[Federal Register Volume 69, Number 203 (Thursday, October 21, 2004)]
[Notices]
[Pages 61882-61884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2739]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50528; File No. SR-CHX-2004-33]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Stock Exchange, 
Incorporated Relating to Floor Broker Network and Connectivity Charges

October 13, 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 September 28, 2004, 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. Pursuant to section 19(b)(3)(A)(ii) of the Act \3\ and Rule 
19b-4(f)(2) thereunder, \4\ the Exchange has designated this proposal 
as establishing

[[Page 61883]]

or changing a due, fee, or other charge, which renders the proposed 
rule change effective immediately upon filing. 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 Exchange proposes to amend its membership dues and fees 
schedule (the ``Fee Schedule''), to bill its floor brokers for certain 
network and connectivity charges.
    The text of the proposed rule change is available upon request at 
the CHX or the Commission.

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
    CHX floor brokers and their institutional customers use the NYFIX 
networks to route orders and process trade-related data. These types of 
networks are becoming an increasingly important tool for floor brokers 
as the institutional brokerage community continues to increase its use 
of technology.
    Although the Exchange currently pays the network and connectivity 
charges associated with NYFIX, the Exchange believes that it is 
appropriate for its floor brokers who use these services to begin 
paying for a significant percentage of these costs. \5\ Accordingly, 
the Exchange is proposing to rebill all but a small portion of these 
network and connectivity charges to the floor brokers who use this 
technology, based on the proportion of each firm's use of the networks 
during each month.
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    \5\ The Exchange currently rebills its on-floor member firms for 
other technology-related costs. See e.g., CHX Fee Schedule, Section 
H (Equipment, Information Services and Technology Charges) 
(rebilling for telephone charges, access and connection to financial 
information services or research and analytics providers and 
execution quality reports prepared by third parties).
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    At the same time, the Exchange would establish a separate 
connectivity charge credit, which would provide each floor broker firm 
that uses the networks with a credit of the firm's share of $15,000. 
\6\ This credit allows the Exchange to pay $15,000 of the floor broker 
network and connectivity charges each month and to rebill its floor 
broker firms for the remaining charges. \7\
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    \6\ Each firm's share of the total $15,000 credit would be based 
on its percentage of the total monthly earned credits generated by 
that firm. Earned credits are generated by floor broker firms based, 
in general terms, on the number of billable shares executed by that 
floor broker in a given month. See CHX Fee Schedule, Section 
M(2)(a). The Exchange believes that it is appropriate to calculate 
the connectivity charge credit in this manner to reward firms that 
efficiently and effectively use technology to execute trades on the 
Exchange.
    \7\ The Exchange also is proposing to delete an obsolete 
provision relating to credits for E-Session trading activity. The 
Exchange ended its E-Session in 2001. See Release No. 34-44705 
(August 15, 2001); 66 FR 43939 (August 21, 2001).
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    These fee changes are designed to take effect on October 1, 2004.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \8\ in general and furthers the objectives 
of section 6(b)(4) of the Act \9\ in particular in that it provides for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received written comments with 
respect to the proposed rule change.

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

    The Exchange asserts that the foregoing proposed rule change has 
become effective upon filing pursuant to section 19(b)(3)(A) of the Act 
\10\ and Rule 19b-4(f)(2) \11\ 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 such 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 
purpose of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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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-2004-33 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-2004-33. 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 Room, 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-

[[Page 61884]]

2004-33 and should be submitted on or before November 12, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2739 Filed 10-20-04; 8:45 am]
BILLING CODE 8010-01-P