[Federal Register: September 14, 1998 (Volume 63, Number 177)] [Notices] [Page 49144-49145] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr14se98-91] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-40405; File No. SR-CHX-98-18] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Approving Proposed Rule Change Relating to the Exchange's Withdrawal of Capital Provisions September 4, 1998. I. Introduction On June 26, 1998, the Chicago Stock Exchange, Inc. (``CHX''or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``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 amend Article II, Rule 6(b) of the Exchange's rules relating to the Exchange's Withdrawal of Capital provisions. The proposed rule change was published for comment in the Federal Register. on August 4, 1998.\3\ The Commission received no comments on the proposal. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1)(1994). \2\ 17 CFR 240.19b-4 (1998). \3\ Securities Exchange Act Release No. 40271 (July 28, 1998), 63 FR 41609. --------------------------------------------------------------------------- II. Description of the Proposal The Exchange proposes to amend Article II, Rule 6(b) of the Exchange's rules in order to limit the applicability of the Exchange's Withdrawal of Capital provisions to member firms for which the Exchange is the Designated Examining Authority (``DEA''). The Exchange's Withdrawal of Capital provisions limit the ability of a partner in a member firm to withdraw capital from the firm. Currently, this requirement applies to both member firms for which the Exchange is the DEA as well as firms subject to examination by a self-regulatory organization (``SRO'') other than the Exchange, if the member firm's DEA does not have a comparable rule. The proposed rule change would eliminate this requirement for all member firms for which the Exchange is not the DEA. II. Discussion After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act, and the rules and regulations thereunder applicable to a national securities exchange. The Commission believes that the proposed rule change is consistent with Section 6 of the Act, in general,\4\ and Section 6(b)(5),\5\ in particular, in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, to foster cooperation and coordination with persons engaged in regulating and facilitating transactions in securities, to 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.\6\ The Commission believes that the proposed rule change will not disturb the financial protections the CHX has in place ensure investor protection, the public interest, or the integrity of the Exchange's markets. CHX member firms, for which the Exchange is the DEA, will still be required to maintain adequate capital reserves. Under the proposed rule change the partnership articles of each member firm for which the Exchange is the DEA will still be required to contain provision requiring written approval [[Page 49145]] from the Exchange for the capital contribution of any partner to be withdrawn on less than six months' written notice of withdrawal if the notice of withdrawal is given prior to six months after the capital contribution was first made. The Commission also notes that the amended CHX withdrawal of capital rule is identical or very similar to those of other SROs.\7\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f. \5\ 15 U.S.C. 78f(b)(5). \6\ In approving this rule, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). \7\ See American Stock Exchange Rule 300, and New York Stock Exchange Rule 313. --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\8\ that the proposed rule change (SR-CHX-98-18) is approved. \8\15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- For the Commission, by the Division of Market Regulations, pursuant to delegated authority.\9\ --------------------------------------------------------------------------- \9\17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 98-24526 Filed 9-11-98; 8:45 am] BILLING CODE 8010-01-M