Document ID: SEC-2007-0360-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Chicago Stock Exchange, Inc.
Posted Date: 2007-03-12T04:00Z

[Federal Register: March 12, 2007 (Volume 72, Number 47)]
[Notices]               
[Page 11068-11069]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr07-142]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55408; File No. SR-CHX-2007-02]

 
Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Amend the CHX Fee Schedule 
on a Retroactive Basis to Clarify the Application of a Credit Against 
Specialist Fixed Fees

March 6, 2007.
    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 12, 2007, 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 substantially 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 Exchange proposes to amend its Schedule of Participant Fees and 
Credits (``Schedule''), on a retroactive basis, to clarify application 
of a monthly specialist fixed fee credit. The text of the proposed rule 
change is available at the Exchange, http://www.chx.com/rules/proposed_rules.htm
, and 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 Exchange included statements 
concerning the purpose of and basis for 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 Change

1. Purpose
    The Exchange seeks to amend the Schedule on a retroactive basis to 
clarify application of a monthly specialist fixed fee credit.
    On November 21, 2006, the Exchange amended the Schedule, providing 
for a monthly specialist fixed fee credit of $25,000, to be in effect 
while the Exchange completed implementation of its new trading model 
and issues were transitioned from being traded by CHX specialists to a 
market maker model.\3\
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    \3\ See Securities Exchange Act Release No. 55070 (January 9, 
2007), 72 FR 2049 (January 17, 2007) (SR-CHX-2006-37).
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    At that time, the Exchange envisioned that the credit would be 
applied on a cumulative basis for November and December of 2006, so 
that the November credit would be $25,000 and the December credit would 
be $50,000. Subsequently, at the December 12, 2006 meeting of its Board 
of Directors, the Exchange determined that it would make the credit 
available for the month of January 2007, but that the credit for 
January would be reduced to $25,000. The proposed rule language in the 
instant proposed rule change clarifies the total amount of the credit 
available for each month.\4\
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    \4\ Thus, the credit for November 2006 is $25,000; the credit 
for December 2006 is $50,000; and the credit for January 2007 is 
$25,000.

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[[Page 11069]]

    The monthly credit is applied against the first $25,000 (or 
$50,000, in the case of December 2006) in monthly specialist fixed fees 
otherwise due the CHX from a participant firm. If the participant 
firm's fixed fee liability is less than the credit amount, the CHX 
would apply a credit equal to the amount of the fixed fee liability, 
but would not issue a refund to such participant firm for the remaining 
balance of the credit, nor would the CHX carry forward the balance of 
the credit for application to future fixed fee liabilities.\5\
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    \5\ For example, if a specialist firm's monthly fixed fee 
liability for November 2006 was $32,000, the CHX would apply the 
$25,000 credit and the firm would be billed for the remaining 
balance of $7,000 in net fixed fees. If a specialist firm's fixed 
fee liability was $10,000, the CHX would apply a credit of $10,000, 
offsetting the entire liability, and the CHX would not bill the 
specialist firm for any fixed fees. The CHX would not issue a refund 
of $15,000 to the specialist firm on account of the unused portion 
of the available credit and the unused portion would not be 
available to offset fixed fee liabilities in future months.
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2. Statutory Basis
    The CHX believes the 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).\6\ The proposed rule change is consistent 
with Section 6(b)(4) of the Act in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among the 
Exchange's members and will result in an additional credit for CHX 
specialist firms impacted by the Exchange's transition to its new 
trading model. The proposed rule change is consistent with Section 
6(b)(5) of the Act 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, and, in 
general, protect investors and the public interest by permitting the 
Exchange to provide incentives for its specialist firms to support the 
transition to new technology that will result in fully automated 
executions.
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    \6\ 15 U.S.C. 78f(b).
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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.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be 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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-CHX-2007-02 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 Number SR-CHX-2007-02. 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 inspection and 
copying in the Commission's Public Reference Room. Copies of the filing 
also will be available for inspection and copying at the principal 
offices 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-2007-02 and should be submitted on or before March 27, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4325 Filed 3-9-07; 8:45 am]

BILLING CODE 8010-01-P