[Federal Register Volume 67, Number 7 (Thursday, January 10, 2002)]
[Notices]
[Pages 1385-1386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-634]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45237; File No. SR-CHX-2001-29]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Chicago 
Stock Exchange, Incorporated Relating to the Listing and Trading of 
Trust Issued Receipts

January 4, 2002.
    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 December 10, 2001, the Chicago Stock Exchange, Incorporated (``CHX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change, 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 and to 
approve the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to add an Interpretation and Policy relating 
to Article XXVIII, Rule 27 of the CHX Rules, which governs the listing 
of Trust Issued Receipts (``TIRs'') on the CHX. The new Interpretation 
and Policy will confirm the eligibility requirements for Component 
Securities represented by a series of TIRs that became part of such TIR 
when the security was either: (a) Distributed by a company whose 
securities were already included as a Component Security in the series 
of TIRs; or (b) received in exchange for the securities of a company 
previously included as a Component Security that are no longer 
outstanding due to a merger, consolidation, corporate combination or 
other event. The text of the proposed rule filing is below. Additions 
are in italics; deletions are in brackets.

Chicago Stock Exchange Rules

Article XXVIII

* * * * *
Trust Issued Receipts
    Rule 27  No change to text
Interpretations and Policies[y]
    .01 No change in text.
    .02 The eligibility requirements for Component Securities that are 
represented by a series of Trust Issued Receipts and that became part 
of the Trust Issued Receipt when the security was either: (a) 
Distributed by a company already included as a Component Security in 
the series of Trust Issued Receipts; or (b) received in exchange for 
the securities of a company previously included as a Component Security 
that is no longer outstanding due to a merger, consolidation, corporate 
combination or other event, shall be as follows:
    (i) the Component Security must be listed on a national securities 
exchange or traded through the facilities of Nasdaq and a reported 
national market system security;
    (ii) the Component Security must be registered under section 12 of 
the Exchange Act; and
    (iii) the Component Security must have a Standard & Poor's Sector 
Classification that is the same as the Standard & Poor's Sector 
Classification represented by Component Securities included in the 
Trust Issued Receipt at the time of the distribution or exchange.
* * * * *

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 III 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
    The Exchange proposes to add an Interpretation and Policy relating 
to Article XXVIII, Rule 27 of the CHX Rules, which governs the listing 
of TIRS on the CHX. The new Interpretation and Policy will confirm the 
eligibility requirements for Component Securities represented by a 
series of TIRs that became part of such TIR when the security was 
either: (a) Distributed by a company whose securities were already 
included as a Component Security in the series of TIRs; or (b) received 
in exchange for the securities of a company previously included as a 
Component Security that are no longer outstanding due to a merger, 
consolidation, corporate combination or other event.
    Article XXVIII, Rule 27 of the CHX Rules set forth the eligibility 
criteria for Component Securities represented by a series of TIRs. The 
current version of the rule does not contain eligibility criteria for 
Component Securities that are automatically deposited into a TIR as a 
result of a distribution or corporate event. Accordingly, the CHX 
proposes the following eligibility requirements for such Component 
Securities: (i) The Component Security must be listed on a national 
securities exchange or traded through the facilities of Nasdaq and a 
reported national market system security; (ii) the Component security 
must be registered under section 12 of the Act; and (iii) the Component 
Security & Poor's Sector Classification represented by Component 
Securities included in the TIR at the time of the distribution or 
exchange.
    The CHX believes that it is appropriate in these limited situations 
to provide alternate eligibility criteria for Component Securities. To 
reduce the number of distributions of securities from the TIR which 
cause inconvenience and increased transaction and administrative costs 
for investors, it is useful to allow certain securities that are 
received as part of a distribution from a company or as the result of a 
merger, consolidation, corporate combination or other event to remain 
in the TIR. The proposed eligibility requirements ensure that Component 
Securities included in a TIR as a result of a distribution or exchange 
event are widely held (having been distributed to all of the 
shareholders holding the original Component Security), traded through 
the facilities of an exchange or Nasdaq and registered under section 12 
of the Act.
    Notably, the Exchange believes that the proposed rule change is 
substantially similar to rule filings previously approved on an 
accelerated basis by the Commission.\3\
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    \3\ See Securities Exchange Act Release Nos. 44309 (May 16, 
2001), 66 FR 28587 (May 23, 2001) (File No. SR-Amex-2001-04); 44928 
(October 12, 2001), 66 FR 53457 (October 22, 2001) (File No. SR-BSE-
2001-05); and 44826 (September 20, 2001, 66 FR 49990 (October 1, 
2001) (File No. SR-Phlx-2001-75).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section

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6(b) of the Act \4\ in general, and furthers the objectives of section 
6(b)(5) \5\ in particular, in that it is designed to promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanisms of a free and open market and a national market system, and, 
in general, protect investors and the public interest.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will impose no 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 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 inspecation and copying at the 
principal office of the CHX. All submissions should refer to the File 
No. SR-CHX-2001-29 and should be submitted by January 31, 2002.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    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, 
and in particular, the requirements of section 6(b)(5) of the Act.\6\ 
Specifically, the Commission finds that the proposal to provide an 
alternate eligibility criteria for Component Securities received as 
part of a distribution or as a result of a merger, consolidation, 
corporate combination or other event to remain in the trust will 
promote just and equitable principles of trade, facilitate transactions 
in securities, remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, 
protect investors and the public interest, and is not designed to 
permit unfair discrimination between customers issuers, brokers, or 
dealers.\7\
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    \6\ 15 U.S.C. 78f(b)(5).
    \7\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f)
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    The CHX has requested that the proposed rule change be given 
accelerated approval pursuant to section 19(b)(2) of the Act.\8\
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    \8\ 15 U.S.C. 78s(b)(2).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of the 
notice of filing thereof in the Federal Register pursuant to section 
19(b)(2).\9\ As noted above, the Commission has previously approved 
proposed rule changes by other exchanges that provided similar 
eligibility requirement.\10\ The Commission does not believe that the 
proposed rule change raises novel regulatory issues that were not 
addressed in the previous filings. Accordingly, the Commission finds 
that it is consistent with section 6(b)(5) of the Act\11\ to approve 
the proposal on an accelerated basis.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See supra note 3.
    \11\ 15 U.S.C. 78f(b)(5).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CHX-2001-29) is hereby 
approved on an accelerated basis.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Divsiion of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-634 Filed 1- 9-02; 8:45 am]
BILLING CODE 8010-01-M