[Federal Register Volume 62, Number 113 (Thursday, June 12, 1997)]
[Notices]
[Pages 32132-32133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15404]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38718; File No. SR-CHX-97-13]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Chicago Stock Exchange, Incorporated Amending Rules
Regarding Trading Variations
June 5, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 2, 1997, 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. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested person.
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\1\ 15 U.S.C. 78s(b)(1).
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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 XX, Rule 22, relating to
trading variations, and to amend Article XX, Rule 35 to make technical
changes necessitated by the changes to Rule 22.\2\ The text of the
proposed rule change is as follows [new text is italicized; deleted
text is bracketed]:
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\2\ The Commission notes that File Nos. SR-CHX-97-11, SR-CHX-97-
12, and SR-CHX-97-14 are related filings whose effectiveness is
linked to this file. See Securities Exchange Nos. 38704 (May 30,
1997) (approving File No. SR-CHX-97-11 on a temporary basis;
reducing the trading increment from eights to sixteenths for
securities that are traded on the Exchange and on Nasdaq); 38717
(June 5, 1997) (approving File No. SR-CHX-97-12 on a temporary
basis; a similar reduction in the trading increment for securities
that are traded on the CHX and on the New York Stock Exchange); and
38719 (June 5, 1997)(approving File No. SR-CHX-97-14 on a temporary
basis; a similar reduction in the trading increment for securities
that are traded only on the Exchange).
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ARTICLE XX
Minimum [Fractional Changes] Variations!
Rule 22. [Bids or offers in stocks above $1.00 per share not be
made at a less variation than \1/8\ of $1.00 per share; in stocks
below $1.00 but above 50 cents per share, at a less fraction than
\1/16\ of $1.00 per share; in stocks below 50 cents per share, at a
less variation than \1/32\ of $1.00 per share; provided that the
Committee on Floor Procedure may fix variations of less than the
above for bids and offers in specific securities or classes of
securities.] Bids and offers in specific securities or classes of
securities traded on the Exchange shall not be made in variations
less than the minimum variation established for such security or
class of security as determined by the Committee on Floor Procedure
from time to time.
Interpretations and Policies
.01 The Committee on Floor Procedure has determined that the
minimum variation for securities traded both on the Exchange and the
American Stock Exchange, Inc. [that are selling above 25 cents]
shall be as follows: for securities that are trading above 25 cents,
\1/16\ of $1.00 per share; and for securities that are selling at or
below 25 cents, \1/32\ of $1.00 per share.
.02 The Committee on Floor Procedure has determined that the
minimum variation for securities traded both on the Exchange and the
Nasdaq National Market shall be as follows: for securities that are
selling at or greater than $10.00, \1/16\ of $1.00 per share; and
for securities that are selling below $10.00, \1/32\ of $1.00 per
share.
.03 The Committee on Floor Procedure has determined that the
minimum variation for securities traded both on the Exchange and the
New York Stock Exchange shall be as follows: for securities that are
selling above $1.00, \1/16\ of $1.00 per share; and for securities
that are selling below $1.00, \1/32\ of $1.00 per share.
.04 The Committee on Floor Procedure has determined that the
minimum variation for securities traded exclusively on the exchange
shall be as follows: for securities that are selling above $1.00,
\1/16\ of $1.00 per share; and for securities that are selling below
$1.00, \1/32\ of $1.00 per share.
Security Quoted ``Ex-dividend,'' ``Ex-distribution,'' ``Ex-rights'' or
``Ex-interest''
Rule 35. When a security is quoted ``ex-dividend,'' ``ex-
distribution,'' ``ex-rights'' or ``ex-interest'' the following kinds
of orders shall be reduced by the value of the payment or rights,
and increased in shares in the case of stock dividends and stock
distributions which result in round lots, on the day the security
sells. Should the disbursement be in an amount other than the
[fraction] minimum variation in which bids and offers are made, or a
multiple thereof, orders shall be reduced by the next higher
[fraction] minimum variation.
Interpretations and Policies
.01 Reduction of orders--Proportional procedures.--Open buy
orders and open stop orders to sell shall be reduced by the
proportional value of a stock distribution on the day a security
sells ex-dividend or ex-distribution. The new price of the order is
determined by dividing the price of the original order by 100% plus
the percentage value of the stock dividend or stock distribution.
For example, in a stock dividend of 3%, the price of an order would
be divided by 103%.
The chart at the end of .03 below lists, for the more frequent
stock distributions, the percentages by which the prices of open buy
orders and open stop orders to sell shall be divided to determine
the new order prices.
[[Page 32133]]
If, as a result of this calculation, the price is not equivalent
to or is not a multiple of the [fraction of a dollar] minimum
variation in which bids and offers are made in the particular
security, the price should be rounded to the next lower
variation[s][; i.e., when a calculation results in a price of
$14.27, the price of an order is rounded to 14\1/4\; a calculation
resulting $14.47 is rounded to 14\3/8\].
In reverse splits, all orders (including open sell orders and
open stop orders to buy) should be cancelled.
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
Current Article XX, Rule 22 provides set trading variations for all
securities, subject to exceptions made by the Committee on Floor
Procedure. Recently, different markets have changed the variations in
which securities are traded. In order to maintain flexibility in
trading securities for which the Exchange is not the primary market,
the proposed rule change allows the Exchange, through the Committee on
Floor Procedure, to adopt as necessary appropriate trading variations
for each security traded on the Exchange.
Earlier this year, the Committee on Floor Procedure determined to
make an exception to the general trading variations used by the
Exchange for securities traded on the American Stock Exchange
(``Amex'') to track the increments in which such securities are traded
on the Amex. That exception was codified as Interpretation and Policy
.01 to Rule 22. This proposed rule change amends Interpretation and
Policy .01 relating to trading variations for Amex securities to
conform the interpretation to changes in the text of Rule 22. The
proposed rule change also adds to Rule 22, Interpretation and Policy
.02 and .03, dealing with trading variations for stocks traded on the
Exchange and the New York Stock Exchange (``NYSE'') or the Nasdaq
National Market, as the case may be. In addition, the proposed rule
change adds Interpretation and Policy .04 to Rule 22, to provide
trading variations for securities traded exclusively on the Exchange.
The proposed change to Article XX, Rule 35 is a technical change to
more accurately reflect the terminology used in Rule 22.
The Exchange proposes that proposed Interpretation and Policy .03
to Rule 22, dealing with trading variations in stocks traded on the
NYSE, become effective at the later of (a) approval by the SEC of the
proposed rule change and (b) such time as enhancement to Intermarket
Trading System (``ITS'') is made to permit trading in Tape A issues in
minimum variations of a sixteenth through ITS. The Exchange further
proposes that proposed Interpretation and Policy .02 to Rule 22 become
effective on the later of (a) approval by the SEC of the proposed rule
change and (b) such date as the National Association of Securities
Dealers' pending rule filing to trade in sixteenths becomes effective
and is implemented.\3\ Current Article XX, Rule 22 provides set trading
variations for all securities, subject to exceptions made by the
Committee on Floor Procedure. Recently, different markets have change
the variations in which securities are traded. In order to maintain the
flexibility of the Exchange in trading securities for which the
Exchange is not the primary market, the proposed rule change allows the
Exchange, through the Committee on Floor Procedure, to adopt as
necessary appropriate trading variations for each security traded on
the Exchange.
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\3\ The Commission notes that it approved File No. SR-NASD-97-27
on May 27, 1997, and it was implemented on June 2, 1997. Securities
Exchange Act Release No. 38678 (May 27, 1997).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \4\ of the Act in general and furthers the objectives of
Section 6(b)(5) \5\ in particular in that it is designed to remove
impediments to and 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments.
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 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 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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Room, 450 Fifth Street, NW.,
Washington, DC 20549. Also, copies of such filing will be available for
inspection and copying at the principal office of the CHX. All
submissions should refer to File No. SR-CHX-97-13 and should be
submitted by July 3, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 C.F.R. 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-15404 Filed 6-11-97; 8:45 am]
BILLING CODE 8010-01-M