[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Notices]
[Pages 49144-49145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24526]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40405; File No. SR-CHX-98-18]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating to the Exchange's 
Withdrawal of Capital Provisions

September 4, 1998.

I. Introduction

    On June 26, 1998, the Chicago Stock Exchange, Inc. (``CHX''or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Article II, Rule 6(b) of 
the Exchange's rules relating to the Exchange's Withdrawal of Capital 
provisions. The proposed rule change was published for comment in the 
Federal Register. on August 4, 1998.\3\ The Commission received no 
comments on the proposal.
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    \1\ 15 U.S.C. 78s(b)(1)(1994).
    \2\ 17 CFR 240.19b-4 (1998).
    \3\ Securities Exchange Act Release No. 40271 (July 28, 1998), 
63 FR 41609.
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II. Description of the Proposal

    The Exchange proposes to amend Article II, Rule 6(b) of the 
Exchange's rules in order to limit the applicability of the Exchange's 
Withdrawal of Capital provisions to member firms for which the Exchange 
is the Designated Examining Authority (``DEA''). The Exchange's 
Withdrawal of Capital provisions limit the ability of a partner in a 
member firm to withdraw capital from the firm. Currently, this 
requirement applies to both member firms for which the Exchange is the 
DEA as well as firms subject to examination by a self-regulatory 
organization (``SRO'') other than the Exchange, if the member firm's 
DEA does not have a comparable rule. The proposed rule change would 
eliminate this requirement for all member firms for which the Exchange 
is not the DEA.

II. Discussion

    After careful review, 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. The Commission believes that the proposed rule change is 
consistent with Section 6 of the Act, in general,\4\ and Section 
6(b)(5),\5\ in particular, in that it is designed to promote just and 
equitable principles of trade, to prevent fraudulent and manipulative 
acts and practices, to foster cooperation and coordination with persons 
engaged in regulating and facilitating transactions in securities, 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.\6\ The Commission believes that the 
proposed rule change will not disturb the financial protections the CHX 
has in place ensure investor protection, the public interest, or the 
integrity of the Exchange's markets. CHX member firms, for which the 
Exchange is the DEA, will still be required to maintain adequate 
capital reserves. Under the proposed rule change the partnership 
articles of each member firm for which the Exchange is the DEA will 
still be required to contain provision requiring written approval

[[Page 49145]]

from the Exchange for the capital contribution of any partner to be 
withdrawn on less than six months' written notice of withdrawal if the 
notice of withdrawal is given prior to six months after the capital 
contribution was first made. The Commission also notes that the amended 
CHX withdrawal of capital rule is identical or very similar to those of 
other SROs.\7\
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \7\ See American Stock Exchange Rule 300, and New York Stock 
Exchange Rule 313.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-CHX-98-18) is approved.

    \8\15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulations, 
pursuant to delegated authority.\9\
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    \9\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-24526 Filed 9-11-98; 8:45 am]
BILLING CODE 8010-01-M