[Federal Register Volume 61, Number 225 (Wednesday, November 20, 1996)]
[Notices]
[Pages 59124-59125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29614]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37947; File No. SR-CHX-96-26]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 to 
Proposed Rule Change Relating to Enhanced SuperMAX and Timed Enhanced 
SuperMAX

November 13, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ notice is hereby given that on October 9, 1996, the 
Chicago Stock Exchange, Incorporated (``CHX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change and an amendment \2\ to 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).
    \2\ On November 8, 1996 the CHX submitted an amendment 
(``Amendment No. 1'') to the proposed rule change. Letter from David 
Rusoff, Esq., Foley & Lardner, to Janet W. Russell-Hunter, Special 
Counsel, Division of Market Regulation, Commission, dated November 
7, 1996. In Amendment No. 1, the CHX replaced the text of the 
proposed rule change originally filed with rule text changed to 
reflect previously inadvertently omitted language.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Pursuant to Rule 19b-4 of the Act \3\ the Exchange requests 
permanent approval of its Enhanced SuperMAX and Timed Enhanced SuperMAX 
pilot program, located in subsections (e) and (f) of Rule 37 of Article 
XX.
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    \3\ 17 CFR 240.19b-4.
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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 CHX 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 CHX 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 May 22, 1995, the Commission approved a proposed rule change of 
the CHX that allows specialists on the Exchange, through the Exchange's 
MAX system, to provide order execution guarantees that are more 
favorable than those required under CHX Rule 37(a), Article XX.\4\ That 
approval order contemplated that the CHX would file with the Commission 
specific modifications to the parameters of MAX that are required to 
implement various options available under this new rule.
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    \4\ See Securities Exchange Act Release No. 35753 (May 22, 
1995), 60 FR 28007.
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    On July 27, 1995, the Commission approved a proposed rule change of 
the CHX that implemented two options available under this new rule.\5\ 
These two new options, Enhanced SuperMAX and Timed Enhanced SuperMAX 
were approved on a pilot basis until July 31, 1996. The Commission 
extended the pilot program until December 31, 1996 and requested that 
the CHX provide a report to the Commission, by August 31, 1996,\6\ 
describing its experience with the pilot program. On August 30, 1996, 
the CHX submitted the report.
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    \5\ See Securities Exchange Act Release No. 36027 (July 27, 
1995), 60 FR 39465.
    \6\ See Securities Exchange Act Release No. 37491 (July 29, 
1996), 61 FR 40690.
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    The purpose of the proposed rule change is to request permanent 
approval of the pilot program. As stated above, the two options 
available in the pilot program are Enhanced SuperMAX and Timed Enhanced 
SuperMAX. Enhanced SuperMAX is merely a reactivation of the Exchange's 
Enhanced SuperMAX program, a program originally approved by the 
Commission on a pilot basis in 1991.\7\ The proposed Enhanced SuperMAX 
program differs from the original pilot program approved in 1991 in 
that it is available starting at 8:45 a.m. instead of 9:00 a.m. This 
program also differs from the Exchange's SuperMAX program in that under 
this program, certain orders are ``stopped'' at the consolidated best 
bid or offer and are executed with reference to the next primary market 
sale instead of the previous primary market sale. Timed Enhanced 
SuperMAX is a slight variation on the Enhanced SuperMAX program. It 
executes orders in the same manner as the Enhanced SuperMAX program 
except that if there are no executions in the primary market after the 
order has been stopped for a designated time period, the order is 
executed at the stopped price at the end of such period. Such period, 
known as a time out period, is pre-selected by a specialist on a stock-
by-stock basis based on the size of the order, may be changed by a 
specialist no more frequently than once a month, and may be no less 
than 30 seconds.
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    \7\ See Securities Exchange Act Release No. 30058 (December 10, 
1991), 56 FR 65765.
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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 a burden on competition.

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

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

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

    Within 15 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 such 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.,

[[Page 59125]]

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-96-26 and should be submitted by December 11, 1996.
    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-29614 Filed 11-19-96; 8:45 am]
BILLING CODE 8010-01-M