Skip to Content

Notice

Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Amend the CHX Fee Schedule on a Retroactive Basis to Clarify the Application of a Credit Against Specialist Fixed Fees

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble March 6, 2007.

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 February 12, 2007, 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 substantially by the CHX. 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 amend its Schedule of Participant Fees and Credits (“Schedule”), on a retroactive basis, to clarify application of a monthly specialist fixed fee credit. The text of the proposed rule change is available at the Exchange, http://www.chx.com/​rules/​proposed_​rules.htm, and 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. 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

The Exchange seeks to amend the Schedule on a retroactive basis to clarify application of a monthly specialist fixed fee credit.

On November 21, 2006, the Exchange amended the Schedule, providing for a monthly specialist fixed fee credit of $25,000, to be in effect while the Exchange completed implementation of its new trading model and issues were transitioned from being traded by CHX specialists to a market maker model.[3]

At that time, the Exchange envisioned that the credit would be applied on a cumulative basis for November and December of 2006, so that the November credit would be $25,000 and the December credit would be $50,000. Subsequently, at the December 12, 2006 meeting of its Board of Directors, the Exchange determined that it would make the credit available for the month of January 2007, but that the credit for January would be reduced to $25,000. The proposed rule language in the instant proposed rule change clarifies the total amount of the credit available for each month.[4]

Start Printed Page 11069

The monthly credit is applied against the first $25,000 (or $50,000, in the case of December 2006) in monthly specialist fixed fees otherwise due the CHX from a participant firm. If the participant firm's fixed fee liability is less than the credit amount, the CHX would apply a credit equal to the amount of the fixed fee liability, but would not issue a refund to such participant firm for the remaining balance of the credit, nor would the CHX carry forward the balance of the credit for application to future fixed fee liabilities.[5]

2. Statutory Basis

The CHX believes the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b).[6] The proposed rule change is consistent with Section 6(b)(4) of the Act in that it provides for the equitable allocation of reasonable dues, fees and other charges among the Exchange's members and will result in an additional credit for CHX specialist firms impacted by the Exchange's transition to its new trading model. The proposed rule change is consistent with Section 6(b)(5) of the Act because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest by permitting the Exchange to provide incentives for its specialist firms to support the transition to new technology that will result in fully automated executions.

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.

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

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will:

(A) By order approve such proposed rule change, or

(B) Institute proceedings to determine whether the proposed rule change should be disapproved.

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

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-2007-02. 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 the filing also will be available for inspection and copying at the principal offices 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-2007-02 and should be submitted on or before March 27, 2007.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Securities Exchange Act Release No. 55070 (January 9, 2007), 72 FR 2049 (January 17, 2007) (SR-CHX-2006-37).

Back to Citation

4.  Thus, the credit for November 2006 is $25,000; the credit for December 2006 is $50,000; and the credit for January 2007 is $25,000.

Back to Citation

5.  For example, if a specialist firm's monthly fixed fee liability for November 2006 was $32,000, the CHX would apply the $25,000 credit and the firm would be billed for the remaining balance of $7,000 in net fixed fees. If a specialist firm's fixed fee liability was $10,000, the CHX would apply a credit of $10,000, offsetting the entire liability, and the CHX would not bill the specialist firm for any fixed fees. The CHX would not issue a refund of $15,000 to the specialist firm on account of the unused portion of the available credit and the unused portion would not be available to offset fixed fee liabilities in future months.

Back to Citation

[FR Doc. E7-4325 Filed 3-9-07; 8:45 am]

BILLING CODE 8010-01-P