[Federal Register Volume 67, Number 62 (Monday, April 1, 2002)]
[Notices]
[Pages 15436-15438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7782]


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SECURITIES AND EXCHANGE COMMISSION

[Release No.34-45642; File No. SR-CSE-2002-03]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Cincinnati Stock Exchange, 
Inc. Relating to Changes in Transaction Fees and Establishing a Pilot 
Revenue Sharing Program for Trading in Nasdaq National Market 
Securities

March 26, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 25, 2002, the 
Cincinnati Stock Exchange, Incorporated (``CSE'' or ``Exchange'') filed 
with the Securities and Exchange Commission

[[Page 15437]]

(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the CSE. The 
Commission is publishing this notice to solicit comment on the proposed 
rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange hereby proposes to amend the Exchange's schedule of 
transaction fees and to establish a pilot revenue sharing program to 
reflect recent developments in competitive business strategy. The text 
of the proposed rule change is below. Additions are in italics, and 
deletions are in brackets.

The Cincinnati Stock Exchange, Incorporated

* * * * *
Chapter XI
Trading Rules
Rule 11.10  National Securities Trading System Fees
A. Trading Fees (No Change to Text)
    (e) (1) (No Change to Text)
    (2) Tape ``C'' Transactions. Tape ``C'' Transactions are defined as 
transactions conducted in Nasdaq securities pursuant to unlisted 
trading privileges (``UTP''). Members will be charged a per share fee 
for Nasdaq securities based upon the following schedule:

------------------------------------------------------------------------
                                                               Fee per
         Number of shares traded (In a single day)              share
------------------------------------------------------------------------
0-5 million................................................    $0.001
5 million one+.............................................     0.000025
------------------------------------------------------------------------

    (1) [Tape ``C'' Transactions. Tape ``C'' Transactions are defined 
as transactions conducted in Nasdaq securities pursuant to unlisted 
trading privileges (``UTP''). Members will be charged $.001 per share 
per side ($1.00/1000 shares), with a maximum charge of $37.50 per firm 
per side, for Tape C Transactions.]
    Tape ``C'' Transaction Credit. Members will receive a 75 percent 
pro rata credit on revenue generated by transactions in Tape ``C'' 
securities.
    [(l)] (m) (No Change in Text)
    [(m)] (n) (No Change in Text)
    [(n)] (o) (No change in Text)
    [(o)] (p) (No change to text)
    [(p)] (q) (No change to text)
* * * * *

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 proposing two amendments to its 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 Rule 11.10(A)(e), (``Crosses and Meets''). Subsection (2) 
establishes a fee schedule for transactions in The Nasdaq Stock Market, 
Inc. (``Nasdaq'') National Market (``NNM'') securities.
    The second change filed by the Exchange creates a pilot program as 
an incentive to Members to trade NNM securities on the Exchange and 
will be codified as 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 members trading NNM 
securities. Under the program,\2\ member firms will receive a 75 
percent (75%) pro rata transaction credit on all Nasdaq Tape C market 
data revenue generated by member trading activity. The pilot program 
runs for 90 days and is set to expire June 28, 2002, if not renewed.
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    \2\ Nasdaq securities will be traded on CSE pursuant to Section 
12(f) of the Act, 15 U.S.C. 78l(f), 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 generally consistent with section 6(b) 
\3\ of the Act. The proposed rule change also furthers the objectives 
of Section 6(b)(5),\4\ particularly, in that the proposed rule change 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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) \5\ 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.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 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 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 or received 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) \6\ of the Act and paragraph (e) of Rule 19b-4 \7\ 
thereunder. At any time within sixty 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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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(e).
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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 proposal 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

[[Page 15438]]

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-CSE-2002-03 and should be 
submitted by April 22, 2002.

    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. 02-7782 Filed 3-29-02; 8:45 am]
BILLING CODE 8010-01-P