Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Stock Exchange, Incorporated Amending the Exchange's Clearing the Post Policy for Cabinet Securities

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39341; File No. SR-CHX-97-28]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the Chicago Stock Exchange, Incorporated Amending the

Exchange's Clearing the Post Policy for Cabinet Securities

November 21, 1997.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ notice is hereby given that on October 23, 1997, the

Chicago Stock Exchange, Incorporated (``CHX'' or the ``Exchange'')

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

proposed rule change as described in Items I, II, III below, which

Items have been prepared by the self-regulatory organization. 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).

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I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The Exchange proposes, for a six-month pilot period, to amend

interpretation and policy .02 of Rule 10 of Article XX and amend Rule

11 of Article XX relating to clearing the post for cabinet securities.

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 period

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

The purpose of the proposed rule change is to amend the Exchange's

existing clearing the post policy for cabinet securities for a six-

month pilot period. The clearing the post policy is contained in

interpretation and policy .02 of CHX Article XX, Rule 10.\2\ The

Exchange's clearing the post policies were previously contained in

several Notices to Members which had been approved by the

Commission.\3\ These Notices to Members, and their corresponding

Approval Orders, explain the Exchange's clearing the post requirements.

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\2\ See Securities Exchange Act Release No. 39337 (November 19,

1997) granting immediate effectiveness to SR-CHX-97-30.

\3\ Securities Exchange Act Release No. 33806 (March 23, 1994)

59 FR 15248 (Notice of Filing and Immediate Effectiveness of File

No. SR-CHX-94-03); Securities Exchange Act Release No. 17766 (May 8,

1981) 46 FR 25745 (Order approving SR-MSE-81-3 and SR-MSE-81-5); and

Securities Exchange Act Release No. 28638 (November 30, 1990) 55 FR

49731 (Order approving SR-MSE- 90-7).

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In general, the clearing the post policy requires a floor broker or

market maker to clear the post by his or her physical presence at the

post. The purpose of this

[[Page 63405]]

proposed rule change is to permit a floor broker or market maker to

clear the post in cabinet securities by phone. The bids and offers made

to clear the post by phone will be audibly announced at the cabinet

post through a speaker system maintained by the Exchange. This new

policy will be effective for a six-month pilot period to permit the

Exchange to determine the effectiveness of the new policy before

implementing it on a permanent basis.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b)(5) \4\ of

the Act in that it is designed to prevent fraudulent and manipulative

acts and practices and to perfect the mechanism of a free and open

market.

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\4\ 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 inappropriate burden on competition.

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

Rule Change Received From Members, Participants or Others

No written comments were either solicited or 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 self-regulatory organization 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. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 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 5 U.S.C. 552, will be available for inspection and copying at the

Commission's Public Reference Room. Copies of such filing will also be

available for inspection and copying at the principal office of the

Exchange. All submissions should refer to File No. SR-CHX-97-28 and

should be submitted by December 19, 1997.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\5\

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\5\ 17 CFR 200.30-3(a)(12).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97-31240 Filed 11-26-97; 8:45 am]

BILLING CODE 8010-01-M