[Federal Register Volume 61, Number 19 (Monday, January 29, 1996)]
[Notices]
[Pages 2851-2852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1473]



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

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36753; File No. SR-CHX-95-30]


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

January 22, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 2, 1996 the 
Chicago Stock Exchange, Incorporated (``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 prepared by the self-regulatory organization. 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).
---------------------------------------------------------------------------

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

    The Exchange proposes to amend Section (c), add a new Section (d), 
and make conforming renumbering changes to existing Sections (d) 
through (o) of its Membership Dues and Fees Schedule.

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 
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 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 simplify the 
Exchange's order processing and transaction fee schedule. The new fee 
schedule contemplates two types of fees. First, the CHX will assess a 
processing fee for odd lot orders and limit orders that are placed on a 
specialist's book and are executed subsequently. The odd lot processing 
fee is similar to the current odd lot transaction fee, except that it 
will not include applicable trade recording fees.\2\ It will be $.35 
per trade, up to a maximum of $400.00 per month. The open limit order 
processing fee will be $.25 per limit order that is executed. Orders in 
NASDAQ/NMS Securities \3\ will not be assessed any order processing 
fees.

    \2\ The Commission notes that the CHX has decided to terminate 
the clearance and settlement services offered by several of its 
subsidiaries. See Securities Exchange Act Release No. 36684 (Jan. 5, 
1995), 61 FR 1195 (approving the necessary proposed rule changes and 
providing details of the CHX's agreement not to engage in the 
businesses from which it has decided to withdraw).
    \3\ The Commission notes that the National Association of 
Securities Dealers, Inc. refers to such securities as ``Nasdaq 
National Market Securities.'' However, the Exchange, in order to 
maintain consistency within its rules, still utilizes the term 
``NASDAQ/NMS Securities.'' The Exchange intends to update this 
aspect of its rules at a later date. Telephone conversation between 
David T. Rusoff, Attorney, Foley & Lardner, and Anthony P. Pecora, 
Attorney, SEC (Jan. 16, 1996).
---------------------------------------------------------------------------

    Second, the Exchange will assess certain transaction fees for 
orders executed on the CHX. Market orders sent via MAX \4\ will not be 
assessed any 

[[Page 2852]]
transaction fees. All other orders (except orders of specialists, 
orders in NASDAQ/NMS Securities, and orders of a floor broker acting in 
the capacity as a principal) will be charged a transaction fee on a 
sliding scale. There will be no charge for the first 500 shares; a 
$.0075 per share charge for the next 2000 shares; a $.005 per share 
charge for the next 7500 shares; and a $.004 per share charge for the 
remaining shares of an order. This transaction fee will be capped at a 
maximum of $100.00 per side. This cap is similar to the cap on round 
lot trades today \5\ except that it will not include applicable trade 
recording fees.\6\ The Exchange will impose a maximum cap of $7,000 per 
month for transaction fees on orders sent via MAX that are executed. 
Also, for these fees, the Exchange will impose maximum monthly 
transaction fees of $45,000 for firms with a floor broker or market 
maker presence on the floor of the Exchange and $65,000 for orders of 
all-floor members. The Exchange will continue to waive transaction fees 
for orders in Tape B eligible issues that are executed through MAX.\7\ 
In addition, all transaction fees for orders in NASDAQ/NMS Securities 
will be waived.

    \4\ MAX stands for ``Midwest Automated Execution System.'' This 
system may be used to provide automated delivery and execution of 
certain orders. See Chicago Stock Exchange Guide, Article XX, Rule 
37.
    \5\ The language contained in the Exchange's current fee 
schedule refers to a ``per trade'' cap, but the Exchange's practice 
has been to interpret this as a ``per side'' cap. Therefore, the 
practical effect of this filing would be to align the language 
contained in the CHX's fee schedule with its current interpretation. 
Telephone conversation between David T. Rusoff, Attorney, Foley & 
Lardner, and Glen Barrentine, Senior Counsel/Team Leader, SEC (Jan. 
18, 1996).
    \6\ See supra note 2.
    \7\ The Consolidated Tape, operated by the Consolidated Tape 
Association (``CTA''), compiles current last sale reports in certain 
listed securities and disseminates these reports to vendors on a 
consolidated basis. The CTA is comprised of the New York, American, 
Boston, Cincinnati, Chicago, Pacific, and Philadelphia Stock 
Exchanges, as well as the Chicago Board Options Exchange and the 
National Association of Securities Dealers, Inc. Transactions in 
American Stock Exchange listed stocks and qualifying regional listed 
stocks are reported on CTA Tape B. See Securities Exchange Act 
Release No. 35239, (Jan. 19, 1995), 60 FR 4935 (extending the waiver 
transaction fees for Tape B eligible issues that are executed 
through MAX).
---------------------------------------------------------------------------

    Fees for specialists will remain unchanged.
    Floor brokers acting in the capacity as a principal will be charged 
a transaction fee for each such order on a sliding scale. There will be 
no charge for the first 500 shares; a $.0015 per share charge for the 
next 2000 shares; a $.001 per share charge for the next 7500 shares; 
and a $.0008 per share charge for the remaining shares of an order. The 
transaction fee will be capped at a maximum of $20.00 per side. 
However, there will be no monthly cap on these transaction fees.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\8\ in general and furthers the objectives of Section 6(b)(4) \9\ in 
particular in that it provides for the equitable allocation of 
reasonable dues, fees, and other charges among the Exchange's members 
and other persons using its facilities.

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes the proposed rule change does not impose any 
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    The foregoing rule change constitutes or changes a due, fee, or 
other charge imposed by the Exchange and, therefore, has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and 
subparagraph (e) of Rule 19b-4 thereunder. \11\

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    At any time within sixty days of the filing of such 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.

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, NW., Washington, DC 20549. 
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 at the 
Commission's Public Reference Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of the CHX. All 
submissions should refer to File No. SR-CHX-95-30 and should be 
submitted by February 20, 1996.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\

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

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-1473 Filed 1-26-96; 8:45 am]
BILLING CODE 8010-01-M