Document ID: SEC-2010-1219-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2010-08-10T04:00Z

[Federal Register: August 10, 2010 (Volume 75, Number 153)]
[Notices]               
[Page 48397-48399]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au10-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62650; File No. SR-CHX-2010-18]

 
Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Alter its Tiered Schedule of Fees and Rebates for Participants for 
Trade Executions of Single-Sided Orders in Securities Priced Over One 
Dollar

August 4, 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 July 30, 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 and II 
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

[[Page 48398]]

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 the 
Substance of the Proposed Rule Change

    The CHX proposes to amend its Schedule of Participant Fees and 
Assessments (the ``Fee Schedule''), effective August 1, 2010, to alter 
its tiered schedule of fees and rebates for Participants for trade 
executions of single-sided orders in securities priced over one dollar 
that occur within the Exchange's Matching System. 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 is proposing to amend its Fee 
Schedule, effective August 1, 2010, to alter its tiered schedule of 
fees and rebates for Participants for trade executions of single-sided 
orders in securities priced over one dollar. The fee imposed on 
Participants for removing liquidity from the Matching System (the 
``take fee'') or credit given to Participants which display orders in 
the Matching System which result in trade executions (the ``provide 
credit'') currently varies depending on the executing Participant's 
Average Daily Volume (``ADV'').\5\ A Participant's ADV is determined by 
the number of shares it has executed as a liquidity provider in any and 
all trading sessions on average per trading day (excluding partial 
trading days) across all tapes on the trading facilities of the CHX 
(excluding all cross transactions) for the calendar month in which the 
executions occurred. There are three volume-based Tiers and the rate of 
applicable take fees and provide credits vary based upon the Tier into 
which a Participant falls.
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    \5\ Through its filing on January 4, 2010, the Exchange 
instituted a tiered fee and rebate structure based on a 
Participant's ADV. See Securities Exchange Act Release No. 61322 
(Jan. 11, 2010), 75 FR 2914 (Jan. 19, 2010) (SR-CHX-2010-01).
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    According to this proposal, the Exchange would delete those 
provisions of the Fee Schedule which vary the take fee based upon the 
Participant's ADV. In its place, the Exchange proposes to impose a flat 
take fee of $0.003/share across all Tapes. The Exchange is also 
proposing to reduce the provide credit for executions in Tape A & C 
securities from $0.0026/share to $0.0025/share for the lowest Tier of 
activity, from $0.0028/share to $0.0027/share in the middle Tier and 
from $0.003/share to $0.0029/share in the highest Tier. For Tape B 
securities, the provide credit is being reduced from $0.0028/share to 
$0.0026/share in the lowest Tier, from $0.003/share to $0.0028/share in 
the middle Tier and from $0.0032/share to $0.0031/share in the highest 
Tier. The flat provide credit paid to CHX-registered Institutional 
Brokers when they represent agency orders which execute in the CHX 
Matching System in Tape B securities will be reduced from $0.0032 to 
$0.0031/share.
    Furthermore, the Exchange proposes to alter the ADV requirements 
for Participants to qualify for the escalating Tiers and associated 
provide credits. The ADV requirement for the lowest Tier of activity 
would be increased from 500,000 shares or less daily to 1,000,000 
shares or less daily. The middle Tier would be changed from an ADV 
which is greater than 500,000 and up to and including 5,000,000 shares 
to an ADV which is greater than 1,000,000 and up to and including 
5,000,000 shares. The ADV for the highest Tier will remain at its 
current level of greater than 5,000,000 shares.
    Finally, we propose to remove the exclusion of trade activity in 
securities priced under $1 in the ADV calculation. Going forward, 
executions in such securities would count towards the determination of 
a Participant's monthly ADV.
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 these changes better tailor the existing tiered fee 
structure to the amount and type of volume which order sending 
Participants direct to the Exchange and may attract additional orders 
to be displayed and executed on our trading facilities.
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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 Regarding 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 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.
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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

[[Page 48399]]

Number SR-CHX-2010-18 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-2010-18. 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, 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 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 publicly available. All 
submissions should refer to File Number SR-CHX-2010-18 and should be 
submitted on or before August 31, 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. 2010-19656 Filed 8-9-10; 8:45 am]
BILLING CODE 8010-01-P