2910 Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices 

Service employment to inform you of 

the rights and protections available to 

you under the Federal 

antidiscrimination laws and 

whistleblower protection regulations. 

Antidiscrimination Laws 

A Federal agency cannot discriminate 

against an employee or applicant with 

respect to the terms, conditions or 

privileges of employment on the basis of 

race, color, religion, sex, national origin, 

age, disability, marital status or political 

affiliation. Discrimination against Postal 

Service employees and applicants on 

these bases is prohibited by one or more 

of the following statutes and 

regulations: 29 U.S.C. 206(d), 631, 633a, 

791, 42 U.S.C. 2000e–16, Employee and 

Labor Relations Manual (ELM) 665.23, 

666.12. 

If you believe that you have been the 

victim of unlawful discrimination on 

the basis of race, color, religion, sex, 

national origin or disability, you must 

contact the Postal Service Equal 

Employment Opportunity (EEO) office 

using the central telephone number 

within 45 calendar days of the alleged 

discriminatory action, or, in the case of 

a personnel action, within 45 calendar 

days of the effective date of the action, 

before you can file a formal complaint 

of discrimination with the Postal 

Service. See, e.g. 29 CFR 1614. The 

central telephone number is: 888–EEO–

USPS (888–336–8777), Deaf and hard of 

hearing call: 800–877–8339, (Federal 

Relay Service). 

If you believe that you have been the 

victim of unlawful discrimination on 

the basis of age, you must either contact 

the EEO office as noted above, within 

the time period noted above, or give 

notice of intent to sue to the Equal 

Employment Opportunity Commission 

(EEOC) within 180 calendar days of the 

alleged discriminatory action. If you are 

alleging discrimination based on marital 

status or political affiliation, you may 

pursue a discrimination complaint by 

filing a grievance through the Postal 

Service’s administrative or negotiated 

grievance procedures, if such 

procedures apply and are available. If 

those procedures do not apply or are not 

available, you may file a written 

complaint including as much specific 

information on the alleged violation as 

possible with the: Vice President Labor 

Relations, Postal Service, 475 L’Enfant 

Plaza, SW., Washington, DC 20260–

4100. 

Whistleblower Protection 

A Postal Service employee with 

authority to take, direct others to take, 

recommend or approve any personnel 

action must not use that authority to 

take or fail to take, or threaten to take 

or fail to take, a personnel action against 

an employee or applicant because of 

disclosure of information by that 

individual that is reasonably believed to 

evidence violations of law, rule or 

regulation; gross mismanagement; gross 

waste of funds; an abuse of authority; or 

a substantial and specific danger to 

public health or safety, unless 

disclosure of such information is 

specifically prohibited by law or such 

information is specifically required by 

Executive order to be kept secret in the 

interest of national defense or the 

conduct of foreign affairs. 

Retaliation against an employee or 

applicant for making a whistleblower 

protected disclosure is prohibited by 

ELM 666.18. If you believe that you 

have been the victim of whistleblower 

retaliation, you may file a written 

complaint with: Postal Service Office of 

Inspector General Hotline, 1735 N. Lynn 

Street, Arlington, VA 22209–2005; or 

via telephone through the toll free 

Office of Inspector General Hotline at 

888–USPS–OIG (888–877–7644). Deaf 

and hard of hearing may use the TTY 

telephone number 866–OIG–TEXT 

(866–644–8398). You may also contact 

the Office of Inspector General Hotline 

through e-mail at hotline@uspsoig.gov. 

Retaliation for Engaging in Protected 

Activity 

The Postal Service cannot retaliate 

against an employee or applicant 

because that individual exercises his or 

her rights under any of the Federal 

antidiscrimination laws or 

whistleblower protection regulations 

listed above. If you believe that you are 

the victim of retaliation for engaging in 

protected activity, you must follow, as 

appropriate, the procedures described in 

the Antidiscrimination Laws and 

Whistleblower Protection sections of 

this notice or, if applicable, the 

administrative or negotiated grievance 

procedures in order to pursue any legal 

remedy. 

Disciplinary Actions 

Under the existing laws, the Postal 

Service retains the right, where 

appropriate, to discipline a Postal 

Service employee for conduct that is 

inconsistent with Federal 

Antidiscrimination Laws and 

Whistleblower Protection regulations up 

to and including removal. Nothing in 

the No FEAR Act alters existing laws or 

permits the Postal Service to take 

unfounded disciplinary action against a 

Postal Service employee or to violate the 

procedural rights of a Postal Service 

employee who has been accused of 

discrimination. 

Additional Information 

For further information regarding the 

No FEAR Act refer to Public Law 107–

174 and the Postal Service No FEAR Act 

Web page http://www.usps.com/ 

nofearact. 

Existing Rights Unchanged 

Pursuant to section 205 of the No 

FEAR Act, neither the Act nor this 

notice creates, expands or reduces any 

rights otherwise available to any 

employee, former employee or applicant 

under the laws of the United States. 

Neva R. Watson 

Attorney, Legislative. 

[FR Doc. E7–849 Filed 1–22–07; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27662; 812–13234] 

MFS Series Trust X, et al.; Notice of 

Application 

January 17, 2007. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 17(d) of the 

Investment Company Act of 1940 

(‘‘Act’’) and rule 17d–1 under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit certain 

registered open-end investment 

companies in the same group of 

investment companies to enter into a 

special servicing agreement (‘‘Special 

Servicing Agreement’’). 

APPLICANTS: MFS Series Trust X, on 

behalf of its series, MFS Aggressive 

Growth Allocation Fund, MFS 

Conservative Allocation Fund, MFS 

Emerging Markets Debt Fund, MFS 

Emerging Markets Equity Fund, MFS 

Floating Rate High Income Fund, MFS 

Growth Allocation Fund, MFS 

International Diversification Fund, MFS 

International Growth Fund, MFS 

International Value Fund and MFS 

Moderate Allocation Fund; MFS Series 

Trust XII, on behalf of its series, MFS 

Lifetime Retirement Income Fund, MFS 

Lifetime 2010 Fund, MFS Lifetime 2020 

Fund, MFS Lifetime 2030 Fund and 

MFS Lifetime 2040 Fund; MFS Series 

Trust I, on behalf of its series, MFS New 

Discovery Fund, MFS Research 

International Fund, MFS Strategic 

Growth Fund and MFS Value Fund; 

MFS Series Trust III, on behalf of its 

series, MFS High Income Fund; MFS 

Series Trust IV, on behalf of its series, 

mstockstill on PROD1PC70 with NOTICES

Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices 2911 

1All entities that currently intend to rely on the 

order have been named as Applicants. Any other 

entity that relies on the order in the future will 

comply with the terms and conditions of the 

application. 

2 ‘‘Top-Tier Funds’’ refers to MFS Aggressive 

Growth Allocation Fund, MFS Conservative 

Allocation Fund, MFS Growth Allocation Fund, 

MFS International Diversification Fund, MFS 

Moderate Allocation Fund, MFS Lifetime 

Retirement Income Fund, MFS Lifetime 2010 Fund, 

MFS Lifetime 2020 Fund, MFS Lifetime 2030 Fund, 

MFS Lifetime 2040 Fund and any other Fund that 

invests substantially all of its assets in the 

Underlying Funds (as defined below). 

3 ‘‘Underlying Funds’’ refers to MFS Emerging 

Markets Debt Fund, MFS Emerging Markets Equity 

Fund, MFS Floating Rate High Income Fund, MFS 

International Growth Fund, MFS International 

Value Fund, MFS New Discovery Fund, MFS 

Research International Fund, MFS Strategic Growth 

Fund, MFS Value Fund, MFS High Income Fund, 

MFS Mid Cap Growth Fund, MFS Money Market 

Fund, MFS International New Discovery Fund, 

MFS Research Fund, MFS Bond Fund, MFS 

Inflation-Adjusted Bond Fund, MFS Intermediate 

Investment Grade Bond Fund, MFS Limited 

Maturity Fund, MFS Research Bond Fund, MFS 

Mid Cap Value Fund, MFS Government Securities 

Fund and any other Fund. 

4The Top-Tier Funds will not be Underlying 

Funds and no Top-Tier Fund will invest in another 

Top-Tier Fund. 

MFS Mid Cap Growth Fund and MFS 

Money Market Fund; MFS Series Trust 

V, on behalf of its series, MFS 

International New Discovery Fund and 

MFS Research Fund; MFS Series Trust 

IX, on behalf of its series, MFS Bond 

Fund, MFS Inflation-Adjusted Bond 

Fund, MFS Intermediate Investment 

Grade Bond Fund, MFS Limited 

Maturity Fund and MFS Research Bond 

Fund; MFS Series Trust XI, on behalf of 

its series, MFS Mid Cap Value Fund; 

MFS Series Trust XIII, on behalf of its 

series, MFS Government Securities 

Fund; Massachusetts Financial Services 

Company (‘‘MFS’’); MFS Fund 

Distributors, Inc. (‘‘MFD’’); and each 

existing or future registered open-end 

management investment company or 

series thereof that is part of the same 

‘‘group of investment companies’’ as 

MFS Series Trust X, MFS Series Trust 

XII, MFS Series Trust I, MFS Series 

Trust III, MFS Series Trust IV, MFS 

Series Trust V, MFS Series Trust IX, 

MFS Series Trust XI and MFS Series 

Trust XIII (the ‘‘Trusts’’) under Section 

12(d)(1)(G)(ii) of the Act and (i) Is 

advised by MFS or any entity 

controlling, controlled by, or under 

common control with MFS, or (ii) for 

which MFD or any entity controlling, 

controlled by, or under common control 

with MFD serves as principal 

underwriter (such investment 

companies or series thereof, together 

with the Trusts and their series, the 

‘‘Funds’’).1

FILING DATES: The application was filed 

on September 15, 2005, and amended 

on January 12, 2007. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on February 12, 2007, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

1090; Applicants, Massachusetts 

Financial Services Company, 500 

Boylston Street, Boston, MA 02116. 

FOR FURTHER INFORMATION CONTACT: John 

Yoder, Senior Counsel, at (202) 551–

6878, or Mary Kay Frech, Branch Chief, 

at (202) 551–6821 (Division of 

Investment Management, Office of 

Investment Company Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained for a fee at the Public 

Reference Desk, U.S. Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–0102 

(telephone (202) 551–5850). 

Applicants’ Representations 

1. MFS is an investment adviser 

registered under the Investment 

Advisers Act of 1940. MFS serves as 

investment adviser to the Funds. MFD 

is registered as a broker-dealer under the 

Securities Exchange Act of 1934 and 

serves as distributor of the Funds. 

2. The Trusts are Massachusetts 

business trusts registered under the Act 

as open-end management investment 

companies. The Trusts currently offer 

48 series, 10 of which are ‘‘Top-Tier 

Funds’’ 2 and 21 of which are 

‘‘Underlying Funds.’’ 3 The Top-Tier 

Funds will invest substantially all of 

their assets in the Underlying Funds.4

The Top-Tier Funds and certain of the 

Underlying Funds currently offer 

multiple classes of shares in reliance on 

rule 18f–3 under the Act. 

3. MFS and the Trusts propose to 

enter into a Special Servicing 

Agreement that would allow an 

Underlying Fund to bear the expenses of 

a Top-Tier Fund (other than advisory 

fees, rule 12b–1 fees and class-specific 

administrative service fees). Under the 

Special Servicing Agreement, each 

Underlying Fund will bear expenses of 

a Top-Tier Fund in proportion to the 

estimated benefits to the Underlying 

Fund arising from the investment in the 

Underlying Fund by the Top-Tier Fund 

(‘‘Underlying Fund Benefits’’). 

4. Applicants state that the 

Underlying Fund Benefits are expected 

to result primarily from the incremental 

increase in assets resulting from 

investment in the Underlying Fund by 

the Top-Tier Fund and the large asset 

size of each shareholder account that 

represents an investment by the TopTier Fund relative to other shareholder 

accounts. A shareholder account that 

represents a Top-Tier Fund will 

experience fewer shareholder 

transactions and greater predictability of 

transaction activity than other 

shareholder accounts. As a result, the 

shareholder servicing costs to any 

Underlying Fund for servicing one 

account registered to a Top-Tier Fund 

will be significantly less than the cost to 

that same Underlying Fund of servicing 

the same pool of assets contributed by 

a large group of shareholders owning 

relatively small accounts in one or more 

Underlying Funds. In addition, by 

reducing Top-Tier Fund expenses, the 

Special Servicing Agreement may lead 

to increased assets being invested in the 

Top-Tier Funds, which in turn would 

lead to increased assets being invested 

in the Underlying Funds, which could 

enable the Underlying Funds to control 

and reduce their expense ratios because 

their operating expenses will be spread 

over a larger asset base. 

5. No Fund will enter into a Special 

Servicing Agreement unless the Special 

Servicing Agreement: (1) Precisely 

describes the services provided to the 

Top-Tier Fund and the fees for those 

services charged to the Top-Tier Fund 

that may be paid by the Underlying 

Fund (‘‘Underlying Fund Payments’’); 

(2) provides that no affiliated person of 

the Top-Tier Funds, or affiliated person 

of such person, will receive, directly or 

indirectly, any portion of the 

Underlying Fund Payments, except for 

bona fide transfer agent services 

approved by the board of trustees 

(‘‘Board’’) of the Underlying Fund, 

including a majority of trustees who are 

not ‘‘interested persons’’ (within the 

meaning of section 2(a)(19) of the Act) 

(‘‘Independent Trustees’’); (3) provides 

that the Underlying Fund Payments may 

not exceed the amount of actual 

expenses incurred by the Top-Tier 

Funds; (4) provides that no Underlying 

Fund will reimburse transfer agent 

expenses of a Top-Tier Fund, including 

mstockstill on PROD1PC70 with NOTICES

2912 Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices 

sub-accounting expenses and other outof-pocket expenses, at a rate in excess of 

the average per account transfer agent 

expenses of the Underlying Fund, 

including sub-accounting expenses and 

other out-of-pocket expenses, expressed 

as a basis point charge (for purposes of 

calculating the Underlying Fund’s 

average per account transfer agent 

expense the Top-Tier Fund’s investment 

in the Underlying Fund will be 

excluded); and (5) has been approved by 

the Fund’s Board, including a majority 

of the Independent Trustees, as being in 

the best interests of the Fund and its 

shareholders and not involving 

overreaching on the part of any person 

concerned. 

Applicants’ Legal Analysis 

1. Section 17(d) of the Act and rule 

17d–1 under the Act provide that an 

affiliated person of, or a principal 

underwriter for, a registered investment 

company, or an affiliate of such person 

or principal underwriter, acting as 

principal, shall not participate in, or 

effect any transaction in connection 

with, any joint enterprise or other joint 

arrangement in which the registered 

investment company is a participant 

unless the Commission has issued an 

order approving the arrangement. MFS, 

as investment adviser, is an affiliated 

person of each of the Underlying Funds 

and Top-Tier Funds, which in turn 

could be deemed to be under common 

control of MFS and therefore affiliated 

persons of each other. The Top-Tier 

Funds and the Underlying Funds also 

may be affiliated persons by virtue of a 

Top-Tier Fund’s ownership of more 

than 5% of the outstanding voting 

securities of an Underlying Fund. 

Consequently, the Special Servicing 

Agreement could be deemed to be a 

joint transaction among the Top-Tier 

Funds, the Underlying Funds and MFS. 

2. Rule 17d–1 under the Act provides 

that, in passing upon a joint 

arrangement under the rule, the 

Commission will consider whether 

participation of the investment 

company in the joint enterprise or joint 

arrangement on the basis proposed is 

consistent with the provisions, policies, 

and purposes of the Act and the extent 

to which the participation is on a basis 

different from or less advantageous than 

that of other participants. 

3. Applicants request an order under 

section 17(d) and rule 17d–1 to permit 

them to enter into the Special Servicing 

Agreement. Applicants state that 

participation by the Top-Tier Funds, the 

Underlying Funds and MFS in the 

proposed Special Servicing Agreement 

is consistent with the provisions, 

policies and purposes of the Act, and 

that the terms of the Special Servicing 

Agreement and the conditions set forth 

below will ensure that no participant 

participates on a basis less advantageous 

than that of other participants. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief shall be 

subject to the following conditions: 

1. No Fund will enter into a Special 

Servicing Agreement unless the Special 

Servicing Agreement: (a) Precisely 

describes the services provided to the 

Top-Tier Funds and the Underlying 

Fund Payments; (b) provides that no 

affiliated person of the Top-Tier Funds, 

or affiliated person of such person, will 

receive, directly or indirectly, any 

portion of the Underlying Fund 

Payments, except for bona fide transfer 

agent services approved by the Board of 

the Underlying Fund, including a 

majority of the Independent Trustees; 

(c) provides that the Underlying Fund 

Payments may not exceed the amount of 

actual expenses incurred by the TopTier Funds; (d) provides that no 

Underlying Fund will reimburse 

transfer agent expenses of a Top-Tier 

Fund, including sub-accounting 

expenses and other out-of-pocket 

expenses, at a rate in excess of the 

average per account transfer agent 

expenses of the Underlying Fund, 

including sub-accounting expenses and 

other out-of-pocket expenses, expressed 

as a basis point charge (for purposes of 

calculating the Underlying Fund’s 

average per account transfer agent 

expense the Top-Tier Fund’s investment 

in the Underlying Fund will be 

excluded); and (e) has been approved by 

the Fund’s Board, including a majority 

of the Independent Trustees, as being in 

the best interests of the Fund and its 

shareholders and not involving 

overreaching on the part of any person 

concerned. 

2. In approving a Special Servicing 

Agreement, the Board of an Underlying 

Fund will consider, without limitation: 

(a) The reasons for the Underlying 

Fund’s entering into the Special 

Servicing Agreement; (b) information 

quantifying the Underlying Fund 

Benefits; (c) the extent to which 

investors in the Top-Tier Fund could 

have purchased shares of the 

Underlying Fund; (d) the extent to 

which an investment in the Top-Tier 

Fund represents or would represent a 

consolidation of accounts in the 

Underlying Funds, through exchanges 

or otherwise, or a reduction in the rate 

of increase in the number of accounts in 

the Underlying Funds; (e) the extent to 

which the expense ratio of the 

Underlying Fund was reduced following 

investment in the Underlying Fund by 

the Top-Tier Fund and the reasonably 

foreseeable effects of the investment by 

the Top-Tier Fund on the Underlying 

Fund’s expense ratio; (f) the reasonably 

foreseeable effects of participation in the 

Special Servicing Agreement on the 

Underlying Fund’s expense ratio; and 

(g) any conflicts of interest that MFS, 

any affiliated person of MFS, or any 

other affiliated person of the Underlying 

Fund may have relating to the 

Underlying Fund’s participation in the 

Special Servicing Agreement. 

3. Prior to approving a Special 

Servicing Agreement on behalf of an 

Underlying Fund, the Board of the 

Underlying Fund, including a majority 

of the Independent Trustees, will 

determine that: (a) The Underlying 

Fund Payments under the Special 

Servicing Agreement are expenses that 

the Underlying Fund would have 

incurred if the shareholders of the TopTier Fund had instead purchased shares 

of the Underlying Fund through the 

same broker-dealer or other financial 

intermediary; (b) the amount of the 

Underlying Fund Payments is less than 

the amount of Underlying Fund 

Benefits; and (c) by entering into the 

Special Servicing Agreement, the 

Underlying Fund is not engaging, 

directly or indirectly, in financing any 

activity which is primarily intended to 

result in the sale of shares issued by the 

Underlying Fund. 

4. In approving a Special Servicing 

Agreement, the Board of a Fund will 

request and evaluate, and MFS will 

furnish, such information as may 

reasonably be necessary to evaluate the 

terms of the Special Servicing 

Agreement and the factors set forth in 

condition 2 above, and make the 

determinations set forth in conditions 1 

and 3 above. 

5. Approval by the Fund’s Board, 

including a majority of the Independent 

Trustees, in accordance with conditions 

1 through 4 above, will be required at 

least annually after the Fund’s entering 

into a Special Servicing Agreement and 

prior to any material amendment to a 

Special Servicing Agreement. 

6. To the extent Underlying Fund 

Payments are treated, in whole or in 

part, as a class expense of an Underlying 

Fund, or are used to pay a class-based 

expense of a Top-Tier Fund, conditions 

1 through 5 above must be met with 

respect to each class of a Fund as well 

as the Fund as a whole. 

7. Each Fund will maintain and 

preserve the Board’s findings and 

determinations set forth in conditions 1 

and 3 above, and the information and 

considerations on which they were 

based, for the duration of the Special 

mstockstill on PROD1PC70 with NOTICES

Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices 2913 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5See Securities Exchange Act Release No. 54548 

(September 29, 2006), 71 FR 59159 (October 6, 

2006) (SR–CHX–2006–28) (approving exchange-toexchange billing procedures under the Plan for the 

Purpose of Creating and Operating an Intermarket 

Communications Linkage Pursuant to Section 

11A(a)(3)(B) of the Securities Exchange Act of 1934 

(‘‘Linkage Plan’’)); Securities Exchange Act Release 

No. 54551 (September 29, 2006), 71 FR 59148 

(October 6, 2006) (approving Linkage Plan). 

6See Securities Exchange Act Release No. 54550 

(September 29, 2006), 71 FR 59563 (October 10, 

2006) (SR–CHX–2006–05) (approving rules to 

implement a new trading model (‘‘NTM’’) that 

allows Exchange participants to interact in a fullyautomated Matching System). 

7See Nasdaq Head Trader Alert #2006–199 

(November 30, 2006); Securities Exchange Act 

Release No. 55041 (January 4, 2007), 72 FR 1356 

(January 11, 2007) (SR–NSX–2006–17); Securities 

Exchange Act Release No. 54941 (December 14, 

2006), 71 FR 77079 (December 22, 2006) (SR–

PHLX–2006–70); and Securities Exchange Act 

Release No. 54795 (November 20, 2006), 71 FR 

68850 (November 28, 2006) (SR–BSE–2006–44). 8BeX has implemented a fee that charges $.0028/ 

share for taking liquidity, subject to a maximum of 

.3% of the quotation price per share, for securities 

with a share price less than $1.00. The CHX’s 

systems cannot currently calculate that type of fee 

cap and, for that reason, the CHX is not currently 

proposing that cap as part of its fees for routing 

orders to BeX. 9 15 U.S.C. 78f(b)(4). 

Servicing Agreement, and for a period 

not less than six years thereafter, the 

first two years in an easily accessible 

place. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–905 Filed 1–22–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55103; File No. SR–CHX–

2006–39] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

Participant Fees and Credits 

January 12, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

21, 2006, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

CHX. The CHX has designated this 

proposal as one establishing or changing 

a member due, fee, or other charge 

imposed by the CHX pursuant to 

Section 19(b)(3)(A)(ii) of the Act,3 and 

Rule 19b–4(f)(2) thereunder,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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The CHX proposes to amend its 

Schedule of Participant Fees and Credits 

(‘‘Fee Schedule’’) to include changes in 

the fees charged for orders routed 

through the NMS Linkage Plan 5 to The 

NASDAQ Stock Market (‘‘Nasdaq’’), the 

National Stock Exchange (‘‘NSX’’), the 

Boston Equities Exchange (‘‘BeX’’) and 

the Philadelphia Stock Exchange 

(‘‘PHLX’’). The text of this proposed rule 

change is available at the CHX, on the 

CHX’s Web site at http://www.chx.com/ 

rules/proposed_rules.htm, and in the 

Commission’s Public Reference Room. 

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 

CHX 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 CHX 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 Exchange’s Fee Schedule, among 

other things, identifies the fees that are 

charged to participants on account of 

outbound NMS Linkage Plan orders. 

Section E.6 of the Fee Schedule applies 

to orders that are Matching Systemeligible 6 and therefore are routed from 

the Matching System to other market 

centers. Section E.8 of the Fee Schedule 

applies to orders that have not yet 

migrated to the Matching System and 

therefore are routed from the Exchange’s 

pre-new NTM facilities. 

When an outbound NMS Linkage Plan 

order is executed on another NMS 

Linkage participant market, that market 

will directly invoice the CHX for a 

transaction fee, in an amount that may 

not exceed the transaction fee that it 

would charge its own member for such 

an execution. The CHX is then 

responsible for payment of such invoice. 

Sections E.6 and E.8 of the Fee Schedule 

permit the CHX to collect a 

corresponding fee from the CHX 

participant that generated the outbound 

NMS Linkage Plan order. The CHX 

believes that it is appropriate to 

establish outbound NMS Linkage fee 

rates that reasonably correspond to the 

respective transaction fee rates being 

charged by the executing markets. 

Accordingly, it is submitting changes to 

Sections E.6 and E.8 of the Fee 

Schedule, to reflect recent 

developments regarding applicable 

transaction fees assessed by Nasdaq, 

NSX, PHLX, and BeX on account of 

NMS Linkage Plan executions.7

Specifically, the proposal would change 

the outbound fee for NMS Linkage 

orders routed to Nasdaq (in issues other 

than exchange-traded funds (‘‘ETFs’’)) 

from $.0015/share to $.0030/share, 

effective January 1, 2007. The proposal 

would also change the outbound fee for 

NMS Linkage orders routed to NSX and 

PHLX to $.0030/share for orders in all 

securities (ETFs and all other 

securities). Finally, the proposal would 

change the outbound fee for NMS 

Linkage orders routed to BeX to $.0028/ 

share for orders in all securities (ETFs 

and all other securities).8

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b)(4) of the 

Act 9 in that it provides for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and is 

consistent with the allocation of dues, 

fees and other charges utilized by other 

self-regulatory organizations that have 

implemented trading platforms similar 

to the CHX new trading model. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any 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 

Because the foregoing proposed rule 

change establishes or changes a due, fee 

mstockstill on PROD1PC70 with NOTICES