[Federal Register Volume 69, Number 102 (Wednesday, May 26, 2004)]
[Notices]
[Pages 29988-29989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11880]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49728; File No. SR-CHX-2004-15]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by The Chicago Stock Exchange, 
Inc. To Set Fees for Member Firms for Computer Hardware Stored on the 
Exchange Premises and for the Connection of that Hardware to the CHX 
System

May 19, 2004.
    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 April 30, 2004, the Chicago Stock Exchange, Inc. (``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 CHX 
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.
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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)(ii).
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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 (the ``Fee Schedule'') to charge member firms a fee for 
computer hardware stored on Exchange premises, and for the connection 
of that hardware to CHX systems, where that hardware is associated with 
systems that are used solely for any purpose other than transmitting 
orders to the Exchange for

[[Page 29989]]

execution. The text of the proposed rule change is available at the 
Commission and 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, 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
    Many of the Exchange's member firms use automated systems that 
interact either with their own posts on the floor or with the posts of 
other trading floor members. These systems might be used to help 
members manage their positions, to automate the execution of orders 
that would otherwise be handled manually, to act as a layoff vendor by 
coordinating the routing of orders to another market or for a variety 
of other purposes. These systems are linked to the Exchange's own 
systems through various data connections. In some cases, member firms 
also store hardware associated with these systems in the Exchange's 
computer facilities.
    The Exchange believes that it is appropriate to share, with member 
firms, the costs of providing both this equipment storage and the 
various data connections to the Exchange's systems. This fee proposal 
would establish a series of fees applicable to the storage of hardware, 
and the maintenance of connections to CHX systems, for member-owned 
systems that are solely used for any purpose other than transmitting 
orders to the Exchange for execution.\4\ These fees include a one-time 
fee associated with the initial installation of the hardware or 
connection, as well as a monthly cost for the period that the hardware 
or connection remains in place. These fee changes are designed to take 
effect May 1, 2004.
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    \4\ The Exchange's members request from time to time, that the 
Exchange allow other market centers to establish direct linkages to 
the Exchange's floor so that members can transmit orders to other 
markets. These linkage systems are available to all CHX specialists 
and floor brokers that contract with each market center. The 
Exchange believes that these direct connections provide cost-
effective and efficient mechanisms that link the Exchange's members 
with other markets. However, since only one of these market centers 
is a member of the CHX, the Exchange believes that it would be 
inappropriate to impose these fees on one market center, while other 
market centers are exempt based on their non-member status. 
Therefore, these fees do not apply to hardware owned and stored in 
CHX facilities by members that are market centers, or to the data 
connections associated with that hardware. Telephone conversation 
between Ellen Neely, Senior Vice President and General Counsel, CHX 
and Ian Patel, Special Counsel, and Marisol Rubecindo, Law Clerk, 
Division of Market Regulation, Commission, dated May 17, 2004.
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2. Statutory Basis
    The Exchange believes the proposal is consistent with Section 6(b) 
of the Act,\5\ in general and Section 6(b)(4) of the Act,\6\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement of 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 Regarding the 
Proposed Rule Change Received From Members, Participants or Others

    No written comments were either solicited or received with respect 
to the proposed rule change.

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,\7\ and Rule 19b-4(f)(2) \8\ thereunder, 
because it establishes or changes a due, fee or other charge imposed by 
the Exchange. 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-CHX-2004-15 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-CHX-2004-15. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549-0609. Copies of such filing also will 
be available for inspection and copying at the principal office of the 
CHX. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly.
    All submissions should refer to File Number SR-CHX-2004-15 and 
should be submitted on or before June 16, 2004.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-11880 Filed 5-25-04; 8:45 am]
BILLING CODE 8010-01-P