[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2893]


[[Page Unknown]]

[Federal Register: February 9, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33570; File No. SR-CSE-92-08]

 

Self-Regulatory Organizations; Cincinnati Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change Relating to Delegation of 
Securities Committee's Authority to an Exchange Officer to Approve 
Designated Issues and Dealers

February 1, 1994.
    On July 27, 1992, the Cincinnati Stock Exchange, Inc. (``CSE'' or 
``Exchange'') submitted to 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 delegate authority to an 
Exchange officer to approve Designated Issues and Dealers. On October 
1, 1992, the CSE submitted to the Commission Amendment No. 1 to the 
proposed rule change.\3\
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
    \3\See letter from Kevin S. Fogarty, General Counsel, CSE, to 
Elizabeth Cosgrove, Attorney, SEC, dated July 30, 1992. The 
amendment made minor clarifying changes to the proposed rule change.
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 31451 (November 13, 1992), 57 FR 54878 
(November 20, 1992). No comments were received on the proposal.
    The rule change amends Article VI, Section 3.1(b) of the CSE's Code 
of Regulations (``By-Laws'') to expressly authorize the Securities 
Committee to delegate to an Exchange officer its authority to approve 
Designated Issues and Dealers.\4\ The following is the text of the rule 
change (additions are italicized):

    \4\The terms ``Designated Issuer'' and ``Designated Dealer'' are 
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defined in the CSE Code of Regulations, Rule 11.9.

    The Securities Committee shall have the authority to adopt 
operating procedures necessary and appropriate for the Exchange's 
automated interface with the Intermarket Trading System (ITS). The 
Securities Committee also may delegate its authority in Rule 11.9 to 
approve Designated Dealers and Designated Issues to an officer of 
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the Exchange.

    Under Rule 11.9, when the CSE lists or obtains unlisted trading 
privileges on an issue, the Securities Committee may designate that 
issue for inclusion in the national Securities Trading System 
(``NSTS''), an electronic securities communication and execution 
facility through which bids and offers of competing dealers, as well as 
public orders, are consolidated for review and execution by users of 
the system.\5\ The Securities Committee also approves proprietary 
members of the Exchange as Designated Dealers who perform market 
functions by entering bids and offers for Designated Issues into the 
System.\6\
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    \5\The NSTS combines the display of both the limit order file 
and current quotation/last sale information to users with the 
matching and execution of like-priced orders, bids and offers 
according to programmed price/time and agency/principal priorities 
in order to give users the ability to perform the brokerage and 
market making functions performed on other exchanges. In addition, 
the NSTS provides for the automatic execution of orders under 
predetermined conditions. CSE Code of Regulations, Rule 11.9(a)(1).
    \6\CSE Code of Regulations, Rule 11.9(c).
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    The Exchange states that it adds issues quite frequently to the 
NSTS, and that it is impractical to assemble the Securities Committee 
to designate each issue or to approve Designated Dealers for those 
issues. The Exchange notes that the rule change does not affect the 
Securities Committee's authority to reassign issues in light of market 
maker performance or to establish general policy; nor doe it delegate 
any authority with respect to applications for membership or listing. 
In addition, the officer to whom the authority is granted will prepare 
a report of his or her actions on a semi-annual basis to be submitted 
to the Securities Committee for ratification.\7\ The Securities 
Committee retains authority to overturn any action by the Officer, and 
members affected by the officer's actions will be so advised at the 
time the actions are taken.\8\ Any person aggrieved by an action of the 
officer has the same rights under the Exchange's rules for review as if 
the Securities Committee had acted and does not have to wait for 
ratification of the officer's action before pursuing those rights.\9\
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    \7\See letter from Robert Ackermann, Vice President, Regulation, 
CSE, to Sandra Sciole, Special Counsel, Division of Market 
Regulation, SEC, dated January 25, 1994.
    \8\Id.
    \9\See CSE Code of Regulations, Chapter X (Adverse Action).
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    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, and, in 
particular, with the requirements of sections 6(b).\10\ In particular, 
the Commission believes the proposal is consistent with the section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, and, in general, to protect investors and the 
public, in that it promotes a more efficient administration of Exchange 
business by allowing Designated Issues and Dealers to be approved by an 
officer instead of requiring the Securities Committee to convene for 
that purpose. In addition, persons affected by the actions of the 
officer will retain any rights and remedies previously available under 
the CSE's Constitution and Code of Regulations.\11\
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    \10\15 U.S.C. 78f(b) (1988).
    \11\See supra note 9 and accompanying text.
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    It is therefore ordered, Pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CSE-92-08) is approved.
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    \12\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of market Regulation, 
pursuant to delegated authority.\13\
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    \13\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2893 Filed 2-8-94; 8:45 am]
BILLING CODE 8010-01-M