[Federal Register Volume 60, Number 241 (Friday, December 15, 1995)]
[Notices]
[Pages 64465-64466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30530]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36569; File No. SR-SCE-95-10]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by Cincinnati Stock Exchange, Inc., Relating to the Definitions 
of Public and Professional Agency Orders

December 11, 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 November 
29, 1995, the Cincinnati Stock Exchange, Inc. (``CSE'' 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 CSE hereby proposes to amend the definition of public agency 
order and professional agency order as follows, with added language in 
italics and deletions in brackets:
Rule 11.9  National Securities Trading System
    (a) No Change.
    (1) through (6) No Change.
    (7) The term ``public agency order'' means any order for an account 
covered by Section 11(a)(1)(E) of the Securities Exchange Act of 1934 
[the account of a person other than a member, an Approved Dealer, or a 
person who could become an Approved Dealer by complying with this Rule 
with respect to his use of the System], which is represented, as agent, 
by a User.
    (8) The term ``professional agency order'' means an order entered 
by a User as agent for the account of a broker-dealer or for an account 
which is not covered by Section 11(a)(1)(E) of the Securities Exchange 
Act of 1934.
    (b) through (u) No Change.

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
    CSE Rule 11.9(l) grants ``public agency'' orders a special time 
priority on the CSE, i.e., public agency orders have priority over 
professional agency orders at the same price. The intent of the 
proposed rule change is to ensure that the privilege of this super-
priority is granted only to those for whom it was originally intended 
by clarifying the distinction between ``public agency'' and 
professional agency'' order flow.\1\

    \1\ The Commission notes that several of the Exchanges' rules, 
such as its order guarantee and preferencing rules, distinguish 
between public and professional agency orders. Thus, the proposed 
rule change would affect certain orders in these contexts as well. 
See, e.g., CSE Rules 11.9(c) and (u).
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    Paragraph (1)(E) in Section 11(a) of the Act, which addresses 
certain issues related to trading by Exchange members, segregates for 
special treatment ``any transaction for the account of a natural 
person, the estate of a natural person, or a trust created by a natural 
person for himself or another natural person.'' The New York Stock 
Exchange (``NYSE'') utilizes this definition of public agency business 
in NYSE Rule 80A, its rule for limiting trading during significant 
market declines. Specifically, NYSE Rule 80A(e)(iii) defines an 
``account of an individual investor'' as ``an account covered by 
Section 11(a)(1)(E) of the Securities Exchange Act of 1934.'' The CSE 
is proposing to incorporate Section 11(a)(1)(E) into its definition of 
public and professional agency orders. The Exchange believes that it is 
appropriate to articulate definitions of agency business that are 
consistent with the general understanding and practice of the 
securities industry.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
in general, and furthers the objectives of Section 6(b)(5) in 
particular, in that it is designed to promote just and equitable 
principles of trade and to protect investors and the public interest.

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

    The CSE 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

    The CSE informed the other Intermarket Trading System participants 
of its intent to file this rule proposal, and no comments were 
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 forgoing. 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 purposed 
rule change between the Commission and any person, other than those 
that maybe 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 CSE. All 
submissions 

[[Page 64466]]
should refer to File No. SR-CSE-95-10 and should be submitted by 
January 4, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-30530 Filed 12-14-95; 8:45 am]
BILLING CODE 8010-01-M