[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Notices]
[Pages 10620-10621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4648]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35394; File No. SR-CHX-95-03]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 to Proposed Rule Change by Chicago Stock
Exchange, Incorporated Relating to Reporting and Disclosure
Requirements
February 17, 1995.
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 February
8, 1995, the Chicago Stock Exchange, Inc. (``CHX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC'') the proposed rule change, and on February 16, 1995, filed
Amendment No. 1 to the proposed rule change,\1\ as described in Items
I, II and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
\1\Amendment No. 1 made non-substantive, clarifying changes to
the proposal. See Letter from Jay O. Wright, Esq., Foley & Lardner,
to Elisa Metzger, Senior Counsel, SEC, dated February 14, 1995.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CHX, pursuant to Rule 19b-4 of the Securities Exchange Act of
1934 (``Act''), proposes to (1) amend Article VI, Rule 5 and add an
interpretation thereto to require that members and member organizations
maintain written procedures to ensure compliance with the securities
laws (and SEC regulations promulgated thereunder) and the Rules of
Exchange; (2) amend Article XI Rule 4 to provide the Exchange with the
authority to require that a member or member organization have an
accounting firm audit its books and to clarify that all members and
member organizations are required to comply with the disclosure
requirements of Rule 17a-5; and (3) add Article XI, Rule 9 to require
that floor brokers who do not clear their own trades procure a letter
of guarantee prior to trading.
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 placed 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
The CHX has two purposes for amending Article VI, Rule 5 to require
that members and member organizations maintain written supervisory
procedures: (1) Requiring written procedures allows the CHX to more
easily verify the existence of procedures; and (2) such a requirement
facilitates the CHX's verification of the content of the procedures.
The visibility of such written procedures will remind members and
member organizations of their obligations to comply with the securities
laws, SEC rules, and the Exchange's rules, thus enhancing compliance.
The CHX's purpose for adding Article XI, Rule 4(c) thereto is to
clarify that all CHX members and member organizations are required to
file monthly and quarterly Focus Reports with the CHX in accordance
with SEC Rule 17a-5 unless the member or member organization is exempt.
The CHX's purpose for adding Article XI, Rule 9 is to enhance the
safety and soundness of the clearing system by ensuring that Floor
Brokers have sufficient financial resources to stand behind their
trades. As a result, fewer disruptions due to the financial distress of
a floor broker are likely to occur. The reliability of the clearing
system is thus augmented.
2. Statutory Basis
The proposed rule changes are consistent with Sections 6(b)(1) and
6(b)(5) of the Act in that the proposed rule changes will aid the
Exchange in enforcing compliance by its members and member
organizations with the securities laws and the Exchange's rules as well
as aiding in preventing fraudulent or manipulative acts in the clearing
of trades.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. [[Page 10621]]
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 publication of this notice in the Federal
Register or within such other 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 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 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 CHX. All
submissions should refer to File No. SR-CHX-95-03 and should be
submitted by March 20, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-4648 Filed 2-24-95; 8:45 am]
BILLING CODE 8010-01-M