[Federal Register Volume 67, Number 217 (Friday, November 8, 2002)]
[Notices]
[Pages 68220-68221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28485]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46762; File No. SR-CHX-2002-30]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated Relating to Eligibility of Limit Orders for Trade Through 
Protection and Amendment No. 1 Thereto

November 1, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice hereby is given 
that on September 13, 2002, the Chicago Stock Exchange, Incorporated 
(``CHX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II and III below, which Items have been prepared 
by the self-regulatory organization. The Exchange filed the proposal 
pursuant to section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. On October 30, 2002, the Exchange filed Amendment No. 1 
to the proposed rule change.\5\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ See letter from Kathleen M. Boege, Assistant General 
Counsel, CHX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated October 29, 2002 (``Amendment 
No. 1''). In Amendment No. 1, the Exchange corrected typographical 
errors contained in the proposed rule text.
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    The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend CHX Article XX, Rule 37(a)(3) to 
clarify the rules relating to the execution of limit orders in the 
specialist's book in the event of a trade through in the primary 
market. The proposed rule change mirrors a change made to another CHX 
rule relating to the automated execution of limit orders, which 
required that a limit order be resident in the specialist's book for a 
time period of 0-15 seconds (as designated by the specialist) before it 
would be eligible for limit order protection. The text of the proposed 
rule change is available from the Office of the Secretary, the 
Commission, and the CHX.

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 regarding the proposed rule change. 
The text of these statements may be examined at the places specified in 
Item IV 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
    On January 11, 2002, the Commission approved a proposed rule change 
submitted by the Exchange amending Article XX, Rule 37(b)(6) of the 
Exchange's rules, which, among other things, governs execution of limit 
orders in the specialist's book in the event of a trade through in the 
primary market.\6\ That proposal required that a limit order be 
resident in the specialist's book for a time period of 0-15 seconds (as 
designated by the specialist) before it would be eligible for limit 
order protection.
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    \6\ See Securities Exchange Act Release No. 45271, 66 FR 2712 
(January 18, 2002)(order approving SR-CHX-2001-17).
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    Another provision of the CHX rules, however, also addresses the 
execution of agency limit orders and should have been amended as part 
of the Exchange's original proposal.\7\ Through this submission, the 
Exchange modifies CHX Article XX, Rule 37(a)(3) to eliminate any 
confusion about the impact of the earlier rule change.
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    \7\ See CHX Article XX, Rule 37(a)(3).
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2. Statutory Basis
    The CHX believes that the proposed rule change is consistent with 
the requirements of the Act and the rules and regulations thereunder 
that are applicable to a national securities exchange, and, in 
particular, with the requirements of section 6(b).\8\ Specifically, the 
proposed rule is consistent with section 6(b)(5) of the Act \9\ 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

[[Page 68221]]

general, to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing rule change does not:
    (1) Significantly affect the protection of investors or the public 
interest;
    (2) Impose any significant burden on competition; and
    (3) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, and the 
Exchange provided the Commission with written notice of its intent to 
file the proposed rule change at least five days prior to the filing 
date, it has become effective pursuant to section 19(b)(3)(A) of the 
Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ At any time within 60 
days of the filing of such rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purpose of 
the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    The Exchange requested that the Commission accelerate the operative 
date of the proposed rule change. The Commission believes that 
accelerating the operative date of the proposed rule change is 
consistent with the protection of investors and the public interest. 
The Commission notes that the substance of the proposed rule change has 
already been subject to a full notice and comment period as part of 
another proposal, which was approved by the Commission.\12\ The instant 
proposed rule change simply amends another Exchange rule to be 
consistent with the previously approved change. As a result, the 
Commission designates the proposed rule change to be effective and 
operative upon filing with the Commission.\13\
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    \12\ See note 6, supra.
    \13\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change 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. 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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CHX-2002-30 and 
should be submitted by November 25, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-28485 Filed 11-7-02; 8:45 am]
BILLING CODE 8010-01-P