[Federal Register Volume 65, Number 196 (Tuesday, October 10, 2000)]
[Notices]
[Pages 60233-60234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25867]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43402; File No. SR-CHX-00-29]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated Relating to Fees for the E-Session

October 2, 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 September 22, 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. The Exchange had 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,\3\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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'') \4\ through December 31, 
2000. The text of the proposed rule change is below. Additions are in 
italics. Deletions are in brackets.
---------------------------------------------------------------------------

    \4\ 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 Commission recently approved the CHX's 
proposal to make the E-Session a permanent part of the CHX's 
operations. See Securities Exchange Act Release No. 43304 (September 
19, 2000), 65 FR 57850 (SR-CHX-00-26). The E-Session takes place 
from 3:30 p.m. to 5:30 p.m., Central Time, Monday through Friday.
---------------------------------------------------------------------------

Membership Dues and Fees

* * * * *

M. Credits

1. Specialists Credits

    Total monthly fees owed 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 to text.
    b. No change to text.
    c. E-Session Credits. A credit of $.25 per trade executed during 
the E-Session. This credit shall be available through December 31, 
2000 [October 1, 2000].

2. Floor Broker Credits

    a. No change to text.
    b. No change to text.
    c. E-Session Credits. Total monthly fees owed 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 December 31, 2000 [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 
Section 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 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 that 
provides Exchange specialists and floor brokers with a credit of $.25 
per trade executed during the E-Session. The credit program was 
effective on filing with the Commission in May 2000,\5\ and is 
scheduled to expire on October 1, 2000. This proposal extends the E-
Session credit program through December 31, 2000.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 42784 (May 15, 
2000), 65 FR 33383 (May 23, 2000 (SR-CHX-00-12).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

[[Page 60234]]

abrogate such rule change if it appears 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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

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, an 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-00-29, and should be 
submitted by October 31, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-25867 Filed 10-6-00; 8:45 am]
BILLING CODE 8010-01-M