[Federal Register Volume 67, Number 180 (Tuesday, September 17, 2002)]
[Notices]
[Pages 58667-58668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23530]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46475; File No. SR-CHX-2001-32]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval of Proposed Rule Change and Amendment Nos. 1 and 2 by the 
Chicago Stock Exchange, Incorporated, Relating to CHX Article XX, Rule 
37 Governing Automatic Execution of Market and Marketable Limit Orders

September 9, 2002.
    On December 26, 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, which governs, among other things, automatic execution of 
market and marketable limit orders, to provide CHX order-sending firms 
with greater flexibility relating to automatic execution of orders by 
CHX specialists. Specifically, the proposed rule change would (a) in 
the case of Dual Trading System issues, commonly referred to as listed 
issues, permit immediate execution (or execution in 15 seconds or less) 
of orders if there is no expression of market interest by a person 
physically present at the specialist's post; and (b) refine existing 
CHX algorithms relating to automatic execution of partial orders and 
price improvement of such orders. On June 19, 2002, the CHX amended the 
proposal.\3\ The CHX again amended the proposed rule change on July 26, 
2002.\4\ Notice of the proposed rule change, as amended by Amendment 
Nos. 1 and 2, was published for comment in the Federal Register on 
August 15, 2002.\5\ The Commission received no comments on the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See June 18, 2002 letter from Kathleen M. Boege, Associate 
General Counsel, CHX, to Nancy J. Sanow, Assistant Director, 
Division of Market Regulation (``Division''), SEC, and attachments 
(``Amendment No. 1''). Amendment No. 1 completely replaced and 
superseded the original filing.
    \4\ See July 25, 2002 letter from Kathleen M. Boege, Associate 
General Counsel, CHX, to Nancy J. Sanow, Assistant Director, 
Division, SEC, and attachments (``Amendment No. 2''). Amendment No. 
2 completely replaced and superseded Amendment No. 1.
    \5\ Securities Exchange Act Release No. 46321 (August 7, 2002), 
67 FR 53369.
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    The Commission has reviewed carefully the proposed rule change, as 
amended, 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).\6\ 
Specifically, the Commission finds that approval of the proposed rule 
change is consistent with Section 6(b)(5) \7\ 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. For these reasons, the Commission finds that the proposed 
rule change is consistent with the

[[Page 58668]]

provisions of the Act, in general, and with Section 6(b)(5) \8\ in 
particular.
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    \6\ 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).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the thirtieth day after the date of 
publication of notice of filing thereof in the Federal Register. In the 
notice, 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. Additionally, the Commission believes that the proposed 
rule change should satisfy the concerns of order-sending firms that 
require immediate executions, while preserving the fundamental 
protections of an auction market environment. The Commission also 
believes that the proposed rule change as it relates to the refinement 
of automatic execution sequences and price improvement algorithms 
should provide benefits to investors, and therefore, the Commission 
believes accelerated approval is appropriate.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-CHX-2001-32), 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. 02-23530 Filed 9-16-02; 8:45 am]
BILLING CODE 8010-01-P