[Federal Register Volume 67, Number 197 (Thursday, October 10, 2002)]
[Notices]
[Pages 63180-63181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25744]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46587; File No. SR-CHX-2002-32]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange,
Incorporated To Reinstate and Extend a Pilot Rule Interpretation
Relating to Trading of Nasdaq/NM Securities in Subpenny Increments
October 2, 2002.
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 October 1, 2002, 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 Exchange. The
Exchange filed the proposal pursuant to section 19(b)(3)(A) of the
Act,\3\ and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6). The Commission waived the 5-day pre-
filing notice requirement.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to reinstate and extend through January 31,
2003, the pilot rule interpretation relating to the trading of Nasdaq/
NM securities in subpenny increments. The pilot expired on September
30, 2002. The CHX does not propose to make any substantive or
typographical changes to the pilot; the only change is a reinstatement
and extension of the pilot's expiration date through January 31, 2003.
The text of the proposal is available at the Commission and at the CHX.
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 its proposal and discussed any
comments it received regarding the proposal. 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
On April 6, 2001, the Commission approved, on a pilot basis through
July 9, 2001, a pilot rule interpretation (CHX Article XXX, Rule 2,
Interpretation and Policy .06 ``Trading in Nasdaq/NM Securities in
Subpenny Increments'') \5\ that requires a CHX specialist (including a
market maker who holds customer limit orders) to better the price of a
customer limit order in his book which is priced at the national best
bid or offer (``NBBO'') by at least one penny if the specialist
determines to trade with an incoming market or marketable limit order.
The pilot was extended on three occasions and expired on September 30,
2002.\6\ The CHX now proposes to reinstate and extend the pilot through
January 31, 2003. The CHX proposes no other changes to the pilot, other
than reinstating and extending it through January 31, 2003.
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\5\ See Securities Exchange Act Release No. 44164 (April 6,
2001), 66 FR 19263 (April 13, 2001)(SR-CHX-2001-07).
\6\ See Securities Exchange Act Release No. 44535 (July 10,
2001), 66 FR 37251 (July 17, 2001) (SR-CHX-2001-15); Securities
Exchange Act Release No. 45062 (November 15, 2001), 66 FR 58768
(November 23, 2001) (SR-CHX-2001-21); Securities Exchange Act
Release No. 45386 (February 1, 2002), 67 FR 6062 (February 8, 2002)
(SR-CHX-2002-02); Securities Exchange Act Release No. 45755 (April
15, 2002) 67 FR 19607 (April 22, 2002) (SR-CHX-2002-10).
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2. Statutory Basis
The CHX believes the proposal is consistent with the requirements
of the Act and the rules and regulations thereunder that are applicable
to a national securities exchange, and, in particular, with the
requirements of Section 6(b).\7\ In particular, the CHX believes the
proposal is consistent with Section 6(b)(5) of the Act \8\ in that it
is designed to promote just and equitable principles 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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\7\ 15 U.S.C. 78f(b).
\8\ 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
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and
Rule 19b-4(f)(6) thereunder.\10\ 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,
[[Page 63181]]
or otherwise in furtherance of the purposes of the Act.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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Nasdaq has requested that the Commission waive both the 5-day
notice and the 30-day operative delay. The Commission believes waiving
the 5-day notice and 30-day operative delay is consistent with the
protection of investors and the public interest. Acceleration of the
operative date will allow the pilot to be reinstated and to continue
uninterrupted through January 31, 2003, and allow the Commission to
further study the trading of Nasdaq/NM securities in subpenny
increments. For these reasons, the Commission designates the proposal
to be effective and operative upon filing with the Commission.\11\
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\11\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal 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 20549-0609. 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 in the Commission's
Public Reference Room. 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 number SR-CHX-2002-32 and should be
submitted by October 31, 2002.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-25744 Filed 10-9-02; 8:45 am]
BILLING CODE 8010-01-P