Document ID: SEC-2014-2118-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2014-12-17T05:00Z

[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75203-75206]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29493]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73814; File No. SR-CHX-2014-19]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
to Amend the Applicability of Certain Fees and Credits Provided Under 
the Fee Schedule

December 11, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\, and Rule 19b-4\2\ thereunder, notice is hereby given that 
on December 4, 2014, the Chicago Stock Exchange, Inc. (``CHX'' or the 
``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).
    \2\ 17 CFR 240.16b-4.
---------------------------------------------------------------------------

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

    CHX proposes to amend the applicability of certain fees and credits 
provided under the Fee Schedule of the CHX (``Fee Schedule'') and to 
clarify other provisions throughout the Fee Schedule. The text of this 
proposed rule change is available on the Exchange's Web site at 
(www.chx.com) 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 changes 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 proposes to expand the scope of Section E.1 of the Fee 
Schedule to include executions resulting from single-sided orders for 
securities that trade in Round Lots of less than 100 shares.\3\ 
Moreover, the Exchange proposes to amend various provisions throughout 
the Fee Schedule for clarification and stylistic consistency. Aside 
from the proposed amendment of the scope of Section E.1, the Exchange 
does not propose to substantively modify any other fees, assessments, 
credits or rebates.
---------------------------------------------------------------------------

    \3\ CHX Article 1, Rule 2(f)(3) defines ``Round Lot'' as ``an 
order of 100 shares, unless otherwise determined by the Committee on 
Exchange Procedure.''
---------------------------------------------------------------------------

Proposed Elimination of Obsolete ``Effective'' and ``Operative'' Dates 
and Capitalization of Defined Terms
    Initially, the Exchange proposes certain non-substantive global 
amendments to the Fee Schedule. Specifically, the Exchange proposes to 
delete references to obsolete ``effective'' and ``operative'' dates 
throughout the Fee Schedule, specifically found under:
     Sections B through E;

[[Page 75204]]

     Section J;
     Section L; and
     Sections O and P.
    Similarly, the Exchange also proposes to eliminate obsolete 
language under Section D stating that ``no monthly charges will be 
assessed under this section D. for CHX's Equinix NY4 data center 
location under April 1, 2012.''
    Moreover, the Exchange proposes to capitalize the terms 
``Institutional Broker,'' ``Odd Lot,'' ``Round Lot'' and ``Clearing 
Participant'' throughout the Fee Schedule as they are defined terms 
under CHX Rules.\4\ In addition, the Exchange proposes to delete the 
hyphen in between certain references to Odd Lots because the term, as 
defined under CHX Rules, does not contain a hyphen.\5\ Specifically, 
the Exchange proposes to amend Section E.1(a), which includes a 
reference to Institutional Brokers; Sections E.3 and E.4, which include 
references to Odd Lots; Section E.8(a), which includes a reference to 
Round Lot; and Section F.2, which includes references to Institutional 
Broker and Clearing Participant.
---------------------------------------------------------------------------

    \4\ See CHX Article 1, Rule 1(n) defining ``Institutional 
Broker;'' see also CHX Article 1, Rule 1(ee) defining ``Clearing 
Participant;'' see also CHX Article 1, Rule 2(f)(3) defining Round 
Lot; see also CHX Article 1, Rule 2(f)(2) defining ``Odd Lot.''
    \5\ See CHX Article 1, Rule 2(f)(2).
---------------------------------------------------------------------------

Amended Section E.1
    Section E.1 provides liquidity removing fees and liquidity 
providing credits for executions resulting from ``one-sided orders of 
100+ shares,'' which describes a Round Lot or more for all but a 
handful of securities currently traded on the Exchange.\6\ Thus, the 
Exchange does not currently apply Section E.1 fees and credits to 
executions resulting from orders in securities that trade in Round Lots 
of less than 100 shares. Instead, such executions are currently 
assessed fees pursuant to Section E.4, which apply to executions 
resulting from orders submitted as Odd Lots.\7\
---------------------------------------------------------------------------

    \6\ As of the date of this filing, the Exchange permits the 
trading of ten securities in Round Lots of less than 100 shares, 
none of which have a primary listing on the Exchange. The Round Lot 
size for a security is determined by the Exchange and is identical 
to the round lot size set by the primary listing market.
    \7\ See supra note 5.
---------------------------------------------------------------------------

    In the interest of clarity and consistency, the Exchange proposes 
to expand the scope of Section E.1 to apply to executions ``resulting 
from orders submitted as at least a Round Lot,'' which would include 
securities that trade in Round Lots of less than 100 shares.\8\ To this 
end, the Exchange proposes to amend the headline to Section E.1 by 
deleting the phrase ``single-sided order'' and replacing the phrase 
``(one-sided orders of 100+ shares)'' with the phrase ``resulting from 
single-sided orders submitted as at least a Round Lot.'' Incidentally, 
the proposed headline clarifies that the Section E.1 fees and credits 
are assessed based on the size of the contra-side orders executed and 
not the size of the execution itself.\9\ The proposed amended headline 
would state as follows:
---------------------------------------------------------------------------

    \8\ See supra note 3; see also supra note 6.
    \9\ For example, where there is an execution between an incoming 
buy order submitted as an Odd Lot and a resting sell order submitted 
as a Round Lot, the buy side will be assessed fees pursuant to 
Section E.4 and the sell side will be given a credit pursuant to 
Section E.1.
---------------------------------------------------------------------------

    Matching System executions resulting from single-sided orders 
submitted as at least a Round Lot
    Moreover, the Exchange proposes the following clarifying and 
stylistic amendments to Section E.1:
     In the first full paragraph under Section E.1:
     Replace the phrase ``rebates paid'' with ``credits 
attributed'' to be consistent with the term ``liquidity providing 
credit'' utilized in the fees and credits chart;
     delete ``(Executions through an Institutional Broker 
Registered with the Exchange Under Article 17 (All Sessions)),'' as the 
Exchange proposes to amend the headline to Section E.3, as discussed 
below; and
     replace citation to ``Section E.3.a.'' with ``Section 
E.3(a)'' to be consistent with the existing taxonomical structure of 
the Fee Schedule, as described below in the proposed amendments to 
Section E.3.
Amended Section E.2-E.5 and E.7
    The Exchange proposes to make additional clarifying and stylistic 
amendments to Section E. The Exchange proposes the following amendments 
to E.2:
     Amend the headline to Section E.2 to be stylistically 
consistent with the proposed amended headline to Section E.1 and to 
replace the term ``All Sessions'' with the more descriptive ``all 
trading sessions,'' which is a phrase currently used under the fees and 
credits chart of Section E.1. Thus, the proposed amended headline would 
state as follows:
    Matching System executions resulting from two-sided orders (cross 
orders) of any number of shares (all trading sessions)\10\
---------------------------------------------------------------------------

    \10\ CHX Article 1, Rule 2(a)(2) defines ``cross order,'' in 
pertinent part, as ``an order to buy and sell the same security at a 
specific price better than the best bid and offer displayed in the 
Matching System and which would not constitute a trade-through under 
Reg NMS (including all applicable exceptions and exemptions).''
---------------------------------------------------------------------------

    The Exchange proposes the following amendments to Section E.3:
     Amend the headline to be stylistically consistent with the 
proposed amended headlines to Sections E.1 and E.2. Thus, the proposed 
amended headline would state as follows:
    Matching System executions resulting from orders submitted by 
Institutional Brokers registered with the Exchange under Article 17 
(all trading sessions)
     In the second to last paragraph under Section E.3:
     insert the term ``Section'' before ``E.4.,'' as the 
current citation is to Section E.4, and delete the period after 
``E.4''; and
     replace ``see (1) and (2) above'' with the more accurate 
``see Sections E.1 and E.2 above.''
     Replace paragraph ``a.'' and ``b.'' with ``(a)'' and 
``(b),'' respectively, to be consistent with the existing taxonomical 
structure of the Fee Schedule, which utilizes parentheses to denote all 
subparagraphs under the first paragraph denoted by an Arabic numeral. 
Thus, the Exchange also proposes to amend Section E.3(b) to replace a 
citation to ``Section E.3.a.'' with ``Section E.3(a).''
     Under Section E.3(a), insert the number ``0'' in front of 
the period within ``$.003/share'' and after ``3'' and insert the term 
``fee'' after ``$.003/share,'' so as to state ``$0.0030/share fee.''
     Under Section E.3(b), insert the number ``0'' in front of 
the period within ``$.0007/share'' and after ``7'' and insert the term 
``fee'' after ``$.0007/share,'' so as to state ``$0.00070/share fee.''
    The Exchange proposes the following amendments to Section E.4:
     Amend the headline to Section E.4 to be stylistically 
consistent with the proposed amended headlines to Sections E.1-3. Thus, 
the proposed amended headline would state as follows:
    Matching System executions resulting from single-sided orders 
submitted as Odd Lots (all trading sessions)
     Insert the number ``0'' in front of the period within 
``$.0040/share'' and insert the term ``fee'' after ``$.0040/share,'' so 
as to read ``$0.0040/share fee.''
    The Exchange proposes to amend the headline to Section E.5 to 
replace ``All Sessions'' with the more descriptive and consistent ``all 
trading sessions.''
    The Exchange proposes the following amendments to Section E.7:
     Amend the headline to replace the term ``All Sessions'' 
with the more

[[Page 75205]]

descriptive and consistent ``all trading sessions.''
     Insert the number ``0'' in front of the period within 
``$.003/share'' and after ``3'' and insert the term ``fee'' after 
``$.003/share,'' so as to read ``$0.0030/share fee.''
Amended Section F
    The Exchange proposes the following clarifying and stylistic 
amendments to Section F:
     Under Section F.2, delete the period placed after 
reference to ``Section E.7'' to be consistent with the current 
taxonomical and related citation structure of the Fee Schedule.
     Under Section F.4, amend obsolete citations to various 
credits that are no longer offered by the Exchange. Currently, the only 
credits available pursuant to Section F are the Institutional Broker 
credits, described under current Section F.2. Thus, the Exchange 
proposes to replace all citations to specific paragraphs under Section 
F with citations to ``Section F.2'' only.\11\
---------------------------------------------------------------------------

    \11\ Aside from the Institutional Broker credits under Section 
F.2, Section F.4 does not apply to any other credits, fee caps or 
rebates offered by the Exchange.
---------------------------------------------------------------------------

Operative Date
    The Exchange proposes to make all changes proposed herein operative 
January 2, 2015. Participants will be notified of the proposed changes 
pursuant to a Legal Notice that will be issued immediately after this 
proposed rule change is filed.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \12\ in general, and furthers the 
objectives of Sections 6(b)(1) \13\ and (b)(4) \14\ of the Act, in 
particular. Specifically, the proposed amended Section E.1 will 
continue to apply equally to all Participants that submit single-sided 
orders to the Matching System, in furtherance of Sections 6(b)(4), as 
the proposed rule provides for the equitable allocation of reasonable 
dues, fees and other charges among members and other persons using its 
facilities. Moreover, the Exchange believes that the proposed amended 
Section E.1 simplifies the Fee Schedule by applying to executions 
resulting from all Round Lot orders, as opposed to merely those that 
result from orders for 100 or more shares, and the other amendments to 
the Fee Schedule would provide clarity and stylistic consistency to the 
Fee Schedule, both in furtherance of Section 6(b)(1), as the proposed 
rule would better enable the Exchange to be so organized as to have the 
capacity to be able to carry out the purposes of the Act and to comply, 
and to enforce compliance by its Participants with the provisions of 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(1).
    \14\ 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 burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Given that the proposed 
amendment to Section E.1 would impact an extremely small number of 
securities traded on the Exchange and the proposed clarifying and 
stylistic amendments do not substantively modify the Fee Schedule, the 
proposed rule change would have no burden on competition. To the 
contrary, the Exchange believes that the proposed rule change would 
promote competition by widening the scope of executions that would be 
subject to lower fees and eligible for credits and providing additional 
clarity to the Fee Schedule.

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 rule change is effective upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \15\ and subparagraph(f)(2) of Rule 
19b-4 thereunder \16\ because it establishes or changes a due, fee or 
other charge imposed by the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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. 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 email to rule-comments@sec.gov. Please include 
File No. SR-CHX-2014-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File No. SR-CHX-2014-19. This file 
number should be included on the subject line if email 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 changes 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the CHX. 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-2014-19 and should be 
submitted on or before January 7, 2015.

[[Page 75206]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29493 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P