[Federal Register Volume 66, Number 4 (Friday, January 5, 2001)]
[Notices]
[Pages 1164-1166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-317]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43778; File No. SR-CHX-00-38]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated Relating to Membership Dues and Fees

December 28, 2000.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4\2\ thereunder, notice hereby is given that 
on December 18, 2000, the Chicago Stock Exchange, Incorporated (``CHX'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in

[[Page 1165]]

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 CHX proposes to amend its membership dues and fees schedule 
(``Schedule''), effective January 1, 2001, to: (1) Increase the special 
fixed fees for Nasdaq/NMS securities; (2) assess a new fixed fee on 
``dedicated odd-lot dealers''; (3) revise the fees for transactions in 
listed securities executed through a floor broker; (4) raise the cap on 
the maximum transaction fees that can be incurred by a member firm; and 
(5) increase the earned credits available through the floor broker 
credit program. Additionally, the Exchange proposes to reconfigure its 
Schedule to include all of its transaction fees in one portion of the 
Schedule. The proposed rule change is available at the principal office 
of the CHX and at 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 CHX included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received regarding 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

A. Purpose
    The proposed rule change amends the Schedule in several ways. These 
changes are designed to allow the Exchange to continue its exponential 
growth while providing a strong market for its members and for 
investors.
    First, the proposal would increase the specialist fixed fees for 
Nasdaq/NMS Securities and assess a new fixed fee on ``dedicated odd-lot 
dealers.'' The specialist fixed fee for Nasdaq/NMS Securities is paid 
by the specialist in each particular security; the amount of the fee is 
based on a market share calculation in that security.\3\ The new 
dedicated odd-lot dealer fee is a flat fee assessed on any odd-lot 
dealer (as defined in Article XXXI, Rule 3 of the Exchange's Rules) 
whose principal business is the trading of odd-lots.\4\
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    \3\ The fixed fee for Nasdaq/NMS Securities was first assessed 
in April 2000. Before that date, the Exchange had charged its 
members a fixed fee on Dual Trading System Securities (securities 
listed on the New York Stock Exchange or the American Stock 
Exchange) for many years. The Nasdaq/NMS-related fixed fees allow 
the Exchange to at least partially defray the costs associated with 
the continued development and anticipated growth of its Nasdaq/NMS 
program. The Exchange originally began assessing a Nasdaq/NM 
Securities fixed fee at a somewhat lower level than the fee that had 
been in place for Dual Trading System Securities to allow members 
time to adjust their business models to this new requirement. Now, 
nine months later, the Exchange proposes to increase the fee to more 
closely resemble the one charged for Dual Trading System Securities.
    \4\ This fee is designed to at least partially defray the costs 
associated with the continued development and anticipated growth of 
the Exchange's odd-lot program.
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    The proposal also makes changes to the CHX's transaction fee 
schedule by: (a) Setting a flat per share fee, instead of a graduated 
fee based on the number of shares traded, for agency transactions in 
Dual Trading System Securities that are executed through a floor 
broker; and (b) raising the current caps on transaction fees paid by 
member firms.\5\
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    \5\ Under the current Schedule, firms are subject to either a 
$78,000 or $54,000 cap on transaction fees for orders that are not 
sent through the Exchange's MAX trading system, depending 
upon whether or not the firm has a market maker or floor broker 
presence. The revised Schedule would remove the reference to a floor 
presence and impose separate $110,000 caps on non-MAX transaction 
fees for transactions in Nasdaq/NMS Securities and in dual Trading 
System Securities.
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    Additionally, the proposal would revise the floor broker credit 
program by increasing the earned credits available under the program 
and by providing that the Exchange will pay floor brokers for any 
unused credits each month. This credit program is designed to stimulate 
growth on the Exchange, enhance the competitive capability of floor 
brokers, and foster cooperation on the Exchange's trading floor by 
rewarding floor brokers for their work to increase Exchange revenue.
    Finally, the proposed would reconfigure the Schedule to include all 
of its transaction fees in one section of the Schedule.
2. Statutory Basis
    The CHX believes that the proposed rule change is consistent with 
Section 6(b)(4) of the Act \6\ in that it provides for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members.
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    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement of Burden on Competition

    The CHX 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 either solicited or received.

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

    The foregoing rule change establishes or changes a due, fee, or 
other charge imposed by the Exchange and therefore has become effective 
pursuant to Section 19(B)(3)(A)(ii) of the Act \7\ and subparagraph 
(f)(2) of Rule 19b-4 \8\ thereunder. 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.
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    \7\ 15 U.S.C. 78f(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CHX-00-38 and 
should be submitted by January 26, 2001.


[[Page 1166]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-317 Filed 1-4-01; 8:45 am]
BILLING CODE 8010-01-M