[Federal Register Volume 69, Number 201 (Tuesday, October 19, 2004)]
[Notices]
[Pages 61532-61533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2713]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50521; File No. SR-CHX-2004-32]


 Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Chicago Stock Exchange, 
Inc. Relating to Membership Dues and Fees Applicable to Orders Sent for 
Execution Through the Exchange's CHXpress Functionality

October 13, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on September 28, 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 CHX. The proposed 
rule change has been filed by the CHX as establishing or changing a 
due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the 
Act,\3\ and Rule 19b-4(f)(2) \4\ thereunder, 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).
    \4\ 17 CFR 240.19b-4(f)(2).
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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, to 
establish fees for orders sent for execution through its 
CHXpresstm functionality. Below is the text of the proposed 
rule change. Proposed new language is in italics.
* * * * *
MEMBERSHIP DUES AND FEES
    A.-E. No change to text.
    F. Transaction and Order Processing Fees
* * * * *
    4. Transaction Fees
    a.-k. No change to text.
    l. CHXpress orders $.0005 per share, if sent by an order-sending 
firm. CHXpress orders sent to the Exchange by an order-sending firm are 
not subject to any other order processing fees, transaction fees, fee 
caps or fee reductions set forth above in Sections F(3) and F(4).
    CHXpress orders entered by a CHX market maker or by a CHX floor 
broker on behalf of a customer shall be exempt from any CHXpress 
transaction fee but shall remain subject to transaction fees that are 
applicable to market maker or floor broker executions.
* * * * *

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 CHX 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 CHX 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 is developing a new automated functionality for 
handling particular orders, called CHXpress. The CHXpress 
functionality, built into the Exchange's MAX[reg] system, is 
designed to provide additional opportunities for the Exchange's members 
and their customers to seek and receive liquidity through automated 
executions of orders at the Exchange.\5\
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    \5\ See Securities Exchange Act Release Nos. 34-50481 (September 
30, 2004); 69 FR 60197 (October 7, 2004) (approval of File No. SR-
CHX-2004-12) and 34-49567 (April 15, 2004); 69 FR 21591 (April 21, 
2004) (notice of File No. SR-CHX-2004-12).
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    Through this submission, the Exchange proposes to establish a 
transaction fee that would apply to executions of CHXpress orders. 
Specifically, CHXpress orders sent by the Exchange's off-floor order-
sending firms through the Exchange's MAX system would be assessed a fee 
of $.0005 per share. CHXpress orders entered by a CHX market maker, or 
by CHX floor broker on behalf of a customer, would not be assessed a 
specific CHXpress order transaction fee, but would remain subject to 
the existing transaction fees (and fee reductions and caps) that are 
currently applicable to market maker and floor broker executions.\6\ 
The CHXpress transaction fee would apply to eligible orders sent 
through the CHXpress functionality when it is rolled out later this 
year.
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    \6\ Agency executions through a floor broker currently are 
$.0035 per share (for executions in ``dual trading system'' issues) 
and $.0025 per share (for executions in Nasdaq/NM securities), up to 
a maximum of $100 per side and subject to certain fee reductions and 
caps. Executions by market makers currently are set at $.0050 per 
share (up to a maximum of $100 per side) and also are subject to 
certain fee reductions and caps. According to the CHX, these fees 
charged to market makers are set at these higher per share rates for 
a variety of reasons, including the need to help defray the costs 
associated with the Exchange's regulatory activities with respect to 
its market makers and the costs associated with any license fees 
that the Exchange pays in connection with the trading of certain 
products. See Securities Exchange Act Release No. 34-49357 (March 3, 
2004), 69 FR 11681 (March 11, 2004) (regarding the market maker 
transaction fees). Moreover, although specialists pay a fixed fee 
associated with the trading of their assigned issues, floor brokers 
do not currently do so; according to the Exchange, transaction fees 
assessed on floor broker executions help the cover the Exchange's 
costs of providing regulatory and technology services to its floor 
broker community.
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3. Statutory Basis
    The CHX believes that its proposal to amend its schedule of dues, 
fees, and charges is consistent with Section 6(b)

[[Page 61533]]

of the Act \7\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \8\ in particular, in that it is an equitable 
allocation of reasonable dues, fees, and other charges among its 
members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\9\ and Rule 19b-4(f)(2) \10\ 
thereunder, because it establishes or changes 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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-2004-32 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-2004-32. 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. 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-
2004-32 and should be submitted on or before November 9, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2713 Filed 10-18-04; 8:45 am]
BILLING CODE 8010-01--P