[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]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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