[Federal Register Volume 67, Number 29 (Tuesday, February 12, 2002)]
[Notices]
[Pages 6561-6562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3299]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45406; File No. SR-CSE-2002-01]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Cincinnati Stock Exchange, 
Inc. Establishing a Fee Schedule for Nasdaq National Market Securities 
Transactions and Establishing a Revenue Sharing Program for Trading in 
Nasdaq National Market Securities

February 6, 2002.
    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 January 25, 2002, the Cincinnati Stock Exchange, Inc. (``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 CSE.\3\ 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.
    \3\ The CSE withdrew SR-CSE-2001-05 and replaced it with SR-CSE-
2002-01 by letter. See letter from Jeffrey T. Brown, Vice President 
Regulation and General Counsel, CSE to Katherine England, Assistant 
Director, Division of Market Regulation, Commission (January 25, 
2002).
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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 the Exchange's rules to establish a 
fee schedule for transactions in Nasdaq National Market securities 
(``Nasdaq NM Securities'') and to establish a revenue sharing program 
to reflect recent developments in competitive business strategy. The 
text of the proposed rule change is available at the principal offices 
of the CSE and at the Commission.

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 the 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. CSE 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 is proposing two amendments to the Exchange rules 
governing transaction fees and market data revenue credits in keeping 
with recent trends in the securities industry.
    The first amendment adds subsection (2) to CSE Rule 11.10(A)(e), 
(``Crosses and Meets''). Proposed subsection (2) establishes a fee 
schedule for transactions in Nasdaq NM Securities.
    The second amendment creates an incentive for CSE members to trade 
Nasdaq NM Securities on the Exchange and will be codified as CSE Rule 
11.10(A)(l) (``Tape `C' Transaction Credit''). The Exchange believes 
the credit is a logical next step in its efforts to provide competitive 
exchange services to CSE members trading Nasdaq NM Securities. Under 
the Nasdaq program,\4\ CSE member firms will receive a 75 percent (75%) 
pro rata transaction credit on all Nasdaq Tape C market data revenue 
generated by CSE member trading of Nasdaq NM Securities.
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    \4\ Nasdaq NM Securities will be traded on CSE pursuant to 
section 12(f) of the Act as well as the Joint Self-Regulatory 
Organization Plan Governing the Collection, Consolidation, and 
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading 
Privilege Basis (``Nasdaq-UTP Plan'').
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2. Statutory Basis
    The proposed rule change is consistent with section 6(b) of the 
Act,\5\ generally, and section 6(b)(5) of the Act,\6\ 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. The proposal also is consistent with 
section 6(b)(4) of the Act \7\ in that it is designed to provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among Exchange members by crediting CSE members on a pro rata basis.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
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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 result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 6562]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.\8\
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    \8\ The Commission received a comment letter from the Nasdaq and 
a response to the letter from the CSE. Both letters are available in 
the Commission's Public Reference Room. See letter from Richard G. 
Ketchum, President, Nasdaq, to Jonathan G. Katz, Secretary, 
Commission (January 9, 2002) and letter from Jeffrey T. Brown, 
Senior Vice President, Secretary and General Counsel, CSE, to 
Jonathan G. Katz, Secretary, Commission (January 24, 2002).
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III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing rule change has become effective on filing pursuant 
to section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(2) 
thereunder,\10\ as establishing or changing a due, fee, or other charge 
paid solely by members of the CSE. 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ See section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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 
CSE. All submissions should refer to File No. SR-CSE-2002-01 and should 
be submitted by March 5, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-3299 Filed 2-11-02; 8:45 am]
BILLING CODE 8010-01-P