[Federal Register Volume 61, Number 165 (Friday, August 23, 1996)]
[Notices]
[Pages 43566-43567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21544]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37579; File No. SR-CHX-96-24]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated Relating to Unlisted Trading Privileges

August 16, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 9, 1996, the 
Chicago Stock Exchange, Incorporated (``CHX'' or the ``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.
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    \1\ 15 U.S.C. 78s(b)(1) (1988).
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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 Article XXVIII, Rule 5 and Article 
XXX, Rule 1, interpretation and policy .01, relating to unlisted 
trading privileges (``UTP'').

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
    Prior to the enactment of the Unlisted Trading Privileges Act of 
1994 (``UTP Act''), Section 12(f) \2\ of the Act allowed an exchange, 
subject to Commission approval, to extend UTP to securities that were 
listed and registered on another exchange.\3\ Section 12(f) required 
exchanges to apply to the Commission and receive Commission approval of 
the exchange's application before extending UTP to a particular 
security. The Commission was required to provide interested parties 
with at least 10 days notice of the application and the Commission had 
to determine whether the extension of UTP to each named security met 
certain criteria. If so, the Commission published an approval order in 
the Federal Register. Exchange Interpretation and Policy .01 of Article 
XXX, Rule 1, reflects this statutory scheme in that it references 
``obtaining'' UTP from the Commission.
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    \2\ 15 U.S.C. 78l.
    \3\ By ``extending UTP'' to a security, the exchange allows its 
members to trade the security as if it were listed on the exchange.
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    The enactment of the UTP Act, however, removed the application, 
notice, and Commission approval process from Section 12(f) of the Act, 
and revised the conditions under which exchanges may extend UTP to most 
registered securities. Currently, Section 12(f)(1)(A)(i) \4\ allows a 
national securities exchange to extend UTP to any security listed and 
registered on another national securities exchange.\5\

[[Page 43567]]

Pursuant to authority granted in Section 12(f)(1)(C),\6\ the Commission 
promulgated Rule 12f-2,\7\ allowing a national securities exchange to 
extend UTP to a subject security on the day following the day on which 
the initial public offering of such subject security commences.
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    \4\ 15 U.S.C. 78l(f)(1)(A)(i).
    \5\ The Commission notes that pursuant to Rule 12f-5, a national 
securities exchange shall not extend unlisted trading privileges to 
any security unless the exchange has in effect a rule or rules 
providing for transactions in the class or type of security to which 
the exchange extends unlisted trading privileges.
    \6\ 15 U.S.C. 78l(f)(1)(C).
    \7\ 17 CFR 240.12f-2 (1995).
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    Accordingly, with the revisions to Section 12(f) as a result of the 
UTP Act, Exchange Article XXVIII, Rule 5 and Exchange Article XXX, Rule 
1, Interpretation and Policy .01, no longer reflect the revised 
statutory scheme. Since exchanges are no longer required to seek 
Commission approval in order to extend UTP, the language in the text of 
the rule referencing the ``obtaining'' of UTP through Commission 
approval should be eliminated. The proposed rule change reflects the 
revised statutory scheme under Section 12(f) and Rule 12f-2. The 
Exchange also proposes to amend Article XXVIII, Rule 5 to allow the 
Exchange President's designee to extend unlisted trading privileges.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(5) of the Act \8\ 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.
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    \8\ 15 U.S.C. 78f(b)(5).
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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 of 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and of Rule 19b-4(e)(1) thereunder,\10\ 
because it constitutes a stated policy, practice or interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule of the Exchange. At any time within 60 days of the filing of such 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(e)(1) (1994).
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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 submissions, 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 Room. 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-96-24 and 
should be submitted by September 13, 1996.

    For the Commission, by the Division of Market Regulations, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-21544 Filed 8-22-96; 8:45 am]
BILLING CODE 8010-01-M