[Federal Register Volume 64, Number 116 (Thursday, June 17, 1999)]
[Notices]
[Pages 32572-32573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15354]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-4182; File No. SR-CHX-99-3]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange,
Inc., Concerning an Increase in the BEST Rule Guarantee and the Minimum
Order Acceptance Level in the MAX System
June 4, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 7, 1999, the Chicago Stock Exchange, Inc. (``CHX'') or ``the
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 Exchange. The
filing was amended on May 26, 1999.\3\ The proposed rule change, as
amended, has been filed by CHX as a ``non-controversial'' rule change
under Rule 19b-4(f)(6) \4\ under the Act.\5\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Kirsten M. Carlson, Foley & Lardner, to
Katherine A. England, Assistant Director, Division of Market
Regulation, Commission, dated May 25, 1999 (``Amendment No. 1'').
\4\ 17 CFR 240.19b-4(f)(6).
\5\ CHX originally filed this proposal under Rule 19b-4(e)(5).
Amendment No. 1 amended this to Rule 19b-4(f)(6). As requested by
CHX, the Commission will consider the original filing, dated May 6,
1999, as the pre-filing notice required by Rule 19b-4(f)(6). The
Amendment No. 1 filing date (May 26, 1999) will be considered the
formal filing date of the rule change.
---------------------------------------------------------------------------
[[Page 32573]]
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to amend Rule 37 of Article XX of the
Exchange's Rules to increase the size of the guarantee contained in the
Best Rule and the minimum order acceptance level in the MAX System for
all agency orders in Dual Trading System issues from 2099 to 5099
shares.\6\ The text of the proposed rule change is available at the CHX
and at the Commission.
---------------------------------------------------------------------------
\6\ The increase to 5099 shares will become operative on a date
specified in a Notice to Members to be issued in the immediate
future.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Propose 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 Exchange 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
Under the Exchange's Guaranteed Execution System (the ``BEST
System''), specialists must currently accept and guarantee execution of
agency orders in Dual Trading System issues from 100 up to and
including 2099 shares. Similarly, the Exchange's Midwest Automatic
Execution System (the ``MAX system'') contains an auto-acceptance
threshold parameter that is designated by the specialist on a stock-by-
stock basis that must be set for 2099 shares or greater for Dual
Trading System issues.
The proposed rule change would increase the Best Rule guarantee and
the auto-acceptance threshold. Specifically, the rule change would
require specialists to accept all agency orders in Dual Trading System
issues from 100 up to and including 5099 shares, and require that the
auto-acceptance threshold parameter be set for 5099 shares or greater
for all Dual Trading System issues.
The Exchange believes that the larger size guarantees will benefit
customers by providing customers with better executions. Further, the
Exchange believes the larger size guarantees will enhance the
competitiveness of the Exchange by attracting additional order flow.
2. Statutory Basis
The Exchange believes that this proposed rule change is consistent
with and furthers the objectives of Section 6(b)(5) of the Act \7\ in
that it is designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating securities transactions, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition.
CHX does not believe that the proposed rule change will impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Data of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder \9\
because the proposed rule change (1) does not significantly affect the
protection of investors or the public interest; (2) does not impose any
significant burden on competition; (3) by its terms, does not become
operative for 30 days from the date of filing, or such shorter time
that the Commission may designate if consistent with the protection of
investors and the public interest; and (4) CHX provided the Commission
with written notice of its intent to file the proposed rule change at
least five days prior to the filing date. At any time within 60 days of
the filing of such proposed rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In reviewing this proposal, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
The Exchange has requested that the Commission approve acceleration
of the operative date of the proposal to June 11, 1999. The Exchange
states that the increase of the BEST Rule Guarantee and auto acceptance
threshold will benefit customers by providing better executions, and
that accelerating the operative date will allow customers to receive
this benefit earlier. The Exchange further states that it is
technologically prepared to begin operations as soon as permitted by
the Commission. The Commission finds that accelerating the operative
date of the rule change as proposed is consistent with the protection
of investors and the public interest, and thus designates June 11,
1999, as the operative date of the filing.
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-
0609. 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 Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
CHX. All submissions should refer to File No. SR-CHX-99-3, and should
be submitted by July 8, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15354 Filed 6-16-99; 8:45 am]
BILLING CODE 8010-01-M
