[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
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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