Document ID: SEC-2010-0384-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2010-03-12T05:00Z

[Federal Register: March 12, 2010 (Volume 75, Number 48)]
[Notices]               
[Page 11953-11954]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr10-168]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61656; File No. SR-CHX-2010-04]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Inc. To Aggregate Trading Activity of Affiliated Participants To 
Calculate Average Daily Trading Volume for Billing Purposes

March 5, 2010.
    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 February 26, 2010, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. CHX has 
filed the proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 
Assessments (the ``Fee Schedule''), effective March 1, 2010, to 
aggregate the activity of affiliate entities when computing and 
assessing certain fees of the Exchange. The text of this proposed rule 
change is available on the Exchange's Web site at http://www.chx.com/
rules/proposed_rules.htm and in the Commission's Public Reference 
Room, 100 F Street, NE., Washington, DC 20549.

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 regarding the proposal. 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
    Through this filing, the Exchange would amend its Fee Schedule, 
effective March 1, 2010, to permit the aggregation of the trading 
activity of affiliated CHX Participants for the purposes of calculating 
and assessing certain fees. A Participant must request the aggregation 
of affiliate activity by submitting an Application to the Exchange.\5\ 
The Exchange shall have the right to request additional information in 
order to verify the affiliate status of an entity.
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    \5\ The Exchange will post the Application form on its public 
Web site.
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    Once approved, the Exchange will aggregate the activity of 
affiliated

[[Page 11954]]

Participants for the calculation of its Matching System Port Charges 
under to Section D of its Fee Schedule and its Transaction Fees for 
single-sided orders under to Section E.1. of its Fee Schedule. Pursuant 
to Section D, the Exchange normally charges a fee for each ``port'' or 
logical network connection to the CHX network. Port charges are not 
assessed for connections to the Matching System for a month in which a 
Participant Firm executes an average daily volume of 5 million or more 
provide shares in the Matching System during the month. Pursuant to 
Section E.1. of the Fee Schedule, Participants pay fees and receive 
rebates for trades executed in our Matching System whenever they take 
or provide liquidity, respectively. The amount of those fees and 
rebates vary depending on whether the Participant executes an average 
daily volume in excess of 500,000 or 5 million provide shares.
    The current proposal would permit two or more Participants which 
are ``affiliates,'' as defined, to aggregate their trade volume for 
purposes of these fee computations. An ``affiliate'' of a Participant 
is defined as any wholly owned subsidiary, parent or sister of the 
Participant that is also a Participant. A ``wholly owned subsidiary'' 
is defined as a subsidiary of a Participant, 100% of whose voting stock 
or comparable ownership interest is owned by the Participant, either 
directly or indirectly through other wholly owned subsidiaries. A 
``parent'' is defined as an entity that directly or indirectly owns 
100% of the voting stock or comparable ownership interest of a 
Participant. A ``sister'' is defined as an entity, 100% of whose voting 
stock or comparable ownership interest is owned by a parent that also 
owns 100% of the voting stock or comparable ownership interest of a 
Participant.
    As noted above, a Participant must apply for this treatment on 
behalf of itself and its affiliate(s). The applicant would be 
responsible for immediately notifying the Exchange if the status of any 
of the affiliated entities changed at some point in the future. For 
example, if a Participant had applied for and been approved to 
aggregate the trading volume of itself and a sister company and their 
common parent company later sold the sister company to an unaffiliated 
third party, then the Participant must immediately notify the Exchange 
that the two companies are no longer affiliated. Finally, the Exchange 
is only obligated to aggregate the volume of affiliates each of which 
are Participants holding a trading permit. The trading volume of 
entities which are not Exchange Participants will not be aggregated 
with that of Participants, even if the two entities are affiliates as 
defined.
    The Exchange proposes to implement the aggregation policy effective 
March 1, 2010.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \7\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among its members. Among other things, the Exchange 
believes that the aggregation policy fairly allows affiliated 
Participants to combine their trading volumes for purpose of certain 
fee calculations and may, as a result, induce such firms to send 
additional orders to the Exchange for execution.
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    \6\ 15 U.S.C. 78f.
    \7\ 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 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 either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \9\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by the self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. At any time within 60 days of the filing of such 
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 purpose of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-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 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-2010-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CHX-2010-04. 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 Web site viewing and 
printing in the Commission's Public Reference Room 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 office 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-
2010-04 and should be submitted on or before April 2, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5298 Filed 3-11-10; 8:45 am]
BILLING CODE 8011-01-P