Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of a Proposed Rule Change as Modified by Amendment No. 1 Thereto Relating to the Handling of Clearly Erroneous Transactions, 3497-3499 [E8-831]
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Federal Register / Vol. 73, No. 13 / Friday, January 18, 2008 / Notices
Option Pilot Program increases the
position and exercise limits for IWM
option from 250,000 contracts to
500,000 contracts.7
The purpose of the instant proposed
rule change is to extend the IWM
Option Pilot Program through March 1,
2008. The Exchange is not proposing
any other change to the IWM Option
Pilot Program. The Exchange believes
that extending the IWM Pilot Program is
warranted due to the positive feedback
received from market participants and
for the reasons cited in the original
proposed rule changes that proposed the
adoption of the IWM Pilot Program.
Also, the Exchange has not encountered
any problems or difficulties relating to
the IWM Option Pilot Program since its
inception. For these reasons, the
Exchange proposes to extend the IWM
Option Pilot Program for the
aforementioned additional period.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
requirements provided under Section
6(b)(5) of the Act,8 which requires 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
rwilkins on PROD1PC63 with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
7 Exercise limits for IWM options are equivalent
to the position limits prescribed for IWM options
in Rule 4.11.07 and the increased exercise limits are
only in effect during the IWM Option Pilot Period.
See Rule 4.12.02.
8 15 U.S.C. 78f(b)(5).
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investors and the public interest,
provided that the self-regulatory
organization has given the Commission
written notice of its intent to file the
proposed rule change at least five
business days prior to the date of filing
of the proposed rule change or such
shorter time as designated by the
Commission, the proposed rule change
has become effective pursuant to
Section 19(b)(3)(A) of the Act 9 and Rule
19b–4(f)(6) thereunder.10
CBOE has requested the Commission
to waive the 30-day operative delay so
that the proposal may become operative
immediately upon filing.
The Commission hereby grants
CBOE’s request 11 and believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. The
Commission notes that the IWM Option
Pilot Program was previously extended.
In addition, waiver of the 30-day
operative period would allow the IWM
Option Pilot Program to continue
uninterrupted.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.12
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 (https://www.sec.gov/
rules/sro.shtml ); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CBOE–2007–147 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
9 15
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6).
11 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposal’s impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
12 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change under Section
19(b)(3)(C) of the Act, the Commission considers
the period to commence on January 8, 2008, the
date on which the Exchange filed Amendment No.
1.
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3497
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CBOE–2007–147. 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 (https://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 CBOE. 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–CBOE–2007–147 and
should be submitted on or before
February 8, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–861 Filed 1–17–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57137; File No. SR–CHX–
2007–24]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing of a Proposed Rule Change as
Modified by Amendment No. 1 Thereto
Relating to the Handling of Clearly
Erroneous Transactions
January 14, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
13 17
E:\FR\FM\18JAN1.SGM
CFR 200.30–3(a)(12).
18JAN1
3498
Federal Register / Vol. 73, No. 13 / Friday, January 18, 2008 / Notices
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
4, 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 the
Exchange. On January 7, 2008, the CHX
submitted Amendment No. 1 to the
proposed rule change. The Commission
is publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules regarding the handling of ‘‘clearly
erroneous’’ and other transactions. The
text of the proposed rule change is
available at the Exchange, the
Commission’s Public Reference Room,
and https://www.chx.com.
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 states that its rules
currently allow the Exchange to cancel
a trade, or modify the terms of a trade,
when the terms of the trade are
determined to be ‘‘clearly erroneous’’ or
when other circumstances (including a
CHX systems problem) require that that
action be taken for the maintenance of
a fair and orderly market or the
protection of investors and the public
interest.3 The Exchange notes that other
exchanges have similar rules.4
rwilkins on PROD1PC63 with NOTICES
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See CHX Rules, Article 20, Rule 10 (‘‘Handling
Clearly Erroneous Transactions’’ and Rule 11
(‘‘Systems Disruptions and Malfunctions’’).
4 See, e.g., Nasdaq Rule 11890 (‘‘Clearly
Erroneous Transactions’’); NYSE Arca Equities Rule
7.10 (‘‘Clearly Erroneous Transactions’’).
2 17
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The Exchange states that as it has
gained experience in the operation of
these rules, it has identified, and is now
proposing, several changes to the rules’
provisions.
First, the Exchange seeks to extend,
from 15 to 30 minutes, the time for
filing an initial written request for
review of a potentially ‘‘clearly
erroneous’’ trade. As part of this change,
the Exchange would also eliminate the
arguably duplicative requirement that a
participant also notify the Exchange by
telephone of its intent to seek review.
Together, the Exchange believes that
these changes would streamline the
process for filing a review request under
these rules.5
Additionally, the Exchange would
establish specific thresholds for
determining whether or not the terms of
a transaction are eligible for review
under the clearly erroneous rules. Under
these thresholds, a trade would be
found to be eligible for review if: (a) For
a trade where the price per share is less
than $1.00, the execution price is 20%
or more away from the midpoint of the
national best bid and offer (‘‘NBBO’’); or
(b) for a trade where the price per share
is equal to or greater than $1.00, the
execution price is 10% or more away
from the midpoint of the NBBO. The
Exchange believes that these easily
applied standards set reasonable
thresholds for determining whether or
not a transaction should be eligible for
review.6
Another proposed change to the
CHX’s rules would eliminate one of the
two levels of appeal that can be taken
from an initial Exchange determination
that the terms of a trade should be
modified or that the trade should be
cancelled.7 Under the existing rule, the
Exchange’s initial decision may be
appealed to a subcommittee of the
Committee on Exchange Procedure and
5 The Exchange notes that extending the time for
filing a complaint to 30 minutes is consistent with
the rules of at least one other exchange. See Nasdaq
Rule 11890(a)(2)(A)(ii) (giving members 30 minutes
to submit written complaints for transactions that
are executed before 9:30 a.m. (Eastern Time) and at
or after 10 a.m. (Eastern Time)).
6 These eligibility requirements would only apply
to trades for regular-way settlement during regular
trading hours. See Proposed CHX Article 20, Rule
10(b). Among other things, the application of these
standards would give participants certainty about
whether or not a particular transaction would be
eligible for review under the clearly erroneous rules
and would allow the Exchange to focus its
resources on addressing situations where more
significant harm has potentially occurred.
7 See Proposed Article 20, Rule 10(d). The
Exchange also would make corresponding changes
to Article 2, Rule 5, relating to appellate rights
arising from subcommittee decisions, to confirm
that the decision of the subcommittee is final and
that the Exchange’s initial decision is not stayed
pending any appeal to the subcommittee.
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Sfmt 4703
the subcommittee’s decision may be
appealed, in turn, to the full Committee
on Exchange Procedure.8 Through this
filing, the Exchange proposes to
eliminate the appeal to the full
Committee. The Exchange believes that
its proposal brings the Exchange’s
procedures in line with those in other
markets.9
The Exchange amended its original
filing to, among other things, include
changes to Article 2, Rule 5, to ensure
that this rule language is consistent with
the changes proposed in Article 20;
describe the composition of a
subcommittee of the Committee on
Exchange Procedure; and make other
more minor adjustments to the rule text.
Additional descriptions were added to
the narrative, as appropriate, to address
changes that were made to the rule text.
Finally, the Exchange would be given
the discretion, in situations where it is
acting on its own initiative to respond
to systems disruptions or extraordinary
market conditions or other
circumstances, to determine that the
number of affected transactions is such
that immediate finality is necessary to
maintain a fair and orderly market and
to protect investors and the public
interest. This determination would
provide certainty to participants whose
transactions were affected by decisions
in these unusual situations.10
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act,11 in general, and furthers
the objectives of Section 6(b)(5) of the
Act,12 in particular, in that it is designed
to 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, to protect
investors and the public interest
enhancing, in certain circumstances, a
participant’s opportunity to make an
initial request for review of a transaction
he believes to be ‘‘clearly erroneous’’
and allowing the Exchange to more
efficiently respond to requests that are
made.
8 A subcommittee of the Committee on Exchange
Procedure is composed of members of the full
Committee on Exchange Procedure.
9 See Nasdaq Rule 11890(c) (providing for an
appeal to the Market Operations Review
Committee); NYSE Arca Rule 7.10(c)(2) (providing
for an appeal to the Clearly Erroneous Execution
Panel).
10 The Exchange notes that other markets have
included a similar provision in their rules. See
Nasdaq Rule 11890(c)(1); NYSE Arca Rule
7.10(c)(2).
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
E:\FR\FM\18JAN1.SGM
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Federal Register / Vol. 73, No. 13 / Friday, January 18, 2008 / Notices
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 not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received by the Exchange with
respect to the proposed rule change.
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 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,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
rwilkins on PROD1PC63 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CHX–2007–24 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–2007–24. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
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16:37 Jan 17, 2008
Jkt 214001
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 am and 3 pm.
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–2007–24 and should
be submitted on or before February 8,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–831 Filed 1–17–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57140; File No. SR–CHX–
2007–23]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Order
Approving a Proposed Rule Change To
Allow the Exchange To Open at 8:30
a.m. (Chicago Time) Without Regard to
the Opening on the Primary Market
January 14, 2008.
I. Introduction
On October 2, 2007, 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 allow the Exchange to open at
8:30 a.m. (Chicago time) without regard
to the opening on the primary market.
To accommodate its implementation
schedule for this proposal, the Exchange
extended the time for Commission
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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3499
action to January 14, 2008. The Federal
Register published the proposed rule
change for comment on November 1,
2007.3 The Commission received no
comments on the proposal.
II. Description
Under existing rules, the Exchange
generally opens for trading in a security
once the primary market has done so.4
If the primary market announces that it
will not open, or if the primary market
has delayed its opening for reasons
other than a regulatory halt, the rules
permit two senior CHX officials to open
the market.5 The Exchange has
proposed to amend its rules to permit
trading to begin at 8:30 a.m. (Chicago
time), except for trading in specified
exchange-traded funds, which would
begin at 7:20 a.m. (Chicago time).6
In conjunction with this change to the
opening time of the Exchange’s market,
the Exchange also proposes two other
changes to its rules. First, the Exchange
would eliminate the opening cross order
type. According to the Exchange, these
cross orders, which are designed to
execute at the primary market opening
price, likely could no longer be
effectively executed on the Exchange,
once the proposed change is made to the
time of the Exchange’s opening.7 In
addition, the Exchange would add a
new rule that prevents immediate or
cancel (‘‘IOC’’) market orders from being
accepted until either (i) the primary
market in a security has opened trading
in that security or (ii) two senior officers
of the Exchange have determined that it
is appropriate for the Exchange to
accept IOC market orders.8 The
3 Securities Exchange Act Release No. 56698
(October 24, 2007), 72 FR 61919.
4 See CHX Rules, Article 20, Rule 1(b).
5 See CHX Rules, Article 20, Interpretation and
Policy .01.
6 See Proposed CHX Rules, Article 20, Rule 1(b).
The Exchange represents that Exchange-traded
funds that begin trading at 7:20 a.m. would be
announced, from time to time, by the Exchange in
a customer service notification or other type of
update. The only exchange-traded fund currently
trading at 7:20 a.m. is the streetTRACKS Gold
Trust. Telephone conversation between Ellen
Neely, President and General Counsel, CHX,
Richard Holley III, Senior Special Counsel, Division
of Market Regulation (‘‘Division’’), Commission,
and Sonia Trocchio, Special Counsel, Division,
Commission (October 18, 2007).
7 If the Exchange’s systems allow its participants
to begin trading before the primary market opens
trading in a particular security, an opening cross
order (which must execute at the primary market
opening price) might violate the protected
quotations of other markets. To avoid this potential
result, the Exchange believes that it is appropriate
to eliminate this order type.
8 See Proposed CHX Rules, Article 1, Rule 2(n)
and Article 20, Rule 4(b)(13). For purposes of this
rule, another exchange would be considered to have
opened for trading in a security when the first trade
Continued
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18JAN1
]]>Agencies
[Federal Register Volume 73, Number 13 (Friday, January 18, 2008)]
[Notices]
[Pages 3497-3499]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-831]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57137; File No. SR-CHX-2007-24]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing of a Proposed Rule Change as Modified by Amendment No.
1 Thereto Relating to the Handling of Clearly Erroneous Transactions
January 14, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 3498]]
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 4, 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 the
Exchange. On January 7, 2008, the CHX submitted Amendment No. 1 to the
proposed rule change. The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules regarding the handling of
``clearly erroneous'' and other transactions. The text of the proposed
rule change is available at the Exchange, the Commission's Public
Reference Room, and https://www.chx.com.
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 states that its rules currently allow the Exchange to
cancel a trade, or modify the terms of a trade, when the terms of the
trade are determined to be ``clearly erroneous'' or when other
circumstances (including a CHX systems problem) require that that
action be taken for the maintenance of a fair and orderly market or the
protection of investors and the public interest.\3\ The Exchange notes
that other exchanges have similar rules.\4\
---------------------------------------------------------------------------
\3\ See CHX Rules, Article 20, Rule 10 (``Handling Clearly
Erroneous Transactions'' and Rule 11 (``Systems Disruptions and
Malfunctions'').
\4\ See, e.g., Nasdaq Rule 11890 (``Clearly Erroneous
Transactions''); NYSE Arca Equities Rule 7.10 (``Clearly Erroneous
Transactions'').
---------------------------------------------------------------------------
The Exchange states that as it has gained experience in the
operation of these rules, it has identified, and is now proposing,
several changes to the rules' provisions.
First, the Exchange seeks to extend, from 15 to 30 minutes, the
time for filing an initial written request for review of a potentially
``clearly erroneous'' trade. As part of this change, the Exchange would
also eliminate the arguably duplicative requirement that a participant
also notify the Exchange by telephone of its intent to seek review.
Together, the Exchange believes that these changes would streamline the
process for filing a review request under these rules.\5\
---------------------------------------------------------------------------
\5\ The Exchange notes that extending the time for filing a
complaint to 30 minutes is consistent with the rules of at least one
other exchange. See Nasdaq Rule 11890(a)(2)(A)(ii) (giving members
30 minutes to submit written complaints for transactions that are
executed before 9:30 a.m. (Eastern Time) and at or after 10 a.m.
(Eastern Time)).
---------------------------------------------------------------------------
Additionally, the Exchange would establish specific thresholds for
determining whether or not the terms of a transaction are eligible for
review under the clearly erroneous rules. Under these thresholds, a
trade would be found to be eligible for review if: (a) For a trade
where the price per share is less than $1.00, the execution price is
20% or more away from the midpoint of the national best bid and offer
(``NBBO''); or (b) for a trade where the price per share is equal to or
greater than $1.00, the execution price is 10% or more away from the
midpoint of the NBBO. The Exchange believes that these easily applied
standards set reasonable thresholds for determining whether or not a
transaction should be eligible for review.\6\
---------------------------------------------------------------------------
\6\ These eligibility requirements would only apply to trades
for regular-way settlement during regular trading hours. See
Proposed CHX Article 20, Rule 10(b). Among other things, the
application of these standards would give participants certainty
about whether or not a particular transaction would be eligible for
review under the clearly erroneous rules and would allow the
Exchange to focus its resources on addressing situations where more
significant harm has potentially occurred.
---------------------------------------------------------------------------
Another proposed change to the CHX's rules would eliminate one of
the two levels of appeal that can be taken from an initial Exchange
determination that the terms of a trade should be modified or that the
trade should be cancelled.\7\ Under the existing rule, the Exchange's
initial decision may be appealed to a subcommittee of the Committee on
Exchange Procedure and the subcommittee's decision may be appealed, in
turn, to the full Committee on Exchange Procedure.\8\ Through this
filing, the Exchange proposes to eliminate the appeal to the full
Committee. The Exchange believes that its proposal brings the
Exchange's procedures in line with those in other markets.\9\
---------------------------------------------------------------------------
\7\ See Proposed Article 20, Rule 10(d). The Exchange also would
make corresponding changes to Article 2, Rule 5, relating to
appellate rights arising from subcommittee decisions, to confirm
that the decision of the subcommittee is final and that the
Exchange's initial decision is not stayed pending any appeal to the
subcommittee.
\8\ A subcommittee of the Committee on Exchange Procedure is
composed of members of the full Committee on Exchange Procedure.
\9\ See Nasdaq Rule 11890(c) (providing for an appeal to the
Market Operations Review Committee); NYSE Arca Rule 7.10(c)(2)
(providing for an appeal to the Clearly Erroneous Execution Panel).
---------------------------------------------------------------------------
The Exchange amended its original filing to, among other things,
include changes to Article 2, Rule 5, to ensure that this rule language
is consistent with the changes proposed in Article 20; describe the
composition of a subcommittee of the Committee on Exchange Procedure;
and make other more minor adjustments to the rule text. Additional
descriptions were added to the narrative, as appropriate, to address
changes that were made to the rule text.
Finally, the Exchange would be given the discretion, in situations
where it is acting on its own initiative to respond to systems
disruptions or extraordinary market conditions or other circumstances,
to determine that the number of affected transactions is such that
immediate finality is necessary to maintain a fair and orderly market
and to protect investors and the public interest. This determination
would provide certainty to participants whose transactions were
affected by decisions in these unusual situations.\10\
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\10\ The Exchange notes that other markets have included a
similar provision in their rules. See Nasdaq Rule 11890(c)(1); NYSE
Arca Rule 7.10(c)(2).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act,\11\ in general, and furthers the objectives of
Section 6(b)(5) of the Act,\12\ in particular, in that it is designed
to 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, to protect investors and the public
interest enhancing, in certain circumstances, a participant's
opportunity to make an initial request for review of a transaction he
believes to be ``clearly erroneous'' and allowing the Exchange to more
efficiently respond to requests that are made.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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[[Page 3499]]
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 not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received by the Exchange with
respect to the proposed rule change.
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 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, 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CHX-2007-24 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-2007-24. 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 (https://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
am and 3 pm. 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-2007-24 and should be
submitted on or before February 8, 2008.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-831 Filed 1-17-08; 8:45 am]
BILLING CODE 8011-01-P
