[Federal Register Volume 66, Number 72 (Friday, April 13, 2001)]
[Notices]
[Pages 19265-19266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9170]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-441677; File No. SR-CHX-2001-05]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated, Relating to the Exchange's SuperMAX 2000 Price 
Improvement Algorithm

April 9, 2001.

I. Introduction

    On March 16, 2001, the Chicago Stock Exchange, Incorporated 
(``CHX'' or filed with the Securities and Exchange Commission 
(``Commissin'' or ``SEC''), 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 that would amend CHX Article XX, 
Rule 37(h) to reduce the determinative spread from $.03 to $.02 as part 
of the Exchange's SuperMAX 2000 price improvement program. Notice of 
the proposed rule change was published for comment in the Federal 
Register on March 23, 2001.\3\ This order approves the proposed rule 
change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 44085 (March 19, 2001), 
66 FR 16304. In the notice, the Commission stated it would consider 
granting accelerated approval of the proposed rule change after a 
15-day comment period.
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II. Description of the Proposal

    According to the CHX, the primary purpose of the proposed rule 
change is to increase the number of orders that are eligible for 
automated price improvement.
    On December 19, 2000, the Commission approved SR-CHX-00-37,\4\ 
implementing SuperMAX 2000, the CHX's new price improvement program, 
which will govern price improvement of all order for issues quoting in 
decimal price increments. SuperMAX 2000 was designed to afford 
specialists the flexibility to provide a wide variety of price 
improvement alternatives, all of which will be equal to or more 
favorable than alternatives that existed previously at the CHX. 
SuperMAX 2000 originally provided for price improvement of at least 
$.01 on orders of 100 shares where the spread between the national best 
bid and offer (``NBBO'') was $.03 or greater.
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    \4\ Securities Exchange Act Release No. 43742 (December 19, 
2000), 65 FR 83119 (December 29, 2000).
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    To remain competitive, the CHX proposes that its specialists be 
permitted (but not obligated) to offer price improvement of $.01 or 
better where the NBBO spread is $.02 or greater. The current 
determinative spread is $.03. The proposal would not impact orders for 
more than 100 shares, in which case the specialist's price improvement 
options are not contingent on a determinative NBBO spread.

III. Discussion

    The Commission has reviewed carefully the proposed rule change and 
finds that it is consistent with the Act and the rules and regulations 
promulgated thereunder applicable to a national securities exchange 
and, in particular, with the requirements of Section 6(b).\5\ 
Specifically, the

[[Page 19266]]

Commission finds that approval of the proposed rule change is 
consistent with Section 6(b)(5) \6\ in that it is designed to promote 
just and equitable principles of trade, to remove impediments and to 
perfect the mechanism of a free and open market and a national market 
system, and in general, to protect investors and the public interest. 
The Commission believes that a reduction in the determinative spread 
from $.03 to $.02 may increase the opportunities for price improvement, 
resulting in a benefit to investors. Additionally, the Commission 
believes the proposal is reasonable because it contemplates equality 
among order-sending firms and their customers by mandating that 
additional price improvement be provided by CHX specialists on an 
issue-by-issue basis, rather than allowing specialists to distinguish 
among order-sending firms when designating price improvement levels.
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    \5\ 15 U.S.C. 78f(b). In approving this proposal, the Commission 
has considered the proposed rule's impact on efficiency, competition 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change before the thirtieth day after the date of publication of notice 
of filing thereof in the Federal Register. In the notice,\7\ the 
Commission indicated that it would consider granting accelerated 
approval of the proposal after a 15-day comment period. The Commission 
received no comments on the proposal during the 15-day comment period. 
The Commission believes it is reasonable to implement the proposal on 
an accelerated basis, in view of the anticipated benefits of the 
proposal. For these reasons, the Commission finds good cause for 
accelerating approval of the proposed rule change.
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    \7\ See footnote 3, supra.
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IV. Conclusion

    For the above reasons, the Commission finds that the proposed rule 
change is consistent with the provisions of the Act, in general, and 
with Section 6(b)(5) \8\ in particular.
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    \8\ 15 U.S.C. 78f(b)(5).
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    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CHX-2001-05), as amended, be 
and hereby is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    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. 01-9170 Filed 4-12-01; 8:45 am]
BILLING CODE 8010-01-M