[Federal Register Volume 68, Number 125 (Monday, June 30, 2003)]
[Notices]
[Pages 38732-38733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16468]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48076; File No. SR-CHX-2003-15]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Incorporated To Amend the 
Membership Dues and Fees Schedule To Increase the Specialist Tape 
Credits for Certain Trades in Tape A and Tape B Securities

June 23, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 2, 2003, 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 
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 May 1, 2003, to increase the specialist tape 
credits for certain trades in Tape A and Tape B securities. The text of 
the proposed rule change is available at the Commission and at the CHX.

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 its proposal and discussed any 
comments it received regarding the proposal. 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 Exchange proposes to amend the Schedule, effective May 1, 2003, 
by increasing the specialist tape credits available for certain trades 
in Tape A and Tape B securities.\3\ Specifically, in any month that the 
CHX's aggregate share of Tape A or Tape B trade volume exceeds the 
CHX's aggregate share of Tape A or Tape B trade volume for the first 
quarter of the year 2003, the Exchange intends to distribute 50% of the 
tape revenue received by the Exchange resulting from that increased 
share of Tape A or Tape B trade volume (``Additional Revenue'').\4\ The 
Exchange plans to distribute this Additional Revenue to specialist 
firms in proportion to each firm's share of that month's incremental 
growth in Tape A or Tape B trade volume. This tape credit program is 
designed to provide additional credits to the specialist firms that 
increase the Exchange's market share in Tape A and Tape B securities.
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    \3\ Tape A securities are securities reported on Tape A of the 
Consolidated Tape Association. Tape B securities are securities 
reported on Tape B of the Consolidated Tape Association.
    \4\ These distributions would be made from a month's Additional 
Revenue after subtracting all direct CTA costs and the Transaction 
Credits otherwise payable for the increased trade volume. At no time 
would any specialist firm receive credits, relating to trades in 
Tape B securities, which exceed 50% of the market data revenue 
received by the Exchange with respect to trades in those securities.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange and, 
in particular, with the requirements of Section 6(b)(4),\5\ in that it 
provides for the equitable allocation

[[Page 38733]]

of reasonable dues, fees and other charges among its members.
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    \5\ 15 U.S.C. 78(f)(b)(4).
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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 either solicited or received.

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 CHX consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    On July 2, 2002, the Commission issued an Order abrogating certain 
proposed rule changes relating to market data revenue sharing 
programs.\6\ In that Order, the Commission expressed concern that the 
subject proposed rule changes raised ``serious questions as to whether 
they are consistent with the Act and with the protection of 
investors.'' Specifically, the Commission questioned the effect of 
market data rebates on the accuracy of market data, and on the 
regulatory functions of self-regulatory organizations.
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    \6\ Securities Exchange Act Release No. 46159 (July 2, 2002), 67 
FR 45775 (July 10, 2002) (File Nos. SR-NASD-2002-61, SR-NASD-2002-
68, SR-CSE-2002-06, and SR-PCX-2002-37) (Order of Summary 
Abrogation).
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    The Commission now solicits comment on the CHX's proposed rule 
change, and in general, on (1) market data fees; (2) the collection of 
market data fees; (3) the distribution of market data rebates; (4) the 
effect of market data revenue sharing programs on the accuracy of 
market data; and (5) the impact of market data revenue sharing programs 
on the regulatory functions of self-regulatory organizations.
    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 at the Commission's 
Public Reference Room. Copies of such filings will also be available 
for inspection and copying at the principal office of the Exchange. All 
submissions should refer to File No. SR-CHX-2003-15 and should be 
submitted by July 21, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-16468 Filed 6-27-03; 8:45 am]
BILLING CODE 8010-01-P