Document ID: SEC-2006-0544-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2006-04-26T04:00Z

[Federal Register: April 26, 2006 (Volume 71, Number 80)]
[Notices]               
[Page 24769-24770]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ap06-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53676; File No. SR-CHX-2006-08]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Granting Approval of Proposed Rule Change and Amendment No. 1 
Thereto Relating to Specialist Participant Fees and Credits

April 18, 2006.
    On February 27, 2006, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend its Participant Fee Schedule to confirm 
that, retroactive to January 1, 2006, specialist fixed fees would not 
be assessed to a specialist firm with respect to securities that are 
temporarily assigned.\3\ On March 2, 2006, CHX filed

[[Page 24770]]

Amendment No. 1 to the proposed rule change.\4\ The proposed rule 
change, as amended, was published for comment in the Federal Register 
on March 14, 2006.\5\ The Commission received no comments on the 
proposal. This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On February 27, 2006, the Exchange filed with the Commission 
a proposed rule change to amend its Participant Fee Schedule to 
confirm that, effective immediately, specialist fixed fees would not 
be assessed to a specialist firm with respect to securities that are 
temporarily assigned. See Securities Exchange Act Release No. 53429 
(March 6, 2006), 71 FR 13197 (March 14, 2006).
    \4\ In Amendment No. 1, the Exchange revised the proposal's rule 
text to clarify its meaning.
    \5\ See Securities Exchange Act Release No. 53433 (March 7, 
2006), 71 FR 13196.
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    Under the Exchange's rules, the Committee on Specialist Assignment 
and Evaluation (``CSAE'') is responsible for appointing participant 
firms to act as specialists on the Exchange.\6\ From time to time, the 
CSAE may make a temporary assignment of one or more securities to a 
specialist firm.\7\ Temporary assignments may be made, for example, 
when one specialist firm has requested and been granted the opportunity 
to deregister in one or more of its securities before the formal 
posting and assignment process has been completed.\8\ Through this 
proposed rule change, as amended, the Exchange seeks to confirm, 
retroactive to January 1, 2006, that, when a firm has been appointed to 
act as specialist in a security on a temporary basis, the firm will not 
be charged the specialist fixed fees otherwise associated with the 
trading of that security.
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    \6\ See Article IV, Rule 6.
    \7\ See Article XXX, Rule 1.
    \8\ The Exchange represents that when a security is to be 
assigned or reassigned, the Exchange notifies specialist firms of 
the assignment opportunity and invites applications for the 
security. See Article XXX, Rule 1, Interpretation and Policy .01, 
Section II. The Exchange further represents that if more than one 
firm seeks the assignment, the CSAE holds meetings with the firms to 
review their demonstrated ability, experience, financial 
responsibility and other factors that are relevant to the CSAE's 
assignment decision. See Article XXX, Rule 1, Interpretation and 
Policy .01, Section II and Section III. The Exchange represents that 
depending upon the number of firms applying for a security and the 
availability of committee members and specialist firm 
representatives, this process could take several weeks to complete. 
An interim temporary assignment allows a security to continue to be 
traded by a specialist firm, while the process is completed.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of Section 6 of the Act,\9\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\10\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(4) of the Act,\11\ which 
requires that the Exchange's rules provide for the equitable allocation 
of reasonable dues, fees, and other charges among its members and 
issuers and other persons using its facilities. The Commission believes 
that the suspension, retroactive to January 1, 2006, of the specialist 
fixed fees for specialist firms who accepted a temporary assignment of 
securities is appropriate because it creates an incentive for a 
specialist firm to act as specialist on a temporary basis pending 
completion of the Exchange's formal process for assigning securities to 
a specialist.
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    \9\ 15 U.S.C. 78f(b).
    \10\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CHX-2006-08), as amended, is 
approved. 
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-6230 Filed 4-25-06; 8:45 am]

BILLING CODE 8010-01-P