54496 Federal Register / Vol. 62, No. 202 / Monday, October 20, 1997 / Notices

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

2 17 CFR 240.19b–4.

3Standard and Poor’s 500 Stock Index is a service

mark of Standard and Poor’s Corporation.

4See Ch. II, Sec. 35(b) of the BSE’s rules.

5See Securities Exchange Act Release Nos. 26218

(October 26, 1988), 53 FR 44137 (November 1, 1988)

(order approving File No. SR–MSE–88–9); 27370

(October 23, 1989), 54 FR 43881 (October 27, 1989)

(order approving File No. SR–MSE–89–9); 28580

(October 25, 1990), 55 FR 45895 (October 31, 1990)

(order approving File No. SR–MSE–90–16); 29868

(October 28, 1991), 56 FR 56535 (November 5, 1991)

(order approving File No. SR–MSE–91–14); 33120

(October 29, 1993), 58 FR 59503 (November 9, 1993)

(order approving File No. SR–CHS–93–22); 36414

(October 25, 1995), 60 FR 55630 (November 1, 1995)

(order approving File No. SR–CHX–95–23); 37459

(July 19, 1996), 61 FR 39172 (July 26, 1996) (order

approving File No. SR–CHX–96–20); and 38221

(January 31, 1997), 62 FR 5871 (February 7, 1997)

(order approving File No. SR–CHX–96–33).

6See CHX Art. IX, Rule 10A.

7 15 U.S.C. 78f(b)(5).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39230; File No. SR–CHX–

97–24]

Self-Regulatory Organizations;

Chicago Stock Exchange; Notice of

Filing of Proposed Rule Change

Regarding A Ban on the Entry of

Certain Stop Orders and Stop Limit

Orders

October 10, 1997.

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

Securities Exchange Act of 1934

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

notice is hereby given that on

September 22, 1997, the Chicago Stock

Exchange, Inc. (‘‘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 selfregulatory organization. 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 add Article

IX, Rule 10B (Stop Order Ban Due to

Extraordinary Market Volatility). The

new rule would prohibit the entry of

certain stop orders and stop limit orders

if the New York Stock Exchange

(‘‘NYSE’’) implements a stop order ban

pursuant to NYSE Rule 80A. The new

rule would exempt stop orders and stop

limit orders of 2,099 shares or less for

the account of an individual investor

pursuant to instructions received

directly from the individual investor.

The text of the proposed rule change is

available at the Office of the Secretary,

the CHX, and at the Commission.

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

self-regulatory organization 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.

The self-regulatory organization 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

Pursuant to its Rule 80A, the NYSE

currently prohibits the entry of stop

orders and stop limit orders if the price

of the primary Standard and Poor’s 500

Stock Price Index 3 futures contract

traded on the Chicago Mercantile

Exchange reaches a value 12 points

below the contract’s closing value on

the previous trading day. Likewise, the

Boston Stock Exchange (‘‘BSE’’)

prohibits the entry of stop and stop limit

orders on the BSE when the NYSE has

a ban in place.4

The Exchange has previously adopted

circuit breaker rules on a pilot basis 5

which parallel the circuit breaker rules

of the NYSE.6 Such rules are designed

to dampen market volatility by

providing a ‘‘time-out’’ to permit

investors and market professionals to

evaluate the state of the market.

However, unlike the NYSE, the

Exchange has not previously prohibited

the entry of stop and stop limit orders

during times of market stress.

The Exchange believes that the

prohibition of stop orders and stop limit

orders, except for individual investor

orders of up to 2099 shares, during

periods of market stress will facilitate

the maintenance of an orderly market

and reduce market volatility.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with the

requirements of Section 6(b)(5) of the

Act 7 which requires that the rules of the

Exchange be designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, and, in general, to

protect investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposal does not impose any burden

on competition that is not necessary or

appropriate in furtherance of the

purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 self-regulatory organization

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. 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

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the CHX. All submissions

should refer to File Number SR–CHX–

97–24 and should be submitted by

November 10, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27696 Filed 10–17–97; 8:45 am]

BILLING CODE 8010–01–M