[Federal Register Volume 68, Number 22 (Monday, February 3, 2003)]
[Notices]
[Pages 5316-5317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2405]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47258; File No. SR-CSE-2003-01]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the Cincinnati Stock Exchange, 
Inc. To Amend Its Market Data Revenue Sharing Program for Tape B 
Securities

January 27, 2003.
    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 6, 2003, 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 the Exchange. On 
January 24, 2003 the CSE amended the proposal. \3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See January 23, 2003 letter from Jennifer M. Lamie, Esquire, 
CSE, to Katherine England, Assistant Director, Division of Market 
Regulation, Commission (``Amendment No. 1''). In Amendment No. 1, 
the CSE changed the text of the proposed rule to address omissions 
that were made in the original rule filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CSE proposes to modify the Exchange's schedule of transaction 
fees to amend its market data revenue sharing program for Tape B 
securities (``Program'') traded on the Exchange. The text of the 
proposed rule change is below. Proposed new language is in italics; 
proposed deletions are in brackets.
Rule 11.10 National Securities Trading System Fees
A. Trading Fees
    (a)-(j) (No change to text)
    (k) Tape ``B'' Transactions. The CSE will not impose a transaction 
fee on Consolidated Tape ``B'' securities. In addition, Members will 
receive a 50 percent pro rata transaction credit of [Net]gross Tape 
``B'' revenue; provided that, however, calculation of the transaction 
credit will be based on net Tape ``B'' revenues in those fiscal 
quarters where the overall revenue retained by the Exchange does not 
offset actual expenses and working capital needs. To the extent market 
data revenue from Tape ``B'' transactions is subject to year-end 
adjustment, credits provided under this program may be adjusted 
accordingly.
    (l)-(r) (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 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.

[[Page 5317]]

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

1. Purpose
    Under Exchange Rule 11.10A(k), members have received a 50 percent 
pro rata transaction credit based on net Tape B revenue since July 
2001. \4\ Prior to that time, the Program was based on gross Tape B 
revenues. In keeping with recent trends in the securities industry, the 
Exchange is proposing to amend the Program so that the pro rata 
percentage is once again based on gross Tape B revenue, but only in 
those fiscal quarters where the Exchange's overall revenues (not just 
Tape B revenues) offset capital expenses and working capital needs. 
Otherwise, if capital expenses and working capital needs are not met, 
the calculation based on net Tape B revenues will continue to apply.
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    \4\ See Securities Exchange Act Release No. 44579 (July 20, 
2001), 66 FR 39068 (July 26, 2001) (SR-CSE-01-03) (among other 
things, added the word ``Net'' before the term ``Tape `B' revenue'' 
to CSE Rule 11.10A(k)).
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2. Statutory Basis
    The proposed rule change is generally consistent with Section 6(b) 
of the Act. \5\ The proposed rule also furthers the objectives of 
Section 6(b)(5) of the Act, \6\ particularly, 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, generally, in that it protects investors 
and the public interest. The proposal also is consistent with Section 
6(b)(4) \7\ 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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    \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 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 with respect to the 
proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 number SR-CSE-2003-01 and 
should be submitted by February 24, 2003.

    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. 03-2405 Filed 1-31-03; 8:45 am]
BILLING CODE 8010-01-P