[Federal Register Volume 62, Number 14 (Wednesday, January 22, 1997)]
[Notices]
[Page 3320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1435]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38170; File No. SR-CHX-96-28]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change Relating to Clearing
The Post
January 15, 1997.
On November 4, 1996, the Chicago Stock Exchange, Inc. (``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 amend Article XX, Rule 10,
interpretations and policies .01 relating to clearing the post.
---------------------------------------------------------------------------
\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ 17 CFR 240.19b-4 (1994).
---------------------------------------------------------------------------
Notice of the proposal was published for comment and appeared in
the Federal Register on November 25, 1996.\3\ No comments were received
on the Exchange proposal. This order approves the Exchange proposal.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 37964 (November 19,
1996), 61 FR 59918 (November 25, 1996).
---------------------------------------------------------------------------
I. Description
On May 30, 1996, the Commission approved the CHX's Minor Rule
Violations Plan (``Plan'').\4\ The Exchange's clearing the post rule,
Article XX, Rule 10 was included under the Plan, making violations of
this rule subject to the summary fine procedures contained in the Plan.
Pursuant to Article XX, Rule 10, interpretations and policies .01,
violators of the Exchange's clearing the post rule are currently
subject to automatic fines of a minimum of fifty dollars, to be
assessed by the Exchange's Committee on Floor Procedure.
---------------------------------------------------------------------------
\4\ Securities Exchange Act Release No. 37255 (May 30, 1996), 61
FR 28918 (approving File No. SR-CHX-95-25).
---------------------------------------------------------------------------
The purpose of the proposed rule change is to eliminate the
authority of the Exchange's Committee on Floor Procedure with respect
to assessing fines for violations of the clearing the post rule. The
Exchange believes that minor violations of the clearing the post rule
are better handled through the new summary fine procedures contained in
the Plan rather than through the Committee on Floor Procedure. The
Exchange further believes that using the Plan as the lone summary fine
procedure will achieve a uniform procedure for imposing fines for
violations of this Exchange rule.
II. Discussion
After careful review, 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.
The Commission believes the proposal is consistent with the
requirements of Section 6(b)(5) and Section 6(b)(6).\5\ More
specifically, 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.\6\
---------------------------------------------------------------------------
\5\ 15 U.S.C. Sec. 78f(b)(5) and 15 U.S.C. Sec. 78f(b)(6).
\6\ In approving this rule change, the Commission has considered
the proposed rules' impact on efficiency, competition, and capital
formation. 15 U.S.C. Sec. 78c(f).
---------------------------------------------------------------------------
An Exchange's ability to effectively enforce compliance by its
members and member organizations with Exchange rules is central to its
self-regulatory functions. The Exchange's earlier inclusion of the
clearing the post rule under the Plan was intended to make the
Exchange's disciplinary system more efficient in prosecuting more
egregious and/or repeated violations of this rule, thereby furthering
its mandates to protect investors and the public interest.\7\ Under the
Plan, the staff of the Exchange presents the facts supporting violative
conduct to a Minor Rule Violation Panel (``Panel''), which consists of
three floor members appointed by the President of the Exchange.\8\ The
Panel is then authorized to either impose the fine, reject the staff's
recommendation, or recommend that the Exchange commence a formal
disciplinary proceeding under Article XII of the CHX rules. If the
staff decides not to recommend the commencement of a formal
disciplinary proceeding, the Panel is required to impose a fine in
accordance with the provisions of the procedure. The Exchange has made
a reasonable determination that preserving a similar summary fine
procedure vested in the Committee on Floor Procedure is unnecessary and
redundant.
---------------------------------------------------------------------------
\7\ The Minor Rule Violations Panel has the authority to
recommend that the Exchange commence a formal disciplinary
proceeding. See Securities Exchange Act Release No. 37255 supra note
4.
\8\ A Minor Rule Violation Panel must consist of one member of
the Committee on Floor Procedure, one member of the Committee's
Rules Subcommittee, and one member not on the Committee or any of
its subcommittees. See Securities Exchange Act Release No. 37255
supra note 4.
---------------------------------------------------------------------------
The Commission believes the proposal is consistent with the Section
6(b)(6) requirement that the members of an exchange be appropriately
disciplined for violations of the rules of the exchange. Under the
plan, minor violations of the clearing the post rule are punishable by
a minimum fine of $100 (as opposed to a minimum $50 fine imposed by the
Committee on Floor Procedure). Eliminating the authority of the
Committee on Floor Procedure to fine violations of the clearing the
post rule thereby serves to eliminate a potentially inconsistent fine
amount and procedure, and ensures a uniform summary fine procedure for
minor violations of the clearing the post rule.
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-CHX-96-28) is approved.
\9\ 15 U.S.C. Sec. 78s(b)(2).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-1435 Filed 1-21-97; 8:45 am]
BILLING CODE 8010-01-M