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68220 Federal Register / Vol. 67, No.

217 / Friday, November 8, 2002 / Notices

when a trade-through that is exempted SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s
pursuant to the Commission’s ITS COMMISSION Statement of the Purpose of, and
Exemption Order occurs in the primary Statutory Basis for, the Proposed Rule
[Release No. 34–46762; File No. SR–CHX–
market. 2002–30]
Change
III. Discussion In its filing with the Commission, the
Self-Regulatory Organizations; Notice Exchange included statements
After careful review, the Commission of Filing and Immediate Effectiveness concerning the purpose of and basis for
finds that the proposed rule change is of Proposed Rule Change by the the proposed rule change and discussed
consistent with the requirements of the Chicago Stock Exchange, Incorporated any comments it received regarding the
Act and the rules and regulations Relating to Eligibility of Limit Orders proposed rule change. The text of these
thereunder applicable to a national for Trade Through Protection and statements may be examined at the
Amendment No. 1 Thereto places specified in Item IV below. The
securities exchange.14 In particular, the
Commission finds that the proposed November 1, 2002. Exchange has prepared summaries, set
rule is consistent with the requirements Pursuant to section 19(b)(1) of the forth in Sections A, B and C below, of
of section 6(b)(5) of the Act 15 because Securities Exchange Act of 1934 (the the most significant aspects of such
it is designed to facilitate transactions in ‘‘Act’’),1 and Rule 19b–4 thereunder,2 statements.
securities; to remove impediments to notice hereby is given that on A. Self-Regulatory Organization’s
and perfect the mechanism of a free and September 13, 2002, the Chicago Stock Statement of the Purpose of, and
open market and a national market Exchange, Incorporated (‘‘CHX’’ or Statutory Basis for, the Proposed Rule
system; and, in general, to protect ‘‘Exchange’’) filed with the Securities Change
investors and the public interest; and is and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule 1. Purpose
not designed to permit unfair
discrimination between customers, change as described in Items I, II and III On January 11, 2002, the Commission
below, which Items have been prepared approved a proposed rule change
issuers, brokers or dealers.
by the self-regulatory organization. The submitted by the Exchange amending
By adopting the proposed exemption, Exchange filed the proposal pursuant to Article XX, Rule 37(b)(6) of the
the Exchange removes the specialist’s section 19(b)(3)(A) of the Act,3 and Rule Exchange’s rules, which, among other
obligation to provide trade-through 19b–4(f)(6) thereunder,4 which renders things, governs execution of limit orders
protection in situations where it will not the proposal effective upon filing with in the specialist’s book in the event of
be permitted to seek satisfaction through the Commission. On October 30, 2002, a trade through in the primary market.6
ITS from the primary market. This the Exchange filed Amendment No. 1 to That proposal required that a limit order
obligation was on the CHX assumed the proposed rule change.5 be resident in the specialist’s book for
voluntarily in order to make its market The Commission is publishing this a time period of 0–15 seconds (as
more attractive to sources of order flow, notice to solicit comments on the designated by the specialist) before it
not an obligation the Act imposes on a proposed rule change from interested would be eligible for limit order
market. The Commission believes that persons. protection.
the business decision to potentially I. Self-Regulatory Organization’s Another provision of the CHX rules,
forego order flow by no longer providing Statement of the Terms of Substance of however, also addresses the execution
print protection is a judgment the Act the Proposed Rule Change of agency limit orders and should have
allows the CHX to make.16 The Exchange proposes to amend been amended as part of the Exchange’s
CHX Article XX, Rule 37(a)(3) to clarify original proposal.7 Through this
IV. Conclusion submission, the Exchange modifies CHX
the rules relating to the execution of
It is therefore ordered, pursuant to limit orders in the specialist’s book in Article XX, Rule 37(a)(3) to eliminate
section 19(b)(2) of the Act,17 that the the event of a trade through in the any confusion about the impact of the
primary market. The proposed rule earlier rule change.
proposed rule change (SR–CHX–2002–
31) is approved. change mirrors a change made to 2. Statutory Basis
another CHX rule relating to the
For the Commission, by the Division of automated execution of limit orders, The CHX believes that the proposed
Market Regulation, pursuant to delegated which required that a limit order be rule change is consistent with the
authority.18 resident in the specialist’s book for a requirements of the Act and the rules
Jill M. Peterson, time period of 0–15 seconds (as and regulations thereunder that are
Assistant Secretary. designated by the specialist) before it applicable to a national securities
[FR Doc. 02–28428 Filed 11–7–02; 8:45 am] would be eligible for limit order exchange, and, in particular, with the
protection. The text of the proposed rule requirements of section 6(b).8
BILLING CODE 8010–01–P
change is available from the Office of Specifically, the proposed rule is
the Secretary, the Commission, and the consistent with section 6(b)(5) of the
CHX. Act 9 in that it is designed to promote
14 In approving this rule proposal, the just and equitable principles of trade, to
Commission notes that it has also considered the 1 15 U.S.C. 78s(b)(1). remove impediments and to perfect the
proposed rule’s impact on efficiency, competition, 2 17 CFR 240.19b–4. mechanism of a free and open market
and capital formation. 15 U.S.C. 78c(f). 3 15 U.S.C. 78s(b)(3)(A).
and a national market system, and, in
15 15 U.S.C. 78f(b)(5). 4 17 CFR 240.19b–4(f)(6).

16 The Commission notes that the CHX’s proposed 5 See letter from Kathleen M. Boege, Assistant
6 See Securities Exchange Act Release No. 45271,
rule change will remain in effect only until the General Counsel, CHX, to Nancy J. Sanow, Assistant
66 FR 2712 (January 18, 2002)(order approving SR–
expiration of the Commission’s ITS Exemption Director, Division of Market Regulation,
CHX–2001–17).
Commission, dated October 29, 2002 (‘‘Amendment
Order on June 4, 2003. 7 See CHX Article XX, Rule 37(a)(3).
No. 1’’). In Amendment No. 1, the Exchange
17 15 U.S.C. 78f(b)(2). 8 15 U.S.C. 78f(b).
corrected typographical errors contained in the
18 17 CFR 200.30–3(a)(12). proposed rule text. 9 15 U.S.C. 78f(b)(5).

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Federal Register / Vol. 67, No. 217 / Friday, November 8, 2002 / Notices 68221

general, to protect investors and the IV. Solicitation of Comments III below, which Items have been
public interest. Interested persons are invited to prepared by Nasdaq. Nasdaq has
B. Self-Regulatory Organization’s submit written data, views and designated this proposal as effective
Statement of Burden on Competition arguments concerning the foregoing, upon filing pursuant to Section
including whether the proposed rule 19(b)(3)(A)(iii) of the Act,3 and
The Exchange does not believe that
change is consistent with the Act. subparagraph (f)(2) of Rule 19b–5.4 The
the proposed rule change will impose
any inappropriate burden on Persons making written submissions Commission is publishing this notice to
competition. should file six copies thereof with the solicit comments on the proposed rule
Secretary, Securities and Exchange change from interested persons.
C. Self-Regulatory Organization’s Commission, 450 Fifth Street, NW,
Statement on Comments Regarding the Washington DC 20549. Copies of the I. Self-Regulatory Organization’s
Proposed Rule Change Received From submission, all subsequent Statement of the Terms of Substance of
Members, Participants or Others amendments, all written statements the Proposed Rule Change
No written comments were either with respect to the proposed rule Nasdaq is filing a proposed rule
solicited or received. change that are filed with the change to continue operating Nasdaq’s
Commission, and all written
III. Date of Effectiveness of the application of the Primex Auction
communications relating to the
Proposed Rule Change and Timing for System’’ (‘‘Primex’’ or ‘‘System’’) as a
proposed rule change between the
Commission Action Pilot Trading System, pursuant to Rule
Commission and any person, other than
Because the foregoing rule change those that may be withheld from the 19b–5 of the Act,5 until November 30,
does not: public in accordance with the 2002, or until the Commission
(1) Significantly affect the protection provisions of 5 U.S.C. 552, will be permanently approves Primex,
of investors or the public interest; available for inspection and copying at whichever period is shorter. Pursuant to
(2) Impose any significant burden on paragraph (f) of Rule 19b–5,6 Nasdaq is
the Commission’s Public Reference
competition; and filing this proposed rule change as
(3) Become operative for 30 days from Room. Copies of such filing will also be
available for inspection and copying at effective immediately. This filing does
the date on which it was filed, or such
shorter time as the Commission may the principal office of the Exchange. All not propose any rule language changes.
designate, and the Exchange provided submissions should refer to File No. II. Self-Regulatory Organization’s
the Commission with written notice of SR–CHX–2002–30 and should be
Statement of the Purpose of, and
its intent to file the proposed rule submitted by November 25, 2002.
Statutory Basis for, the Proposed Rule
change at least five days prior to the For the Commission, by the Division of Change
filing date, it has become effective Market Regulation, pursuant to delegated
pursuant to section 19(b)(3)(A) of the authority.14 In its filing with the Commission,
Act 10 and Rule 19b–4(f)(6) Margaret H. McFarland, Nasdaq included statements concerning
thereunder.11 At any time within 60 Deputy Secretary. the purpose of and basis for the
days of the filing of such rule change, [FR Doc. 02–28485 Filed 11–7–02; 8:45 am] proposed rule change and discussed any
the Commission may summarily BILLING CODE 8010–01–P comments it received on the proposed
abrogate such rule change if it appears rule change. The text of these statements
to the Commission that such action is may be examined at the places specified
necessary or appropriate in the public SECURITIES AND EXCHANGE in Item IV below. Nasdaq has prepared
interest, for the protection of investors, COMMISSION summaries, set forth in Sections A, B,
or otherwise in furtherance of the [Release No. 34–46756; File No. SR–NASD– and C below, of the most significant
purpose of the Act. 2002–156]
The Exchange requested that the aspects of such statements.
Commission accelerate the operative Self-Regulatory Organizations; Notice A.Self-Regulatory Organization’s
date of the proposed rule change. The of Filing and Immediate Effectiveness Statement of the Purpose of, and
Commission believes that accelerating of Proposed Rule Change by the Statutory Basis for, the Proposed Rule
the operative date of the proposed rule National Association of Securities Change
change is consistent with the protection Dealers, Inc., Relating to the Primex
of investors and the public interest. The Auction System’ 1. Purpose
Commission notes that the substance of
the proposed rule change has already October 31, 2002. The Primex Auction System is a
been subject to a full notice and Pursuant to Section 19(b)(1) of the facility of Nasdaq that has been
comment period as part of another Securities Exchange Act of 1934 operating as a Pilot Trading System
proposal, which was approved by the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 (‘‘PTS’’), as defined in paragraph (c)(2)
Commission.12 The instant proposed notice is hereby given that on October of Rule 19b–5 of the Act.7 As such,
rule change simply amends another 31, 2002, the National Association of Nasdaq was not required to file a
Exchange rule to be consistent with the Securities Dealers, Inc., through its proposed rule change under Rule 19b–
previously approved change. As a subsidiary The Nasdaq Stock Market, 4 of the Act 8 as long as the Primex
result, the Commission designates the Inc. (‘‘Nasdaq’’), filed with the maintained its status as a PTS. Under
proposed rule change to be effective and Securities and Exchange Commission paragraph (c)(2) of Rule 19b–5, a system
operative upon filing with the (‘‘Commission’’) the proposed rule
Commission.13 change as described in Items I, II, and
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–5(f)(2).
10 15U.S.C. 78s(b)(3)(A). considered the proposed rule’s impact on
11 17 CFR 240.19b–4(f)(6). efficiency, competition, and capital formation. 5 17 CFR 240.19b–5.

12 See note 6, supra. 14 17 CFR 200.30–3(a)(12). 6 17 CFR 240.19b–4(f).

13 For purposes only of accelerating the operative 1 15 U.S.C. 78s(b)(1). 7 17 CFR 240.19b–5(c)(2).

date of this proposal, the Commission has 2 17 CFR 240.19b–4. 8 17 CFR 240.19b–4.

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