Document ID: SEC-2006-1280-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes:Chicago Stock Exchange, Inc.
Posted Date: 2006-10-03T04:00Z

[Federal Register: October 3, 2006 (Volume 71, Number 191)]
[Notices]               
[Page 58456-58457]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc06-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54522; File No. SR-CHX-2006-26]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change, 
and Amendment No. 1 Thereto, Prohibiting a Participant Firm From 
Earning Credits When Its Exchange Bill Is More Than 30 Days Past Due

September 27, 2006.
    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 August 22, 2006, 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 Exchange. On 
September 22, 2006, the Exchange filed Amendment No. 1.\3\ The Exchange 
has designated this proposal as one establishing or changing a due, 
fee, or other charge imposed by a self-regulatory organization pursuant 
to Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ 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 
persons.
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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 clarified the new language 
it proposes to add to its Schedule of Participant Fees and Credits 
(``Fee Schedule''). Originally, the Exchange proposed that the Fee 
Schedule be amended to provide that a CHX participant firm shall not 
be entitled to ``receive'' credits for any month when the 
participant firm's Exchange bill is more than 30 days past due. In 
Amendment No. 1, the Exchange made a clarifying change, instead 
amending the Fee Schedule to provide that a CHX participant firm 
shall not be entitled to ``earn'' credits for any month when the 
participant firm's Exchange bill is more than 30 days past due. For 
purposes of calculating the 60-day period within which the 
Commission may summarily abrogate the proposed rule change the 
Commission considers the period to commence on September 22, 2006, 
the date on which the CHX filed Amendment No. 1. See 15 U.S.C. 
78s(b)(3)(C).
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 Fee Schedule to provide that a CHX 
participant firm shall not be entitled to earn credits for any month 
when the participant firm's Exchange bill is more than 30 days past 
due. The text of the proposed rule change, as amended, is available on 
the Exchange's Web site at http://www.chx.com/rules/[fxsp0]proposed--

rules.htm, at the Office of the Secretary of the Exchange, and at 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 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 Exchange 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
    Under the Exchange's Fee Schedule, the Exchange's participants, 
including its specialists and floor brokers, can qualify for credits 
that reduce the total monthly fees owed by these participants.\6\ These 
credits include a specialist ``transaction credit'' based on monthly 
tape revenue in securities reported on Tape A and B of the Consolidated 
Tape Association and a floor broker ``earned credit'' based on the 
transaction fees received as a result of floor broker executions.\7\
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    \6\ The Exchange's Fee Schedule also includes a new credit for 
two-sided quote providers and a credit for dedicated odd-lot 
dealers.
    \7\ See Fee Schedule, Section M(1)(specialist credits) and 
Section M(2)(a)(floor broker earned credits).
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    Through this proposed rule change, the Exchange amends the Fee 
Schedule to add a new provision--applicable to all credits--that 
prevents a participant firm from earning credits for any month when 
payment of the firm's Exchange bill (from one or more previous months) 
is more than 30 days past due.\8\ The Exchange believes that this 
provision appropriately limits a participant's ability to receive 
credits from the Exchange when it has not paid an Exchange bill that 
has been due and owing for at least 30 days.
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    \8\ For example, a participant's February bill is distributed in 
early March (say, March 10) and due in early April (in this example, 
April 10). It would be 30 days past due on May 10. If a participant 
has not paid its February bill by May 10, the participant would not 
be eligible to receive credits for the month of May (and for any 
later months during which the bill remains unpaid).
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2. Statutory Basis
    The Exchange believes that its proposal to amend its schedule of 
fees is consistent with Section 6(b)(4) of the Act \9\ provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its members.
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    \9\ 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 will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 foregoing proposed rule change establishes or changes a due, 
fee, or other charge applicable only to a member pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) thereunder.\11\ 
Accordingly, the proposal took effect upon filing with the Commission.
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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, as amended, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such

[[Page 58457]]

action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.\12\
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    \12\ See supra at note 3.
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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-2006-26 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-2006-26. 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 such 
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-2006-26 and should be submitted on or before October 
24, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-16248 Filed 10-2-06; 8:45 am]

BILLING CODE 8010-01-P