[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Notices]
[Pages 35864-35865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17253]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38760; File No. SR-CHX-97-16]


Self-Regulatory Organizations; Notice of Filing of and Order 
Granting Temporary Accelerated Approval to a Proposed Rule Change by 
the Chicago Stock Exchange, Incorporated Relating to Trading Variations

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 20, 1997, the Chicago 
Stock Exchange, Incorporated (``CHX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I and II 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 and to grant accelerated approval on a 
temporary basis to the proposed rule change.
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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 modify Article XX, Rule 22 of the CHX's 
Rules, relating to trading variations.

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 III 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
    Article XX, Rule 22 of the Exchange's Rules gives the Exchange's 
Committee on Floor Procedure the authority to fix minimum variations 
for bids and offers in specific securities or classes of securities. 
Pursuant to this authority, the Exchange changed its minimum variation 
to \1/16\ of $1.00 per share for securities traded both on the Exchange 
and the New York Stock Exchange (``NYSE'') that are selling at or 
greater than $1.00, and to \1/32\ of $1.00 per share for such 
securities that are selling below $1.00, effective at 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.
    Since the date of that filing, the NYSE proposed changing its 
minimum variation to \1/16\ for all stocks trading at or above 
50 cents, rather than the $1.00 standard adopted in SR-CHX-97-12.\2\ 
The Commission recently approved the NYSE proposal.\3\ As a result, the

[[Page 35865]]

purpose of this proposed rule change is to adopt a minimum variation of 
\1/16\ for securities trading at or above 50 cents, and a minimum 
variation of \1/32\ for securities trading below 50 cents. Another 
purpose of the proposed rule change is to make a technical correction 
to the minimum variation for securities traded both on the American 
Stock Exchange (``Amex'') and CHX. Specifically, rather than using a 
minimum variation of \1/16\ for securities trading above 25 cents, the 
\1/16\ variation will be used for securities traded at or above 
25 cents.
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    \2\ The Commission notes that, at the time the CHX filed 
proposed rule SR-CHX-97-12, NYSE Rule 62 provided:
    \3\ Securities Exchange Act Release No. 38744 (June 18, 1997) 
(granting temporary approval to a proposed rule change by the NYSE 
that, among other things, replaced eighths with sixteenths as the 
minimum variation for certain securities).
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    The proposed rule change will only be effective until such time as 
the Commission approves SR-CHX-97-13, a proposed rule change regarding 
general changes to the Exchange's Rules on trading variations.\4\
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    \4\ Securities Exchange Act Release No. 28718 (June 5, 1997), 62 
FR 32132 (June 12, 1997)(publishing notice of SR-CHX-97-13).
    Bids or offers in stocks above one dollar per share shall not be 
made at a less variation than \1/8\ of one dollar per share; in 
stocks below one dollar but above \1/2\ of one dollar per share, at 
a less variation than \1/16\ of one dollar per share; in stocks 
below \1/2\ of one dollar per share, at a less variation than \1/32\ 
of one dollar per share . . . provided that the Exchange may fix 
variations of less than the above for bids and offers in specific 
issues of securities or classes of securities.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(5) of the Act \5\ in that it is designed to promote just 
and equitable principles of trade, 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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    \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 not impose any 
burden on competition.

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

    The Exchange has neither solicited nor received written comments.

III. Solicitation of Comments

    Interested person 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. 552, will be available for inspection and copying at the 
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, 
D.C. 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-97-16 and should be 
submitted by July 23, 1997.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange and, in 
particular, with the requirements of Section 6 and Section 11A of the 
Act.\6\ The CHX's proposal to conform its minimum increments to those 
of the Amex and the NYSE is reasonable because the Commission has 
previously found that the primary markets' trading variation are 
consistent with the Act. Thus, it is appropriate in this instance for 
the Exchange to match its competitors' minimum trading variations.
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    \6\ 15 U.S.C. 78f(b) and 78k-1. In approving this rule change, 
the Commission notes that it has considered the proposal's impact on 
efficiency, competition, and capital formation, consistent with 
Section 3 of the Act. Id Sec. 78c(f).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register. The Exchange intended to 
conform its rule regarding minimum increments to those of the primary 
markets when it submitted its proposed rule change. This proposal rule 
change will enable the CHX to competitively quote such securities in 
the manner that it originally intended when it submitted it proposals. 
Requiring the Exchange to wait the full statutory review period for the 
proposed rule change would unnecessarily delay the implementation of 
the CHX's original intent. At the same time, the proposal is effective 
only until the Commission acts on File No. SR-CHX-97-13.\7\ This will 
provide the Commission with a sufficient period to receive and assess 
comments on SR-CHX-97-16. Therefore, the Commission believes it is 
consistent with Section 6(b)(5) and Section 19(b)(2) of the Act to 
grant accelerated approval on a temporary basis to the proposed rule 
change.\8\
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    \7\ File No. SR-CHX-97-13 is a companion filing that requests 
permanent approval of the procedures described herein. Securities 
Exchange Act Release No. 38718 (June 5, 1997), 62 FR 32132 (June 12, 
1997). File Nos. SR-CHX-97-11 SR-CHX-97-12, and SR-CHX-97-14 are 
related filing whose effectiveness is linked to SR-CHX-97-13. See 
Securities Exchange Act Release Nos. 38704 (May 30, 1997), 62 FR 
31467 (June 9, 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 6, 1997), 62 FR 32134 (June 12, 1997) (approving File No,. SR-
CHX-97-12 on a temporary basis, reducing the trading increment from 
eights to sixteenths for securities that are traded on the Exchange 
and on the NYSE), and 38719 (June 5, 1997), 62 FR 32131 (June 12, 
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).
    \8\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
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V. Conclusion

    It is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CHX-97-16) is hereby approved 
on an accelerated basis until the Commission acts on File No. SR-CHX-
97-13.

    \9\ 15 U.S.C. 78s(b)(2).
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    For the commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 97-17253 Filed 7-1-97; 8:45 am]
BILLING CODE 8010-01-M