[Federal Register Volume 62, Number 159 (Monday, August 18, 1997)]
[Notices]
[Pages 44024-44025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21749]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38922; File No. SR-CSE-97-07]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by The Cincinnati Stock Exchange, Inc. Relating to Minor Rule
Plan Violations
August 11, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on August 5, 1997, The Cincinnati Stock Exchange, Incorporated
(``CSE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the Exchange.\3\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. Sec. 78s(b)(1) (1998).
\2\ 17 CFR 240.19b-4 (1991).
\3\ This proposed rule change was originally filed on June 24,
1997. The CSE subsequently submitted Amendment No. 1 which altered
minor technical language in Item II. Letter from Adam W. Gurwitz,
Vice President Legal and Secretary, CSE, to Karl J. Varner, Esq.,
SEC, dated August 4, 1997. This proposed rule change replaces SR-
CSE-97-06, which has been withdrawn. Letter from Adam W. Gurwitz,
Vice President Legal and Secretary, CSE, to Katherine England,
Assistant Director, SEC, dated June 23, 1997.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CSE hereby proposes to amend Exchange Rule 8.14 to expand its
Minor Rule Violation Program. The text of the proposed rule change is
below. Additions are italicized.
The Cincinnati Stock Exchange, Incorporated
Rule 8.14 Imposition of Fines for Minor Violation(s) of Rules
No Change.
Interpretations and Policies
.01 List of Exchange Rule Violations and Fines Applicable thereto
Pursuant to Rule 8.14:
(a)-(d) No Change.
[[Page 44025]]
(e) Rule 4.2 and Interpretations thereunder related to the
requirement to furnish Exchange-related order, market and transaction
data, as well as financial or regulatory records and information.
(f) Rule 11.9(c) related to the requirement to comply with
quotation policies.
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 proposed rule change is to enhance the
Exchange's Minor Rule Violation Program. Exchange Rule 8.14 provides
for an alternative disciplinary regime involving violations of Exchange
Rules that the Exchange determines are of a minor nature. The Minor
Rule Violation Program provides the Exchange with the ability, but not
the obligation, to address minor rule violations by imposing a fine,
not to exceed $2500, on any member that the Exchange determines has
violated such rule. Adding a particular rule violation to the Minor
Rule Violation Program in no way circumscribes the Exchange's ability
to treat violations of those rules through more formal disciplinary
measures. The Minor Rule Violation Program simply provides the Exchange
with greater flexibility in addressing rule violations appropriately.
Section (e) of Rule 8.14 requires the Exchange from time to time to
prepare a list of minor rule violations.
As part of its ongoing effort to improve its regulatory program,
the Exchange has determined that certain rule violations should be
added to the Minor Rule Violation Program. The Minor Rule Violation
Program currently includes the requirements of Exchange Rules 4.1 and
4.2, concerning books and records, to submit trade data to the
Exchange. The Exchange intends to clarify that a member must also
provide financial and regulatory records in accordance with Rule 4.2
and Interpretation thereunder as well as trade-related information.
Similarly, the proposed rule change will include quotation policies
set by the Exchange's Securities and Market Performance Committee and
delineated by Regulatory Circular. Exchange Rule 11.9(c) requires
Designated Dealers, the Exchange's multiple, competing specialists, to
maintain continuous quotations throughout the trading day. Including
these quotation requirements in the Minor Rule Violation Program will
help the Exchange ensure compliance with its quotation requirements and
spread parameters because the Exchange will have adequate regulatory
flexibility in dealing with potential violations. This, in turn, will
enhance the value of quotations made by the Exchange's multiple,
competing specialists.
(2) 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 is designed to promote just and equitable
principles of trade and 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. Specifically,
the proposed rule change will augment the Exchange's ability to police
its market and will increase the Exchange's flexibility in responding
to minor rule violations. The Exchange will be able to address
appropriate minor rule violations promptly and efficiently through the
minor rule procedures, without the need to initiate formal disciplinary
proceedings.
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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No comments were solicited in connection with the proposed rule
change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 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 90 days of such date if it finds such longer period to
be appropriate and publishes its reason for so finding or (ii) as to
which the Exchange consents, the Commission will:
(A) by order approve such proposed rule change, or
(B) institute proceedings to determined 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. People 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 in
the Commission's Public Reference Room. Copies of the filing will also
be available for inspection and copying at the CSE's principal offices.
All submissions should refer to File No. SR-CSE-97-07 and should be
submitted by September 8, 1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
---------------------------------------------------------------------------
\4\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-21749 Filed 8-15-97; 8:45 am]
BILLING CODE 8010-01-M
