[Federal Register Volume 67, Number 229 (Wednesday, November 27, 2002)]
[Notices]
[Pages 70986-70987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30044]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46861; File No. SR-CHX-2002-35]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated to Establish an OTC Access and Connection Charge for CHX 
OTC Specialist Firms

November 20, 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 October 28, 2002, the Chicago Stock Exchange, Incorporated (``CHX'' 
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 Exchange. The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the CHX under section 
19(b)(3)(A)(ii) of the Act,\3\ which renders the proposal effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 (``Schedule'') to incorporate an ``OTC Access and Connection 
Charge'' that will apportion among CHX over-the-counter (``OTC'') 
specialist firms the incremental technology costs associated with 
accessing OTC market participants. The text of the proposed rule change 
is below. Proposed new language is in italics.

Membership Dues and Fees

* * * * *

H. Equipment, Information Services and Technology Charges

* * * * *

OTC Access and Connection Charges

    Each specialist firm shall be billed, on a monthly basis, for 
actual access charges and other amounts that become due in accordance 
with the Exchange's contractual arrangements to access OTC market 
participants.
    Amounts billed to the specialist firm will be based on the number 
of OTC/UTP co-specialists at each firm using products licensed or 
otherwise procured by the Exchange, adjusted on a monthly basis to 
reflect changes in the firm's number of OTC/UTP co-specialists; 
provided, however, that (i) the minimum monthly amount that will be 
billed to a specialist firm will be based on the firm's number of OTC/
UTP co-specialists as of the date an agreement is executed; and (ii) if 
the firm elects to deregister from all OTC/UTP issues, the firm must 
continue to pay the minimum monthly amount referenced above, for

[[Page 70987]]

the remaining initial term of the Exchange's contractual commitment.
* * * * *

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 Exchange 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 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 CHX proposes to amend the Schedule by incorporating an OTC 
Access and Connection Charge that will apportion among CHX OTC 
specialist firms the incremental technology costs associated with 
accessing OTC market participants.
    As the OTC market prepares for full implementation of Nasdaq's 
SuperMontage system and the NASD's Alternative Display Facility (which 
will not be accessible by CHX specialists), many CHX OTC specialists 
consider it imperative that the CHX enter into access arrangements with 
various OTC market participants and procure certain proprietary 
technological enhancements that will permit CHX OTC specialists to 
obtain ready access to various pools of liquidity in the OTC market. 
Given the substantial technology costs that the CHX has incurred and 
continues to incur relating to the transitions in the OTC market, 
including development costs associated with the independent securities 
information processor that will be operational next year, the CHX 
believes it is appropriate for CHX OTC specialists to bear a 
proportionate share of the technology costs associated with accessing 
the OTC market.
    Accordingly, the CHX Finance Committee and Board of Governors 
approved institution of the proposed OTC Access and Connection Charge, 
as what the CHX believes is a reasonable means of allocating such 
technology costs among the CHX OTC specialist firms that benefit from 
such CHX expenditures. The Exchange believes that its OTC specialist 
firms are in agreement with this proposal.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b)(4) of the Act \4\ in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among its 
members.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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.

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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \5\ and subparagraph (f)(2) of rule 19b-4 
thereunder,\6\ because it involves a due, fee, or other charge. At any 
time within 60 days of the filing of the 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 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 Exchange. All 
submissions should refer to file number SR-CHX-2002-35, and should be 
submitted by December 18, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30044 Filed 11-26-02; 8:45 am]
BILLING CODE 8010-01-P