Document ID: SEC-2011-1369-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2011-09-12T04:00Z

[Federal Register Volume 76, Number 176 (Monday, September 12, 2011)]
[Notices]
[Pages 56248-56249]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23172]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65269; File No. SR-CHX-2011-26]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Remove its Tiered Schedule of Fees and Rebates and To Lower or Remove 
Certain Rebates

    September 6, 2011.
    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 25, 2011, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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

    The CHX proposes to amend its Schedule of Fees and Assessments (the 
``Fee Schedule''), effective September 1, 2011, to remove its tiered 
schedule of fees and rebates and lower or remove certain rebates. The 
text of this proposed rule change is available on the Exchange's 
website at http://www.chx.com/rules/proposed_rules.htm and in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549.

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''), effective September 1, 
2011, to remove its tiered fee and rebate structure for Participants 
for trade executions of single-sided orders in securities priced over 
one dollar during the regular trading session and to lower or remove 
certain rebates. These fee changes are being proposed to simplify the 
Exchange's Fee Schedule and increase revenue to the Exchange.
    In January, 2010, the Exchange introduced a tiered schedule of fees 
and rebates according to which the fee imposed on Participants for 
removing liquidity from the Matching System (the ``take fee'') or 
credit given to Participants which display orders in the Matching 
System which result in trade executions (the ``provide credit'') varied 
depending on the executing Participant's Average Daily Volume 
(``ADV'').\5\ A Participant's ADV is determined by the number of shares 
it has executed as a liquidity provider in any and all trading sessions 
on average per trading day (excluding partial trading days) across all 
tapes on the trading facilities of the CHX (excluding all cross 
transactions) for the calendar month in which the executions occurred. 
Under this tiered schedule, there were three volume-based Tiers and the 
rate of applicable take fees and provide credits varied based upon the 
Tier into which a Participant falls.
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    \5\ Through its filing on January 4, 2010, the Exchange 
instituted a tiered fee and rebate structure based on a 
Participant's ADV. See, SR-CHX-2010-01, Exchange Act. Rel. No. 34-
61322 (January 11, 2010), 75 FR 2914 (Jan. 19, 2010).
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    In August, 2010, the Exchange altered its tiered Fee Schedule to 
delete those provisions which varied the take fee based upon the 
Participant's ADV and imposed a flat take fee of $0.003/share across 
all Tapes.\6\ The Exchange also reduced the provide credit for 
executions in Tape A & C securities from $0.0026/share to $0.0025/share 
for the lowest Tier of activity, from $0.0028/share to $0.0027/share in 
the middle Tier and from $0.003/share to $0.0029/share in the highest 
Tier. For Tape B securities, the provide credit was reduced from 
$0.0028/share to $0.0026/share in the lowest Tier, from $0.003/share to 
$0.0028/share in the middle Tier and from $0.0032/share to $0.0031/
share in the highest Tier. The flat provide credit paid to CHX-
registered Institutional Brokers when they represent agency orders 
which execute in the CHX Matching System in Tape B securities was also 
reduced from $0.0032 to $0.0031/share.
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    \6\ See, SR-CHX-2010-18, Exchange Act. Rel. No. 34-62650 (August 
4, 2010), 75 FR 48397 (August 10, 2010).
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    According to this proposal, the Exchange would delete those 
provisions of the Fee Schedule which vary the provide credit based upon 
the Participant's ADV. In its place, the Exchange proposes to remove 
the provide credit for executions in Tape A & C securities during the 
regular trading session and, for Tape B securities, the provide credit 
would be reduced to $0.0022/share. The flat provide credit

[[Page 56249]]

paid to CHX-registered Institutional Brokers when they represent agency 
orders which execute in the CHX Matching System would also be removed 
for Tape A & C securities and the credit in Tape B securities would be 
reduced from $0.0027 to $0.0022/share. The Exchange believes that this 
proposal will simplify its Fee Schedule and will result in increased 
revenue.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \8\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and other persons using any facility or 
system which the Exchange operates or controls. Among other things, the 
removal of the Exchange's tiered fee and rebate structure will simplify 
the Fee Schedule by instituting reasonable rates that do not vary based 
upon a Participant's ADV and thereby equitably allocate fees among all 
Participants in a non-discriminatory manner. Additionally, the removal 
of the provide credit for executions in Tape A & C securities and the 
lowering of the provide credit in Tape B securities during the regular 
trading session, as well as for institutional broker transactions, will 
equitably allocate the same reasonable rebate rates among all 
Participants.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 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 \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-CHX-2011-26 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-2011-26. 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 website (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 website 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 such filing will also 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 No. SR-CHX-2011-26 and should be submitted on or 
before October 3, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23172 Filed 9-9-11; 8:45 am]
BILLING CODE 8011-01-P