Document ID: SEC-2014-1311-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2014-08-05T04:00Z

[Federal Register Volume 79, Number 150 (Tuesday, August 5, 2014)]
[Notices]
[Pages 45570-45572]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18385]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72711; File No. SR-CHX-2014-10]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Concerning the Use of Market Data Feeds by the Exchange

July 29, 2014.
    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 16, 2014, the Chicago Stock Exchange, Inc. (``CHX'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. 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

    CHX proposes to adopt Article 1, Rule 4, to provide that the 
consolidated market data feed disseminated by the securities 
information processors shall be the only market data feed utilized by 
the Exchange for all operational and regulatory compliance purposes. 
The Exchange has designated this proposal as non-controversial and 
provided the Commission with the notice required by Rule 19b-
4(f)(6)(iii) under the Act.\3\
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    \3\ 17 CFR 240.19b-4(f)(6)(iii).
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    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 on 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.

[[Page 45571]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt Article 1, Rule 4 to provide that 
the consolidated market data disseminated by the securities information 
processors (``SIPs'') \4\ (``SIP data feeds'') shall be the only market 
data feed utilized by the Exchange for all operational and regulatory 
compliance purposes. The SIP data feeds are the only data feeds the 
Exchange currently utilizes for all operational and regulatory 
compliance purposes. Thus, the Exchange does not utilize any direct 
proprietary market data feeds from any external market for such 
purposes.\5\
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    \4\ See 15 U.S.C. 78c(a)(22)(A).
    \5\ In addition to the SIP data feeds, the Exchange utilizes its 
own internal data regarding its own market for operational and 
regulatory compliance purposes.
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    For example, the Exchange only utilizes the SIP data feeds to 
calculate the National Best Bid and Offer (``NBBO'') for the purposes 
of compliance with Regulation NMS and Regulation SHO. The Exchange does 
not ignore or modify SIP quote data for the purposes of establishing 
the NBBO under any circumstances where the SIP data feed shows an 
uncrossed market.\6\ Similarly, the Exchange utilizes the SIP data 
feeds in its surveillance of order and trade activity on the Exchange, 
when applicable.
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    \6\ Pursuant to Paragraph .01(d) of CHX Article 20, Rule 5, the 
Exchange's NBBO calculation protocol will ignore crossing quotes and 
shall execute orders up to the first uncrossed NBBO. In doing so, 
the Exchange will only utilize the SIP data feeds to establish the 
first uncrossed NBBO.
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    The Exchange notes that it does not currently offer outbound order 
routing from the Exchange. If the Exchange implements outbound routing 
in the future, the Exchange intends for its routing facilities to only 
utilize the SIP data feeds.\7\ The Exchange also notes that it does not 
currently offer pegged orders, which are orders that have a limit price 
that tracks the NBBO, such as the midpoint of the NBBO.
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    \7\ Adoption of an outbound order routing functionality is 
subject to Commission approval pursuant to Rule 19b-4 under the Act.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\8\ In particular, the 
proposal is consistent with Section 6(b)(5) of the Act,\9\ because it 
would promote just and equitable principles of trade, remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system. Specifically, the Exchange believes that 
the proposed rule concerning the Exchange's use of the SIP market data 
feeds will enhance transparency concerning the operation of the 
Exchange. This will, in turn, promote the public confidence and 
strengthen the national market system.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change 
implicates any competitive issues. To the contrary, the Exchange 
anticipates that other national securities exchanges will also adopt 
similar rules outlining their respective use of data feeds and this 
proposed rule will ensure consistent treatment of this subject matter 
in the respective rulebooks.

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 Exchange has designated this rule filing as non-controversial 
under Section 19(b)(3)(A) of the Act \10\ and paragraph (f)(6) of Rule 
19b-4 thereunder.\11\ Because the foregoing proposed rule change does 
not: (i) Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, as required under Rule 
19b-4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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-2014-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-CHX-2014-10. 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 
10:00 a.m. and 3:00 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

[[Page 45572]]

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-2014-10 and should be submitted on 
or before August 26, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-18385 Filed 8-4-14; 8:45 am]
BILLING CODE 8011-01-P