[Federal Register Volume 67, Number 189 (Monday, September 30, 2002)]
[Notices]
[Page 61360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24699]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46533; File No. SR-CHX-2002-05]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated Requesting Permanent 
Approval of Pilot Rules Relating to the Securities Industry Transition 
to Decimal Pricing

September 23, 2002.
    On March 1, 2001, the Chicago Stock Exchange, Incorporated (``CHX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), 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 requesting permanent approval of pilot rules 
relating to decimal pricing. The Federal Register published the 
proposed rule change for comment on February 2, 2001.\3\ 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\ Securities Exchange Act Release No. 43882 (January 24, 
2001), 66 FR 8819.
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    Specifically, the Exchange proposes permanent approval of changes 
to Article XX, Rule 37 which (1) allow specialists to elect, on an 
issue by issue basis, to either manually or automatically execute limit 
orders when a trade-through occurs in the primary market; (2) remove 
the ``pending auto-stop'' functionality from the Exchange's systems; 
and (3) allow a specialist, on an issue by issue basis, to establish an 
auto execution guarantee that is not dependent on the ITS Best Bid or 
Offer (``ITS BBO'') or National Best Bid or Offer (``NBBO'') size. The 
Exchange also proposes permanent approval of the pilot rule change to 
Article XX, Rule 23 of the Exchange's rules, which governs 
participation in crossing transactions in Nasdaq/NM securities effected 
on the floor of the Exchange. On August 24, 2000, the Commission 
originally approved the pilots \4\ and, by a series of subsequent 
submissions, each pilot was extended to September 30, 2002.\5\ The 
Commission finds that the proposed rule change is consistent with the 
Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
section 6(b) of the Act.\6\ Specifically, the Commission finds that the 
proposed rule change is consistent with the Section 6(b)(5)\7\ 
requirements that the rules of an exchange be designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts and, in general, to protect investors and the public 
interest.\8\ The Commission believes that the proposal is reasonably 
designed to limit the impact on the Exchange of the change to a decimal 
pricing environment. The Commission notes that no comments have been 
received since the proposed rule change was approved on a pilot basis 
over two years ago.
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    \4\ These changes were proposed in two separate CHX submissions, 
the second of which dealt solely with decimal-related changes to the 
Exchange's crossing rule, Article XX, Rule 23. See Securities 
Exchange Act Release No. 43204 (August 24, 2000), 65 FR 53065 
(August 31, 2000) (SR-CHX-00-22) (approving changes to various CHX 
rules on a pilot basis (``Omnibus Decimal Pilot'')); see also 
Securities Exchange Act Release No. 43203 (August 24, 2000), 65 FR 
53067 (August 31, 2000) (SR-CHX-00-13) (approving changes to the CHX 
crossing rule on a pilot basis (``Crossing Rule Decimal Pilot'')).
    \5\ See Securities Exchange Act Release Nos. 43974 (February 16, 
2001), 66 FR 11621 (February 26, 2001) (SR-CHX-2001-03) (extending 
Omnibus Decimal Pilot through July 9, 2001); 44488 (June 28, 2001), 
66 FR 35684 (July 6, 2001) (SR-CHX-2001-13) (extending Omnibus 
Decimal Pilot through November 5, 2001); 45059 (November 15, 2001), 
66 FR 58543 (November 21, 2001) (SR-CHX-2001-20) (extending Omnibus 
Decimal Pilot through January 14, 2002), 45481 (February 27, 2002), 
67 FR 10244 (March 6, 2002) (SR-CHX-2002-01) (extending Omnibus 
Decimal Pilot through April 15, 2002); and 45819 (April 24, 2002), 
67 FR 21787 (May 1, 2002) (extending the Omnibus Decimal Pilot until 
September 30, 2002); see also, Securities Exchange Act Release Nos. 
44000 (February 23, 2001), 66 FR 13361 (March 5, 2001) (extending 
Crossing Rule Decimal Pilot through July 9, 2001), 45010 (November 
1, 2001), 66 FR 56585 (November 8, 2001) (SR-CHX-2001-22) (extending 
Crossing Rule Decimal Pilot through January 14, 2002), 45482 
(February 27, 2002), 67 FR 10243 (March 6, 2002) (SR-CHX-2002-03) 
(extending Crossing Rule Decimal Pilot through April 15, 2002); and 
45819 (April 24, 2002), 67 FR 21787 (May 1, 2002) (extending the 
Crossing Rule Decimal Pilot until September 30, 2002).
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ In approving this rule change, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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-2002-05) 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. 02-24699 Filed 9-27-02; 8:45 am]
BILLING CODE 8010-01-P