46392 Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices

6The Commission notes that pursuant to Article

XVII, Section 4 of the Options Clearing

Corporation’s (‘‘OCC’’) by-laws, OCC is empowered

to fix an exercise settlement amount in the event

it determines a current index value is unreported

or otherwise unavailable. Further, OCC has the

authority to fix an exercise settlement amount

whenever the primary market for the securities

representing a substantial part of the value of an

underlying index is not open for trading at the time

when the current index value (i.e., the value used

for exercise settlement purposes) ordinarily would

be determined. See Securities Exchange Act Release

No. 37315 (June 17, 1996), 61 FR 42671 (order

approving SR–OCC–95–19).

7See Securities Exchange Act Release No., 34157

(June 3, 1994), 59 FR 30062 (June 10, 1994) (SR–

AMEX–92–35).

8The AMEX represented to the Commission that

it has the necessary systems capacity to support the

new series of options to be generated by the Index.

The AMEX also stated that it requested a written

representation from the Options Price Reporting

Authority (‘‘OPRA’’) confirming the adequacy of its

systems capacity. The AMEX will not permit

trading of options on the index until it confirms

with the Commission that OPRA has given the

AMEX a written representation that it has the

necessary systems capacity. See Letter from Claire

P. McGrath, Vice President & Special Counsel,

Derivative Securities, the AMEX, to Ivette Lopez,

Assistant Director, Office of Market Supervision,

Division of Market Regulation, Commission, dated

August 18, 1997.

9 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

10 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. 38718

(June 5, 1997), 62 FR 32132 (June 12, 1997).

4Letter from David T. Rusoff, Esq., Foley &

Lardner, to Ivette Lo ́pez, Division of Market

Regulation, SEC, dated June 20, 1997 (‘‘Amendment

No. 1’’). Amendment No. 1 conformed the CHX’s

proposal to similar rules of the New York Stock

Exchange and the American Stock Exchange by

slightly modifying the level at which trading

securities in increments of 1⁄32 of a dollar may

occur.

expiration, then the prior day’s last sale

price will be used in the calculation.6

Exchange rules applicable to Stock

Index options. AMEX Rules 900C

through 980C will apply to the trading

of option contracts based on the Index.

These rules cover issues such as

surveillance, exercise prices, and

position limits. Surveillance procedures

currently used to monitor trading in

each of the Exchange’s other index

options will also be used to monitor

trading in options on the Index. The

Index is deemed to be a Stock Index

Option under Rule 901C(a) and a Stock

Index Industry Group under Rule

900C(b)(1). With respect to Rule

903C(b), the Exchange proposes to list

near-the-money (i.e., within ten points

above or below the current index value)

option series on the Index at 21⁄2 point

strike (exercise) price intervals when the

value of the Index is below 200 points.

In addition, the Exchange expects that

the review required by Rule 904C(c) will

result in a position limit of 15,000

contracts with respect to options on this

Index.

2. Basis

The proposed rule change is

consistent with Section 6(b) of the

Exchange Act in general and furthers

the objectives of Section 6(b)(5) in

particular in that it is 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 facilitating

transactions in securities, and to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any 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 solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Exchange Act. Pursuant to the

Generic Index Approval Order,7 the

AMEX may not list options for trading

on the Index prior to 30 days after

August 19, 1997.8 At any time within 60

days of the filing of such proposed 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 the furtherance of the

purposes of the Exchange Act.9

IV. Solicitation of Comments

Interested person 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, N.W.,

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 in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, DC 20549. 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 number SR–AMEX–

97–31 and should be submitted by

September 23, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–21384 Filed 8–29–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38965; File No. SR–CHX–

97–13]

Self-Regulatory Organizations Chicago

Stock Exchange, Incorporated; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment No. 1 to Proposed Rule

Change Relating to Trading Variations

August 22, 1997.

I. Introduction

On June 2, 1997, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘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

decrease the minimum variation for

certain securities from an eighth to a

sixteenth of a dollar and to make

conforming changes to its rule regarding

when a security is quoted ‘‘exdividend,’’ ‘‘ex-distribution,’’ ‘‘exrights,’’ or ‘‘ex-interest.’’

The proposed rule change was

published for comment in the Federal

Register on June 12, 1997.3 No

comments were received concerning the

proposal. On July 1, 1997, the Exchange

submitted Amendment No. 1 to the

proposed rule change.4 This order

approves the proposal, including
Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices 46393

5Securities Exchange Act Release Nos. 38571

(May 5, 1997), 62 FR 25682 (May 9, 1997)

(approving File No. SR–Amex–97–14); 38678 (May

27, 1997), 62 FR 30363 (June 6, 1997) (approving

File No. SR–NASD–97–27); 38897 (Aug. 1, 1997),

62 FR 42847 (Aug. 8, 1997) (approving SR–NYSE–

97–21).

6Securities Exchange Act Release Nos. 38590

(May 9, 1997), 62 FR 26832 (May 15, 1997)

(approving File No. SR–CHX–97–08; reducing the

trading increment from eighths to sixteenths for

securities that are traded on the Exchange and on

the Amex); 38704 (May 30, 1997), 62 FR 31467

(June 9, 1997) (approving File No. SR–CHX–97–11

on a temporary basis; a similar reduction in the

trading increment for securities that are traded on

the Exchange and on Nasdaq); 38717 (June 5, 1997),

62 FR 32134 (June 12, 1997) (approving File No.

SR–CHX–97–12 on a temporary basis; a similar

reduction in the trading increment for securities

that are traded on the CHX and on the NYSE); and

38719 (June 5, 1997) (approving File No. SR–CHX–

97–14 on a temporary basis; a similar reduction in

the trading increment for securities that are traded

only on the Exchange).

7See File Nos. SR–CHX–97–11, SR–CHX–97–12,

and SR–CHX–97–14.

8The proposal also makes conforming changes to

CHX Rule 35; the Exchange’s rule regarding when

a security is quoted ‘‘ex-dividend,’’ ‘‘exdistribution,’’ ‘‘ex-rights,’’ or ‘‘ex-interest.’’

9 15 U.S.C. §§ 78f(b) and 78k–1. In approving this

rule change, the Commission notes that it has

considered the proposal’s impact on efficiency,

competition, and capital formation, consistent with

Section 3(f) of the Act. Id. § 78c(f).

10The rule change is consistent with the

recommendation of the Division of Market

Regulation (‘‘Division’’) in its Market 2000 Study,

in which the Division noted that the 1⁄8 minimum

variation can cause artificially wide spreads and

hinder quote competition by preventing offers to

buy or sell at prices inside the prevailing quote. See

SEC, Division of Market Regulation, Market 2000:

An Examination of Current Equity Market

Developments 18–19 (Jan. 1994).

11A study that analyzed the reduction in the

minimum tick size from 1⁄8 to 1⁄16 for securities

listed on the Amex priced between $1.00 and $5.00

found that, in general, the spreads for those

securities decreased significantly while trading

activity and market depth were relatively

unaffected. See Hee-Joon Ahn, Charles Q. Chao, and

Hyuk Choe, Tick Size, Spread, and Volume, 5 J.

Fin. Intermediation 2 (1996).

12These changes, however, may become effective

upon filing if they meet certain statutory

requirements. See 15 U.S.C. § 78s(b)(3)(A)(i) and 17

CFR 240.19b–4(e).

13 15 U.S.C. § 78s(b)(2).

14 15 U.S.C. § 78s(b)(2).

15 17 CFR 200.30–3(a)(12).

Amendment No. 1 on an accelerated

basis.

III. Description of the Proposal

Recently, there has been a movement

within the industry to reduce the

minimum trading and quotation

increments imposed by the various selfregulatory organizations (‘‘SROs’’). For

example, the New York Stock Exchange

(‘‘NYSE’’), The Nasdaq Stock Market

(‘‘Nasdaq’’), and the American Stock

Exchange (‘‘Amex’’) have recently

reduced their minimum increments.5 In

addition, several third market makers

have begun quoting securities in

increments smaller than the primary

markets. The CHX responded by

submitting rule filings that matched the

primary markets’ changes.6 In order to

permit a quick response to rapidly

changing market conditions, however,

some of those proposals were granted

only temporary accelerated approval.7

The current proposal. The current

proposal seeks permanent approval of

those rule changes.8

III. Commission’s Findings

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. In particular, the Commission

believes the proposal comports with the

requirements of Section 6 and Section

11A of the Act.9

The proposed rule change will likely

enhance the quality of the market for the

affected securities. Allowing the CHX to

permanently quote and trade equity

securities in finer increments will

facilitate quote competition.10 This

should help produce more accurate

pricing of such securities and can result

in tighter quotations.11 In addition, if

the quoted markets are improved by

reducing the minimum increment, the

change could result in added benefits to

the market such as reduced transaction

costs.

The proposed rule change also will

allow the CHX the flexibility it needs to

address the recent transition to smaller

increments and to remain competitive

with competing market centers.

Nevertheless, the Commission notes that

any further change in the minimum

increment constitutes (1) a change in a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement of an

existing rule of the CHX, or (2) a change

in an existing order-entry or trading

system of the CHX, or (3) both.

Therefore, the Exchange is obligated to

file such proposed changes with the

Commission.12

The Commission finds good cause for

approving Amendment No. 1 prior to

the thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. This amendment

does not raise any new, significant

regulatory concerns. It simply conforms

the CHX’s proposal to similar rules of

the NYSE and the Amex by slightly

modifying the level at which trading

securities in increments of 1⁄32 of a

dollar may occur. Therefore, the

Commission believes that granting

accelerated approval to Amendment No.

1 is appropriate and consistent with

Section 19(b)(2) of the Act.13

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

1. Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 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, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of the CHX. All submissions

should refer to File No. SR–CHX–97–13

and should be submitted by September

23, 1997.

V. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,14 that the

proposed rule change (SR–CHX–97–13)

is approved, including Amendment No.

1 on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23135 Filed 8–29–97; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice No. 2598]

Ad Hoc on the 1998 International

Telecommunication Union Policy

Forum; International

Telecommunications Advisory

Committee (ITAC) Meeting Notice

The Department of State announces

the establishment, under its

International Telecommunications

Advisory Committee (ITAC), of an Ad

Hoc Group to prepare for the Second

World Telecommunication Policy

Forum (WTPF). The first three meetings

will be held at the Department of State,

2201 ‘‘C’’ Street, N.W., Washington,

D.C., as follows: