63210 Federal Register / Vol. 62, No. 228 / Wednesday, November 26, 1997 / Notices

12See supra note 8.

13 15 U.S.C. 78s(b)(2).

14 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

the Commission believes that the

position and exercise limits are

reasonable in light of the fact that the

size of the OEX contract will be halved.

Doubling the position and exercise

limits, therefore, will permit market

participants to maintain, after the split

of the Index, their current level of

investment in OEX options.

The Commission further believes that

doubling the Index’s divisor will not

have an adverse market impact or make

trading in OEX options susceptible to

manipulation. After the split, the Index

will continue to be comprised of the

same stocks with the same weightings

and will be calculated in the same

manner, except for the proposed change

in the divisor. The Commission notes

that the CBOE’s surveillance procedures

also will remain the same.

Finally, the Commission notes that

the Exchange provided notice of the

proposed changes to the Index and the

OEX contract to its membership through

a circular.12 The Commission believes

that the CBOE provided adequate notice

to market participants regarding this

change to the Index value and the OEX

contract prior to its implementation.

IV. Conclusion

For the foregoing reasons, the

Commission finds that the CBOE’s

proposal is consistent with the

requirements of the Act and the rules

and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (SR–CBOE–97–

48) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31019 Filed 11–25–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39337; File No. SR–CHX–

97–30]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Stock Exchange, Incorporated

Codifying the Exchange’s Clearing the

Post Policy

November 19, 1997.

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

Securities Exchange Act of 1934

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

October 23, 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, II,

and III below, which Items have been

prepared by the self-regulatory

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

interpretation and policy .02 to Rule 10

of Article XX relating to clearing the

post. The text of the proposed rule

change is as follows: Additions are

italicized.

Article XX

Rule 10. Manner of Bidding and

Offering.

No change in text.

* * * Interpretations and Policies

.02 Clearing the Post.

Policy. All orders received by floor

brokers or originated by market makers

on the floor of the Exchange must

effectively clear the post before the

orders may be routed to another market,

either via the ITS System or through the

use of alternative means.

Floor brokers who receive an order on

the floor have a fiduciary responsibility

to seek a best price executive for such

order. This responsibility includes

clearing of the Exchange’s post prior to

routing an order to another market so

that other buying and selling interest at

the post can be checked for a potential

execution that may be as good as or

better than the execution available in

another market.

Market makers are required to provide

depth and liquidity to the Exchange

market, among other things. Exchange

Rules require that all market maker

transactions constitute a course of

dealings reasonably calculated to

contribute to the maintenance of a fair

and orderly market. In so doing, market

makers must adhere to traditional

agency/auction market principles on the

floor. Transactions by Exchange market

makers on other exchanges which fail to

clear the Exchange post do not

constitute such a course of dealings.

Notwithstanding the above, it is

understood that on occasion a customer

will insist on special handling for a

particular order that would preclude it

from clearing the post on the Exchange

floor. For example, a customer might

request that a specific order be given a

primary market execution. These

situations must be documented and

reported to the Exchange. Customer

directives for special handling of all

orders in a particular stock or all stocks,

however, will not be considered as

exceptions to the clearing the post

policy.

All executions resulting from bids and

offers reflected on Instinet terminals

resident on the Exchange floor

constitute ‘‘orders’’ which are

‘‘communicated’’ to the Exchange floor.

Therefore, all orders resulting from

interest reflected on Instinet terminals

on the Exchange floor must be handled

as any other order communicated to the

floor. All such orders must be presented

to the post during normal trading hours.

All trades between Instinet and

Exchange floor members are Exchange

trades and must be executed on the

Exchange.

Method of Clearing the Post. The

Exchange’s clearing the post policy

requires the floor broker or market

maker to be physically present at the

post. A market maker, after requesting

the specialist’s market quote, must bid

or offer the price and size of his

intended interest at the post. A floor

broker must clear the post by requesting

a market quote from the specialist. If the

specialist or any other member who has

the post indicates an interest to trade at

the price that was bid or offered by the

market maker or the price of the floor

broker’s order (even though that order

has not yet been bid or offered), then the

trade may be consummated with the

specialist (or whomever has the post) in

accordance with existing Exchange

priority, parity and precedence rules. If

the specialist (or any other member who

has the post) indicates interest to trade

at that price but the member

communicating the intended interest,

including Instinet interest, determines

not to consummate the trade with the

specialist or such member, then, to

preserve the Exchange’s existing

priority, parity and precedence rules,

the trade may not be done with any

other Exchange floor member. (See

Article XXX, Rule 2.) If the trade is

consummated with the specialist or

other member who has the post, the

specialist (or any customer represented

by the specialist) is not required to pay

any fees to the broker or market maker

in connection with the execution of the

order, unless such fee is expressly

authorized by an Exchange Rule. If the

specialist does not indicate an interest

to trade, then the trade may be

consummated with another Exchange
Federal Register / Vol. 62, No. 228 / Wednesday, November 26, 1997 / Notices 63211

2Securities Exchange Act Release No. 33806

(March 23, 1994) 59 FR 15248 (Notice of Filing and

Immediate Effectiveness of file No. SR–CHX–94–

03); Securities Exchange Act Release No. 17766

(May 8, 1981) 46 FR 25745 (Order approving SR–

MSE–81–3 and SR–MSE–81–5); and Securities

Exchange Act Release No. 28638 (November 30,

1990) 55 FR 49731 (Order approving SR–MSE–90–

7).

3 15 U.S.C. 78f(b)(5).

4 15 U.S.C. 78s(b)(3)(A).

5 17 CFR 240.19b–4(e). 6 17 CFR 200.30–3(a)(12).

floor member on the Exchange floor

with a resultant Exchange print.

Failure to clear the post may result in

a ‘‘trade-through’’ or ‘‘trading ahead’’ of

other floor interest. In addition, failure

to properly clear the post may result in

a violation of the Exchange’s Just and

Equitable Trade Principles Rile (Article

VIII, Rule 7) and a market maker rule

that requires all market maker

transactions to constitute a course of

dealing reasonably calculated to

contribute to the maintenance of a fair

and orderly market (Article XXXIV,

Rule 1). Failure to properly clear the

post may also subject the violator to a

minor rule violation under the

Exchange’s Minor Rule Violation Plan.

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

The purpose of the proposed rule

change is to codify the Exchange’s

existing clearing the post policies in the

CHX Guide. The clearing the post policy

will become an interpretation and

policy of CHX Article XX, Rule 10. The

Exchange’s clearing the post policies are

currently contained in several Notices to

Members which had been approved by

the Commission.2 These Notices to

Members, and their corresponding

Approval Orders explain the Exchange’s

clearing the post requirements. No

substantive change is being made to the

clearing the post policy at this time.

2. Statutory Basis

The proposed rule change is

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

Act 3 in that it is designed to prevent

fraudulent and manipulative acts and

practices and to perfect the mechanism

of a free and open market.

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 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

The foregoing rule change constitutes

a stated policy, practice or

interpretation with respect to the

meaning, administration, or

enforcement of an existing rule of the

Exchange pursuant to Section

19(b)(3)(A) 4 of the Act and

subparagraph (e) of Rule 19b–4 5

thereunder. At any time within 60 days

of the filing of such 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.

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 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. 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 CHX. All submissions

should refer to File No. SR–CHX–97–30

and should be submitted by December

17, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31017 Filed 11–25–97; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. 28895]

Airport Privatization Pilot Program:

Application Procedures

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of amendment to final

application procedures; request for

comments.

SUMMARY: Section 149 of the Federal

Aviation Authorization Act of 1996

establishes an airport privatization pilot

program, and authorizes the Department

of Transportation to grant exemptions

from certain Federal statutory and

regulatory requirements for up to five

airport privatization projects. On

September 16, 1997, the FAA issued a

notice of final procedures for

application for an exemption under the

program. The notice included a

provision that air carriers that submitted

a proposal for the private operation of

an airport but were unsuccessful would

not be counted as air carriers for the

purpose of the requirement that certain

aspects of the privatization application

be approved by 65 percent of the air

carriers at the airport. In this

amendment to the procedures, the FAA

is clarifying that the provision does not

apply retroactively to requests for

proposals issued prior to the issuance of

the FAA procedures on September 16,

1997. With respect to future requests for

proposals, the provision is suspended

until the FAA undertakes further public

process on this aspect of the procedures.

A separate provision of the procedures,

which states that an air carrier that is a

successful bidder on a privatization

proposal will not be considered an air

carrier under the 65 percent rule, is not

affected.