[Federal Register Volume 68, Number 196 (Thursday, October 9, 2003)]
[Notices]
[Pages 58368-58369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25569]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48584; File No. SR-CSE-2003-13]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Cincinnati Stock Exchange, 
Inc., To Extend Its Liquidity Provider Fee and Rebate Pilot Program

October 2, 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 September 29, 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 and 
II below, which Items have been prepared by the Exchange. The Exchange 
has filed this proposal pursuant to section 19(b)(3)(A) of the Act \3\ 
and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal 
effective upon filing with the Commission.\5\ The Commission is

[[Page 58369]]

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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The CSE asked the Commission to waive the 5-day pre-filing 
notice requirement and the 30-day operative delay. See Rule 19b-
4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend its pilot program for the Liquidity 
Provider Fee and Rebate (``Program'') through December 31, 2003. The 
pilot was originally proposed in SR-CSE-2002-16,\6\ and is set to 
expire on September 30, 2003.\7\ The CSE proposes no substantive 
changes to the Program, other than extending its operation through 
December 31, 2003. The text of the proposed rule change is available at 
the CSE and at the Commission.
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    \6\ Securities Exchange Act Release No. 46848 (November 19, 
2002), 67 FR 70793 (November 26, 2002) (''Original Pilot'').
    \7\ The pilot, which was originally set to expire on March 31, 
2003, was subsequently extended until September 30, 2003. Securities 
Exchange Act Release No. 47596 (March 28, 2003), 68 FR 16594 (April 
4, 2003) (SR-CSE-2003-03).
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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
    On October 22, 2002, CSE filed SR-CSE-2002-16,\8\ which proposed to 
establish a pilot transaction credit for liquidity providers that is 
paid by liquidity takers on each intra-CSE execution \9\ in Nasdaq 
securities. Under the pilot, the Exchange amended CSE Rule 11.10A(g)(1) 
by adding subparagraph (B) to charge the liquidity taker, i.e., the 
party executing against a previously displayed quote/order, $0.004 per 
share. The Exchange then passes on to the liquidity provider, i.e., the 
party providing the displayed quote/order, $0.003 per share with the 
Exchange retaining $0.001 per share. With this rule filing, CSE is 
extending the Program through December 31, 2003.
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    \8\ See Original Pilot, supra note 6.
    \9\ An ``intra-CSE execution'' is any transaction that is 
executed on the Exchange for which the executing member on the buy-
side of the transaction differs from the executing member on the 
sell-side of the transaction.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
section 6(b) of the Act \10\ in general, and furthers the objectives of 
section 6(b)(5) \11\ 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, generally, in that it protects investors and the public 
interest. The CSE believes that the proposed rule change is also 
consistent with section 6(b)(4) of the Act,\12\ in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among CSE members by crediting members on a pro rata 
basis.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 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 orOthers

    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

    Because the foregoing proposed rule change does not:

    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to section 19(b)(3)(A) of the Act \13\ and 
Rule 19b-4(f)(6) \14\ thereunder. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 5-day pre-
filing notice requirement and the 30-day operative delay. The 
Commission believes that such waivers are consistent with the 
protection of investors and the public interest, for they will allow 
the pilot to continue without interruption. For these reasons, the 
Commission designates the proposal to be effective and operative upon 
filing with the Commission.\15\
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    \15\ For purposes only of accelerating the operative date of the 
proposed rule change, the Commission has considered the proposed 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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 
Exchange. All submissions should refer to file number SR-CSE-2003-13 
and should be submitted by October 30, 2003.
    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-25569 Filed 10-8-03; 8:45 am]
BILLING CODE 8010-01-P