[Federal Register Volume 63, Number 17 (Tuesday, January 27, 1998)]
[Notices]
[Pages 3940-3941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1856]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39557; File No. SR-CHX-97-33]


Self-Regulatory Organizations; Chicago Stock Exchange; Notice of 
Filing of and Immediate Effectiveness of Proposed Rule Change Regarding 
Regulatory Cooperation

January 16, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on December 
11, 1997, the Chicago Stock Exchange, Incorporated (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') 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.

I. Self-Regulatory Organization's Statement of The Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Article VIII, Rule 11 of its Rules 
to clarify the existing Rule and to require regulatory cooperation by 
members, member organizations, and others over whom the Exchange has 
jurisdiction in connection with certain investigations and proceedings 
that are initiated by other exchanges or self-regulatory organizations.

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 Exchange 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 Exchange 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
    Currently, Article VIII, Rule 11 requires members (and certain 
others) to submit books and papers, furnish information, and appear and 
provide testimony to the Exchange's Board and other committees or 
officers of the Exchange, among other things. While the Exchange 
believes that the current rule provides adequate authority to require 
members (and others specified in the rule) to provide information to 
other regulatory organizations, the Exchange believes that clarifying 
this provision to expressly provide for such information is desirable, 
especially because other self-regulatory organizations have recently 
amended their rules to clarify their information-sharing authority.
    The proposed rule change would expressly provide that no member, 
member organization, or partner, officer, director or other person 
associated with a member or other person or entity subject to the 
jurisdiction of the Exchange shall refuse to appear and testify before 
another exchange or self-regulatory organization in connection with a 
regulatory investigation, examination or disciplinary proceeding, or 
refuse to furnish documentary materials or other information, or 
otherwise impede or delay such investigation, examination or 
disciplinary proceeding if the Exchange requests such information or 
testimony in connection with an inquiry resulting from an agreement 
entered into by the Exchange with other exchanges or self-regulatory 
organizations with whom the Exchange has entered into agreements for 
the sharing of information and other forms of mutual assistance, 
including but not limited to members and affiliate members of the 
Intermarket Surveillance Group.\1\ The proposed rule change would 
explicitly provide that the Exchange may enter into agreements with 
domestic and foreign self-regulatory organizations providing for the 
exchange of information and other forms of mutual assistance for market 
surveillance, investigative, enforcement and regulatory purposes. The 
requirements of the proposed rule would apply regardless of whether the 
Exchange had itself initiated a formal investigation or disciplinary 
proceeding.
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    \1\ The Intermarket Surveillance Group (``ISG'') is an 
organization of securities industry self-regulatory organizations 
formed in 1983 to coordinate and develop intermarket surveillance 
programs designed to identify and combat fraudulent and manipulative 
acts and practices. In order to promote its purposes, members agree 
to exchange such information as is necessary for ISG members to 
perform their self-regulatory and market surveillance functions.
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    The proposed rule change would also provide that any person or 
entity required to furnish information or testimony pursuant to the new 
rule must be afforded the same rights and procedural protections as 
that person or entity would have if the Exchange had initiated the 
request for information or testimony.
    While the Exchange believes that the current rule provides adequate 
authority to require members and specified others to provide testimony, 
documentary materials or other information to the Exchange's Board or 
to the Exchange (or any committee, subcommittee or officer thereof) and 
refrain from impeding or delaying any examination, inquiry, or 
investigation (whether formal or informal) the Exchange believes that 
changes are desirable to conform this text to the new provisions added 
above. Specifically, the proposed rule change would provide that no 
member, member organization, or partner, officer, director or other 
person associated with a member or other person or entity subject to 
the jurisdiction of the Exchange shall impede or delay an Exchange 
examination, inquiry or investigation (whether formal or informal) with 
respect to possible violations within the disciplinary jurisdiction of 
the Exchange or with respect to possible limitations on access to 
Exchange services or otherwise with respect to the discharge of its 
duties nor refuse to furnish testimony, documentary materials or other 
information requested by the Board of Governors or by the Exchange (or 
by any committee, subcommittee, or officer thereof) during

[[Page 3941]]

the course of such examination, inquiry or investigation or otherwise 
in furtherance of the discharge of its or his duties. Failure to 
furnish such testimony, documentary materials or other information 
requested pursuant to the proposed rule on the date or within the time 
period requested would be considered obstruction of an Exchange inquiry 
or investigation and would not be subject to formal disciplinary 
action.
2. Basis
    The Exchange believes that 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 foster cooperation and 
coordination with persons regulating securities transactions, 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any 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 on 
the proposed change.

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

    Because the proposed rule change: (1) does not significantly affect 
the protection of investors or the public interest; (2) does not impose 
any significant burden on competition; and (3) does not become 
operative for 30 days from December 11, 1997, the date of which it was 
filed, and the Exchange provided the Commission with written notice of 
its intent to file the proposed rule change at least five days prior to 
the filing date, it has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(e)(6) thereunder.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purpose of this Act.

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. 552, will be available for inspection and copying at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
CHX. All submissions should refer to File No. SR-CHX-97-33 and should 
be submitted by February 17, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-1856 Filed 1-26-98; 8:45 am]
BILLING CODE 8010-01-M