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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, Incorporated Relating to Membership Dues and Fees

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Start Preamble December 28, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4[2] thereunder, notice hereby is given that on December 18, 2000, the Chicago Stock Exchange, Incorporated (“CHX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Start Printed Page 1165Items I, II, and III 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The CHX proposes to amend its membership dues and fees schedule (“Schedule”), effective January 1, 2001, to: (1) Increase the special fixed fees for Nasdaq/NMS securities; (2) assess a new fixed fee on “dedicated odd-lot dealers”; (3) revise the fees for transactions in listed securities executed through a floor broker; (4) raise the cap on the maximum transaction fees that can be incurred by a member firm; and (5) increase the earned credits available through the floor broker credit program. Additionally, the Exchange proposes to reconfigure its Schedule to include all of its transaction fees in one portion of the Schedule. The proposed rule change is available at the principal office of the CHX 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 CHX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received regarding 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

A. Purpose

The proposed rule change amends the Schedule in several ways. These changes are designed to allow the Exchange to continue its exponential growth while providing a strong market for its members and for investors.

First, the proposal would increase the specialist fixed fees for Nasdaq/NMS Securities and assess a new fixed fee on “dedicated odd-lot dealers.” The specialist fixed fee for Nasdaq/NMS Securities is paid by the specialist in each particular security; the amount of the fee is based on a market share calculation in that security.[3] The new dedicated odd-lot dealer fee is a flat fee assessed on any odd-lot dealer (as defined in Article XXXI, Rule 3 of the Exchange's Rules) whose principal business is the trading of odd-lots.[4]

The proposal also makes changes to the CHX's transaction fee schedule by: (a) Setting a flat per share fee, instead of a graduated fee based on the number of shares traded, for agency transactions in Dual Trading System Securities that are executed through a floor broker; and (b) raising the current caps on transaction fees paid by member firms.[5]

Additionally, the proposal would revise the floor broker credit program by increasing the earned credits available under the program and by providing that the Exchange will pay floor brokers for any unused credits each month. This credit program is designed to stimulate growth on the Exchange, enhance the competitive capability of floor brokers, and foster cooperation on the Exchange's trading floor by rewarding floor brokers for their work to increase Exchange revenue.

Finally, the proposed would reconfigure the Schedule to include all of its transaction fees in one section of the Schedule.

2. Statutory Basis

The CHX believes that the proposed rule change is consistent with Section 6(b)(4) of the Act [6] in that it provides for the equitable allocation of reasonable dues, fees, and other charges among its members.

B. Self-Regulatory Organization's Statement of Burden on Competition

The CHX does not believe that the proposed rule change will impose any inappropriate 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

The foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange and therefore has become effective pursuant to Section 19(B)(3)(A)(ii) of the Act [7] and subparagraph (f)(2) of Rule 19b-4 [8] thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington DC 20549-0609. 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 at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-CHX-00-38 and should be submitted by January 26, 2001.

Start Signature
Start Printed Page 1166

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  The fixed fee for Nasdaq/NMS Securities was first assessed in April 2000. Before that date, the Exchange had charged its members a fixed fee on Dual Trading System Securities (securities listed on the New York Stock Exchange or the American Stock Exchange) for many years. The Nasdaq/NMS-related fixed fees allow the Exchange to at least partially defray the costs associated with the continued development and anticipated growth of its Nasdaq/NMS program. The Exchange originally began assessing a Nasdaq/NM Securities fixed fee at a somewhat lower level than the fee that had been in place for Dual Trading System Securities to allow members time to adjust their business models to this new requirement. Now, nine months later, the Exchange proposes to increase the fee to more closely resemble the one charged for Dual Trading System Securities.

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4.  This fee is designed to at least partially defray the costs associated with the continued development and anticipated growth of the Exchange's odd-lot program.

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5.  Under the current Schedule, firms are subject to either a $78,000 or $54,000 cap on transaction fees for orders that are not sent through the Exchange's MAX® trading system, depending upon whether or not the firm has a market maker or floor broker presence. The revised Schedule would remove the reference to a floor presence and impose separate $110,000 caps on non-MAX transaction fees for transactions in Nasdaq/NMS Securities and in dual Trading System Securities.

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7.  15 U.S.C. 78f(b)(3)(A)(ii).

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[FR Doc. 01-317 Filed 1-4-01; 8:45 am]

BILLING CODE 8010-01-M