Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Notices 709

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 48797 

(November 17, 2003), 68 FR 65975.

4 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).

5 15 U.S.C. 78f(b)(5).

6 15 U.S.C. 78s(b)(2).

7 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See December 17, 2003 letter from Ellen J. 

Neely, Senior Vice President (‘‘SVP’’) and General 

Counsel (‘‘GC’’), CHX, to Joseph P. Morra, Special 

Counsel, Division of Market Regulation 

(‘‘Division’’), Commission, and attachments 

(‘‘Amendment No. 1’’). Amendment No. 1 

completely replaced and superseded the original 

filing.

4See December 22, 2003 letter from Ellen J. 

Neely, SVP and GC, CHX, to Joseph P. Morra, 

Special Counsel, Division, Commission, and 

attachments (‘‘Amendment No. 2’’). Amendment 

No. 2 completely replaced and superseded 

Amendment No. 1.

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received from 

Members, Participants or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission will: 

A. By order approve such proposed 

rule change, or 

B. Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing. 

Persons making written submissions 

should file six copies thereof with the 

Secretary, Securities and Exchange 

Commission, 450 Fifth Street, NW., 

Washington, DC 20549. Comments may 

also be submitted electronically at the 

following e-mail address: rulecomments@sec.gov. All comment letters 

should refer to File No. SR–Amex–

2003–101. This file number should be 

included on the subject line if e-mail is 

used. To help the Commission process 

and review your comments more 

efficiently, comments should be sent in 

hardcopy or by e-mail but not by both 

methods. 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 in 

the Commission’s Public Reference 

Room. Copies of such filing will also be 

available for inspection and copying at 

the principal office of the Amex. All 

submissions should refer to File No. 

Amex–2003–101 and should be 

submitted by January 27, 2004.

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–222 Filed 1–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–48996; File No. SR–CBOE–

2003–49] 

Self-Regulatory Organizations; Order 

Approving Proposed Rule Change by 

the Chicago Board Options Exchange, 

Incorporated Relating to Time Periods 

Within the Membership Process 

December 29, 2003. 

On October 21, 2003, the Chicago 

Board Options Exchange, Inc. (‘‘CBOE’’

or ‘‘Exchange’’) submitted to 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 

that would extend the time periods (i) 

after which an individual’s inactive 

nominee status will be terminated and 

(ii) during which a former individual 

member may reapply for membership 

through the renewal/change of status 

application process. The Federal 

Register published the proposed rule 

change for comment on November 24, 

2003.3 The Commission received no 

comments on the proposal.

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.4 In particular, the 

Commission believes that the proposed 

rule change is consistent with section 

6(b)(5) of the Act,5 which requires, 

among other things, that CBOE’s rules 

be designed to promote just and 

equitable principles of trade and, in 

general, to protect investors and the 

public interest. The proposed rule 

change should increase the flexibility of 

the Exchange’s membership process 

without compromising its standards. In 

addition, the Commission believes that 

the proposed rule change should 

prevent former members from trying to 

obtain the lower renewal applicant fee 

without following through on their 

applications or membership approvals 

on a timely basis.

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,6 that the 

proposed rule change (SR–CBOE–2003–

49) be, and it hereby is, approved.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–223 Filed 1–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49004; File No. SR–CHX–

2002–09] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change and 

Amendment Nos. 1 and 2 by the 

Chicago Stock Exchange, Incorporated 

To Amend Its Minor Rule Violation Plan 

December 29, 2003. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 11, 

2002, the Chicago Stock Exchange, 

Incorporated (‘‘CHX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been prepared by the Exchange. 

The CHX amended the proposed rule 

change on December 22, 2003,3 and 

again on December 23, 2003.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons.

710 Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Notices 

5 17 CFR 240.11Ac1–1.

6Fines under the Plan can provide an appropriate 

situations. 

For example, where member conduct is not 

intentional or of such magnitude that it can be 

considered reckless, a fine under the Plan might be 

an appropriate response to a first, second or third 

violation by an Exchange member. The Exchange is 

mindful, however, that more egregious violations 

should not be handled through the summary 

proceedings authorized by the Plan.

7 ITS-related violations of the Firm Quote Rule 

will be addressed in another filing, which the CHX 

will soon submit to the Commission for 

consideration.

8One additional change to the current rule text 

deletes the reference to CHX Article XX, Rule 43(d), 

which has been merged with the BEST Rule 

provision of the Exchange’s rulebook. See Securities 

Exchange Act Release No. 47811 (May 7, 2003), 68 

FR 25916 (May 14, 2003)(SR–CHX–2002–20).

9The Commission notes that certain of the rules 

that the CHX proposes to add to the Plan relate to 

market making obligations, and further notes that 

the Commission has indicated previously that ‘‘only 

the most technical and non-substantive violations’’

of a market maker’s obligations should be handled 

pursuant to a minor rule plan. Securities Exchange 

Act Release No. 27878, 55 FR 13345 (April 10, 

1990)(SR–NYSE–89–44).

10 15 U.S.C. 78(f)(b).

11 15 U.S.C. 78(f)(b)(5).

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The CHX proposes to add to its Minor 

Rule Violation Plan (‘‘Plan’’) certain 

violations of Rule 11Ac1–1 under the 

Act 5 (‘‘Firm Quote Rule’’), as well as 

violations of CHX Article XX, Rule 37(a) 

(‘‘BEST Rule’’) and CHX Article XX, 

Rule 37, Interpretation and Policy .04 

(‘‘Ability to Switch MAX to Manual 

Execution’’ procedures). The text of the 

proposed rule change is available at the 

Commission and at 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 

its proposal and discussed any 

comments it received regarding the 

proposal. 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 

The Plan provides a method for the 

Exchange to prosecute minor violations 

of rules contained in the Plan and to 

deter violations of those rules. Under 

the Plan, the Exchange may impose a 

monetary fine, instead of instituting a 

formal disciplinary proceeding, for a 

rule violation that the Exchange has 

found is minor in nature, but which the 

Exchange believes warrants a sanction 

more serious than a warning letter.6

Fines under the Plan can be up to 

$2,500 per violation.

The Exchange proposes to add to the 

Plan: 

• Violations of the Firm Quote Rule 

that are not related to commitments sent 

through the Intermarket Trading System 

(‘‘ITS’’); 7

• Violations of the Exchange’s BEST 

Rule; and 

• Violations of the Ability to Switch 

MAX to Manual Execution procedures.8

The CHX believes that the addition of 

these rule violations to the Plan would 

enhance the enforcement efforts of the 

Exchange’s Market Regulation 

Department (‘‘Department’’) by 

providing it with a broader range of 

enforcement options. Specifically, for 

these violations, the Department would 

be able to seek, in summary fashion, a 

disciplinary sanction that is more severe 

than a warning letter, but not as severe 

as the penalties that could result from 

the often time-consuming process of a 

formal disciplinary hearing.9

Under the Exchange’s proposal, 

eligible violations of the Firm Quote 

Rule would face recommended fines of 

$500 for the first violation, $1,000 for 

the second violation, and $2,500 for the 

third and subsequent violations. 

Violations of the Exchange’s BEST Rule 

and the Ability to Switch MAX to 

Manual Execution procedures would 

face recommended fines of $100 for the 

first violation, $500 for the second 

violation, and $1,000 for the third and 

subsequent violations. 

2. Statutory Basis 

The Exchange 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).10 In 

particular, the CHX believes the 

proposed rule change is consistent with 

section 6(b)(5) of the Act 11 in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to, 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.

B. Self-Regulatory Organization’s 

Statement on 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 on 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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the CHX consents, the 

Commission will: 

(A) By order approve the proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposal 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 

20549–0609. Comments may also be 

submitted electronically at the following 

e-mail address: rule-comments@sec.gov. 

All comment letters should refer to File 

No. SR–CHX–2002–09. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review comments more efficiently, 

comments should be sent in hardcopy 

or by e-mail but not by both methods. 

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 filings will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

submissions should refer to File No. 

Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Notices 711

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2The Commission has modified the text of the 

summaries prepared by EMCC.

3A copy of the proposed rule language which sets 

out the timing for buy-ins and sell-outs is attached 

as an exhibit to EMCC’s filing.

4Securities Exchange Act Release No. 41415 (May 

17, 1999), 64 FR 27841 (May 21, 1999) [File No. SR–

EMCC–98–10]. 5 15 U.S.C. 78q–1(b)(3)(F).

SR–CHX–2002–09 and should be 

submitted by January 27, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–221 Filed 1–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49011; File No. SR–EMCC–

2003–07] 

Self-Regulatory Organizations; 

Emerging Markets Clearing 

Corporation; Notice of Filing and Order 

Granting Accelerated Approval on a 

Temporary Basis of a Proposed Rule 

Change Relating to Buy-In and Sell-Out 

Procedures 

December 30, 2003. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

December 22, 2003, the Emerging 

Markets Clearing Corporation (‘‘EMCC’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared primarily by EMCC. The 

Commission is publishing this notice 

and order to solicit comments from 

interested persons and to grant 

accelerated approval temporarily 

through June 30, 2004, to the proposed 

rule change.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change would (a) 

revise EMCC Rule 7, Sections 18 (BuyIns) and 19 (Sell-Outs) to shorten the 

time period when a buy-in and sell-out 

may be initiated and when it may be 

executed and (b) make conforming, 

technical changes to EMCC Rule 1 

(Definitions and Descriptions) and Rule 

7. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

EMCC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. EMCC has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements.2

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

When EMCC was formed, it was 

recognized that its buy-in and sell-out 

procedures should be similar to those of 

the International Securities Market 

Association (‘‘ISMA’’) because of 

EMCC’s understanding that ISMA’s 

procedures are generally followed by 

emerging market trading parties for 

transactions settled outside EMCC. The 

reason for this was to preclude EMCC 

members from being subject to a buy-in 

or sell-out by a non-EMCC member and 

not be able to retransmit the buy-in or 

sell-out to an EMCC member in the 

same time frame. Accordingly, EMCC’s 

buy-in and sell-out rules followed the 

time periods that would be used by nonEMCC members for these processes. 

EMCC recently learned that the ISMA 

buy-in and sell-out time frames will be 

changed effective January 1, 2004. If 

EMCC does not make corresponding 

changes to its rules by that date, it is 

possible that to avoid potential buy-in 

and sell-out exposure EMCC members 

will no longer submit transactions to 

EMCC. If EMCC members were to 

submit such transactions, they could be 

adversely affected due to the differences 

in buy-in time frames for ex-clearing 

trades. Accordingly, in order not to 

jeopardize the use of EMCC for trade 

processing and to not expose its 

members to risk, EMCC seeks to change 

its rules to conform to the industry 

change that is expected to become 

effective January 1, 2004. Basically, the 

change will shorten the time period 

when a buy-in and sell-out may be 

initiated and when it may be executed.3

EMCC understands that the emerging 

markets securities industry is favorably 

disposed to EMCC’s proposed rule 

change.

In addition to the above proposed 

changes, EMCC also seeks to make 

technical corrections to its Rule 1 

(Definitions and Descriptions) and Rule 

7 with regard to several rule and section 

references regarding buy-in and sell-out 

provisions. Rules 7 and 8 were revised 

in 1999,4 but some references to those 

rules and to specific sections therein 

were not amended to reflect those 

changes. This filing will correct that 

oversight.

EMCC believes that the proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder because it 

will promote the prompt and accurate 

clearance and settlement of securities 

transactions. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

EMCC does not believe that the 

proposed rule change will have an 

impact on or impose a burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments relating to the 

proposed rule change have been 

solicited or received.

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder and 

particularly with the requirements of 

section 17A(b)(3)(F) 5 of the Act, which 

requires that the rules of a clearing 

agency be designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions. 

Because this proposed rule change 

aligns EMCC’s buy-in and sell-out 

procedures with those of ISMA, EMCC 

should avoid any abrupt stoppage of the 

use of its services thereby enabling 

EMCC to continue to provide for the 

prompt and accurate clearance and 

settlement of transactions in emerging 

markets securities.

EMCC has requested that the 

Commission find good cause for 

approving the proposed rule change 

prior to the thirtieth day after the date 

of publication of notice of filing. The 

Commission finds good cause for 

approving the proposed rule change 

prior to the thirtieth day after the date 

of publication of notice of filing because 

by so approving EMCC will be able to 

conform its buy-in and sell-out 

procedures to the new industry 

guidelines generally used in 

transactions cleared outside EMCC 

when those industry guidelines become 

effective January 1, 2004. This will help 

to avoid confusion and other adverse