34062 Federal Register / Vol. 74, No. 133 / Tuesday, July 14, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5These fees are set forth in Sections E.3. (Agency 

executions through an institutional broker) and E.7. 

(Trade Processing Fees) of the Fee Schedule. 

6 In order to accommodate this change, the 

definition of ‘‘Originating Broker’’ would be 

modified to delete the reference to executions ‘‘on 

an away market.’’ 

7 15 U.S.C. 78f. 

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

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60259; File No. SR–CHX– 

2009–08] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

the Reallocation of Credits Paid to 

Institutional Brokers 

July 7, 2009. 

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 June 29, 

2009, 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 prepared 

by the Exchange. CHX filed the proposal 

pursuant to Section 19(b)(3)(A) 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 

Assessments (the ‘‘Fee Schedule’’), 

effective July 1, 2009, to change the 

manner in which CHX-registered 

Institutional Brokers are paid a credit 

based upon (1) Transaction Fees 

generated by Agency orders executed by 

them on the Exchange’s trading facilities 

and (2) Trade Processing Fees generated 

by transactions executed on another 

trading center, but submitted to clearing 

via the Exchange’s systems. The text of 

this proposed rule change is available 

on the Exchange’s Web site at http:// 

www.chx.com/rules/proposed_rules.htm 

and in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549. 

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 

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 

Through this filing, the Exchange 

would amend its Fee Schedule, effective 

July 1, 2009, to change the manner in 

which CHX-registered Institutional 

Brokers are paid credits based on both 

Transaction Fees generated by Agency 

orders executed by them on the 

Exchange’s trading facilities and on 

Trade Processing Fees generated by 

orders executed on away markets, but 

submitted to clearing by them via the 

Exchange’s systems. 

CHX-registered Institutional Brokers 

are paid a Credit which is based upon 

a percentage of the fees derived from 

transactions handled by them for other 

Exchange Participants.5 Pursuant to this 

filing, the Fee Schedule would be 

amended to reduce the overall Credit 

paid to Institutional Brokers (‘‘Credit’’) 

from 18% to 16% of the Fees charged 

to Participants in transactions in which 

the Institutional Brokers are involved in 

either the execution or clearance 

thereof. The amended Fee Schedule 

would also alter the manner in which 

such credits are distributed to 

Institutional Brokers involved in such 

transactions. Currently, the Institutional 

Broker representing the ultimate 

clearing participant in transactions 

executed on the Exchange receives the 

full Credit. For transactions executed on 

another trading center and reported to 

clearing via the Exchange’s systems, 

however, the Credit is divided between 

the Originating Broker (defined as the 

Institutional Broker which executed the 

trade) and the Broker of Credit (defined 

as the Institutional Broker that acted as 

the broker for the ultimate Exchange 

clearing participant). 

Under the proposed changes, the Fee 

Schedule would be modified to 

harmonize the allocation of Credits paid 

to Institutional Brokers derived from 

Transaction Fees with those paid based 

upon Trade Processing Fees. In each 

case, the Credits would be divided 

between the Originating Broker and the 

Broker of Credit and would be paid at 

the same rates.6 Pursuant to the revised 

Fee Schedule, the Broker of Credit 

would receive three-quarters (3/4) of the 

total Credit paid to Institutional Brokers 

in the relevant transactions, or 12%. 

The Originating Broker would receive 

the remaining 4% of the Credit for the 

initial execution of the trade, whether 

on our trading facilities or in an away 

market. An Institutional Broker could 

act as both the Originating Broker and 

the Broker of Credit in any given 

transaction, in which case it would earn 

Credits in both capacities. 

The Exchange believes that the 

harmonization of the manner of 

payment and rates for Transaction Fee 

Credits with those for Trade Processing 

Fee Credits is sensible and will serve to 

eliminate potential confusion 

concerning the nature and amount of 

Credits paid in Institutional Brokerhandled transactions. Moreover, the 

transactions handled by Institutional 

Brokers frequently are complicated and 

involve numerous counterparties. 

Originating Brokers typically retain 

additional clerical and operational staff 

to process and reconcile all of the terms 

of and parties to these transactions. The 

payment of a portion of the Credit to the 

Originating Broker recognizes the 

additional costs borne by them and the 

Exchange hopes that it will also incent 

Institutional Brokers to execute 

additional fee-generating orders. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 7 in general, and 

furthers the objectives of Section 6(b)(4) 

of the Act 8 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among its members. The Exchange 

believes that the proposed changes to 

the allocation of Institutional Broker 

credits is fair and reasonable in that it 

provides for additional compensation to 

Originating Brokers in circumstances 

where they did not previously receive 

any portion of the Credit. While the 

overall amount of Credits is being 

reduced for transactions consummated 

on our trading facilities, this reduction 

is offset by an increase in the amount of 

Credits paid based upon away market 

trades. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 133 / Tuesday, July 14, 2009 / Notices 34063 

9 15 U.S.C. 78s(b)(3)(A)(ii). 

10 17 CFR 240.19b–4(f)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b-4. 

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 

The foregoing proposed rule change is 

effective upon filing pursuant to Section 

19(b)(3)(A)(ii) of the Act 9 and Rule 19b– 

4(f)(2) thereunder.10 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. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–CHX–2009–08 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CHX–2009–08. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro/shtml). 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, on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such filing will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–CHX–2009– 

08 and should be submitted on or before 

August 4, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–16582 Filed 7–13–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60253; File No. SR–ISE– 

2009–34] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Regarding Customer Cross 

Orders 

July 7, 2009. 

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 June 24, 

2009, International Securities Exchange, 

LLC (‘‘ISE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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 ISE proposes to adopt rules 

related to the execution of Customer 

Cross Orders. The text of the proposed 

rule amendment is as follows, with 

deletions in [brackets] and additions 

italicized: 

* * * * * 

Rule 715. Types of Orders 

(a) through (h) no change. 

(i) Customer Cross Orders. A 

Customer Cross Order is comprised of a 

Public Customer Order to buy and a 

Public Customer Order to sell at the 

same price and for the same quantity. 

* * * * * 

Rule 717. Limitations on Orders 

(a) through (g) no change. 

Supplemental Material to Rule 717 

.01 Rule 717(d) prevents an Electronic 

Access Member from executing agency 

orders to increase its economic gain 

from trading against the order without 

first giving other trading interest on the 

Exchange an opportunity to either trade 

with the agency order or to trade at the 

execution price when the Member was 

already bidding or offering on the book. 

However, the Exchange recognizes that 

it may be possible for an Electronic 

Access Member to establish a 

relationship with a customer or other 

person (including affiliates) to deny 

agency orders the opportunity to 

interact on the Exchange and to realize 

similar economic benefits as it would 

achieve by executing agency orders as 

principal. It will be a violation of Rule 

717(d) for an Electronic Access Member 

to be a party to any arrangement 

designed to circumvent Rule 717(d) by 

providing an opportunity for a customer 

or other person (including affiliates) to 

regularly execute against agency orders 

handled by the Electronic Access 

Member immediately upon their entry 

into the System. 

.02 no change. 

* * * * * 

Rule 721. [[Reserved]] Customer Cross 

Orders 

Customer Cross Orders are 

automatically executed upon entry 

provided that the execution is at or 

between the best bid and offer on the 

Exchange and (i) is not at the same 

price as a Public Customer Order on the 

Exchange’s limit order book and (ii) will 

not trade through the NBBO unless the 

order is for at least 500 contracts and 

has a premium value of at least 

$150,000. 

mstockstill on DSKH9S0YB1PROD with NOTICES