regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.,

[Federal Register: July 14, 1999 (Volume 64, Number 134)]

[Notices]

[Page 38060-38061]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr14jy99-156]

[[Page 38060]]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41605; File No. SR-CHX-99-06]

Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendments No. 1 by the Chicago Stock Exchange, Inc. Relating to the Minimum for Nasdaq-100 Shares and Disclaimer of Liability With Respect to the Nasdaq-100 Index

July 7, 1999.

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 June 21, 1999, the Chicago Stock Exchange, Inc. (``CHX'' or the ``Exchange'') filedwith the Securities and Exchange Commission (the ``Commission'' or the ``SEC'') the proposed rule change, as described in Items I, and II below, which Items have been prepared by the self- regulatory organization. The filing was subsequently amended on July 1, 1999.\3\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons, and simultaneously approving the filing.

\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

\3\ In Amendment No. 1, the Exchange moved a new section proposed under CHX Rule 24 of Article XXVIII, Investment Company Units, to CHX Rule 25 of Article XXVIII, Portfolio Depository Receipts; as well as made a typographic correction to the proposed rule change. See Letter from Kirsten M. Carlson, Foley & Lardner, to Katherine A. England, Assistant Director, Division of Market Regulation, Commission, dated June 30, 1999 (``Amendment No. 1'').

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   The Exchange proposes to amend CHX Rule 22 of Article XX, to amend interpretation and policy .05 thereunder, to permit dealings in Nasdaq- 100 Shares of the Nasdaq 100 Trust (``Nasdaq-100 Shares'') in increments smaller than the minimum variation, and to amend CHX Rule 25 of Article XXVIII relating to disclaimer of liability with respect to the Nasdaq-100 Index.\4\

   \4\ See Amendment No. 1, supra note 3.

2. 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 III 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.

   1. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

      1. Purpose

         The Exchange is proposing to amend CHX Rule 22 of Article XX, to amend interpretation and policy .05 thereunder, to permit dealings in Nasdaq-100 Shares in increments of \1/64\ of $1.00. The Nasdaq 100 Trust is a unit investment trust sponsored by Nasdaq-Amex Investment Product Services, Inc. with a portfolio based on the component stocks of the Nasdaq-100 Index. The Exchange intends to trade the Nasdaq-100 Shares pursuant to unlisted trading privileges (``UTP'') under the Exchange's Investment Company Unit rules.\5\ These securities are currently traded on the American Stock Exchange (``Amex'') in increments of \1/64\ of $1.00 and, thus, the Exchange believes it is appropriate to trade these securities on the Exchange with the same minimum increment of \1/64\ of $1.00 as well.\6\

         \5\ See CHX Rule 24 of Article XXVIII.

         \6\ See Securities Exchange Act Release No. 41119 (February 26, 1999), 64 FR 11510 (March 9, 1999) (SR-Amex-98-34).

         In connection with the Exchange's license agreement with the Nasdaq Stock Market (``Nasdaq'') relating to, among other things, the use of the name ``Nasdaq-100 Shares,'' and the disclaimers of liability relating to the Nasdaq-100 Index, the Exchange is proposing to amend CHX Rule 25 of Article XXVIII to add a new subsection (h) to codify a rule governing disclaimers of liability relating to the Nasdaq-100 Index.\7\ The proposed CHX Rule 25 of Article XXVIII will reflect the disclaimers of liability language adopted by the Amex in its Rule 1006.\8\

         \7\ See Amendment No. 1, supra note 3.

         \8\ Id.

      2. Statutory Basis

         The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act \9\ in general and furthers the objectives of Section 6(b)(5) \10\ in particular in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons regulating securities transactions, 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.

         \9\ 15 U.S.C. 78f(b).

         \10\ 15 U.S.C. 78f(b)(5).

   2. 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.

   3. 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.

3. Solicitation of Comments

   Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change 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 filedwith 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 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 No. SR-CHX-99-06 and should be submitted by August 4, 1999.

4. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change

   The Commission finds that the CHX's proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\11\ Specifically, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act \12\ because it will facilitate transactions in securities by permitting

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   the CHX: (1) To trade Nasdaq-100 Shares, on a UTP basis, in increments of \1/64\th of $1.00, and (2) to adopt a disclaimer of liability rule relating to the Nasdaq-100 Index, consistent with the license agreement between Nasdaq and the Exchange.

   \11\ In reviewing the proposed rule change, the Commission considered its potential impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

   \12\ 15 U.S.C. 78f(b)(5).

   The Exchange has requested that the Commission find good cause pursuant to Section 19(b)(2) of the Act for approving the proposed rule change prior to the thirtieth day after the publication of the proposal in the Federal Register. The Commission believes that such action is appropriate, in that the proposed rule change establishes the same minimum trading variation as the Amex has adopted for Nasdaq-100 Shares. Further, the proposed rule relating to the disclaimer of liability with respect to the Nasdaq-100 Index is also identical to the disclaimer of liability adopted by the Amex.\13\ For the reasons set forth above, the Commission does not believe that this proposal raises any new regulatory issues. Accordingly, the Commission finds that there is good cause for approving the proposed rule change prior to the thirtieth day after the publication of the proposal in the Federal Register.

   \13\ The Amex Disclaimer of liability provision was approved in Securities Exchange Act Release Nos. 41119 (February 26, 1999), and 41562 (June 25, 1999). It was subject to the full notice and comment process in Securities Exchange Act Release No. 41119 and no comments were received with respect to the disclaimer.

5. Conclusion

   It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\14\ that the proposed rule change is hereby approved on an accelerated basis.

   \14\ 15 U.S.C. 78s(b)(2).

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\15\

   \15\ 17 CFR 200.30-3(a)(12).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 99-17934Filed7-13-99; 8:45 am]

   BILLING CODE 8010-01-M