[Federal Register Volume 60, Number 157 (Tuesday, August 15, 1995)]
[Notices]
[Pages 42209-42210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20251]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36092; File No. SR-CSE-95-03, Amendment No. 1]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by The Cincinnati Stock Exchange, Inc. Relating to Customer
Order Executions
August 11, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on
August 11, 1995, the Cincinnati Stock Exchange, Inc. (``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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The CSE hereby proposes to adopt certain order exposure and limit
order protection policies for Exchange Rules 11.9(u) and 12.10.
The text of the proposed rule change is as follows, where additions
are italicized and deleations are [bracketed].
Rule 11.9(u)
No Change
Interpretations and Policies:
.01 Price Improvement Opportunity
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 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 interest 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 order at
an improved price or expose the order on the Exchange for a minimum of
thirty seconds in an attempt to improve the price.
.02 Limit Order Protection
Public agency limit orders shall be filled if one of the following
conditions occur:
(a) the bid or offering at the limit price has been exhausted in
the primary market (NOTE: orders will be executed in whole or in part,
based on the rules of priority and precedence, on a share for share
basis with trades executed at the limit price in the primary market);
(b) there has been a price penetration of the limit in the primary
market; or
(c) the issue is trading at the limit price on the primary market
unless it can be demonstrated that such order would not have been
executed if it had been transmitted to the primary market or the
customer and the Designated Dealer agree to a specific volume related
or other criteria for requiring a fill.
In unusual trading situations, a Designated Dealer may seek relief
from the above requirements from two Trading Practices Committee
members or a designated member of the Exchange staff who would have the
authority to set execution prices.
Rule 12.10 Best Execution
No Change
Interpretations and Policies
.01 As part of a member's fiduciary obligation to provide best
execution for its customer orders, the member shall expose on the
Exchange [to the national market system] all or a representative
portion of any public agency limit order which is priced either on or
between the national best bid and offer, unless:
(i) such order is immediately executed; or
(ii) the customer expressly requests that the order not be exposed.
If a representative portion of his or her limit order is executed,
a member must treat the remainder of the order as a new order for the
purpose of compliance with the Exchange's limit order exposure policy.
[[Page 42210]]
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
The purpose of the proposed rule change is to continue the efforts
of The Cincinnati Stock Exchange to improve the quality of its market.
Specifically, the Exchange is proposing to codify certain requirements
with respect to order exposure and limit order protection. These
requirements will ensure that customer orders receive (1) an
opportunity to obtain an improved price, and (2) at a minimum, as good
an execution as that which is provided by the primary markets.
Exception language to specific exposure requirements has been
included in order to assure the public that a broker-dealer will always
act in a manner consistent with his or her fiduciary responsibility as
agent. For example, it may not be in the best interest of the customer
to always expose an order for thirty seconds in a fast market or to
expose all of an order if such order is for a large size.
2. Statutory Basis
The CSE believes that 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 principles of trade and remove impediments to and perfect the
mechanism of a free and open market and a national market system.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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
On August 3, 1995, the Exchange solicited comments from the
participants of the Intermarket Trading System. No comments were
received prior to filing the proposed rule change with the Commission.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the 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 the 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. 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 at
the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of the CSE. All
submissions should refer to File No. SR-CSE-95-03, Amendment No. # 1
and should be submitted by September 5, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-20251 Filed 8-14-95; 8:45 am]
BILLING CODE 8010-01-M
