[Federal Register Volume 64, Number 116 (Thursday, June 17, 1999)]
[Notices]
[Pages 32572-32573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15354]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-4182; File No. SR-CHX-99-3]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Inc., Concerning an Increase in the BEST Rule Guarantee and the Minimum 
Order Acceptance Level in the MAX System

June 4, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 7, 1999, the Chicago Stock Exchange, Inc. (``CHX'') or ``the 
Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
filing was amended on May 26, 1999.\3\ The proposed rule change, as 
amended, has been filed by CHX as a ``non-controversial'' rule change 
under Rule 19b-4(f)(6) \4\ under the Act.\5\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Kirsten M. Carlson, Foley & Lardner, to 
Katherine A. England, Assistant Director, Division of Market 
Regulation, Commission, dated May 25, 1999 (``Amendment No. 1'').
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ CHX originally filed this proposal under Rule 19b-4(e)(5). 
Amendment No. 1 amended this to Rule 19b-4(f)(6). As requested by 
CHX, the Commission will consider the original filing, dated May 6, 
1999, as the pre-filing notice required by Rule 19b-4(f)(6). The 
Amendment No. 1 filing date (May 26, 1999) will be considered the 
formal filing date of the rule change.

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[[Page 32573]]

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

    The Exchange proposes to amend Rule 37 of Article XX of the 
Exchange's Rules to increase the size of the guarantee contained in the 
Best Rule and the minimum order acceptance level in the MAX System for 
all agency orders in Dual Trading System issues from 2099 to 5099 
shares.\6\ The text of the proposed rule change is available at the CHX 
and at the Commission.
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    \6\ The increase to 5099 shares will become operative on a date 
specified in a Notice to Members to be issued in the immediate 
future.
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II. Self-Regulatory Organization's Statement of the Propose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CHX 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
    Under the Exchange's Guaranteed Execution System (the ``BEST 
System''), specialists must currently accept and guarantee execution of 
agency orders in Dual Trading System issues from 100 up to and 
including 2099 shares. Similarly, the Exchange's Midwest Automatic 
Execution System (the ``MAX system'') contains an auto-acceptance 
threshold parameter that is designated by the specialist on a stock-by-
stock basis that must be set for 2099 shares or greater for Dual 
Trading System issues.
    The proposed rule change would increase the Best Rule guarantee and 
the auto-acceptance threshold. Specifically, the rule change would 
require specialists to accept all agency orders in Dual Trading System 
issues from 100 up to and including 5099 shares, and require that the 
auto-acceptance threshold parameter be set for 5099 shares or greater 
for all Dual Trading System issues.
    The Exchange believes that the larger size guarantees will benefit 
customers by providing customers with better executions. Further, the 
Exchange believes the larger size guarantees will enhance the 
competitiveness of the Exchange by attracting additional order flow.
2. Statutory Basis
    The Exchange believes that this proposed rule change is consistent 
with and furthers the objectives of Section 6(b)(5) of the Act \7\ in 
that it is designed to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
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.
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    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition.

    CHX 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 rule change.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder \9\ 
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; (3) by its terms, does not become 
operative for 30 days from the date of filing, or such shorter time 
that the Commission may designate if consistent with the protection of 
investors and the public interest; and (4) CHX provided the Commission 
with written notice of its intent to file the proposed rule change at 
least five days prior to the filing date. At any time within 60 days of 
the filing of such 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 purposes of 
the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In reviewing this proposal, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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    The Exchange has requested that the Commission approve acceleration 
of the operative date of the proposal to June 11, 1999. The Exchange 
states that the increase of the BEST Rule Guarantee and auto acceptance 
threshold will benefit customers by providing better executions, and 
that accelerating the operative date will allow customers to receive 
this benefit earlier. The Exchange further states that it is 
technologically prepared to begin operations as soon as permitted by 
the Commission. The Commission finds that accelerating the operative 
date of the rule change as proposed is consistent with the protection 
of investors and the public interest, and thus designates June 11, 
1999, as the operative date of the filing.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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-
0609. 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 in 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-99-3, and should 
be submitted by July 8, 1999.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15354 Filed 6-16-99; 8:45 am]
BILLING CODE 8010-01-M