[Federal Register Volume 63, Number 149 (Tuesday, August 4, 1998)]
[Notices]
[Pages 41609-41610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20691]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40271; File No. SR-CHX-98-18]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Stock Exchange, Inc. Relating to the Exchange's
Withdrawal of Capital Provisions
July 28, 1998.
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 June 26, 1998, the Chicago Stock Exchange, Inc. (``CHX'' 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 CHX.
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) (1994).
\2\ 17 CFR 240.19b-4 (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 Article II, Rule 6(b) of the
Exchange's rules relating to the Exchange's Withdrawal of Capital
provisions.
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 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 CHX 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 Exchange proposes to amend Article II, Rule 6(b) of the
Exchange's rules in order to limit the applicability of the Exchange's
Withdrawal of Capital provisions to member firms for which the Exchange
is the Designated Examining Authority (``DEA''). The Exchange's
Withdrawal of Capital provisions limit the ability of a partner in a
member firm to withdraw capital from the firm. Currently, this
requirement applies to both member firms for which the Exchange is the
DEA as well as firms subject to examination by a self-regulatory
organization (``SRO'') other than the Exchange if the member's DEA does
not have a comparable rule. The proposed rule change would eliminate
this requirement for all firms for which the Exchange is not the DEA.
The Exchange does not believe that, given the current regulatory
scheme, it is necessary to review and analyze the rules of other SROs
to determine whether such rules are comparable to the Exchange's rule
on this particular issue. All other SROs have rules that have been
approved by the SEC and that
[[Page 41610]]
are deemed to promote just and equitable principles of trade, to remove
impediments and to perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest. As a result, the CHX believes imposing the Withdrawal
of Capital Rule on member firms for which the Exchange is not the DEA,
if the member's DEA does not have a comparable rule, only fosters
unnecessary and duplicative regulation.\3\ The text of the proposed
rule change is as follows:
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\3\ The New York Stock Exchange and the American Stock Exchange
have rules regarding withdrawal of capital. The other exchanges do
not. Telephone conversations between Patricia L. Levy, General
Counsel, CHX, and Katherine A. England, Assistant Director, Division
of Market Regulation, Commission (July 17, 1998).
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Deletions are [bracketed].
ARTICLE II
Member Firms
Subordination of Claims
Rule 6. (a) No change in text.
(b) Withdrawal of Capital--The partnership articles of each member
firm for which this Exchange is the Designated Examining Authority [or
of a member firm subject to examination by another self-regulatory
organization not having a comparable rule] shall contain provisions
that without prior written approval of the Exchange the capital
contribution of any partner may not be withdrawn on less than six
months' written notice of withdrawal given no sooner than six months
after such contribution was first made. Each member firm shall promptly
notify the Exchange of the receipt of any notice of withdrawal of any
part of a partner's capital contribution or if any withdrawal is not
made because prohibited under the provisions of Securities and Exchange
Commission Rule 15c3-1 (see 15c3-1(e)).
2. Statutory Basis
The proposed rule change is consistent with Section 6 of the
Act,\4\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\5\ in particular, in that it is designed to perfect the
mechanisms of a free and open market and a national market system, and
to protect investors and the public interest.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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(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
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
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 reasons 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 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, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, SEC, 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 at 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-98-18 and should be
submitted by August 25, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-20691 Filed 8-3-98; 8:45 am]
BILLING CODE 8010-01-M
