[Federal Register Volume 62, Number 237 (Wednesday, December 10, 1997)]
[Notices]
[Pages 65113-65114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32310]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39395; File No. SR-CSE-97-12]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange, 
Inc., Relating to Transaction Credits

December 3, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, 15 U.S.C. Sec. 78s(b)(1) (``Act''), notice is hereby given that 
on November 13, 1997, The Cincinnati Stock Exchange, Incorporated 
(``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 the 
CSE.\1\ The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
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    \1\ On November 19, 1997, the Exchange submitted Amendment No. 1 
to the filing. See letter from Adam W. Gurwitz, Vice President and 
Secretary, CSE, to Marie Ito, Special Counsel, Division of Market 
Regulation, Commission, dated November 19, 1997.
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I. Self Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its schedule of fees in order to 
provide a transaction credit for Tape B transactions.\2\
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    \2\ ``CTA Network B'' is commonly known as Tape B, and is 
defined in the Consolidated Tape Association Plan as ``the 
[Consolidated Tape] System as utilized to make available `CTA 
Network B information' (that is, last sale price information related 
to Network B Eligible Securities).'' The Consolidated Tape 
Association Plan further defines ``Network B Eligible Securities'' 
to mean securities ``admitted to dealings on the [American Stock 
Exchange], [Boston Stock Exchange], [Chicago Board Options 
Exchange], [Chicago Stock Exchange], CSE, [Pacific Exchange], 
[Philadelphia Stock Exchange] or on any other exchange, but not also 
admitted to dealings on [the New York Stock Exchange].'' CTA Plan, 
at 1-3.
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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 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. The CSE has prepared summaries, set forth in sections 
(A), (B), and (C) below, of the most significant parts 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 is implementing a credit for transactions in all Tape 
B securities in order to create an incentive for members to trade such 
securities on the Exchange. The Exchange believes the credit is a 
logical next step in its efforts to remain the low-cost provider of 
exchange services in the National Market System. Members will be 
credited on a pro rata basis, based upon the percentage of tape B 
transaction market share captured by the Exchange

[[Page 65114]]

in a given quarter. The new credit is delineated in Exhibit A.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
in general, and furthers the objectives of Section 6(b)(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. It is also 
consistent with Section 6(b)(4) in that it is designed to provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among Exchange members by crediting members on a pro rata basis.\3\
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    \3\ The Commission notes that the filing may raise questions 
concerning payment for order flow. To the extent that it does raise 
such issues, exchange members should consider any associated 
disclosure obligations, namely pursuant to Rules 10b-10 and 11Ac1-3 
under the Act, 17 CFR 240.10b-10 and 17 CFR 240.11Ac1-3, 
respectively.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CSE 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 solicited in connection with the proposed 
rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act and subparagraph (e)(2) of Rule 19b-4 thereunder 
because it constitutes or changes a due, fee, or other charge imposed 
by the Exchange. 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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. Sec. 552, will be available for inspection and copying in 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filings will also be available 
for inspection and copying at the principal office of the CSE. All 
submissions should refer to File No. SR-CSE-97-12 and should be 
submitted by December 31, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.

Exhibit A

Proposed Rule Change

The Cincinnati Stock Exchange, Incorporated

Additions are italicized

Rule 11.10  National Securities Trading System Fees

    A. Trading Fees.
    a.--(1) No Change.
    (j) Tape ``B'' Transactions. The CSE will not impose a 
transaction fee on Consolidated Tape ``B'' securities. In addition, 
Members will receive a pro rata transaction credit based on the 
following schedule:

------------------------------------------------------------------------
                                                              Percentage
                                                              of Tape B 
 Average quarterly exchange Tape B transaction market share    revenue  
                                                               credited 
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1-2.99%....................................................           10
3-4.99%....................................................           25
5-6.99%....................................................           30
7% and greater.............................................           40
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    (k)--(n) No Change.
    B. Membership Fees.
    No Change.

[FR Doc. 97-32310 Filed 12-9-97; 8:45 am]
BILLING CODE 8010-01-M