[Federal Register Volume 69, Number 27 (Tuesday, February 10, 2004)]
[Notices]
[Pages 6353-6354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2807]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49188; File No. SR-CHX-2003-17]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment No. 1 Thereto by the Chicago Stock Exchange, 
Incorporated Relating to Automatic Quotations

February 4, 2004.
    On June 16, 2003, 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

[[Page 6354]]

of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change that would delete an interpretation of CHX Article XX, Rule 7 
that prohibits specialists from disseminating automatically-generated 
quotations that are more than $.10 away from the Intermarket Trading 
System best bid or offer. On November 26, 2003, CHX filed Amendment No. 
1 to the proposed rule change.\3\ The Federal Register published the 
proposed rule change, as amended, for comment on December 31, 2003.\4\ 
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 letter from Kathleen M. Boege, Associate General 
Counsel, CHX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated November 25, 2003 (``Amendment 
No. 1''). In Amendment No. 1, the Exchange expanded its discussion 
regarding the consequences of the proposed rule change, and also 
clarified that the proposed rule change was filed pursuant to 
Section 19(b)(2) of the Act. 15 U.S.C. 78s(b)(2).
    \4\ See Securities Exchange Act Release No. 48982 (December 23, 
2003), 68 FR 75674.
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    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.\5\ In 
particular, the Commission believes that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\6\ which requires, among 
other things, that an exchange's rules be designed to remove 
impediments to and 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 CHX has represented that, following the securities 
industry's transition to decimal pricing, the consolidated quotations 
in the national securities markets flicker significantly throughout the 
trading day. Consequently, the quotations generated by CHX's auto-quote 
functionality flicker significantly during the trading day, resulting 
in significant, costly quotation traffic. Given that the Consolidated 
Quotation Association is now charging participants based on their 
capacity requirements, CHX wants to eliminate any unnecessary use of 
capacity. The Commission notes that, since automatic executions are 
required to be executed at the national best bid or offer in effect at 
the time the order is received or better, the proposed change should 
not have any negative effect on execution prices.
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    \5\ 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).
    \6\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change, as amended, (SR-CHX-2003-17) be, 
and it hereby is, approved.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2807 Filed 2-9-04; 8:45 am]
BILLING CODE 8010-01-P