[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Notices]
[Pages 13492-13493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6086]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35449; File No. SR-CHX-95-5]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated Relating to the 
Authority of the Committee on Floor Procedure

March 7, 1995.
    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 February 
10, 1995, the Chicago Stock Exchange, Incorporated (``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. On March 1, 1995, the Exchange submitted to the 
Commission Amendment No. 1 to the proposed rule change.\1\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

    \1\See letter from David Rusoff, Foley & Lardner, to Jennifer 
Choi, SEC, dated February 27, 1995. The original filing incorrectly 
references Rule 3 of Article IV of the Exchange Rules as the rule to 
be amended. Amendment No. 1 alters the proposed rule change to 
reference Rule 3 of Article XII as the correct rule to be amended.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    At present, Rule 3 of Article XII provides the Committee on Floor 
Procedure with the authority to summarily fine members and exclude them 
from the Exchange premises under certain circumstances. The Exchange 
proposes to amend Rule 3 and interpretation .02 thereunder to provide 
the Committee on Floor Procedure with the same authority over persons 
associated with a member.\2\ Under the current Rule 3, the Committee on 
Floor Procedure or an appropriately designated subcommittee has the 
authority to summarily fine and exclude from the Exchange a member 
whose conduct is deemed to be improper and to recommend investigations 
pursuant to Rule 1 of Article XII regarding any conduct on the floor of 
the Exchange. Specifically, any member of the Floor Committee or a 
member of its appropriately designated subcommittee may summarily fine 
any member for conduct classified as Class B\3\ in an amount not to 
exceed $100. For conduct classified as Class A offenses,\4\ any member 
of the Floor Committee or a member of its appropriately designated 
subcommittee with the concurrence of two other floor officials (floor 
governors if immediately available) may summarily fine a member in an 
amount not to exceed $2,500 and summarily exclude a member from the 
Exchange for no longer than the remainder of the trading day.

    \2\The Exchange does not specifically define the term 
``associated person'' in its Rules. For purposes of Rule 3, Article 
XII, the Exchange refers to an associated person as defined in 
Section 3(a)(18) of the Securities Exchange Act of 1934. 
Conversation with David Rusoff, Foley & Lardner, and Jennifer Choi, 
Attorney, SEC, dated February 27, 1995. Section 3(a)(18) defines an 
``associated person of a broker or dealer'' as any ``partner, 
officer, director, or branch manager of such broker or dealer (or 
any person occupying a similar status or performing similar 
functions), any person directly or indirectly controlling, 
controlled by, or under common control with such broker or dealer, 
or any employee of such broker or dealer * * *.''
    \3\Class B violations involve minor offenses such as dress code 
and smoking violations.
    \4\Class A represents more serious violations than Class B and 
includes such conduct as fighting, threatening speech, and other 
conduct that is detrimental to the interest or welfare of the 
Exchange.
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    For either class of offenses, a member, who has been adversely 
affected by any action taken under Rule 3, except for a summary 
exclusion,\5\ by any person or [[Page 13493]] body, other than the full 
Floor Procedure Committee, may appeal to the full Floor Procedure 
Committee within five days of receiving notice of the action by making 
a written request. Upon appeal, the full Floor Procedure Committee may 
increase or decrease the amount of a summary fine or the length of an 
exclusion from the Exchange. The Floor Procedure Committee, however, 
may not fine a member in an amount in excess of $2,500 or exclude a 
member from the Exchange in excess of five full business days. The 
decision of the Floor Procedure Committee is deemed final with respect 
to any action involving no more than a $100 fine.

    \5\A member summarily excluded has the right to petition for 
reinstatement after a sufficient ``cooling-off'' period has elapsed.
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    By written request, a member may appeal a determination of the full 
Floor Procedure Committee involving more than a $100 fine to the 
Executive Committee. The Executive Committee will review the report of 
the action as certified by the Secretary unless it decides to open the 
record for additional evidence. The Executive Committee may increase or 
decrease the amount of a summary fine or the length of an exclusion 
after review. The Executive Committee, however, may not fine a member 
in an amount in excess of $2,500 or exclude a member from the Exchange 
in excess of five full business days.

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
    At present, CHX Rule 3 of Article XII describes the ability of the 
Exchange's Committee on Floor Procedure to summarily fine members and 
exclude them from the Exchange premises. The purpose of the proposed 
rule change is to give the Committee on Floor Procedure the same 
authority over persons associated with a member.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to prevent fraudulent and manipulative acts 
and practices and to perfect the mechanisms of a free and open market.

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

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the publication of this notice in the Federal 
Register or within such other 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, N.W., Washington, D.C. 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, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-CHX-95-5 and should be 
submitted by April 3, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6086 Filed 3-10-95; 8:45 am]
BILLING CODE 8010-01-M