[Federal Register Volume 74, Number 132 (Monday, July 13, 2009)]
[Notices]
[Pages 33494-33495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16449]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60243; File No. SR-CHX-2009-09]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Chicago Stock Exchange, 
Inc. Adding the Post Only and Post Only ISO Order Types

July 6, 2009.
    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 June 29, 2009, the Chicago Stock Exchange, Inc. (``CHX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II, below, which Items have been prepared by CHX. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend its rules to add the Post Only and Post Only 
ISO order types. The text of this proposed rule change is available on 
the Exchange's Web site at (http://www.chx.com), at the principal 
office of the Exchange, and in 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 changes and 
discussed any comments it received regarding the proposal. 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 amend CHX Article 20, Rule 4 to add the 
Post Only and Post Only ISO order types.
    A Post Only Order is an order designed to encourage displayed 
liquidity on the Exchange. By its terms, a Post Only Order is posted on 
the Exchange and does not route away to another trading center. A Post 
Only Order will be immediately cancelled if it is marketable against a 
contra-side order in the Matching System when entered, or if it is at a 
price that would lock or cross a manual or protected quotation.
    A Post Only ISO Order is a type of ISO order that will be 
immediately cancelled without execution if it is marketable against a 
contra-side order in the Matching System when entered. If a Post Only 
ISO is not immediately cancelled, it will be posted on the Exchange at 
the entered limit price. By entering a Post Only ISO, a Participant 
represents that such Participant has simultaneously routed one or more 
additional limit orders marked ``ISO,'' as necessary, to away markets 
to executed against the full displayed size of any protected quotation 
for the security with a price that is superior or equal to the limit 
price of the Post Only ISO entered in the Matching System. 
Consequently, a Post Only ISO order will be displayed by the Exchange 
regardless of whether it will lock or cross another market center's 
quote.
    Orders marked Post Only and Post Only ISO will always be considered 
``liquidity providing'' by the Exchange for purposes of application of 
the Exchange's fees and rebate programs. By making a Post Only or Post 
Only ISO designation, Participants are able to avoid the risk that 
their orders will be considered ``liquidity taking'' for purposes of 
application of the Exchange's fees and rebate programs. CHX notes that 
order types similar to the proposed Post Only and Post Only ISO order 
types are already in use by other market centers.\3\
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    \3\ See Rule 11.11(c)(5) and (c)(8)(ii) of the National Stock 
Exchange, Rule 11.9(c)(6) of the BATS Exchange and Rule 7.31(w) of 
NYSE Arca.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general,\4\ and furthers the objectives 
of Section 6(b)(5) in particular,\5\ in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transaction in 
securities, to remove impediments and perfect the mechanisms of a free 
and open market, and, in general, to protect investors and the public 
interest by allowing CHX to amend its rules to add the Post Only and 
Post Only ISO order types based on similar rules already in effect at 
other exchanges. The addition of these order types will benefit 
Exchange customers and promote competition among market centers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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

    No written comments were either solicited or received.

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 after the date of

[[Page 33495]]

the filing, or such shorter time as the Commission may designate, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \6\ and 
Rule 19b-4(f)(6) \7\ thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
CHX has satisfied this requirement.
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    The Exchange has asked the Commission to waive the operative delay 
to permit the proposed rule change to become operative prior to the 
30th day after filing. The Commission has determined that waiving the 
30-day operative delay of the Exchange's proposal is consistent with 
the protection of investors and the public interest.\8\ The Commission 
believes that the proposed rule change is substantially similar to 
rules adopted by other exchanges and does not raise any new regulatory 
issues.\9\ Therefore, the Commission designates the proposal operative 
upon filing.
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    \8\ For purposes only of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \9\ See supra note 3.
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    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.

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-2009-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CHX-2009-09. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2009-09 and should be 
submitted on or before August 3, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16449 Filed 7-10-09; 8:45 am]
BILLING CODE 8010-01-P