[Federal Register Volume 64, Number 129 (Wednesday, July 7, 1999)]
[Notices]
[Pages 36726-36727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17154]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41569; File No. SR-CHX-99-05]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Inc., Relating to a Specialist Assignment Fee for Nasdaq/National 
Market Securities

June 28, 1999.
    Purusant 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 11, 1999, the Chicago Stock Exchange, Inc. (``CHX'' or ``the 
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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 membership dues and fees 
schedule to provide for an increase, from $500 to $2000, of the 
Specialist Assignment Fee charged upon approval of an Exchange 
specialist's application to serve as the CHX specialist for a Nasdaq/
National Market (``Nasdaq/NM'') issue. The text of the proposed change 
is as follows.

[[Page 36727]]

Additions are in italics; deletions are in brackets.
* * * * *

MEMBERSHIP DUES AND FEES

* * * * *

(b) Registration Fee.

    Specialist Assignment: There shall also be an assignment fee of 
$500 [per issue] for each Dual Trading System issue and a $2,000 
assignment fee for each NASDAQ/NM issue upon the approval by the 
Committee on Specialist Assignment and Evaluation of an application of 
a member or member organization to act as specialist in an issue 
[security]. However, for Dual Trading System issues, this fee shall be 
applicable in competitive assignments only.
* * * * *

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

    In its filing with the Commission, CHX included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed 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 Exchange 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 purpose of the proposed rule change is to partially defray the 
incremental costs of the Exchange's program whereby CHX specialists 
trade Nasdaq/NM issues (the ``OTC/UTP Program''). At present, the only 
costs recovered by the Exchange in connection with the OTC/UTP Program 
are certain technology costs, including the costs associated with 
procuring hardware and software dedicated exclusively to the OTC/UTP 
Program.\3\ Given the rapid expansion of the Exchange's OTC/UTP 
Program, and the corresponding demands on the Exchange's financial and 
other resources to support such growth, the Executive Committee of the 
Exchange has determined that an increase in the Specialist Assignment 
Fee for Nasdaq/NM issues constitutes the best means of ensuring that 
the OTC/UTP product line generates revenue sufficient to support 
further anticipated growth, without placing the financial burden of 
such growth on the Exchange or those Exchange members that are not part 
of the OTC/UTP Program. The Exchange believes that the relatively 
modest proposed increase is reasonable given the financial 
opportunities generated by serving as a CHX specialist in Nasdaq/NM 
issues.
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    \3\ The Commission notes a related recent rule change filed by 
CHX in this regard, charging OTC/UTP specialists for new technology 
and dedicated equipment. See Securities Exchange Act Release No. 
41526 (June 15, 1999).
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    The CHX Rules expressly authorize the Exchange to ``* * * fix and 
impose other charges or fees to be paid to the Exchange by members and 
member organizations * * * for the use of equipment or facilities. * * 
*'' \4\ Proceeding under this authority, the Exchange's Executive 
Committee, meeting on May 26, 1999, determined that increasing the 
Specialist Assignment Fee to $2,000 per Nasdaq/NM issue constituted a 
reasonable increase and an appropriate means of ensuring that 
specialist continuity is retained. The Exchange represents that all 
specialist firms involved in the OTC/UTP Program were represented at 
the May 28, 1999, meeting of the Exchange's OTC Committee discussing 
the proposed increase, and no objection was raised.
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    \4\ Art. XIV, Rule 7(a).
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2. Statutory Basis
    The Exchange believes that this proposed rule change is consistent 
with and furthers the objections of Section 6(b)(4) of the Act \5\ in 
that it provides for the equitable allocation of reasonable dues, fees, 
and other change among its members.
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    \5\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CHX does not believe that the proposed rule change will impose a 
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 or received. As set forth above, 
however, the Exchange did present the proposed rule change at a meeting 
of the Exchange's OTC Committee, which includes representatives of all 
specialist firms that participate in the OTC/UTP Program. The OTC 
Committee meeting also is open to any Exchange member that wishes to 
attend. No objections to the proposed rule change were articulated at 
such meeting.

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

    The foregoing rule change, which establishes or changes a due, fee, 
or other charge applicable to members of the Exchange, has become 
effective pursuant to Section 19(b)(3)(A) \6\ of the Act and 
subparagraph (f)(2) of Rule 19b-4 thereunder.\7\ At any time within 60 
days of the filing of the 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19B-4(f)(2). In reviewing this proposal, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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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 
CHX. All submissions should refer to File No. SR-CHX-99-05, and should 
be submitted by July 28, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-17154 Filed 7-6-99; 8:45 am]
BILLING CODE 8010-01-M