[Federal Register Volume 63, Number 140 (Wednesday, July 22, 1998)]
[Notices]
[Pages 39319-39320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19441]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40202; File No. SR-CHX-98-15]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Inc. Relating to Specialists' 
Payment of Listing Fees

July 14, 1998.
    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 June 16, 1998, 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 CHX. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to add Article XXX, Rule 20A in order to 
establish that Specialists, Co-Specialists and Relief Specialists may 
not pay listing fees for any issuing corporation for which they act in 
such capacity. 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 CHX 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 CHX 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 Exchange proposes to adopt new Rule 20A to Article XXX to 
establish that Specialists, Co-Specialists and Relief Specialists may 
not pay listing fees, including initial and maintenance fees, for any 
issuing corporation for which they act in such capacity.
    The purpose of the proposed rule change is to avoid situations in 
which either an actual or apparent conflict of interest may arise. A 
Specialist has an obligation to maintain a free and open market in an 
issue. In order to maintain the integrity of the market, Specialists 
must remain independent of issuers. The Exchange has already 
established rules that seek to ensure that independence. For example, 
Article XXX, Rule 23 prohibits Specialists from engaging in any 
business transactions with the issuer of exclusive issues. Also, 
Interpretation .01 to Article XXXVIII,

[[Page 39320]]

Rule 23 contains a section on the relationship between company 
officials and Specialists designed to ensure that the relationship is 
appropriate. Consistent with that goal, the Exchange seeks to impose a 
broad restriction that Specialists cannot pay listing fees for any 
issuer, whether the issue is exclusive or not. The Exchange believes 
that the proposed rule change will help ensure that there are no 
incentives on the part of issuers of Specialists that may jeopardize or 
call into question the independence of the market.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\3\ in general, and furthers the objectives 
of Section 6(b)(5) of the Act,\4\ in particular, in that it is designed 
to perfect the mechanisms of a free and open market and a national 
market system, and to protect investors and the public interest.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(5).
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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

    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 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 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, including whether the proposed rule 
change is consistent with the Act. 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 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 at the 
Commission's Public Reference Room, 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 No. SR-CHX-98-15 and should be submitted by August 12, 
1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-19441 Filed 7-21-98; 8:45 am]
BILLING CODE 8010-01-M