[Federal Register Volume 63, Number 8 (Tuesday, January 13, 1998)]
[Notices]
[Pages 1985-1986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-722]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39519; File No. SR-CHX-97-28]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated Amending the 
Exchange's Clearing the Post Policy for Cabinet Securities

January 6, 1998.
    On October 23, 1997, the Chicago Stock Exchange, Incorporated 
(``CHX'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ 
and Rule 19b-4 thereunder,\2\ amending the Exchange's clearing the post 
policy for cabinet securities. The Commission published notice of the 
proposed rule change in the Federal Register on November 28, 1997. No 
comment letters were received. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Description of the Proposal

    The Exchange proposes to amend its existing clearing the post 
policy for cabinet securities for a six-month pilot period. The 
clearing the post policy is contained in interpretation and policy .02 
of CHX Article XX, Rule 10.\3\ The Exchange's clearing the post 
policies were previously contained in several Notices to Members which 
had been approved by the Commission.\4\ These Notices to Members, and 
their corresponding Approval Orders, explain the Exchange's clearing 
the post requirements.
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    \3\ See Securities Exchange Act Release No. 39337 (November 19, 
1997) granting immediate effectiveness to SR-CHX-97-30.
    \4\ Securities Exchange Act Release No. 33806 (March 23, 1994) 
59 FR 15248 (Notice of Filing and Immediate Effectiveness of File 
No. SR-CHX-94-03); Securities Exchange Act Release No. 17766 (May 8, 
1981) 46 FR 25745 (Order approving SR-MSE-81-3 and SR-MSE-81-5); and 
Securities Exchange Act Release No. 28638 (November 39, 1990) 55 FR 
49731 (Order approving SR-MSE-90-7).
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    In general, the clearing the post policy requires a floor broker or 
market maker to clear the post by his or her physical presence at the 
post. The purpose of this proposed rule change is to permit a floor 
broker or market maker to clear the post in cabinet securities by 
phone. The bids and offers made to clear the post by phone will be 
audibly announced at the cabinet post through a speaker system 
maintained by the Exchange. This new

[[Page 1986]]

policy will be effective for a six-month pilot period to permit the 
Exchange to determine the effectiveness of the new policy before 
implementing it on a permanent basis.

II. Discussion

    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, the requirements of Sections 6(b)(5) \5\ in that it is 
designed to prevent fraudulent, manipulative acts and practices and to 
promote just and equitable principles of trade, and to remove 
impediments to and protect the mechanism of a free and open market and 
to protect investors and the public interest.\6\
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    \5\ 15 U.S.C. Sec. 78f(b)(5).
    \6\ In approving this rule, the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
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    The Commission believes that allowing floor brokers or market 
makers to clear the post for cabinet securities while remaining at 
their post will ensure that these floor brokers or market makers will 
be at their posts when they need to respond to orders in more liquid 
securities at a much faster pace.
    The Commission believes that approving the proposed rule change on 
a pilot basis is reasonable under the Act because it will serve to 
protect investors and the public interest by providing the Exchange 
with the opportunity to evaluate the effects of allowing floor brokers 
and market makers to clear the post for cabinet securities by phone 
instead of in person, and to determine whether any modifications are 
necessary. The pilot program will expire on July 6, 1998. The 
Commission requests that the CHX submit a report on the effectiveness 
of the pilot program by June 6, 1998.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\7\ that the proposed rule change (SR-CHX-97-28) is approved on a pilot 
basis through July 6, 1998.

    \7\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-722 Filed 1-12-98; 8:45 am]
BILLING CODE 8010-01-M