

[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Notices]               
[Page 59316-59317]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc07-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56657; File No. SR-CHX-2007-09]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend the Exchange's 
Institutional Broker Rules To Add Provisions Relating to the Handling 
of Stop and Stop-Limit Orders

October 12, 2007.
    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 March 21, 2007, the Chicago Stock Exchange, Inc. (``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 substantially prepared by CHX. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to add new provisions to 
confirm how institutional brokers should handle stop and stop-limit 
orders. The text of the proposed rule change is available at http://www.chx.com/rules/proposed_rules.htm
, at the Exchange, and at the 

Commission's Public Reference Room.

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 Exchange 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 IV below. The Exchange 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 Exchange proposes to add a new provision to its institutional 
broker rules

[[Page 59317]]

to confirm how institutional brokers should handle stop and stop-limit 
orders.\3\ Under these provisions, an institutional broker could choose 
to, but would not be required to, accept stop or stop-limit orders.
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    \3\ Other provisions of the institutional broker rules confirm 
the order-handling obligations associated with market, limit, and 
not held orders.
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    Under this proposal, a stop order to buy (sell) would become a 
market order when a transaction in the security at or above (below) the 
stop price is reported in an effective transaction reporting plan after 
the order is received by an institutional broker. Similarly, stop-limit 
orders to buy (sell) would become limit orders when a transaction in 
the security at or above (below) the stop price is reported in an 
effective transaction reporting plan after the order is received by an 
institutional broker. Stop or stop-limit orders could be elected either 
by the price of the opening transaction on the Exchange or by the price 
of the opening on any other market center reporting in an effective 
transaction reporting plan. These proposed provisions are substantially 
similar to requirements set forth in the rules of other self-regulatory 
organizations, including New York Stock Exchange LLC (``NYSE'') and the 
Financial Industry Regulatory Authority, Inc. (``FINRA'') (f/k/a 
National Association of Securities Dealers, Inc. (``NASD'')).\4\
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    \4\ See NYSE Rule 13; NASD Rule 5120(h).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \5\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act.\6\ The proposed rule change 
is consistent with Section 6(b)(5) of the Act because it would promote 
just and equitable principles of trade, remove impediments to and 
perfect the mechanism of, a free and open market and a national market 
system, and, in general, protect investors and the public interest by 
permitting the Exchange to add a new provision to its institutional 
broker rules to confirm how institutional brokers should handle stop 
and stop-limit orders.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer 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 Exchange consents, the Commission will:
    (A) By order approve such 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, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-CHX-2007-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CHX-2007-09. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CHX-2007-09 and should be 
submitted on or before November 9, 2007.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-20586 Filed 10-18-07; 8:45 am]

BILLING CODE 8011-01-P
