Document ID: SEC-2007-1793-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2007-12-31T05:00Z

[Federal Register: December 31, 2007 (Volume 72, Number 249)]
[Notices]               
[Page 74381-74382]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de07-100]                         

[[Page 74381]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57036; File No. SR-CHX-2007-27]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend its Rule 25 To 
Eliminate a Requirement That a Participant Have a Formal Written 
Agreement To Use Another Participant's Give-Up

December 21, 2007.
    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 December 12, 2007, 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 and 
II below, which Items have been substantially prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend CHX Rule 25 to eliminate a 
requirement that a participant have a formal written agreement to use 
another participant's give-up.\3\ The text of this proposed rule change 
is available at the Exchange's Web site, http://www.chx.com, the 

Exchange's principal office, and at the Commission's Public Reference 
Room.
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    \3\ See e-mail from Ellen Neely, President and General Counsel, 
CHX, to Richard Holley III, Senior Special Counsel, Division of 
Trading and Markets, Commission, dated December 20, 2007 (defining a 
``give-up'' as a multi-character symbol that identifies a CHX 
participant firm. In the context of this rule, if a participant 
executes a trade using another participant's give-up, the firm is 
identifying the other firm as a party to the trade and allocating 
the trade to the other firm's account for clearing).
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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
    When the CHX developed rules for its new trading model, it included 
a provision that requires a participant that executes a trade using 
another participant's give-up to have a written agreement authorizing 
the use of the give-up. The rule mirrors similar requirements in some 
other automated systems--it is designed to provide a measure of 
additional assurance that orders will clear and settle, even when they 
are submitted from remote locations, by firms that do not know each 
other.
    Soon after implementing its new trading model, the Exchange filed a 
proposal to limit the way in which the rule would apply to its 
institutional brokers.\4\ Specifically, the Exchange sought to 
incorporate a new interpretation and policy that would confirm that 
institutional brokers could use other participants' give-ups in 
accordance with reasonable written order-handling procedures, without 
specifically requiring that a written agreement be in place. The 
Exchange noted in that filing that, while it believed that the rule 
provided an appropriate general standard, it was not intended to 
require a potentially substantial change in the long-standing business 
practices of the Exchange's institutional brokers, who often execute a 
trade using another participant's give-up, pursuant to instructions 
from such participant or its customer.
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    \4\ See File No. SR-CHX-2006-36. The Exchange has withdrawn this 
proposal.
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    Upon further reflection, the Exchange now proposes to eliminate the 
``give-up agreement'' rule altogether. The Exchange continues to 
believe that the rule sets a good business standard, but does not 
believe that it is appropriate to put a hard-and-fast rule to that 
effect in place because of its potential impact on the day-to-day 
business practices of some of its institutional brokers.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \5\ in general, and with Section 6(b)(5) of the Act \6\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and, 
in general, to protect investors and the public interest by allowing 
firms to develop their own business practices in connection with the 
execution of formal written agreements with the firms that send them 
orders.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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 purpose of the Act.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which Amex consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be disproved.

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 rule-comments@sec.gov. Please include 

File Number SR-CHX-2007-27 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CHX-2007-27. This file

[[Page 74382]]

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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal offices 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 Number SR-CHX-2007-27 and should be 
submitted on or before January 22, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-25373 Filed 12-28-07; 8:45 am]

BILLING CODE 8011-01-P