Document ID: SEC-2007-0659-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2007-05-10T04:00Z

[Federal Register: May 10, 2007 (Volume 72, Number 90)]
[Notices]               
[Page 26660-26662]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10my07-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55705; File No. SR-CHX-2007-05[

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto, Relating to Participant Fees and Credits

 May 4, 2007.
    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 March 23, 2007, 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 substantially by the CHX. 
The CHX amended the proposed rule change on May 1, 2007.\3\ The CHX has 
designated this proposal as one establishing or changing a member due, 
fee, or other charge imposed by the CHX under Section 19(b)(3)(A)(ii) 
of the Act,\4\ and Rule 19b-4(f)(2) thereunder,\5\ which renders the 
proposal 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\ See Amendment No. 1. The Commission considers the 60-
abrogation period to have commenced on May 1, 2007, the date the CHX 
filed Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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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 
Credits (``Fee Schedule''), effective April 1, 2007, to (1) assess a 
single ``take'' fee and provide a single ``provide'' credit for 
Matching System transactions in all securities; (2) eliminate the 
provisions relating to sharing of market data; and (3) modify the 
Matching System routing fees for executions through the Reg

[[Page 26661]]

NMS Linkage Plan. The text of the proposed rule change is available at 
the CHX, the Commission's Public Reference Room, and the CHX's Web site 
at 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, the 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. 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 CHX proposes to amend its Fee Schedule, effective April 1, 
2007, to (1) assess a single ``take'' fee and provide a single 
``provide'' credit for Matching System transactions in all securities; 
(2) eliminate the provisions relating to sharing of market data 
revenues; and (3) modify the Matching System routing fees for 
executions through the Reg NMS Linkage Plan.
    On April 1, 2007, the new market data revenue allocation formula 
that is part of Regulation NMS takes effect.\6\ This new formula 
significantly modifies the manner in which market data revenue is 
allocated among the self-regulatory organizations that participate in 
the plans associated with the dissemination of market data. Among other 
things, the new formula allocates revenue among the securities in each 
plan based (in most cases) on the square root of the dollar volume of 
trading in each security; allocates revenue based upon both quotes and 
trades in each security; and limits the amount of revenue associated 
with trades with dollar volumes less than $5,000.\7\ The Exchange 
believes that it is appropriate to gain some experience with the impact 
of this new revenue sharing formula before determining whether it is 
appropriate to share a portion of that revenue with Exchange 
participants.\8\ As a result, effective April 1, 2007, the Exchange 
proposes to eliminate the market data revenue credits set out in its 
Fee Schedule.
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    \6\ See Release No. 34-55160 (January 24, 2007), 72 FR 4202 
(January 30, 2007) (File No. S7-10-04) (confirming that the 
compliance date for the market data revenue allocation amendment 
remains April 1, 2007).
    \7\ See Reg NMS Final Rule Release, No. 34-51808, File No. S7-
10-04, 70 FR 37496 (June 29, 2005), Section XIV (Text of Adopted 
Amendments to the CTA Plan, the CQ Plan and the Nasdaq UTP Plan).
    \8\ In addition, even if the Exchange believed it was 
appropriate to share revenue under the new allocation, the Exchange 
will not receive sufficient information from the securities 
information processors to readily calculate the amount of revenue 
that might be shared in connection with a specific quote or trade.
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    At the same time, however, the Exchange would slightly increase its 
``take'' fees and more significantly increase the ``provide'' credits 
for transactions that occur within the CHX's Matching System. Under 
these changes, the CHX would charge a ``take'' fee of $.0029/share and 
pay a ``provide'' credit of $.0026/share. These changes are designed, 
at least in part, to provide an incentive for participants to submit 
single-sided orders to the Matching System for execution.
    As a final portion of this proposed rule change, the Exchange would 
modify the routing fees associated with the use of the Linkage Plan's 
routing mechanism. These proposed fee changes respond, in part, to 
changes instituted by other markets and simplify the fee structure by 
assessing a fee of $0.0030/share for executed orders routed to all 
markets in all securities (except that a $.0003/share fee will be 
assessed on executed orders routed to the NYSE in non-ETFs).\9\ The 
Exchange believes that this simplified fee structure will be easier for 
its participants to understand; will not require the Exchange to 
continually modify its fees as other markets make changes to their own 
fee schedules; and will allow the Exchange to cover a portion of its 
costs of providing its participants with access to the Linkage 
Plan.\10\
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    \9\ See Securities Exchange Act Release No. 55395 (March 2, 
2007), 72 FR 11067 (March 12, 2007) (SR-CBOE-2007-25) (setting new 
transaction fees for the CBOE Stock Exchange).
    \10\ These costs include the costs associated with maintaining 
an omnibus clearing account for Linkage Plan transactions with the 
National Securities Clearing Corporation. 10
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    The provisions in Sections E(1), E(6) and F(1) of the CHX Schedule 
of Participant Fees and Credits that were applicable only through March 
31, 2007 are deemed to have been removed, effective as of April 1, 
2007, leaving only the provisions that took effect on April 1, 2007.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(4) of the 
Act \11\ in that it provides for the equitable allocation of reasonable 
dues, fees and other charges among its members.
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    \11\ 15 U.S.C. 78f(b)(4).
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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.

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

    Because the foregoing proposed rule change establishes or changes a 
member due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(2) \13\ thereunder. 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 19b-4(f)(2).
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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, as amended, 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 No. SR-CHX-2007-05 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CHX-2007-05. 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

[[Page 26662]]

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. Copies of such 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 Number SR-CHX-2007-05 
and should be submitted on or before May 31, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-8960 Filed 5-9-07; 8:45 am]

BILLING CODE 8010-01-P