 7, 1994.\3\
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\3\See Securities Exchange Act Release Nos. 29524 (August 5,
1991), 56 FR 38160; 30353 (February 7, 1992), 57 FR 5918; 31011
(August 7, 1992), 57 FR 38704; and 32280 (May 7, 1993), 58 FR 28422.
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On February 25, 1994, the CSE filed a rule change containing
certain proposals to further enhance the quality of its market,
including a proposed prohibition against ``auto-quoting'' and
limitations on the maximum spread which exchange specialists could
quote in the stocks in which they make markets.\4\ Further, on March
31, 1994, the CSE filed a rule change which would make its preferencing
pilot permanent.\5\ The Commission's staff has requested that the
Exchange seek an interim 90 day extension of the preferencing pilot in
order to afford the Commission the opportunity to consider the
relationship between the quality of markets proposal and the
preferencing program.\6\
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\4\See SR-CSE-94-01; Securities Exchange Act Release No. 33849
(April 1, 1994), 59 FR 16870.
\5\See SR-CSE-94-01. In its filing for permanent approval, the
Exchange requests that two restrictions of the pilot be lifted:
first, the number of preferred securities be expanded beyond the
current 350 limitation; and second; a lifting of the ban on cash
payments to preferencing dealers for preferenced orders.
\6\Conversation between David Colker, Executive Vice President
and Chief Operating Officer, Cincinnati Stock Exchange, and Jill W.
Ostergaard, Attorney, Division of Market Regulation, SEC, on April
25, 1994.
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Accordingly, this rule filing would extend the existing pilot
program form its current expiration date of May 7, 1994 until August 6,
1994. During this interim extension, the pilot will continue to operate
in accordance with all existing conditions.\7\
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\7\These conditions include the two cited above regarding the
number of preferenced securities and cash payment for order flow, as
well as the requirement that the Exchange provides certain
information to the Commission.
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2. Statutory Basis
The proposed rule change is consistent with section 6(b) of the Act
in general and furthers the objectives of section 6(b)(5) in particular
in that it will promote just and equitable principals of trade and
remove impediments to and perfect the mechanisms of a free and open
market and a national market system.
B. Self-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.
B. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The CSE solicited comments on the original filing from other
Intermarket Trading System participants.\8\
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\8\See File No. SR-CSE-90-6.
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III. 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, NW., Washington, DC 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 in the
Commission's Public Room. Copies of the filing will also be available
for inspection and copying at the principal office of the CSE. All
submissions should refer to the file number in the caption above and
should be submitted by May 26, 1994.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change and Amendment No. 1
The CSE filed this interim extension at the Commission staff's
request to enable the Commission to review the impact of the Exchange's
quality of markets filing on the preferencing program. Under the
circumstances, the Commission finds that allowing the preferencing
pilot to continue for an additional 90 days is necessary.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the CSE and, in particular, the requirements
of section 6(b)(5).
The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof. Accelerated approval will avoid an unnecessary
interruption of the preferencing pilot. Accordingly, under these
circumstances, the Commission believes the CSE's preferencing pilot
should be permitted to continue operating for 90 days, ending August 6,
1994.
It is therefore Ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change be, and hereby is, approved for an
additional period, ending August 6, 1994.
For the Commission by the Division of Market Regulation,
pursuant to the delegated authority.\9\
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\9\17 CFR 200.30-3(a)(12)(1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-10750 Filed 5-4-94; 8:45 am]
BILLING CODE 8010-01-M
