[Federal Register Volume 70, Number 108 (Tuesday, June 7, 2005)]
[Notices]
[Pages 33230-33232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2888]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51763; File No. SR-CHX-2005-15]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto Relating to Participant Fees and Credits

May 31, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

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(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 2, 2005, 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. On May 
23, 2005, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange made technical corrections 
to the rule text of the proposed rule change. The effective date of 
the original proposed rule change is May 2, 2005, and the effective 
date of the amendment is May 23, 2005. For purposes of calculating 
the 60-day period within which the Commission may summarily abrogate 
the proposed rule change, as amended, under Section 19(b)(3)(C) of 
the Act, the Commission considers the period to commence on May 23, 
2005, the date on which the Exchange submitted Amendment No. 1. See 
15 U.S.C. 78s(b)(3)(C).
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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 Participant Fee Schedule (the ``Fee 
Schedule'') to (1) eliminate the assignment fee for listed securities 
that are not assigned in competition; and (2) modify the Exchange's 
fixed fee for specialists trading Nasdaq/NM securities. The text of the 
proposed rule change is available on the CHX's Web site (www.chx.com), 
at the CHX's Office of the Secretary, and at the Commission's Public 
Reference Room.

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 proposes to modify its Fee Schedule in two ways. 
Specifically, the Exchange proposes to (1) eliminate the assignment fee 
for listed securities that are not assigned in competition; and (2) 
modify the Exchange's fixed fee for specialists trading Nasdaq/NM 
securities.
    Eliminating certain assignment fees. Under the current Fee 
Schedule, the Exchange charges a fee to a specialist that receives the 
assignment of a listed security when other firms are not competing for 
the assignment. To encourage firms to trade additional listed 
securities by reducing their costs of doing so, the Exchange proposes 
to eliminate this assignment fee.\4\ The Exchange previously had waived 
this fee on a temporary basis, through the end of 2004; the current 
proposal would eliminate the fee altogether.\5\
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    \4\ The Exchange would continue to charge specialist assignment 
fees with respect to securities that are assigned to a specialist 
firm in competition with other firms, reflecting the increased 
administrative costs associated with allocating stocks in 
competition.
    \5\ See Securities Exchange Act Release No. 50657 (November 12, 
2004), 69 FR 67615 (November 18, 2004) (SR-CHX-2004-34).
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    Modifying the fixed fee. The Exchange currently charges specialists 
trading Nasdaq/NM securities a base fixed fee that is the greater of 
(a) $20,000 or (b) the firm's pro rata share of $60,000. The Exchange 
now believes that it is appropriate to modify the calculation to impose 
a flat base fee of $20,000. This modified calculation allows the 
Exchange to recoup many of the fixed costs of running its OTC 
specialist program, while not imposing unnecessary fees on specialist 
firms.\6\
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    \6\ At a basic level, many of the Exchange's costs of supporting 
the OTC specialist program do not vary based on the number of OTC 
specialist firms or the number of issues traded. These costs, 
however, can increase with substantial increases in trading volume 
or can decrease with substantial decreases in trading volume or in 
the number of firms that trade Nasdaq/NM securities. The Exchange's 
proposed changes to the fixed fee are consistent with these 
principles.
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    The Exchange believes that these changes to the Fee Schedule 
represent a fair allocation of the costs associated with the Exchange's 
specialist programs. As noted above, the changes are also intended to 
provide specialists with an appropriate incentive to increase the 
number of issues that they trade (consistent with the specialist's 
duties as a specialist), which could allow the Exchange's participants 
to offer their customers access to a wider array of specialist-traded 
securities.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\8\ in particular, in that it 
provides for the 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 proposed rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of 
Rule 19b-4 thereunder,\10\ because it establishes or changes a due, 
fee, or other charge imposed by the CHX. 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ See supra note 3.
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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, as amended, 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-2005-15 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-2005-15. This 
file

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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. Copies of the filing 
also will be available for inspection and copying at the principal 
offices 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-2005-15 and should be submitted on or before June 28, 2005.

    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. E5-2888 Filed 6-6-05; 8:45 am]
BILLING CODE 8010-01-P