Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices 55445

3 Id.

4 15 U.S.C. § 78k(a)(1)(G). 5 15 U.S.C. § 78f(b)(5).

6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

request of a specialist, any other stock

with the approval of a floor official.

Other proposed rules apply to MOC

orders on Non-Expiration Days. No such

MOC order may be entered after 2:50

p.m., Central Time, in any stock, except

to offset a published order imbalance.

Floor brokers representing such orders

must indicate their MOC interest to the

specialist by 2:50 p.m. No MOC order in

any stock may be canceled or reduced

in size after 2:50 p.m. Cancellations to

correct a legitimate error, however, will

continue to be permitted after 2:50 p.m.

For MOC orders on Non-Expiration

Days, as soon as practicable after 2:50

p.m., notice will be published by the

Exchange of any MOC order imbalance

of 50,000 shares or more in the Pilot

Stocks,3 stocks being added to or

dropped from an index, and, upon the

request of a specialist, any other stock

with the approval of a floor official.

A specialist will only be obligated to

accept and guarantee execution of those

MOC orders that are of a size and type

that a specialist would otherwise be

required to accept and guarantee

execution of, if the orders did not have

a market-at-the-close designation.

The proposed rule change provides

that a specialist shall execute MOC

orders in a stock in a specified manner.

Where there is an imbalance between

the buy and sell MOC orders, the

specialist shall, at the close of the

Primary Trading Session on that day,

execute the imbalance for its own

account at the closing price on the

primary market of the stock. The

specialist shall then stop the remaining

buy and sell orders against each other

and pair them off at the closing price on

the primary market of the stock. The

‘‘pair off’’ transaction shall be reported

to the consolidated last sale reporting

system as ‘‘stopped stock.’’ Where the

aggregate size of the buy MOC orders

equals the aggregate size of the sell MOC

orders, the buy orders and sell orders

shall be stopped against each other and

paired off at the closing price on the

primary market of the stock. The

transaction shall be reported to the

consolidated last sale reporting system

as ‘‘stopped stock.’’

Proprietary orders represented

pursuant to Section 11(a)(1)(G) 4 of the

Act (i.e., ‘‘G’’ orders) must be

announced as such and yield priority,

parity and precedence to any order

which is for the account of a person

who is not a member, member

organization or associated person

thereof. Market orders to sell short atthe-close represented as ‘‘G’’ orders

must yield priority, parity and

precedence to limit orders not

represented pursuant to Section

11(a)(1)(G) of the Act. For example, in

executing paired-off MOC orders, a ‘‘G’’

order to sell short at-the-market would

yield to sell orders limited at the closing

price that are not represented as ‘‘G’’

orders. This will be the policy even if

the ‘‘G’’ order to sell short at-the-market

theoretically could have been executed

at a better price (and still satisfy the

‘‘short sale’’ rule in terms of a ‘‘plus’’ or

‘‘zero plus’’ tick) had there not been a

pair-off on the transaction. This would

not be applicable if the order was a

market order to sell ‘‘long’’ or a market

order to buy.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

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

designed to promote just and equitable

principles of trade, to foster cooperation

and coordination with persons engaged

in regulating 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.

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

The Exchange did not solicit or

receive written comments 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 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.

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

submissions, all subsequent

amendments, all 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 persons, other

than those that may be withheld from

the public in accordance with the

provisions of 5 U.S.C. § 522, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Exchange. All submissions

should refer to File No. SR–CHX–97–19

and should be submitted by November

14, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28179 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39257; File No. SR–CHX–

97–27]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Stock Exchange, Inc. Relating

to the Execution of Stopped Orders

Under the Enhanced SuperMAX

Program

October 17, 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 October

15, 1997, the Chicago Stock Exchange,

Incorporated (‘‘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
55446 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices

3See Securities Exchange Act Release No. 35753

(May 22, 1995), 60 FR 28007 (May 26, 1995) (order

approving File No. SR–CHX–95–08).

4 Id.

5See Securities Exchange Act Release No. 39162

(September 30, 1997), 62 FR 52367 (October 7,

1997) (File No. SR–CHX–97–23).

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78s(b)(30)(A).

8 17 CFR 240.19b–4(e)(6). 9 17 CFR 200.30–3(a)(12).

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 amend its

Rule 37(e) of Article XX relating to the

execution of stopped orders under the

CHX’s Enhanced SuperMAX program.

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

On May 22, 1995, the Commission

approved a proposed rule change that

allows specialists on the Exchange,

through the Exchange’s MAX system, to

provide order execution guarantees that

are more favorable than those required

under CHX Rule 37(a), Article XX.3 That

approval order contemplated that the

CHX would file with the Commission

specific modifications to the parameters

of MAX that are required to implement

various options available under the

rule.4

On September 16, 1997, the CHX

proposed changes to the Enhanced

SuperMAX program.5 For technological

reasons, the CHX has decided not to

implement those changes at this time.

Instead, the CHX will continue to

operate the Enhanced SuperMAX

program, as that program existed prior

to the September 1997 proposed

changes.

As a result, as is currently the case,

under the Enhanced SuperMAX

program, certain orders will be

‘‘stopped’’ at the ITS BBO (as that term

is defined in Article XX, Rule 37 of the

CHX rules) and will be executed with

reference to the next primary market

sale. The Enhanced SuperMAX program

will continue to include a time-out

feature whereby if there are no

executions in the primary market after

the order has been stopped for a

designated time period, the order will

be executed at the stopped price at the

end of such period. Such period, known

as a time-out period, will continue to:

(1) Be pre-selected by a specialist on a

stock-by-stock basis based on the size of

the order; (2) be able to be changed by

a specialist no more frequently than

once a month; and (3) last no less than

30 seconds.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

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

to promote just and equitable principles

of trade, to remove impediments 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 a

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No comments were 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 has become

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

of the Act 7 and Rule 19b–4(e)(6) 8

thereunder because it: (1) Does not

significantly affect the protection of

investors or the public interest; (2) does

not impose any significant burden on

competition; and (3) was provided by

the Exchange to the Commission with

written notice of its intent to file the

proposed rule change at least five days

prior to the filing date. A proposed rule

change filed under Rule 19b–4(e) does

not become operative prior to thirty

days after the date of filing or such

shorter time as the Commission may

designate if such action is consistent

with the protection of investors and the

public interest. At any time within 60

days of the filing of the 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 furtherance of the

purposes of the Act.

The Commission finds good cause to

accelerate the thirty day period for the

proposed rule change to become

operative prior to the thirtieth day after

the date of the filing, October 15, 1997.

The Commission notes that due to

technological obstacles, the Exchange

currently is unable to implement the

changes to its Enhanced SuperMAX

program envisioned in its September

filing, which became effective upon

filing. The Commission further notes

that acceleration will allow the

Exchange to continue to enforce its rules

relating to the treatment of stopped

orders under the Enhanced SuperMAX

program, as such rules existed prior to

the September filing. For the foregoing

reasons, the proposed rule change will

become operative immediately.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing.

Persons making written submission

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington DC 20549. Copies of the

submissions, 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 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room, 450 Fifth Street, NW.,

Washington, DC 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 number SR–CHX–

97–27 and should be submitted by

November 14, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices 55447

1 15 U.S.C. § 78s(b)(1). 2 15 U.S.C. § 78f(b)(5).

3 15 U.S.C. § 78f.

4 15 U.S.C. § 78f(b)(5).

5Securities Exchange Act Release Nos. 38571

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

(approving an AMEX proposal to reduce the

minimum trading variation from 1⁄8 to 1⁄16); 38744

Continued

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28180 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–10–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39259; File No. SR–CHX–

22]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Chicago Stock

Exchange, Incorporated Relating to the

Exchange’s Automated Execution

System

October 20, 1997.

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

Securities Exchange Act of 1934

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

September 12, 1997, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change, as described in Items I and

II below, which Items have been

prepared by the Exchange. 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 proposed to amend

Rule 37(b)(6) of Article XX of the

Exchange’s Rules, relating to the

Exchange’s automated execution

system, the ‘‘MAX System.’’ The

modification provides for a fifteen

second delay before a MAX execution

except where the spread between the

ITS Best Bid and ITS Best Offer is equal

to the minimum price variation in the

relevant issue.

The text of the proposed rule change

is available at the Office of the

Secretary, the Exchange, 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

Exchange 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 III 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

Article XX, Rule 37(b)(6) currently

provides that, when using the

Exchange’s MAX System in the

execution of Dual Trading System

issues, there will generally be a fifteen

second delay between the time a market

order is entered into MAX and the time

it is automatically executed. This delay

allows opportunity for price

improvement. However, Rule 37(b)(6)

also currently provides that where the

spread between the ITS Best Bid and

ITS Best Offer is 1⁄8 point, on order will

immediately be executed (because of the

lack of opportunity for price

improvement).

Certain Dual Trading System issues

have recently begun trading in

minimum variations less than 1⁄8 point

(e.g., 1⁄16 point). In recognition of this

change, the proposed rule change

provides for a fifteen second delay

before a MAX execution except where

the spread between the ITS Best Bid and

ITS Best Offer is equal to the minimum

variation in the relevant issue. The

Exchange believes this modification will

allow customers the maximum

opportunity for price improvement.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

Section 6(b)(5) 2 of the Act in that it is

designed to promote just and equitable

principles of trade, 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.

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

The Exchange did not solicit or

receive written comments with respect

to the proposed rule change.

III. 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, N.W.,

Washington, D.C. 20549. Copies of the

submissions, all subsequent

amendments, all 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 persons, other

than those that may be withheld from

the public in accordance with the

provisions of 5 U.S.C. § 522, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the Exchange. All submissions

should refer to File No. SR–CHX–97–22

and should be submitted by November

21, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has reviewed

carefully the Exchange’s proposed rule

change and believes, for the reasons set

forth below, the proposal is consistent

with the requirements of Section 6 of

the Act 3 and the rules and regulations

thereunder applicable to a national

securities exchange. Specifically, the

Commission believes the proposal is

consistent with Section 6(b)(5) 4 of the

Act because it will facilitate transactions

in securities by providing investors with

the opportunity for price improvement,

promote just and equitable principles of

trade, remove impediments to, and

perfect the mechanism of a free and

open market.

The proposed rule change modifies

the Exchange’s rule relating to its MAX

System so that automatic execution is

delayed to provide the opportunity for

price improvement in stocks trading in

minimum increments of less than 1⁄8.

This modification comports with the

movement towards smaller trading and

quotation increments for equity

securities traded on securities

exchanges.5 Furthermore, it establishes