Document ID: SEC-2012-0308-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2012-02-23T05:00Z

[Federal Register Volume 77, Number 36 (Thursday, February 23, 2012)]
[Notices]
[Pages 10792-10794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4150]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66410; File No. SR-CHX-2012-06]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend its Fee Schedule To Provide for a New Cross Connection Charge and 
Waive Monthly Fees at its New Facility Until April 1, 2012

February 16, 2012.
    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 9, 2012, the Chicago Stock Exchange,

[[Page 10793]]

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 
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

    CHX proposes to amend its Schedule of Fees and Assessments (the 
``Fee Schedule''), to provide for certain new cross connection charges 
and to waive monthly port fees and cross connection charges otherwise 
applicable to any Participants connecting to CHX's new facilities in 
the Equinix NY4 data center (``NY4'') until April 1, 2012. CHX also 
proposes consolidating connection charges and modifying certain 
descriptions contained in the Fee Schedule for clarity. The text of 
this proposed rule change is available on the Exchange's Web site at 
(www.chx.com) 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 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 proposes to amend its Schedule of 
Fees and Assessments (the ``Fee Schedule'') to provide for certain new 
cross connection charges and to waive monthly port fees and cross 
connection charges otherwise applicable to any Participants connecting 
to CHX's new facilities in the Equinix NY4 data center (``NY4'') until 
April 1, 2012. CHX also proposes consolidating connection charges and 
modifying certain descriptions contained in the Fee Schedule for 
clarity.
    Last year, CHX began an initiative to establish a presence at NY4 
in order to improve latencies for its east coast customers and increase 
the use of its Matching System. The following proposed modifications to 
the CHX Fee Schedule are related to this initiative.
    The Exchange proposes to consolidate all connection charges into 
section D. and rename this section ``Connection Charges.'' The Exchange 
also proposes dividing connection charges into two general categories: 
1. ``Matching System Port Charges'', which are assessed for each 
logical connection into the Exchange's Matching System; and, 2. ``Cross 
Connection Charges'', which are assessed based upon the capacity of the 
line that physically connects equipment and the type of equipment that 
is being connected. Such connections are utilized to send market data 
to, and receive orders from, the customer's equipment.
    Under new section D. 1. ``Matching System Port Charges'' the 
Exchange will further clarify, in both the heading and the following 
descriptive paragraph, that such charges are for ``logical'' (i.e. not 
physical) connectivity. The Exchange will also further specify that one 
port charge is assessed for each Participant give-up that has access 
through any Participant connection to the Matching System. 
Additionally, the Exchange proposes removing the parenthetical 
reference to the effective date from the rule text.
    Under new section D. 2. ``Cross Connection Charges'' the Exchange 
will clarify in the heading that such charges are for ``physical'' 
connectivity. The Exchange also proposes subdividing new section D. 2. 
into cross connection charges that are available for: (a) Carrier 
equipment to customer equipment connections; and, (b) Customer 
equipment to CHX equipment connections. The Exchange notes that the 
various charges specified in new section D. 2. (a) are those charges 
that previously appeared as ``Data Connections'' under section G. ``Co-
location Fees.'' The Exchange believes that moving these charges from 
section G. into section D. and thereby consolidating them with other 
types of connection charges will clarify the Fee Schedule. The Exchange 
also proposes deleting the subheading ``Space'' from Section G. ``Co-
location Fees'' since it will no longer be needed to distinguish space 
rental charges from connectivity charges.
    This proposal would also change the description for the ``CHX 
Network Connection'' charge, which previously appeared in Section G., 
to ``1G Connection'' and would also add a second, higher capacity, 10G 
cross connection charge under new section D. 2. (b); which are physical 
connections from customer equipment to CHX equipment. In the case of 
the 1G connection, the Exchange will continue to charge a one-time fee 
of $150 to establish the connection and a recurring monthly fee of 
$100. In the case of the new higher capacity 10G connection, the 
Exchange proposes charging a one-time fee of $1,000 to establish the 
connection and a recurring monthly fee of $500. As mentioned above, 
such connections are utilized to send market data to, and receive 
orders from, the customer's equipment
    Finally, in order to encourage current and new customers to 
establish connections at the Exchange's new facility and to provide a 
transitional period for those current customers that would like to move 
their connections from Chicago to the new NY4 facility, CHX proposes 
waiving monthly port fees and monthly cross connection charges at the 
NY4 facility until April 1, 2012. The Exchange believes that waiving 
monthly charges at NY4 until this date certain will accomplish its two 
goals of encouraging the establishment of new connections while 
avoiding temporarily double charging those customers that would simply 
like to connect to the new facility and then subsequently disconnect 
from the Chicago facility. To communicate this policy to all 
Participants, the Exchange proposes adding language to its Fee Schedule 
indicating that no monthly charges will be assessed under section D. 
for CHX's Equinix NY4 data center location until April 1, 2012. The 
Exchange notes that it will waive only the monthly fees applicable 
under section D. and not one-time fees because such fees are associated 
with the establishment of a new physical connection.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \5\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \6\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and other persons

[[Page 10794]]

using any facility or system which the Exchange operates or controls.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
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    Specifically, the Exchange believes that the addition of the 1G and 
10G cross connection charges specified above is reasonable because 
these charges are similar to those in effect for equivalent services at 
other exchanges.\7\ Furthermore, these charges are equitable and non-
discriminatory in that they are only charged to those Participants that 
have exclusive use of the connection for which the Exchange is 
charging.
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    \7\ See BATS BZX Exchange Fee Schedule, ``Physical Connection 
Charges'', p.4, available on BATS' public Web site. See also 
DirectEdge EDGA Exchange Fee Schedule, Physical Connectivity Fees, 
p. 3, available on DirectEdge's public Web site.
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    The Exchange also believes that the waiver of monthly fees 
otherwise applicable under section D. of its Fee Schedule for 
connections established at its new NY4 facility until April 1, 2012 is 
both reasonable and equitable in that it encourages all Participants to 
establish connections at the new facility but will ultimately impose 
new charges on those that have established additional connections after 
that date. Furthermore, the Exchange believes that the waiver of 
monthly fees until a date certain results in a non-discriminatory 
application of fees in that it will not temporarily double charge those 
Participants that are transitioning to the new facility, provided the 
new connection is made and the old connection discontinued prior to 
April 1, 2012.
    Finally, the Exchange believes that the proposed consolidation of 
connection charges and
    other clarifying modifications to its Fee Schedule are consistent 
with Section 6(b) of the Act \8\ in general, and further the objectives 
of Section 6(b)(5) of the Act \9\ in particular, in that they foster a 
better understanding of the various fees charged by the Exchange to all 
Participants and other persons using any facility or system which the 
Exchange operates or controls.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of 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. The addition of fees similar 
to those charged by competing markets and the temporary waiver of 
monthly fees at a new facility during a brief transitional period will 
not impose any burden on competition.

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 proposed rule change is to take effect pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \11\ because it establishes or changes a due, fee or other 
charge applicable to the Exchange's members and non-members, which 
renders the proposed rule change effective upon filing.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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    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.

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 email to rule-comments@sec.gov. Please include 
File Number SR-CHX-2012-06 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-2012-06. This file 
number should be included on the subject line if email 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 the 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-2012-06 and should be 
submitted on or before March 15, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4150 Filed 2-22-12; 8:45 am]
BILLING CODE 8011-01-P