Document ID: SEC-2006-0633-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2006-05-17T04:00Z

[Federal Register: May 17, 2006 (Volume 71, Number 95)]
[Notices]               
[Page 28727-28728]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my06-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53781; File No. SR-CHX-2006-12]

 
Self Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Participant Fees and Credits.

May 10, 2006.
    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 April 24, 2006, 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 CHX. 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 CHX proposes to amend its Participant Fee Schedule (the ``Fee 
Schedule'') to reduce the assignment fees charged to specialist firms 
seeking the right to trade securities to $500 per assignment, when the 
securities are assigned in competition with other firms. 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.

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 regarding 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 Changes

1. Purpose
    Under the Exchange's rules, the Committee on Specialist Assignment 
and Evaluation is responsible for appointing participant firms to act 
as specialists on the Exchange.\3\ When more than one firm competes for 
the right to be the specialist in a particular security, the Exchange 
charges assignment fees of $1,000 or $4,000 for the assignment, 
depending on the number of firms competing for that right.\4\
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    \3\  See Article IV, Rule 6.
    \4\ For ``dual trading system'' securities, a group of 
securities which includes securities listed on the New York Stock 
Exchange or American Stock Exchange, the Exchange currently charges 
a $1,000 assignment fee if the security (or a group of securities) 
was assigned in competition with at least one other participant and 
up to one-third of all participants that trade these issues. The fee 
for the assignment of this type of security is increased to $4,000 
if the security (or a group of securities) was assigned in 
competition with more than one-third of the participants that trade 
these issues. For Nasdaq/NM securities, the Exchange currently 
charges a $1,000 assignment fee if the security was assigned in 
competition with one other participant firm; the fee is increased to 
$4,000 if two or more firms compete for the assignment.
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    In a separate filing, the Exchange has submitted a proposal to 
implement a new trading model, which features an automated Matching 
System into which orders may be sent for execution, but which does not 
involve the use of specialists to handle customer orders.\5\ Instead, 
in this new model, off-Exchange market makers may choose to handle 
customer orders, by sending those orders to the Exchange or to other 
venues for execution. Because the Exchange plans to be able to 
implement its new model in the second quarter of 2006, the Exchange 
believes that the right to trade securities as an Exchange specialist 
has only a short-term benefit. For that reason, the Exchange proposes 
to reduce the assignment fees to $500 per security, regardless of the 
number of participants competing for the assignments and regardless of 
the type of security that is being assigned.\6\
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    \5\ See SR-CHX-2006-05.
    \6\ The Exchange believes that it is appropriate to maintain at 
least a $500 assignment fee to help defray the costs of the 
assignment process. The Exchange will continue to charge no fee when 
securities are assigned without competition. The Exchange is 
submitting a separate filing, SR-CHX-2006-13, which proposes to make 
this fee reduction effective retroactively to March 1, 2006.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 28728]]

Section 6(b)(4) of the Act \7\ in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and creates an appropriate (and limited) incentive for a firm to agree 
to act as specialist on a temporary basis.
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    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement of Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition.

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

    No written comments were either solicited or received.

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

    The foregoing rule change establishes or changes a due, fee or 
other charge imposed by the Exchange and therefore has become effective 
pursuant to Section 19(b)(3)(A) of the Act \8\ and subparagraph (f)(2) 
of Rule 19b-4 thereunder.\9\ 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).
    \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 proposal 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-2006-12 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 No. SR-CHX-2006-12. 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 changes 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 will also 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 No. SR-CHX-2006-12 and should be submitted on or before June 7, 
2006.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-7470 Filed 5-16-06; 8:45 am]

BILLING CODE 8010-01-P