[Federal Register Volume 66, Number 78 (Monday, April 23, 2001)]
[Notices]
[Pages 20501-20502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9963]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44180; File No. SR-CHX-2001-06]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated, Amending Its SuperMAX 2000 Price Improvement Algorithm To 
Permit Application of the Algorithm to Odd Lot Orders

April 16, 2001.

I. Introduction

    On March 19, 2001, the Chicago Stock Exchange, Incorporated 
(``CHX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' 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 permit application of the Exchange's SuperMAX 2000 price 
improvement algorithm to odd lot orders. Notice of the proposed rule 
change was published for comment in the Federal Register on March 28, 
2001.\3\ This order approved 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. 44090 (March 21, 2001), 
66 FR 16962. 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.

[[Page 20502]]

    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 orders 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 did not by its terms permit price improvement 
of odd lot orders.
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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 to odd lot 
orders. The proposal would permit odd lot dealers to provide price 
improvement of $.01 or better, in the case of odd lot orders received 
when the national best bid and offer spread is $.05 or larger.

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 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 the proposed rule change may 
increase the opportunities for price improvement by allowing the 
Exchange's odd lot dealers to offer price improvement of odd lot 
orders, 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 price improvement be provided by CHX odd lot dealers on an issue-
by-issue basis, rather than allowing odd lot dealers 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, given 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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    In is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CHX-2001-06), 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. 01-9963 Filed 4-20-01; 8:45 am]
BILLING CODE 8010-01-M