[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Notices]
[Pages 35865-35866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17254]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38772; File No. SR-CHX-97-09]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange,
Inc. Relating to an Amendment to Rule 37 of Article XX Concerning the
Definition of Best Bid or Offer in the BEST and MAX Rules
June 25, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 9, 1997, as amended on
June 24, 1997,\2\ the Chicago Stock Exchange, Inc. (``CHX'' or
``Exchange'') filed with the Securities and Exchange Commission
[[Page 35866]]
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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. 78s(b)(1).
\2\ On June 24, 1997 the CHX filed Amendment No. 1 to its
proposal with the Commission. The amendment removes the words ``size
and price'' from the definition of the best bid or offer. See letter
from David T. Rusoff, Foley & Lardner to Ivette Lopez, Assistant
Director, SEC (June 24, 1997).
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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.
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 self-regulatory organization
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
As described below, the purpose of the proposed rule change is to
amend Rule 37 of Article XX (the BEST Rule and the MAX Rule) to correct
the definitions of best bid or offer found throughout this Rule so as
to reflect existing Exchange practice.
Definition of Best Bid and Offer
The Exchange's BEST Rule (Art. XX, Rule 37(a)) currently states
that, subject to certain exceptions, all agency market orders are
guaranteed an execution on the basis of the best bid disseminated
pursuant to SEC Rule 11Ac1-1 \3\ on a sell order or the best offer
disseminated pursuant to SEC Rule 11Ac1-1 on a buy order (collectively,
the national best bid or offer (``NBBO'')). While the NBBO is utilized
for NASDAQ/NM Securities traded on the Exchange, the Exchange has
always utilized the Intermarket Trading System best bid or offer (``ITS
BBO'') \4\ for Dual Trading System Securities (i.e., securities also
traded on the NYSE or the Amex). As a result, instead of using the NBBO
definition in the BEST Rule and MAX Rule,\5\ the Exchange believes that
it is more accurate to describe the BEST Rule guarantee and the MAX
Rule executions in terms of the ITS BBO for Dual Trading System issues.
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\3\ 17 CFR 240.11Ac1-1.
\4\ The ITS BBO is defined as the best bid/offer quote among the
American, Boston, Cincinnati, Chicago, New York, Pacific,
Philadelphia or the Intermarket Trading System/Computer Assisted
Execution System quote, as appropriate.
\5\ The MAX Rule (Art. XX, Rule 37(b)) sets forth the procedures
applicable to the automated execution of orders entered into the MAX
System.
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This definitional change merely reflects an inadvertent error in
the drafting of the BEST Rule and the MAX Rule and will not result in
any systems changes.
2. Statutory Basis
The Exchange represents that the proposed rule change is consistent
with Section 6(b)(5) \6\ of the Act, in that it is designed to promote
just and equitable principles of trade, 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.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will not 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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change constitutes a stated policy, practice or
interpretation with respect to the meaning, administration, or
enforcement of an existing rule of the Exchange pursuant to Section
19(b)(3)(A) of the Act \7\ and subparagraph (e) of Rule 19b-4
thereunder.\8\
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\7\ U.S.C. 78s(b)(3)(a).
\8\ CFR 240.19b-4.
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At any time within 60 days of the filing of the proposed rule
change,\9\ the Commission may summarily abrogate such rule change if
its 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.
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\9\ The 60 day abrogation period commences from June 24, 1997,
the date of the submission of the substantive amendment.
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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 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
than may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of the Chicago Stock
Exchange. All submissions should refer to File No. SR-CHX-97-09 and
should be submitted by July 23, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17254 Filed 7-1-97; 8:45 am]
BILLING CODE 8010-01-M
