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Self-Regulatory Organizations; Order Granting Approval to a Proposed Rule Change and Amendment No. 1 Thereto by the Chicago Stock Exchange, Inc. Relating to Membership Dues and Fees

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Start Preamble April 1, 2004.

On January 21, 2004, the Chicago Stock Exchange, Inc. (“CHX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to amend its membership dues and fees schedule (the “Fee Schedule”) to clarify the applicability of certain Fee Schedule provisions relating to transaction fees, and to establish a schedule of maximum monthly transaction fees for certain agency orders executed through a CHX floor broker. The Exchange proposed to apply the Fee Schedule changes on a retroactive basis effective as of November 1, 2003.[3] On February 19, 2004, the Exchange submitted an amendment to the proposed rule change.[4] The proposed rule change, as amended, was published for comment in the Federal Register on March 1, 2004.[5] The Commission received no comments on the proposal.

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange [6] and, particularly, Section 6(b)(4) of the Act, which requires that the rules of an exchange provides for the equitable allocation of reasonable dues, fees, and other charges among its members.[7] The Commission believes that the Exchange's proposal to apply its current Fee Schedule on a retroactive basis to November 1, 2003, should allow the Exchange to provide eligible order-sending firms that route significant levels of order flow to the CHX a transaction fee credit. The Commission notes that the retroactive application of the proposal will not result in the assessment of any additional fees against CHX members.

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,[8] that the proposed rule change, as amended, (SR-CHX-2004-01) is approved.

Start Signature

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

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  On December 31, 2003, the Exchange filed an identical amendment to the Fee Schedule, as immediately effective. See SR-CHX-2003-39. Because the Exchange also sought to apply the Fee Schedule amendments on a retroactive basis (i.e., to the months November and December, 2003), the Exchange submitted the proposed rule change for notice and comment.

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4.  See facsimile from Ellen J. Neely, Senior Vice President & General Counsel, CHX, to A. Michael Pierson, Attorney, and Marisol Rubecindo, Law Clerk, Division of Market Regulation (“Division”), Commission, dated February 19, 2004 (“Amendment No. 1”). Amendment No. 1 replaced the proposed rule change in its entirety.

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5.  See Securities Exchange Act Release No. 49298 (February 23, 2004), 69 FR 9660.

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6.  In approving this proposed rule change, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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[FR Doc. 04-8085 Filed 4-8-04; 8:45 am]