[Federal Register Volume 66, Number 78 (Monday, April 23, 2001)]
[Notices]
[Pages 20501-20502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9963]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-44180; File No. SR-CHX-2001-06]
Self-Regulatory Organizations; Order Granting Accelerated
Approval of Proposed Rule Change by the Chicago Stock Exchange,
Incorporated, Amending Its SuperMAX 2000 Price Improvement Algorithm To
Permit Application of the Algorithm to Odd Lot Orders
April 16, 2001.
I. Introduction
On March 19, 2001, the Chicago Stock Exchange, Incorporated
(``CHX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC''), 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 that would amend CHX Article XX,
Rule 37(h) to permit application of the Exchange's SuperMAX 2000 price
improvement algorithm to odd lot orders. Notice of the proposed rule
change was published for comment in the Federal Register on March 28,
2001.\3\ This order approved the proposed rule change on an accelerated
basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 44090 (March 21, 2001),
66 FR 16962. In the notice, the Commission stated it would consider
granting accelerated approval of the proposed rule change after a
15-day comment period.
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II. Description of the Proposal
According to the CHX, the primary purpose of the proposed rule
change is to increase the number of orders that are eligible for
automated price improvement.
[[Page 20502]]
On December 19, 2000, the Commission approved SR-CHX-00-37,\4\
implementing SuperMax 2000, the CHX's new price improvement program,
which will govern price improvement of all orders for issues quoting in
decimal price increments. SuperMAX 2000 was designed to afford
specialists the flexibility to provide a wide variety of price
improvement alternatives, all of which will be equal to or more
favorable than alternatives that existed previously at the CHX.
SuperMAX 2000 originally did not by its terms permit price improvement
of odd lot orders.
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\4\ Securities Exchange Act Release No. 43742 (December 19,
2000), 65 FR 83119 (December 29, 2000).
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To remain competitive, the CHX proposes that its specialists be
permitted (but not obligated) to offer price improvement to odd lot
orders. The proposal would permit odd lot dealers to provide price
improvement of $.01 or better, in the case of odd lot orders received
when the national best bid and offer spread is $.05 or larger.
III. Discussion
The Commission has reviewed carefully the proposed rule change and
finds that it is consistent with the Act and the rules and regulations
promulgated thereunder applicable to a national securities exchange
and, in particular, with the requirements of Section 6(b).\5\
Specifically, the Commission finds that approval of the proposed rule
change is consistent with Section 6(b)(5) \6\ 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. The Commission believes that the proposed rule change may
increase the opportunities for price improvement by allowing the
Exchange's odd lot dealers to offer price improvement of odd lot
orders, resulting in a benefit to investors. Additionally, the
Commission believes the proposal is reasonable because it contemplates
equality among order-sending firms and their customers by mandating
that price improvement be provided by CHX odd lot dealers on an issue-
by-issue basis, rather than allowing odd lot dealers to distinguish
among order-sending firms when designating price improvement levels.
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\5\ 15 U.S.C. 78f(b). In approving this proposal, the Commission
has considered the proposed rule's impact on efficiency, competition
and capital formation. 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78f(b)(5).
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The Commission finds good cause for approving the proposed rule
change before the thirtieth day after the date of publication of notice
of filing thereof in the Federal Register. In the notice,\7\ the
Commission indicated that it would consider granting accelerated
approval of the proposal after a 15-day comment period. The Commission
received no comments on the proposal during the 15-day comment period.
The Commission believes it is reasonable to implement the proposal on
an accelerated basis, given the anticipated benefits of the proposal.
For these reasons, the Commission finds good cause for accelerating
approval of the proposed rule change.
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\7\ See footnote 3, supra.
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IV. Conclusion
For the above reasons, the Commission finds that the proposed rule
change is consistent with the provisions of the Act, in general, and
with Section 6(b)(5) \8\ in particular.
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\8\ 15 U.S.C. 78f(b)(5).
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In is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-CHX-2001-06), be and hereby
is approved.
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\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-9963 Filed 4-20-01; 8:45 am]
BILLING CODE 8010-01-M