[Federal Register Volume 63, Number 171 (Thursday, September 3, 1998)]
[Notices]
[Pages 47056-47057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23765]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40369; File No. SR-CHX-98-13]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Order Approving Proposed Rule Change Relating to the Exchange's
Clearing the Post Policy
August 26, 1998.
I. Introduction
On June 10, 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 make the Exchange's clearing
the post policy permanent.\3\ The proposed rule change was published
for comment in the Federal Register on July 16, 1998.\4\ The Commission
received no comments on the proposal.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release Nos. 39519 (January 6,
1998), 63 FR 1985 (January 13, 1998) (order approving proposed rule
change CHX-97-28 amending the Exchange's clearing the post policy
for cabinet securities for a six-month pilot program) and 40144
(June 30, 1998), 63 FR 27157 (July 9, 1998) (order approving
proposed rule change CHX-98-17 extending the Exchange's pilot
program relating to the clearing the post policy for cabinet
securities for a five-month period or until the approval of the
instant proposed rule change).
\4\ See Securities Exchange Act Release No. 40187 (July 9,
1998), 63 FR 38442.
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II. Description of the Proposal
The Exchange proposes to amend interpretation and policy .02 of CHX
Rule 10 of Article XX and amend CHX Rule 11 of Article XX relating to
clearing the post and to make permanent the policy contained in Article
XX, Rule 11 regarding the ability of oral bids and offers on cabinet
securities \5\ to clear the post by phone. Prior to the pilot program's
approval, the Exchange's clearing the post policy required a floor
broker or market maker to clear the post by his or her physical
presence at the post. The proposed rule change does not require the
floor broker's or market maker's physical presence to clear the post.
Instead, a floor broker or market maker may clear the post by phone.
The bids and offer made to clear the post by phone are audibly
announced at the cabinet post through a speaker system maintained by
the Exchange.
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\5\ A cabinet security is any security that is either listed or
available to be traded on the CHX pursuant to unlisted trading
privileges that is not assigned a specialist. Telephone conversation
between Andrea Svehala, Manager, Equity Floor Surveillance, CHX, and
Marc McKayle, Attorney, Division of Market Regulation, Commission
(July 24, 1998).
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The proposed rule change will also expand the clearing the post
policy to bids and offers in all securities traded on the trading
floor. Interpretation and policy .02 of CHX Rule 10 of Article XX, as
amended, will allow a floor broker or market maker to clear the post by
phone for bids and offers in any security traded on the trading floor
provided they are audibly announced at the post through a speaker
system maintained by the Exchange, and the floor broker or market maker
is physically present on the Exchange floor.
III. 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,\6\ and Section
6(b)(5),\7\ 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.\8\
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(5).
\8\ 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).
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The Commission believes that allowing floor brokers or market
makers to clear the post for cabinet securities while remaining at
their post will ensure that these floor brokers or market makers will
be at their post when they need to respond to orders in more liquid
securities at a much faster pace. The Commission also believes that
expending the policy to all securities traded on the trading floor,
provided that the bid or offer is audibly announced at the post and
floor broker or market maker is physical present on the Exchange floor,
is consistent with the Act. Expanding the policy should extend the
efficiencies experienced during the clearing the post for cabinet
securities pilot program to all securities on the CHX floor.\9\ The
Commission
[[Page 47057]]
believes that the proposed rule change should augment the ability of
floor brokers and market makers to respectively seek best price
execution for orders and provide depth and liquidity to the Exchange
market.
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\9\ The CHX submitted a report to the Commission representing
that the policy has been well received by the floor brokers and
market makers of the Exchange, and that no adverse effects have been
experienced since the implementation of the pilot program. The
report was filed pursuant to Securities Exchange Act Release No.
39519 (January 6, 1998), 63 FR 1985 (January 13, 1998) (order
approving amendment to the Exchange's clearing the post policy for
cabinet securities). See Report on the Effectiveness of the Pilot
Program for Clearing the Cabinet Post by Phone, dated June 5, 1998.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-CHX-98-19) is approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-23765 Filed 9-2-98; 8:45 am]
BILLING CODE 8010-01--M
