[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Pages 2914-2915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-799]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61322; File No. SR-CHX-2010-01]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Implement a Tiered Fee Schedule

January 11, 2010.
    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 January 4, 2010, 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. CHX 
filed the proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder,\4\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CHX proposes to amend its Schedule of Participant Fees and 
Assessments (the ``Fee Schedule''), effective January 4, 2010, to 
implement a tiered rate of fees when removing or providing liquidity on 
the Exchange. The text of the proposed rule change is available on the 
Exchange's Web site at http://www.chx.com/rules/proposed_rules.htm, on 
the Commission's Web site at http://www.sec.gov, at CHX, 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 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
    Through this filing, the Exchange would amend its Fee Schedule, 
effective January 4, 2010, to provide for a tiered schedule of fees and 
rebates for Participants for trade executions of single-sided orders in 
securities priced over $1 in the event that certain volume thresholds 
are achieved. The volume thresholds are based on the Participant's 
Average Daily Volume (``ADV''), which is determined, with respect to a 
given Participant, by the number of shares such Participant has 
executed as a liquidity provider in any and all trading sessions on 
average per trading day (excluding partial trading days) across all 
tapes on the trading facilities of the CHX (excluding all cross 
transactions) for the calendar month in which the executions occurred.
    According to this proposal, a Participant entering a single-sided 
(i.e., not a cross order type) order in Tape A and C securities would 
be charged a fee of $0.003/share when removing liquidity from the 
Matching System if its monthly ADV (as defined above) is 500,000 shares 
or less. Such Participants would also receive a rebate of $0.0026/share 
when they provided liquidity to the Matching System. Participants which 
had a monthly ADV of greater than 500,000 up to and including 5,000,000 
shares would be charged a fee of $0.0029 when removing liquidity. 
Participants falling into this category would also receive a rebate of 
$0.0028/share when providing liquidity to the Matching System. Finally, 
Participants which had a monthly ADV of greater than 5,000,000 shares 
would pay a fee of $0.0028 when removing liquidity from the Matching 
System and a rebate of $0.003 when they provided liquidity.
    For Tape B securities, a Participant entering a single-sided (i.e., 
not a cross order type) order would be charged a fee of $0.003/share 
when removing liquidity from the Matching System if its monthly ADV is 
500,000 shares or less. Such Participants would also receive a rebate 
of $0.0028/share when they provided liquidity to the Matching System. 
Participants which had a monthly ADV of greater than 500,000 up to and 
including 5,000,000 shares would be charged a fee of $0.0029 when 
removing liquidity. Participants falling into this category would also 
receive a rebate of $0.003/share when providing liquidity to the 
Matching System. Finally, Participants which had a monthly ADV greater 
than 5,000,000

[[Page 2915]]

shares would pay a fee of $0.0028 when removing liquidity from the 
Matching System and a rebate of $0.0032 when they provided liquidity.
    Under this program, Participants which, on a net basis, provide 
Tape A and C securities would pay fees at lower volume levels but, as 
their monthly ADV increases, this rate structure will ultimately 
invert. Through this mechanism, the Exchange seeks to maximize revenue 
at lower volume levels while incenting all Participants to provide 
greater liquidity to the Matching System. Furthermore, the Exchange 
believes that the increased rebate will help attract additional orders 
to be displayed and executed on our trading facilities. The Exchange 
notes that a number of other exchanges have tiered fee schedules which 
offer different rates depending on the monthly ADV of liquidity-
providing executions on their facilities, and our proposed fee 
structure will help us remain competitive with these entities.\5\ The 
Exchange believes that the implementation of a tiered fee schedule may 
incent firms to display their orders on our trading facility and 
increase the volume of securities traded here.
---------------------------------------------------------------------------

    \5\ See, e.g., Nasdaq Stock Market (``Nasdaq'') Rule 7018; 
National Stock Exchange (``NSX'') Fee Schedule; NYSE Arca Fee 
Schedule; International Securities Exchange (``ISE'') Fee Schedule 
(equity mid-point match orders).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \7\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among its members. Among other things, the change to the 
fee schedule would provide incentives to Participants to increase the 
amount of liquidity provided on our trading facilities, which may 
contribute to an increase in trading volume on the Exchange and in the 
income derived therefrom.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose 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

    The foregoing proposed rule change is effective upon filing 
pursuant to Section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) 
thereunder.\9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2010-01 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-2010-01. 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, on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such filing will 
also 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 No. SR-CHX-
2010-01 and should be submitted on or before February 9, 2010.
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-799 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P