Document ID: SEC-2005-0138-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2005-10-24T04:00Z

[Federal Register: October 24, 2005 (Volume 70, Number 204)]
[Notices]               
[Page 61482-61484]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc05-90]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52612; File No. SR-CHX-2005-25]

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

October 14, 2005.
    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 September 16, 2005, 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 by the CHX. On October 3, 
2005, CHX filed Amendment No. 1 to the proposed rule change.\3\ On 
October 12, 2005, CHX filed Amendment No. 2 to the proposed rule 
change.\4\ The CHX has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by the CHX under Section 
19(b)(3)(A)(ii) of the Act,\5\ and Rule 19b-4(f)(2) thereunder,\6\ 
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 parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange: (1) made clarifying 
changes to the proposed rule text and the purpose section of the 
filing; and (2) noted that the proposed rule change is submitted in 
conjunction with the filing (SR-CHX-2005-23), which established a 
special allocation process available to the Committee on Specialist 
Assignment and Evaluation (``CSAE'') in special circumstances 
involving the allocation of more than 100 stocks at a time.
    \4\ In Amendment No. 2, which superseded Amendment No. 1 in its 
entirety, the Exchange made a minor change to the proposed rule text 
and made a corresponding change to the purpose section of the 
proposed rule change.
    The effective date of the original proposed rule change is 
September 16, 2005, the effective date of Amendment No. 1 is October 
3, 2005 and the effective date of Amendment No. 2 is October 12, 
2005. For purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on October 12, 2005, the date on which the CHX filed 
Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 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 Participant Fee Schedule (the ``Fee 
Schedule'') to confirm the assignment fees that apply when the 
Exchange's CSAE assigns a group of securities to a specialist firm in 
competition with other specialist firms. Below is the text of the 
proposed rule change, as amended. Proposed new language is italicized; 
proposed deletions are in [brackets].

Participant Fees and Credits

* * * * *

        D. Specialist
         Assignment Fees.
            Specialist         No change to text
             Application Fee.
            Assignment of      Once the Committee on Specialist
             Dual Trading       Assignment and Evaluation approves a
             System             Participant to act as specialist in a
             Securities.        security (or a group of securities),
                                that Participant must pay the following
                                fee:

                              * * * * * * *
            $1,000...........  If the security (or group of securities)
                                was assigned in competition with at
                                least one other Participant and up to
                                one-third of all Participants that trade
                                Dual Trading System Securities
            $4,000...........  If the security (or group of securities)
                                was assigned in competition with more
                                than one-third of all Participants that
                                trade Dual Trading System Securities
            Assignment of      Beginning on September 1, 2004, once the
             Nasdaq/NM          Committee on Specialist Assignment and
             Securities.        Evaluation approves a Participant to act
                                as specialist in a security (or a group
                                of securities), that Participant must
                                pay the following fee:

                              * * * * * * *
            $1,000...........  If the security (or group of securities)
                                was assigned in competition with one
                                other Participant that trades Nasdaq/NM
                                Securities

[[Page 61483]]

            $4,000...........  If the security (or group of securities)
                                was assigned in competition with two or
                                more [member firms] Participants that
                                trade Nasdaq/NM Securities

                              * * * * * * *

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, as 
amended, and discussed any comments it received regarding the proposal, 
as amended. 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 Exchange's CSAE is responsible for assigning securities to be 
traded by specialist firms.\7\ Although the CSAE ordinarily assigns 
securities on a one-by-one basis, the CSAE could choose to assign 
securities in groups consisting of more than one security.
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    \7\ See Article XXX, Rule 1.
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    Through this submission, the Exchange proposes to modify its Fee 
Schedule to confirm the assignment fees that apply when the CSAE 
assigns a group of securities to a specialist firm in competition with 
other specialist firms. Specifically, the Exchange proposes to charge, 
for the assignment of a group of listed securities: (a) a fee of $1,000 
per group, if the group was assigned in competition with at least one 
other participant and up to one-third of all participants trading Dual 
Trading System Securities; and (b) a fee of $4,000 per group, if the 
group was assigned in competition with more than one-third of the 
participants trading Dual Trading System Securities.\8\ Similarly, the 
Exchange proposes to charge, for the assignment of a group of Nasdaq/NM 
securities: (x) a fee of $1,000 per group if the group of securities 
was assigned in competition with at least one other participant that 
trades Nasdaq/NM securities; and (y) a fee of $4,000 per group, if the 
group of securities was assigned in competition with two or more 
participants that trades Nasdaq/NM securities.
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    \8\ ``Dual Trading System Securities'' are securities listed on 
the New York Stock Exchange, the American Stock Exchange or any 
other stock exchange that are also listed or traded on the Chicago 
Stock Exchange.
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    These changes to the Fee Schedule are submitted in connection with 
SR-CHX-2005-23, which proposed a change to Rule 1 of CHX Article XXX 
that established an allocation process available to the CSAE, in 
special circumstances involving the allocation of more than 100 stocks 
at a time.\9\ If the CSAE determines that it will allocate a large 
number of stocks by posting groups of stocks at the beginning of the 
application and assignment process, then these changes to the Fee 
Schedule would govern the applicable assignment fees.\10\
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    \9\ The Commission notes that the Exchange uses the terms 
``security(ies), stock(s) and issue(s)'' interchangeably. See 
Securities Exchange Act Release No. 52379 (September 2, 2005), 70 FR 
53825 (September 12, 2005).
    \10\ According to the Exchange, assignment fees are assessed 
upon permanent assignment of the subject issues.
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    The Exchange represents that the fees associated with the 
assignment of securities in competition would be the same for a single 
security and for a group of securities. The Exchange believes that 
these charges are appropriate because, among other things, the 
Exchange's work associated with the assignment of securities in 
competition is not measurably different based on the number of 
securities that are being assigned at a particular time. In each 
instance, Exchange staff gathers data relating to each applicant's 
demonstrated ability, experience and financial responsibility and the 
CSAE meets to review the data, to hear presentations from applicants 
and to determine the appropriate assignment decision.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, 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 CHX's 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, as 
amended, 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 solicited or received with respect to the 
proposed rule change.

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

    The foregoing proposed rule change, as amended, has been designated 
as a fee change pursuant to Section 19(b)(3)(A) of the Act \12\ and 
Rule 19b-4 thereunder \13\ because it establishes or changes a due, fee 
or other charge imposed by the Exchange. Accordingly, the proposal will 
take effect upon filing with the Commission. At any time within 60 days 
of the filing of the 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ See supra note 4.
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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 Number SR-CHX-2005-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303. All submissions should refer to 
File Number SR-CHX-2005-25. 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

[[Page 61484]]

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. 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-
2005-25 and should be submitted on or before November 14, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5858 Filed 10-21-05; 8:45 am]

BILLING CODE 8010-01-P