[Federal Register Volume 59, Number 60 (Tuesday, March 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7281]


[[Page Unknown]]

[Federal Register: March 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33798; File No. SR-CHX-93-23]

 

Self-Regulatory Organizations; Filing of Proposed Rule Change by 
the Chicago Stock Exchange, Inc. (``CHX'') Relating to Price Protection 
of Limit Orders

March 22, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on 
September 30, 1993, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The CHX requests permanent approval of its proposed rule change 
relating to price protection of limit orders.\1\ The rule change 
provides primary market protection to certain limit orders trading at 
the limit price in a primary market's after-hours trading session.\2\ 
On February 1, 1994, the CHX's pilot program was extended until April 
30, 1994.\3\
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    \1\Concurrently with this notice, the Commissions also 
publishing for comment proposals submitted by the New York Stock 
Exchange, Inc., the American Stock Exchange, Inc., the Boston Stock 
Exchange, Inc., the Philadelphia Stock Exchange, Inc. and the 
Pacific Stock Exchange, Inc., to request permanent approval for 
their respective programs which provide for executions of securities 
after regular trading hours. See File Nos. SR-NYSE-93-50; BSE-93-24; 
SR-Amex-93-15; SR-Phlx-94-8; and SR-PSE-94-2.
    \2\On June 13, 1991, the Commission approved, on a pilot basis, 
File No. SR-MSE-91-11, which amended CHX Rule 37 (in 1991, the CHX 
was named the Midwest Stock Exchange or MSE). See Securities 
Exchange Act Release No. 29297 (June 13, 1991), 56 FR 28191 (June 
19, 1991) (order approving File No. SR-56 FR 28191 (June 19, 1991) 
(order approving File No. SR-MSE-91-11) (MSE Approval Order). The 
CHX procedures provide primary market protection for customer GTX 
orders (good until canceled, executable in the afternoon session) in 
securities listed on the NYSE and on the Amex and traded during the 
after-hours sessions of those Exchanges. The New York Stock Exchange 
(``NYSE'') initiated its Off-Hours trading (``OHT'') Crossing 
Sessions in June 1991. See Securities Exchange Act Release No. 29237 
(May 24, 1991), 56 FR 24853 (May 31, 1991) (approving File Nos. SR-
NYSE-90-52 and NYSE-90-53). The American Stock Exchange, Inc. 
(``Amex'') established an after-hours trading facility in August 
1991. See Securities Exchange Act Release No. 29515 (August 2, 
1991), 56 FR 37736 (August 8, 1991) (approving File No. SR-Amex-91-
15). The Commission approved extensions of the NYSE, Amex and CHX 
pilots, as well as pilots by the other regional exchanges until 
January 31, 1994 and further extended the pilots until April 30, 
1994. See Securities Exchange Act Release Nos. 32365 (May 25, 1993), 
58 FR 31560 (June 3, 1993), and 33562 (February 8, 1994), 59 FR 5792 
(February 8, 1994).
    \3\See Securities Exchange Act Release No. 33562, supra note 2. 
File No. SR-CHX-93-23 requested both an extension and permanent 
approval of the proposal relating to the price protection of limit 
orders. This notice concerns the CHX's permanent approval request.
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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 self-regulatory organization 
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 self-regulatory organization 
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 purpose of the proposed rule change is to request permanent 
approval of the Exchange's price protection of limit orders based on 
after-hours prints in a primary market. The proposed change requires 
that Exchange specialists provide primary market protection for those 
limit orders entered during the Exchange's primary trading session 
which are designated as executable after the close of the regular 
Exchange auction market trading session, known as ``GTX'' orders 
(``good until cancelled, executable in the afternoon session'').\4\
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    \4\The Exchange is open for business for two trading sessions 
during each business day. The first trading session (the Primary 
Trading Session) is conducted on the Floor of the Exchange from 8:30 
a.m. to 3 p.m., Central time, Monday through Friday. The second 
session (the Secondary Trading Session) is conducted through the 
Portfolio Trading System, pursuant to the provisions of Article XX 
from 3:30 p.m. to 5 p.m., Central time, Monday through Friday. The 
Floor of the Exchange is closed during the Secondary Trading 
Session. See CHX Article IX, rule 10.
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    The Exchange provided the Commission with an updated report 
describing the Exchange's experience with the new rule during the 
period of January 1, 1993, through September 1, 1993, with a summary 
review covering the entire pilot program from June 13, 1991, through 
September 1, 1993.\5\ The Exchange has already provided much of the 
information requested in monthly reports and has provided all requested 
information in a single report to the Commission dated April 30, 1993, 
covering data collected through January 1, 1993.\6\ The Commission 
requested in its order extending the pilot until April 30, 1994, that 
the Exchange submit to the Commission by March 15, 1994, an updated 
report concerning the pilot activity through February 28, 1994. This 
updated report will assist the Commission in considering the Exchange's 
request for permanent approval prior to the April 30, 1994 expiration 
of the pilot program.
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    \5\See letter from David T. Rusoff, Attorney, Foley & Lardner, 
to Diana Luka-Hopson, Branch Chief, Commission, dated September 30, 
1993.
    \6\See letter from Daniel J. Liberti, Associate Counsel, MSE, to 
Diana Luka-Hopson, Branch Chief, Commission, dated April 30, 1993.
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2. Statutory Basis
    The proposed rule change is consistent with Sections 6(b)(5) and 
11A of the Act in that it is designed to promote just and equitable 
principles of trade, perfect the mechanism of a free and open national 
market system, and, in general, further investor protection and the 
public interest in fair and orderly markets on national securities 
exchanges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that no burdens will be placed on competition 
as a result of the proposed rule change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    No comments were received 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 self-regulatory organization consents, the Commission will: 
(A) By order approve the 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 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 Section, 450 Fifth Street, NW., 
Washington, DC 20549. 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-93-23 and should be 
submitted by April 19, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7281 Filed 3-28-94; 8:45 am]
BILLING CODE 8010-01-M