[Federal Register Volume 65, Number 100 (Tuesday, May 23, 2000)]
[Notices]
[Pages 33383-33384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12928]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42784; File No. SR-CHX-00-12]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
Chicago Stock Exchange, Incorporated Relating to Fees for the E-Session

May 15, 2000.
    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 May 1, 2000, the Chicago Stock Exchange, Incorporated (``CHX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. On May 15, 2000, the Exchange amended the proposal. \3\ The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the CHX under Section 
19(b)(3)(A)(ii) of the Act,\4\ which renders the proposal effective 
upon filing with the Commission. 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).
    \2\ 17 CFR 240.19b-4.
    \3\ See May 12, 2000 letter from Kathleen M. Boege, Associate 
General Counsel, CHX, to Nancy J. Sanow, Assistant Director, 
Division of Market Regulation, SEC (``Amendment No. 1''). Amendment 
No. 1 states that the subject E-Session credit will be available 
through October 1, 2000.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 membership dues and fees 
schedule (the ``Schedule'') to provide Exchange specialists and floor 
brokers with a credit of $.25 per trade executed during the Exchange's 
extended hours trading session (``E-Session'') \5\ through October 
1,200. The text of the proposed rule change is below. Additions are in 
italics. Deletions are in brackets.
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    \5\ On October 13, 1999, the Commission approved, on a pilot 
basis, the CHX's proposed rule change that allowed the CHX to 
implement an extended hours trading session. See Securities Exchange 
Act Release No. 42004 (October 13, 1999), 64 FR 56548 (October 20, 
1999) (SR-CHX-99-16). The E-Session is currently approved to 
continue through October 1, 2000. See Securities Exchange Act 
Release No. 42463 (February 28, 2000), 65 FR 11817 (March 6, 2000) 
(SR-CHX-00-02).
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MEMBERSHIP DUES AND FEES

* * * * *
M. Credits
1. Specialist Credits
    Total monthly fees owned by a specialist to the Exchange will be 
reduced (but to no less than zero) by the application of the following 
[transaction] credits:
    a. No change.
    b. No change.
    c. E-Session Credits. A credit of $.25 per trade executed during 
the E-Session. This credit shall be available through October 1, 2000.
2. Floor Broker Credits.
    a. No change.
    b. No change.
    c. E-Session Credits. Total monthly fees owned by a floor broker to 
the Exchange will also be reduced (but to no less than zero) by the 
application of an E-Session Credit. ``E-Session Credit'' means a credit 
of $.25 per trade executed during the E-Session. This credit shall be 
available through October 1, 2000.
* * * * *

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

[[Page 33384]]

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 October 29, 1999, the Exchange implemented the E-Session, which 
permits investors to submit limit orders for execution until 5:30 p.m., 
Central Time. To encourage members to seek additional order flow during 
the E-Session, the Exchange developed an E-Session credit program, 
necessitating a change to the Schedule. The proposal amends the 
Schedule to provide Exchange specialists and floor brokers with a 
credit of $.25 per trade executed during the E-Session through October 
1, 2000.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \6\ in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among its 
members.
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    \6\ 15 U.S.C. 78f(b)(4).
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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 solicited or received.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\8\ because it involves a due, fee, or other charge. 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.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ The Commission notes that the proposal may raise questions 
concerning payment for order flow. To the extent that it does raise 
such issues, exchange members should consider best execution and 
disclosure obligations they may have under the federal securities 
laws in general, and particularly under Rules 10b-10 and 11Ac1-3 
under the Act. 17 CFR 240.10b-10 and 17 CFR 240.11Ac1-3, 
respectively.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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. 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 number SR-CHX-00-12, and should be 
submitted by June 13, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-12928 Filed 5-22-00; 8:45 am]
BILLING CODE 8010-01-M