[Federal Register Volume 69, Number 65 (Monday, April 5, 2004)]
[Notices]
[Pages 17722-17723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7601]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49496; File No. SR-CHX-2003-25]


Self-Regulatory Organizations; Chicago Stock Exchange, 
Incorporated; Order Granting Approval to Proposed Rule Change and 
Amendments No. 1 and No. 2 Thereto Relating to Stop Order Handling 
Rules

March 29, 2004.
    On August 11, 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 of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend CHX Article XXX, Rule 
22, which governs the handling of stop orders. On January 29, 2004, the 
Exchange filed Amendment No. 1 to the proposed rule change,\3\ and on 
February 17, 2004, the Exchange filed Amendment No. 2 to the proposed 
rule change.\4\
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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 (``Division''), Commission, dated January 28, 2004 
(``Amendment No. 1''). Amendment No. 1 replaced the originally filed 
proposal in its entirety.
    \4\ See letter from Kathleen M. Boege, Associate General 
Counsel, CHX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation (``Division''), Commission, dated February 13, 
2004 (``Amendment No. 2''). Amendment No. 2 replaced the originally 
filed proposal, as superceded by Amendment No. 1, in its entirety.
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    The proposed rule change, as amended, was published for comment in 
the Federal Register on February 26, 2004.\5\ The Commission received 
no comments on the proposal. This order approves the proposed rule 
change, as amended.
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    \5\ See Securities Exchange Act Release No. 49283 (February 19, 
2004), 69 FR 8998.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange \6\ 
and, in particular, the requirements of Section 6 of the Act \7\ and 
the rules and regulations thereunder. Specifically, the Commission 
finds that the proposed rule change, as amended, is consistent with 
Section 6(b)(5) of the Act \8\ which

[[Page 17723]]

requires that the Exchange's rules be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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 Commission believes that 
the CHX's proposal to explicitly codify its policy for handling stop 
orders should help to provide guidance for its members regarding the 
handling and execution of such orders. The Commission also believes 
that defining and confirming that a stop order, once elected by a price 
penetration on a national securities exchange or association, will be 
treated as a market order for purposes of determining the execution 
price due the order, should conform the CHX's stop order handling rules 
to those of other markets, including the New York Stock Exchange, Inc. 
(``NYSE''), the American Stock Exchange LLC (``Amex''), and the Pacific 
Exchange, Inc.\9\
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    \6\ In approving this proposed rule change, as amended, the 
Commission notes that it 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.
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See NYSE Rule 13; Amex Rule 131; and Archipelago Exchange 
Facility Rule 7.31.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-CHX-2003-25), as 
amended, be, and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-7601 Filed 4-2-04; 8:45 am]
BILLING CODE 8010-01-P