Document ID: SEC-2008-0678-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2008-05-08T04:00Z

[Federal Register: May 8, 2008 (Volume 73, Number 90)]
[Notices]               
[Page 26174-26176]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my08-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57767; File No. SR-CHX-2008-06]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Regarding the Definition of Qualified 
Contingent Trade

May 2, 2008.
    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 April 29, 2008, 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 and 
II below, which Items have been substantially prepared by CHX. On May 
1, 2008, CHX submitted Amendment No. 1 to the proposed rule change. The 
Exchange has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \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)(6).
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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 its rules to delete from the 
definition of Qualified Contingent Trade the requirement that such 
transactions be for a minimum size of either 10,000 shares or $200,000 
in transaction value. The text of the proposed rule change is available 
at CHX, the Commission's Public Reference Room, and http://www.chx.com/
rules/proposed_rules.htm.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CHX 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. 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's rules currently define the term ``Qualified 
Contingent Trade'' according to the definition included in an exemptive 
order issued by the Commission on August 31, 2006.\5\ Pursuant to the 
Exemptive Order, Qualified Contingent Trades are exempt from the trade-
through restrictions of

[[Page 26175]]

Regulation NMS.\6\ The Exchange has incorporated an identical 
definition of Qualified Contingent Trades in order that such trades 
could also be exempted from Exchange rules restricting intermarket 
trade-throughs.
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    \5\ See Securities Exchange Act Release No. 54389 (August 31, 
2006), 71 FR 52829 (September 7, 2006) (Order Granting an Exemption 
for Qualified Contingent Trades from Rule 611(a) of Regulation NMS) 
(``Exemptive Order'').
    \6\ 17 CFR 242.600 et seq. See 17 CFR 242.611.
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    On April 4, 2008, the Commission issued a revised exemptive order 
eliminating one of the elements of the original Qualified Contingent 
Trade definition.\7\ Based upon a request from the Chicago Board 
Options Exchange, Incorporated, the Revised Exemptive Order deleted the 
minimum size restrictions of 10,000 shares or $200,000 in transaction 
value which were part of the original definition. The Exchange proposes 
to eliminate the size and value restrictions from its own definition of 
Qualified Contingent Trade in order to operate its marketplace in a 
manner consistent with Commission directives. The Exchange proposes to 
change its rules to eliminate any minimum size or value restrictions in 
its definition of the term Qualified Contingent Trade. The Exchange 
also proposes to eliminate an obsolete reference in the rule to the 
prospective application of Regulation NMS and to correct an erroneous 
citation in Article 20, Rule 5 to the Qualified Contingent Trade 
definition.
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    \7\ See Securities Exchange Act Release No. 57620 (April 4, 
2008), 73 FR 19271 (April 9, 2008) (Order Modifying the Exemption 
for Qualified Contingent Trades from Rule 611(a) of Regulation NMS) 
(``Revised Exemptive Order'').
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2. Statutory Basis
    CHX believes the proposal is consistent with the requirements of 
the Act and the rules and regulations thereunder that are applicable to 
a national securities exchange, and, in particular, with the 
requirements of Section 6(b) of the Act.\8\ The Exchange believes that 
the proposed changes are consistent with Section 6(b)(5) of the Act,\9\ 
because they would promote just and equitable principles of trade, 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest by allowing CHX to amend its rules to reflect 
the Revised Exemptive Order defining the term Qualified Contingent 
Trade.
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    \8\ 15 U.S.C. 78(f)(b).
    \9\ 15 U.S.C. 78(f)(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 purposes of the Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\12\ 
However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would allow the Exchange to implement the proposal without needless 
delay. The Commission notes that it recently modified the definition of 
Qualified Contingent Trade originally adopted in the Exemptive 
Order.\14\ For this reason, the Commission designates the proposed rule 
change to be operative upon filing with the Commission.\15\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change, at least five business days prior to the date of filing 
of the proposed rule change, or such shorter time as designated by 
the Commission. The Exchange has satisfied the five-day pre-filing 
notice requirement.
    \13\ Id.
    \14\ See Revised Exemptive Order, supra note 7.
    \15\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 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.\16\
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    \16\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on May 1, 
2008, the date on which the Exchange submitted Amendment No. 1.
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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-2008-06 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-2008-06. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of 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

[[Page 26176]]

should refer to File Number SR-CHX-2008-06 and should be submitted on 
or before May 29, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-10210 Filed 5-7-08; 8:45 am]

BILLING CODE 8010-01-P