[Federal Register Volume 61, Number 97 (Friday, May 17, 1996)]
[Notices]
[Pages 24988-24989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12467]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37204; File No. SR-CHX-96-13]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated, Relating to the 
Modification of the Hours of the Exchange's Primary Trading Session and 
the Establishment of a Post-Primary Trading Session

May 13, 1996.
    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 April 9, 
1996, 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, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. On May 10, 1996, the Exchange submitted to the Commission 
Amendment No. 1 to the proposed rule change.\1\ The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ See Letter from David Rusoff, Attorney, Foley & Lardner, to 
Ivette Lopez, Assistant Director, Division of Market Regulation, 
SEC, dated May 9, 1996 (``Amendment No. 1''). Amendment No. 1 added 
amendments to Article IX, Rule 10(b); Article XX, Rule 1; and 
Article XXI, Rule 1 to the proposed rule change. Amendment No. 1 
also added two paragraphs to the end of Section II.A.1 of the 
original filing in order to describe the amendments to the proposed 
rule change contained in Amendment No. 1, and corrected the text of 
Exhibit A to the original filing. For a more detailed description of 
Amendment No. 1, see text accompanying notes 6-8.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 10(b) of Article IX, Rule 1 of 
Article XX, several interpretations and policies under Rule 37 of 
Article XX, and Rule 1 of Article XXI in order to modify the Exchange's 
trading hours for each traded security to track the trading hours of 
the security's primary market and to add a new Post-Primary Trading 
Session.

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
    Currently, the Exchange's Primary Trading Session runs from 8:30 
a.m. to 3 p.m., central time, Monday through Friday. One purpose of the 
proposed rule change is to amend Article XX, Rule 10(b) to conform the 
Exchange's Primary Trading Session hours for each traded security to 
the trading hours during which the security is traded on its primary 
market. If a security's primary market is the CHS, the trading hours 
will be from 8:30 a.m. to 3:30 p.m., central time.\2\
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    \2\ Trading in the Chicago Basket, currently conducted on the 
Floor of the Exchange from 8:30 a.m. to 3:15 p.m., central time, 
will be unaffected by the proposed rule change.
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    The proposed rule change would also add a Post-Primary Trading 
Session (``PPS'') on the trading floor.\3\ The PPS for orders and 
securities designated as eligible for the PPS would be for one-half 
hour after the close of the regular trading session on the security's 
primary market. Securities in which the CHX is the primary market will 
not be eligible for the PPS.
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    \3\ The CHX represents that ITS will be available for both 
inbound and outbound trades during the PPS to the extent that other 
market centers (e.g., the Pacific Stock Exchange, Incorporated and 
the Philadelphia Stock Exchange, Inc.) are open for trading. The CHX 
also represents the PPS will be surveilled in the same manner and 
using the same techniques as those used to surveil the Primary 
Trading Session. To facilitate the surveillance of the PPS, CHX's 
surveillance staff will remain on-site during the PPS and for any 
necessary additional time period after the close of the PPS. See 
Letter from David T. Rusoff, Attorney, Foley & Lardner, to Ivette 
Lopez, Assistant Director, Division of Market Regulation, SEC, dated 
May 9, 1996 (``ITS/Surveillance Letter'').
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    Only orders designated as eligible for the PPS would be eligible 
for execution during the PPS.\4\ Market, limit and contingent order 
types currently acceptable would be accepted for PPS if so designated. 
In this regard, GTX orders would only be accepted if specifically 
designated as PPS-eligible. The Exchange's MAX System will not be 
available as an automated execution system or as an automated routing 
system during the PPS. As a result, order sending firms must contact a 
floor

[[Page 24989]]

broker in order to send an order to the CHX during the PPS. Because the 
PPS will be an extension of the Exchange's daily auction market, all 
the Exchange's rules applicable to floor trading during the Exchange's 
Primary Trading Session, as modified by proposed Interpretation and 
Policy .05 of Rule 37, Article XX, will continue to be applicable.\5\ 
For example, specialists will be required to quote markets and trading 
will occur based on real-time price and quote changes.
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    \4\ The Exchange will require order tickets of PPS-eligible 
orders to include an ``E'' designator, which will indicate that the 
order is eligible for execution during the PPS. See ITS/Surveillance 
Letter, supra note 3.
    \5\ As part of the proposed rule change, the Exchange has moved 
existing Interpretation and Policies .01-.03 of Rule 37(a), Article 
XX, currently found at the end of subparagraph (a) of Rule 37, to 
the end of Rule 37, and renumbered existing Interpretation and 
Policy .01 of Rule 37 as Interpretation and Policy .04.
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    To accomplish the foregoing, the Exchange is amending Article XX, 
Rule 1 and Article XXI, Rule 1 to make it clear that these rules also 
apply to the PPS.\6\ The Exchange is also amending Interpretation and 
Policy .02 of Rule 37, Article XX to make it clear that although GTX 
orders are executable after the close of the PPS (i.e., in the 
Exchange's Secondary Trading Session), they are executed based on 
trading that occurs in a security in a primary market's after-hours 
closing price trading session, at that closing price, and are not 
executable based on trading in, or the closing price established in, 
the PPS.\7\
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    \6\ See Amendment No. 1, supra note 1.
    Article XX of the CHX Rules contains the Exchange's trading 
rules. Article XX, Rule 1 currently states that the rules contained 
in Article XX have general applicability to Exchange Contracts made 
on the Exchange during the Primary Trading Session, and, to the 
extent determined by the Exchange, to Exchange Contracts not made on 
the Exchange.
    Article XXI, Rule 1 currently requires each Exchange member to 
promptly advise the Exchange of each of his or her transactions that 
are executed on the Floor of the Exchange during the Primary Trading 
Session or through the Portfolio Trading System.
    \7\ For a description of operation of the Exchange's Secondary 
Trading Session, see Securities Exchange Act Release No. 33991 (May 
2, 1994), 59 FR 23904 (May 9, 1994) (File No. SR-CHX-93-23).
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    Finally, the Exchange is also amending Article IX, Rule 10(b) to 
provide that if trading on the Exchange is halted during the Primary 
Trading Session pursuant to Article XX, Rule 10A, and such trading halt 
is still in effect at the close of the Primary Trading Session, the PPS 
scheduled for that day will be cancelled.\8\
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    \8\ See Amendment No. 1, supra note 1.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act \9\ in that it is designed to promote just and equitable principals 
of trade, to remove impediments to 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.
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    \9\ 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 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-regualtory 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, N.W., 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, N.W., 
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-CHX-96-13 and should be 
submitted June 7, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12467 Filed 5-16-96; 8:45 am]
BILLING CODE 8010-01-M