

[Federal Register: August 27, 2007 (Volume 72, Number 165)]
[Notices]               
[Page 49032]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27au07-90]                         


[[Page 49032]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56291; File No. SR-CHX-2006-42]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Approving Proposed Rule Change, as Modified by Amendment No. 1 
Thereto, To Modify Provisions Relating to Cross With Yield Orders

 August 20, 2007.

I. Introduction

    On December 22, 2006, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 permit participants submitting ``cross with 
yield'' orders to elect to yield to undisplayed interest in the 
Exchange's central matching engine (``Matching System''). On July 6, 
2007, the Exchange filed Amendment No. 1 to the proposed rule change. 
The proposed rule change, as modified by Amendment No. 1, was published 
for comment in the Federal Register on July 20, 2007.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 56064 (July 13, 
2007), 72 FR 39865.
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II. Description of the Proposal

    The Exchange permits participants to submit ``cross with yield'' 
orders into its Matching System. A cross with yield order is an order 
that contains an instruction to execute a cross transaction at a 
specific price, together with an instruction to yield interest on the 
buy, sell or either side of the order, as specified in the order, to 
any order already displayed in the Matching System at the same or 
better price, to the extent necessary to allow the cross transaction to 
occur.\4\ The proposed rule change would amend the Exchange's 
definition of a ``cross with yield'' order to permit a CHX participant 
to elect to yield to undisplayed interest in the Matching System, 
including undisplayed portions of reserve size orders and any 
undisplayed orders, in addition to bids and offers that are displayed 
in the Matching System.
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    \4\ See CHX Rules, Article 1, Rule 2(h) and Article 20, Rules 
4(b)(7) and 8(e).
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III. Discussion

    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, and in 
particular, with Section 6(b)(5) of the Act,\5\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.\6\
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    \5\ 15 U.S.C. 78f(b)(5).
    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. See 15 U.S.C. 78c(f).
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    The Commission notes that cross with yield orders are intended to 
provide an efficient means to execute a cross transaction at a 
particular price, yielding interest to orders in the Matching System 
that have priority. The Commission believes that the proposed rule 
change will expand the flexibility of this order type by providing a 
greater opportunity for orders being crossed to interact with all 
available market interest in the Exchange's Matching System. 
Accordingly, the Commission finds that the proposed rule change is 
consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-CHX-2006-42), as amended, is 
approved.
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-16838 Filed 8-24-07; 8:45 am]

BILLING CODE 8010-01-P
