63578 Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices

4See Exchange Act Rel. No. 38571 (May 5, 1997),

62 FR 25682 (May 9, 1997) (Commission order

approving a change in the minimum increment to

1⁄16th for securities listed on the American Stock

Exchange); Exchange Act Rel. No. 38678 (May 27,

1997), 62 FR 30363 (June 3, 1997) (Commission

order approving a change in the minimum

increment to 1/16th for Nasdaq-listed securities);

and Exchange Act Rel. No. 38897 (Aug. 1, 1997),

62 FR 42847 (Aug. 8, 1997) (Commission order

approving a change in the minimum increment to

1⁄16th for NYSE listed-securities).

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

6 17 CFR 200.30–3(a)(12).

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

2See Securities Exchange Act Release No. 39028

(September 8, 1997), 62 FR 48329.

imposed by the various SROs.4 As

derivative securities, the prices of

options are determined in reference to

the prices of the underlying securities.

Consequently, the Exchange believes

that where practicable, the Exchange

should have minimum increments

comparable to those applicable to the

securities underlying CBOE options.

The proposed rule change would give

the Exchange the flexibility to follow

the suit of the principal exchanges for

the underlying securities without

having to continually update its rules

but at the same time would give the

Exchange the flexibility it needs to

deviate from the minimum increments

established by the principal markets for

the underlying securities in the event

that the CBOE’s systems were not

immediately able to handle such

increments. The Exchange, therefore,

believes the quality of the market for

CBOE options will be enhanced by

allowing for more accurate pricing of

CBOE options.

2. Statutory Basis

The Exchange represents that the

proposed rule change is consistent with

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

would remove impediments to and

perfect the mechanism of a free and

open market in a manner consistent

with the protection of 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 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 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, 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

Room. 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–CBOE–97–49 and should be

submitted by December 22, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31388 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39342; File No. SR–CHX–

97–29]

Self-Regulatory Organizations; Notice

of Filing of and Order Granting

Accelerated Approval to Proposed

Rule Change by the Chicago Stock

Exchange, Incorporated Relating to a

Policy of the Specialist Assignment

and Evaluation Committee

November 21, 1997.

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

Securities Exchange Act of 1934

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

October 27, 1997, 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 and II

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 and to

grant accelerated approval to the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

Article XXX, Rule 1, Interpretation and

policy .01 to amend the current one-year

pilot program concerning a policy of the

Exchange’s Committee on Specialist

Assignment and Evaluation (‘‘CSAE’’)

relating to the time periods for which a

co-specialist must trade a security

before deregistering as the specialist for

the security. This change would be in

effect for the remainder of the current

one-year pilot program.

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 III 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 September 8, 1997, the

Commission approved a rule change on

a one year pilot basis relating to the time

periods for which a co-specialist must

trade a security before deregistering as

the specialist for the security.2 The pilot

program currently expires on

September, 1998. The purpose of the

proposed rule change is to make a slight

modification to this pilot program.

The Exchange’s CSAE is responsible

for, among other things, appointing

specialists and co-specialists and

conducting deregistration proceedings
Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices 63579

3CHX Rules, Article IV, Rule 4.

4CHX Rules, Article XXX, Rule 1, Interpretation

and Policy .01. 5 15 U.S.C. 78f(b)(5).

6 In approving this rule, the Commission notes

that is has considered the proposed rule’s impact

on efficiency, competition, and capital formation.

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

in accordance with Article XXX of the

Exchange’s rules.3 Seven circumstances

may lead to the need for assignment or

reassignment of a security.4 One such

circumstance is by specialist request.

Currently, the CSAE will initiate a

reassignment proceeding if it believes

that such action is called for. Using this

standard, the CSAE’s policy under the

current one year pilot program is as

follows:

For a security that was awarded to a

co-specialist in competition, such cospecialist is required to trade the

security awarded in competition for one

year before being able to deregister in

the security if no other specialist will be

assigned to the security after posting.

Two-years must elapse before an intrafirm transfer of the issue (i.e., a transfer

of the issue to another co-specialist in

the same specialist unit) is normally

permitted without posting.

For a security that was awarded to a

co-specialist without competition, such

co-specialist is required to trade the

security awarded without competition

for a three month period before being

able to deregister in the security if no

other specialist will be assigned to the

security after posting. A six-month time

period must elapse before an intra-firm

transfer is normally permitted.

At this time, the Exchange believes

that one aspect of the new policy should

be amended and one aspect should be

clarified. Specifically, the Exchange

believes that the requirement that six

months elapse before permitting an

intra-firm transfer of an issue that was

awarded without competition is too

onerous. Instead, the Exchange believes

that, where the security was awarded

without competition, there should be no

minimum time period before the intrafirm transfer will be considered by the

CSAE without posting. Because the

security was awarded without

competition from any competing

applicant from another specialist unit,

no one would be disadvantaged if the

security is transferred to another cospecialist in the same specialist unit

without waiting for six months to

elapse, provided the transfer is to a

qualified co-specialist, which

determination shall be made by the

CSAE.

Without this change, a specialist unit

might be tempted to return the security

to the cabinet (which can be done after

only three months) and having another

co-specialist in the same unit apply to

take it back out, or, for less profitable

issues, not apply for the security in the

first place. This change will further the

Exchange’s goal of increasing the depth

and liquidity of the market by

encouraging specialists to apply for

issues that might otherwise remain in

the cabinet.

Second, the Exchange would like to

clarify the intra-firm transfer policy

when a security is awarded with

competition. While the two-year period

is appropriate for permitting an intrafirm transfer without posting, the

Exchange believes that a specialist unit

should be given an opportunity for an

intra-firm transfer after one year. As a

result, for securities awarded with

competition, after one year has elapsed,

the CSAE will consider requests for an

intra-firm transfer if the security is

posted, in order to permit other

specialist units and co-specialists to

apply to trade the issue.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b)(5) of the Act 5 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. 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, 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. 552, will be

available for inspection and copying in

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 Exchange.

All submissions should refer to file

number SR–CHX–97–29 and should be

submitted by [insert date 21 days from

the date of publication].

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission has carefully

reviewed CHX’s proposed rule change

and has concluded, for the reasons set

forth below, that the proposal is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange, and in particular,

the requirements of Sections 6(b)(5) in

that it is designed to prevent fraudulent,

manipulative acts and practices and to

promote just and equitable principles of

trade, and to remove impediments to

and protect the mechanism of a free and

open market and to protect investors

and the public interest.6

The Commission finds that the

amended policy, as proposed, should

result in a reasonable balance between

the interests of consistency and

continuity with respect to the trading of

an issue by a particular specialist and

that of a specialist in having the

flexibility to deregister in an

unprofitable issue. Under the pilot

program as approved in September, for

a security that was awarded in

competition, a co-specialist wishing to

transfer that issue to another cospecialist in the firm before the two

years had elapsed might find it easier to

deregister after one year and have

another co-specialist in the specialist

unit apply for the issue again. Similarly,

for a security that was awarded without

competition, a co-specialist would

deregister within three months to allow

another co-specialist in the firm to

apply for the security again rather than

have to wait the full six months. The

change will remove the need for

deregistration prior to making an intrafirm transfer.

Overall, the Commission concludes

that the proposed changes are minor but

may encourage CHX specialists to

register in additional securities that

might otherwise remain in the cabinet.

This, in turn, could add to the depth
63580 Federal Register / Vol. 62, No. 230 / Monday, December 1, 1997 / Notices

7 15 U.S.C. 78f and 78s(b)(2).

8 15 U.S.C. 78s(b)(2).

9 17 CAR 200.30–3(a)(12).

1The NASD submitted Amendment No. 1 to the

proposed rule filing on November 14, 1997, the

substance of which is incorporated into this notice

and the proposed rule filing. See letter from John

M. Ramsay, Deputy General Counsel, NASD

Regulation, to Katherine A. England, Assistant

Director, Market Regulation, Commission, dated

November 12, 1997 (‘‘Amendment No. 1’’).

and liquidity of the market for such

additionally listed securities.

Finally, the Commission notes that

the proposed change to the pilot

program does not alter the notification

requirement to order entry firms, and

the effective date of a specialist’s

deregistration.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication notice thereof in the

Federal Register. This will permit the

changes to be in effect for as much of

the pilot program as possible thereby

allowing CHX to better assess the effects

of these changes to be assessed prior to

the expiration of the pilot. In addition,

the rule change that implemented the

pilot program was published in the

Federal Register for the full comment

period and no comments were received.

Accordingly, the Commission believes

that it is consistent with Sections 6 and

19(b) of the Act 7 to accelerate approval

of the proposed rule change.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

proposed rule change (SR–CHX–97–29)

is hereby approved on an accelerated

basis.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–31394 Filed 11–28–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39346; File No. SR–NASD–

97–79]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc., Relating to Fees and

Hearing Session Deposits for the

Arbitration of Claims by Public

Investors, Members and Associated

Persons

November 21, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on October 29, 1997,1

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

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 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

NASD Regulation is proposing to

amend Rules IM–10104, 10205 and

10332 of the NASD’s Code of

Arbitration Procedure (‘‘Code’’) to

increase the arbitrator honoraria and the

arbitration filing fees and hearing

session deposits for intra-industry and

public investor arbitrations

administered by NASD Regulation.

Below is the text of the proposed rule

change. Proposed new language is in

italics; proposed deletions are in

brackets.

IM–10104. Arbitrator’s Honorarium

All persons [serving on panels of

arbitrators pursuant to Rule 10104 of]

selected to serve as arbitrators pursuant

to the Association’s Code of Arbitration

Procedure shall be paid an honorarium

for each hearing session (including a

prehearing conference) in which they

participate [while in the performance of

said duties].

The honorarium shall be $[150]200

for [a single] each hearing session [,

$225 for a double session], $50 for travel

to a canceled hearing, and $[50]75 per

day additional honorarium to the

chairperson of the panel. The

honorarium for a case not requiring a

hearing [is $75 per case] shall be $125.

10205. Schedule of Fees for Industry

and Clearing Controversies

(a) At the time of filing a Claim,

Counterclaim, Third Party Claim, or

Cross-Claim in an industry or clearing

controversy which is required to be

submitted to arbitration before the

Association as set forth in Rule 10201,

above, a party who is a member shall

pay a non-refundable filing fee and shall

remit a hearing session deposit to the

Association in the amounts stated in

paragraph (k) unless such fee or deposit

is specifically waived by the Director of

Arbitration. A party who is an

associated person shall pay a nonrefundable filing fee and shall pay a

hearing session deposit in the amounts

specified for customer claimants in Rule

10332. If the associated person is a joint

claimant with a member, the member

shall pay a non-refundable filing fee

and shall pay a hearing session deposit

in the amounts specified in paragraph

(k) of this Rule. Where multiple hearing

sessions are required, the arbitrator(s)

may require any of the parties to make

additional hearing deposits for each

additional hearing session. In no event

shall the amount deposited by all

parties per hearing session exceed the

amount of the largest initial hearing

deposit made by any party under the

paragraph (k) below.

(b) No change.

(c) No change.

(d) No change.

(e) If the dispute, claim, or

controversy does not involve, disclose,

or specify a money claim, the nonrefundable filing fee assessed on a party

who is a member shall be $500. If the

dispute, claim, or controversy does not

involve, disclose, or specify a money

claim, the hearing session deposit to be

remitted by a party shall be $1000

[$600]. These amounts may be adjusted

by the Director of Arbitration or the

panel of arbitrators may require the

maximum amount specified in the

schedule [$1,000].

(f) No change.

(g) No change.

(h) No change.

(i) If an eligible matter is submitted

for arbitration as a large and complex

case, under the procedures set forth in

Rule 10334, or under procedures agreed

upon by the parties, following the

Administrative Conference specified in

Rule 10334(b), the fees and deposits for

such matter shall be those set forth in

the schedule of fees for claims over

$10,000,000 [$5,000,000].

(j) No change.

(k) Schedule of Fees