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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Cincinnati Stock Exchange, Inc. Extending a Pilot Revenue Sharing Program for Trading in Nasdaq National Market Securities

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Start Preamble June 28, 2002.

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 June 28, 2002, the Cincinnati Stock Exchange, Inc. (“CSE” 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 CSE. 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 Exchange proposes to extend a pilot related to a fee schedule for transactions in Nasdaq National Market securities (“Nasdaq NM Securities”) and to establish a revenue sharing program to reflect recent developments in competitive business strategy. The text of the proposed rule change is below. Additions are in italics, and deletions are in brackets.

Chapter XI

Trading Rules

Rule 11.10 National Securities Trading System Fees

A. Trading Fees (No Change to Text)

* * * * *

(e) (1) (No Change to Text)

(2) Tape “C” Transactions. Tape “C” Transactions are defined as transactions conducted in Nasdaq securities pursuant to unlisted trading privileges (“UTP”). Members will be charged a per share fee for Nasdaq securities based upon the following schedule:

Number of Shares Traded (In a single day)Fee Per Share
0-5 million$0.001
5 million one plus+$0.000025
* * * * *

(l) [Tape “C” Transactions. Tape “C” Transactions are defined as transactions conducted in Nasdaq securities pursuant to unlisted trading privileges (“UTP”). Members will be charged $.001 per share per side ($1.00/1000 shares), with a maximum charge of $37.50 per firm per side, for Tape C Transactions.]

[Tape “C” Transaction Credit. Members will receive a 75 percent pro rata credit on revenue generated by transactions in Tape “C” securities.

[(l)](m) (No Change in Text)

[(m)](n) (No Change in Text)

[(n)](o) (No change in Text)

[(o)](p) (No change to text).

[(p)](q) (No change to text)

* * * * *

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 CSE included statements concerning the purpose of, and the 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. CSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. Start Printed Page 45577

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

1. Purpose

The Exchange is proposing to extend the pilot revenue sharing program filed for immediate effectiveness on March 25, 2002.[3] Under the CSE's program for trading Nasdaq NM securities, member firms will receive a 75 percent revenue (75%) pro rata transaction credit on all Nasdaq Tape C market data revenue generated by member trading activity. The pilot program will expire August 30, 2002, if not renewed.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b) of the Act,[4] generally, and section 6(b)(5) of the Act,[5] in particular, in that it is designed to promote just and equitable principles of trade, and to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposal also is consistent with Section 6(b)(4) of the Act [6] in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among Exchange members by crediting CSE members on a pro rata basis.

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

The CSE does not believe that the proposed rule change will result in 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

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change has become effective on filing pursuant to Section 19(b)(3)(A) of the Act [7] and Rule 19b-4(f)(2) thereunder,[8] as establishing or changing a due, fee, or other charge paid solely by members of the CSE. 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.[9]

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 in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the CSE. All submissions should refer to File No. SR-CSE-2002-06 and should be submitted by July 30, 2002.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[10]

Jill M. Peterson,

Assistant Secretary.

End Signature End Preamble

Footnotes

3.  Securities Exchange Act Release No. 45642 (March 26, 2002), 67 FR 15436 (April 1, 2002) (File No. SR-CSE-2002-03).

Back to Citation

9.  See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).

Back to Citation

[FR Doc. 02-17130 Filed 7-8-02; 8:45 am]

BILLING CODE 8010-01-P