[Federal Register Volume 60, Number 213 (Friday, November 3, 1995)]
[Notices]
[Pages 55872-55874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27275]



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[[Page 55873]]


SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-36432; File No. SR-CHX-95-24]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated Relating to Agency 
Crosses Between the Disseminated Exchange Market

October 27, 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 October 
11, 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 October 17, 1995, the Exchange submitted 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 Glen 
Barrentine, Team Leader, SEC, dated October 13, 1995. Amendment No. 
1 corrects the text of Exhibit A to the filing, which sets forth the 
text of the proposed rule change, by adding a sentence that had been 
inadvertently omitted from Exhibit A as initially filed.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend interpretation and policy .01 to 
Rule 23 of Article XX of the Exchange's Rules relating to agency 
crosses between the disseminated Exchange market. The text of the 
proposed rule change is as follows [deleted text is bracketed]:
Article XX, Rule 23
    Rule 23. No Change.
* * * Interpretations and Polices
    .01 A specialist must refrain from interfering at the cross price 
with an agency cross [of 10,000 shares or greater] which is to be 
effected at a price between the disseminated Exchange market in 
existence at the time the broker arrives at the post; provided, the 
broker has not previously solicited the specialist's assistance in 
consummating any part of the trade. However, the specialist may 
participate if he or she is willing to better one side of the cross.
    A specialist who has a disseminated bid or offer at the cross price 
shall be allowed to participate at the cross price in a size greater 
then specialist is disseminating.
    In no event shall an agency order in the book, having time 
priority, remain unexecuted after any other order at its price has been 
effected pursuant to this rule or otherwise.

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
    On March 3, 1994, the Commission approved a proposed rule change 
submitted by the Exchange relating to the execution of agency cross 
transactions at a price between the disseminated Exchange market.\2\ 
Specifically, that rule required a CHX specialist to refrain from 
interfering with a floor-brokered agency cross of 10,000 shares or more 
at a cross price between the disseminated Exchange market.

    \2\See Securities Exchange Act Release No. 33708 (Mar. 3, 1994), 
59 FR 11339 (File No. SR-MSE-93-05).
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    The purpose of this proposed rule change is to require a CHX 
specialist to refrain from interfering with all floor-brokered agency 
crosses regardless of size, at a cross price between the disseminated 
Exchange market. As before, the specialist is obligated to satisfy all 
orders on the book with priority at the cross price. In addition, as 
before the specialist can participate if he or she has a disseminated 
bid or offer at the cross price, regardless of the size of the quote, 
and a specialist can participate if he or she is willing to provide one 
side of the cross with a better price.
    The proposed rule change will increase the possibility of immediate 
execution for agency crosses on the Exchange. This, in turn, will 
improve the Exchange's ability to compete for order flow and will 
enhance the depth and liquidity of the Exchange market.
    In terms of auction market principles, the proposed rule change 
strikes an appropriate balance between the competing needs of various 
customer orders represented for execution on the Exchange and the 
proprietary trading operations of Exchange members and member 
organizations, including specialists.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to promote just and equitable principles of 
trade, to remove impediments and to perfect the mechanism of a free and 
open market and a national market system, and, in general, to protect 
investors and the public interest.

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 funding 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, 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 

[[Page 55874]]
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, 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-95-24 and should be submitted by November 24, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-27275 Filed 11-2-95; 8:45 am]
BILLING CODE 8010-01-M