Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, Inc. Relating to the Execution of Stopped Orders Under the Enhanced SuperMAX Program

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39257; File No. SR-CHX-97-27]

Self-Regulatory Organizations; Notice of Filing and Immediate

Effectiveness of Proposed Rule Change by the Chicago Stock Exchange,

Inc. Relating to the Execution of Stopped Orders Under the Enhanced

SuperMAX Program

October 17, 1997.

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 October 15, 1997, the Chicago Stock Exchange, Incorporated (``CHX''

or ``Exchange'') filed with the Securities and Exchange Commission

(``SEC'' or ``Commission'') the proposed rule change as described in

Items I, II, and III below, which Items have been prepared by the self-

regulatory organization. The

[[Page 55446]]

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 Rule 37(e) of Article XX

relating to the execution of stopped orders under the CHX's Enhanced

SuperMAX program. The text of the proposed rule change is available at

the Office of the Secretary, the CHX, and at the Commission.

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 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 IV 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

1. Purpose

On May 22, 1995, the Commission approved a proposed rule change

that allows specialists on the Exchange, through the Exchange's MAX

system, to provide order execution guarantees that are more favorable

than those required under CHX Rule 37(a), Article XX.\3\ That approval

order contemplated that the CHX would file with the Commission specific

modifications to the parameters of MAX that are required to implement

various options available under the rule.\4\

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\3\ See Securities Exchange Act Release No. 35753 (May 22,

1995), 60 FR 28007 (May 26, 1995) (order approving File No. SR-CHX-

95-08).

\4\ Id.

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On September 16, 1997, the CHX proposed changes to the Enhanced

SuperMAX program.\5\ For technological reasons, the CHX has decided not

to implement those changes at this time. Instead, the CHX will continue

to operate the Enhanced SuperMAX program, as that program existed prior

to the September 1997 proposed changes.

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\5\ See Securities Exchange Act Release No. 39162 (September 30,

1997), 62 FR 52367 (October 7, 1997) (File No. SR-CHX-97-23).

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As a result, as is currently the case, under the Enhanced SuperMAX

program, certain orders will be ``stopped'' at the ITS BBO (as that

term is defined in Article XX, Rule 37 of the CHX rules) and will be

executed with reference to the next primary market sale. The Enhanced

SuperMAX program will continue to include a time-out feature whereby if

there are no executions in the primary market after the order has been

stopped for a designated time period, the order will be executed at the

stopped price at the end of such period. Such period, known as a time-

out period, will continue to: (1) Be pre-selected by a specialist on a

stock-by-stock basis based on the size of the order; (2) be able to be

changed by a specialist no more frequently than once a month; and (3)

last no less than 30 seconds.

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with

Section 6(b)(5) of the Act \6\ in that it is designed to promote just

and equitable principles of trade, 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.

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\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 a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed

Rule Change Received From Members, Participants or Others

No comments were solicited or received.

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

Commission Action

The Commission finds that the proposed rule change has become

effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-

4(e)(6) \8\ thereunder because it: (1) Does not significantly affect

the protection of investors or the public interest; (2) does not impose

any significant burden on competition; and (3) was provided by the

Exchange to the Commission with written notice of its intent to file

the proposed rule change at least five days prior to the filing date. A

proposed rule change filed under Rule 19b-4(e) does not become

operative prior to thirty days after the date of filing or such shorter

time as the Commission may designate if such action is consistent with

the protection of investors and the public interest. 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.

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\7\ 15 U.S.C. 78s(b)(30)(A).

\8\ 17 CFR 240.19b-4(e)(6).

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The Commission finds good cause to accelerate the thirty day period

for the proposed rule change to become operative prior to the thirtieth

day after the date of the filing, October 15, 1997. The Commission

notes that due to technological obstacles, the Exchange currently is

unable to implement the changes to its Enhanced SuperMAX program

envisioned in its September filing, which became effective upon filing.

The Commission further notes that acceleration will allow the Exchange

to continue to enforce its rules relating to the treatment of stopped

orders under the Enhanced SuperMAX program, as such rules existed prior

to the September filing. For the foregoing reasons, the proposed rule

change will become operative immediately.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and

arguments concerning the foregoing. Persons making written submission

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, NW., Washington DC 20549. Copies

of the submissions, 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 U.S.C. 552, will be available for inspection and copying in the

Commission's Public Reference Room, 450 Fifth Street, NW., Washington,

DC 20549. Copies of such filing also will be available for inspection

and copying at the principal office of the CHX. All submissions should

refer to file number SR-CHX-97-27 and should be submitted by November

14, 1997.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\9\

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\9\ 17 CFR 200.30-3(a)(12).

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[[Page 55447]]

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97-28180 Filed 10-23-97; 8:45 am]

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