Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 28007

1The proposed rule change is identical to the rule

change previously approved by the Commission for

the New York Stock Exchange, Inc. and the

National Association of Securities Dealers. See

Securities Exchange Act Release No. 34967 (Nov.

10, 1994), 59 FR 59803 (Nov. 18, 1994) (File Nos.

SR–NYSE–94–23; SR–NYSE–94–24); Securities

Exchange Act Release No. 35208 (Jan. 10, 1995), 60

FR 3688 (Jan. 18, 1995) (File No. SR–NASD–94–66).

1 15 U.S.C. § 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3See CHX 37(a), Article XX.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Propose Rule

Change

1. Purpose

The Series 8 examination is an

industry-wide qualification examination

for securities sales supervisors. The

Series 8 examination is generally

required under rules of the selfregulatory organizations (‘‘SROs’’) for

persons who are engaged in the

supervision of general securities branch

offices (i.e., branch office managers) and

of general securities registered

representatives. The Series 8

examination tests a candidate’s

knowledge of securities industry rules

and regulations and certain statutory

provisions applicable to general

securities sales supervision. The Series

8 examination specifications detail the

areas covered by the examination and

break down the number of examination

questions culled from each area.

Revision of the Series 8 examination

and specifications was recently

undertaken by an industry committee

composed of representatives from SROs

(the New York Stock Exchange, the

American Stock Exchange, the Chicago

Board Options Exchange, the Municipal

Securities Rulemaking Board, the

National Association of Securities

Dealers, and the Philadelphia Stock

Exchange) and representatives from

broker-dealers, including branch office

managers, compliance personnel, and

corporate executives, in order to update

the examination in view of changes in

relevant laws, rules, and regulations, the

development of new products, and to

reflect various changes in industry

practices. The committee reviewed the

examination specifications, content

areas, and item bank and developed

some new questions in new areas.

The revised examination continues to

cover the areas of knowledge required to

supervise sales activities in securities.

However, the focus of the content of the

examination has been shifted to

concentrate more closely on supervisory

duties. Accordingly, certain questions

have been deleted from the examination

that deal with routine calculations and

basic product knowledge, and questions

on new federal and SRO rules and

regulations have been incorporated into

the examination, as well as questions on

new products, supervision, and changes

in industry practices. The revised

examination and specifications include

coverage of these new areas. The

examination will remain a six-hour,

two-part, 200 question examination.

2. Statutory Basis

The statutory basis for the Series 8

examination lies in Section 6(c)(3)(B) of

the Act. Under that Section, it is the

Exchange’s responsibility to prescribe

standards of training, experience, and

competence for persons associated with

Exchange members and member

organizations. Pursuant to this statutory

obligation, the Exchange has developed

examinations that are administered to

establish that persons associated with

Exchange members and member

organizations have attained specific

levels of competence and knowledge.

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

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (1) Does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition; and

(3) does not become operative for 30

days from May 12, 1995, the date on

which it was filed, and the Exchange

provided the Commission with written

notice of its intent to file the proposed

rule change at least five days prior to the

filing date, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act and Rule 19b–4(e)(6) thereunder.1

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.

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 Exchange. All submissions

should refer to File No. SR–CBOE–95–

27 and should be submitted by June 16,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[Release No. 34–35753; File No. SR–CHX–

95–08]

Self-Regulatory Organizations;

Chicago Stock Exchange,

Incorporated; Order Granting Approval

to Proposed Rule Change and Notice

of Filing and Order Granting

Accelerated Approval to Amendment

No. 1 Relating to Order Execution

Guarantees

May 22, 1995.

I. Introduction

On March 2, 1995, the Chicago Stock

Exchange, Incorporated (‘‘CHX’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

adopt new Rule 37(d), Article XX to

allow specialists on the Exchange to

provide order execution guarantees that

are more favorable than those currently

required under CHX Rule 37(a), Article

XX (‘‘BEST Rule’’) 3 through the

Exchange’s automated execution system

(‘‘MAX’’).
28008 Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices

4See letter from David Rusoff, Foley & Lardner,

to Glen Barrentine, Senior Counsel, SEC, dated

April 12, 1995. Amendment No. 1 amends the text

of the proposed rule change and clarifies its intent

and scope.

5 17 CFR 240.11Ac1–1 (1994).

6The Dual Trading System of the Exchange

allows the execution of both round-lot and add-lot

orders in certain issues assigned to specialists on

the Exchange and listed on either the New York

Stock Exchange or the American Stock Exchange.

7Some examples provided by the Exchange of the

different options that may be available to specialists

include SuperMAX and, if reactivated, Enhanced

MAX. See letter from David Rusoff, Foley &

Lardner, to Glen Barrentine, Senior Counsel, SEC,

dated April 12, 1995.

8 15 U.S.C. 78f(b) (1988 & Supp. v 1993).

9See Securities Exchange Act Release No. 35547

(Mar. 29, 1995), 60 FR 17375 (Apr. 5, 1995).

10 15 U.S.C. 78s(b)(2) (1988).

11 17 CFR 200.30–34(a)(12) (1004).

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35547 (Mar.

29, 1995), 60 FR 17375 (Apr. 5, 1995).

No comments were received on the

proposal. On April 13, 1995, the

Exchange submitted Amendment No. 1

to the proposed rule change.4 This order

approves the proposed rule change,

including Amendment No. 1 on an

accelerated basis.

II. Description of Proposal

At the present time, under the BEST

Rule, Exchange specialists are required

to guarantee executions of market and

limit orders under certain

circumstances. Under the rule,

specialists must accept and guarantee

execution of all agency orders, other

than limit orders in Nasdaq/NMS

Securities, from 100 up to and including

2099 shares. For all agency market

orders, the specialist must fill the orders

at the best bid or best offer disseminated

pursuant to Rule 11Ac1–1 under the

Act.5 For all agency limit orders in Dual

Trading System issues,6 the specialist

must fill the order if the bid or offer at

the limit price has been exhausted in

the primary market, there has been a

price penetration of the limit in the

primary market (trade through of a CHX

limit order), or the issue is trading at the

limit price on the primary market unless

it can be demonstrated that such order

would not have been executed if it had

been transmitted to the primary market

or the broker and specialist agree to a

specific volume related or other criteria

for requiring a fill.

Moreover, pursuant to current Rule

37(b), Article XX, the Exchange’s MAX

system provides for the automatic

execution of orders that are eligible for

execution under the Exchange’s BEST

Rule as discussed above and certain

other orders as long as such orders are

less than or equal to the auto-execution

threshold. The specialist must set the

auto-execution threshold at 1099 shares

or greater on a stock-by-stock basis.

The Exchange proposes to amend

Rule 37, Article XX by adding new

subsection (d) to allow specialists to

provide guarantees that are more

favorable than those required under the

BEST Rule. Moreover, under Rule 37(d),

the Exchange, at the request of a

specialist, may provide for automatic

execution of orders through MAX in

accordance with the additional

guarantees that the specialists decide to

provide. The Exchange expects to file

with the Commission at a later time the

specific modifications to the parameters

of the automated execution system that

are required to implement the

additional guarantees.7

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b).8 The

Commission believes the proposal is

consistent with the Section 6(b)(5)

requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public interest.

The Commission believes that the

proposed rule change to allow

specialists to provide more favorable

guarantees than those currently required

under CHX’s Best Rule will benefit

investors. For example, public

customers may benefit by receiving

executions at a better price or for a

greater size than the minimum

requirements under the Best Rule. The

Commission believes that the proposal

also would enhance competition on the

Exchange by providing specialists with

the opportunity to compete based upon

the additional guarantees they offer.

The Commission notes, however, that

the Exchange has indicated that this

proposal is intended to be an ‘‘enabling

rule.’’ Accordingly, the Commission

expects that the future filings proposing

further modifications to MAX will

describe in detail the more favorable

guarantees being offered. Moreover, the

Commission will review such proposals

to ensure that they do not detract from

order exposure.

The Commission finds good cause for

approving amendment No. 1 to the

proposed rule change prior to the

thirteenth day after the date of

publication of notice of filing thereof.

The Exchange’s original proposal was

published in the Federal Register for

the full statutory period and no

comments were received.9 Amendment

No. 1 amends the text of the rule to

delete extraneous language and to make

clear that the guarantee is not

‘‘promised’’ to a particular individual,

but provided for issues chosen by the

specialist. Moreover, Amendment No. 1

clarifies the intent and scope of the

proposed rule change and the options

that the Exchange anticipates for the

automated system.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

1. Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW.,

Washington, D.C. 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, 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–95–08

and should be submitted by June 16,

1995.

V. Conclusion

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–CHX–95–08)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12981 Filed 5–25–95; 8:45 am]

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