[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Notices]
[Pages 49144-49145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24526]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40405; File No. SR-CHX-98-18]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Order Approving Proposed Rule Change Relating to the Exchange's
Withdrawal of Capital Provisions
September 4, 1998.
I. Introduction
On June 26, 1998, the Chicago Stock Exchange, Inc. (``CHX''or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend Article II, Rule 6(b) of
the Exchange's rules relating to the Exchange's Withdrawal of Capital
provisions. The proposed rule change was published for comment in the
Federal Register. on August 4, 1998.\3\ The Commission received no
comments on the proposal.
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\1\ 15 U.S.C. 78s(b)(1)(1994).
\2\ 17 CFR 240.19b-4 (1998).
\3\ Securities Exchange Act Release No. 40271 (July 28, 1998),
63 FR 41609.
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II. Description of the Proposal
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 firm's
DEA does not have a comparable rule. The proposed rule change would
eliminate this requirement for all member firms for which the Exchange
is not the DEA.
II. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act, and the rules
and regulations thereunder applicable to a national securities
exchange. The Commission believes that the proposed rule change is
consistent with Section 6 of the Act, in general,\4\ and Section
6(b)(5),\5\ in particular, in that it is designed to promote just and
equitable principles of trade, to prevent fraudulent and manipulative
acts and practices, to foster cooperation and coordination with persons
engaged in regulating and facilitating transactions in securities, 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.\6\ The Commission believes that the
proposed rule change will not disturb the financial protections the CHX
has in place ensure investor protection, the public interest, or the
integrity of the Exchange's markets. CHX member firms, for which the
Exchange is the DEA, will still be required to maintain adequate
capital reserves. Under the proposed rule change the partnership
articles of each member firm for which the Exchange is the DEA will
still be required to contain provision requiring written approval
[[Page 49145]]
from the Exchange for the capital contribution of any partner to be
withdrawn on less than six months' written notice of withdrawal if the
notice of withdrawal is given prior to six months after the capital
contribution was first made. The Commission also notes that the amended
CHX withdrawal of capital rule is identical or very similar to those of
other SROs.\7\
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(5).
\6\ In approving this rule, the Commission has considered the
proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\7\ See American Stock Exchange Rule 300, and New York Stock
Exchange Rule 313.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-CHX-98-18) is approved.
\8\15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulations,
pursuant to delegated authority.\9\
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\9\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-24526 Filed 9-11-98; 8:45 am]
BILLING CODE 8010-01-M
