[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Notices]
[Pages 4180-4182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01027]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68657; File No. SR-CHX-2012-19]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Alter Fee Schedule Relating to Port Charges

January 15, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on December 31, 2012, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    CHX proposes to amend Exchange Rules and its Schedule of 
Participant Fees and Assessments (the ``Fee Schedule'') to alter fees 
relating to port charges. The Exchange proposes to implement the fee 
change on January 1, 2013. The text of this proposed rule change is 
available on the Exchange's Web site at http://www.chx.com/rules/proposed_rules.htm, at the principal office of the Exchange, 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 self-regulatory organization 
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 those statements may be examined at 
the places specified in Item IV below.

[[Page 4181]]

The Exchange has prepared summaries, set forth in sections A, B and C 
below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Through this filing, the Exchange proposes to amend its Schedule of 
Fees and Assessments (the ``Fee Schedule'') to amend its cap on port 
charges. Under the current Fee Schedule, the Exchange does not assess a 
port charge under two circumstances: (1) When a Participant Firm 
accesses the Exchange's Matching System through Brokerplex, or (2) when 
a Participant Firm executes an average daily volume of 5 million or 
more provide shares in the Matching System during the month. As under 
the current rules, the Exchange's proposed rule change will not assess 
a port charge to those Participant Firms who access the Exchange's 
Matching System through Brokerplex. The Exchange proposes only to alter 
the second scenario relating to the average daily volume cap.
    Specifically, the Exchange proposes to lower the threshold average 
daily volume of provide shares in the Matching System from five (5) 
million to one (1) million and to cap the port charges to the greatest 
number of ports in either CHX data center.\4\ Under the proposed rule, 
if a Participant Firm executes an average daily volume of one (1) 
million or more provide shares in the Matching System during the month, 
the Exchange proposes to cap the charges equal to the greatest number 
of ports in either CHX data center. The ports would continue to be 
counted per CHX clearing ``give-up.'' \5\ For example, a Participant 
Firm that qualified for the cap by achieving the one (1) million 
average daily provide share level and had four ports in CHX's Chicago 
data center and three ports in CHX's New Jersey data center would only 
be assessed a $400/port for the four ports in Chicago.
---------------------------------------------------------------------------

    \4\ The Exchange currently has two data centers; one in New 
Jersey and one in Chicago.
    \5\ A give-up is a clearing identifier associated with a 
Participant Firm. Participant Firms may have multiple clearing 
identifiers. Under the proposed rule, Participant Firms will be 
charged a port fee per give-up or clearing identifier per port.
---------------------------------------------------------------------------

    The Exchange believes the proposed port fee changes are appropriate 
to attract liquidity and increase revenue to the Exchange while 
encouraging connections in both of CHX's data centers. The Exchange 
believes the rule change will promote disaster preparedness among CHX 
Participant Firms as Participant Firms will have access to multiple 
ports at the Exchange. Under the current rules, Participant Firms that 
have multiple connections in both of CHX's data centers but do not 
achieve an average daily volume of five (5) million or more provide 
shares in the Matching System for the month could have significant port 
fees. The Exchange believes that by lowering the average daily volume 
requirement to a more modest one (1) million provide shares, a larger 
number of Participant Firms will be incentivized to supply liquidity 
and qualify for the port charge cap. The Exchange also believes that 
imposing a cap on port charges at this more modest level will encourage 
more Participant firms to establish connections in both data centers 
while also allowing the exchange to receive at least some port charges 
from all Participant Firms.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are 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. The 
Exchange believes that the proposed amendments to the Fee Schedule are 
necessary to attract liquidity and increase revenue to the Exchange 
while encouraging Participant Firms to establish connections at both 
CHX data centers. Section 6(b)(4) states that exchange rules must 
``provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members and issuers and other persons using its 
facilities.'' The Exchange proposes to amend its fee schedule to impose 
a cap on port charges for those Participant Firms that average one (1) 
million or more daily provide share levels as an equitable solution to 
incentivize Participant Firms to provide liquidity on the Exchange. The 
Exchange believes that such change will allow for fees that are not 
designed to permit unfair discrimination between customers, issuers, 
brokers or dealers since the rules will apply only to those Participant 
Firms that incur significant costs from having ports at multiple 
locations. Further, imposing a cap on port charges at a more modest 
level will encourage more Participant firms to establish connections in 
both data centers while also allowing the exchange to receive at least 
some port charges from all Participant Firms.
---------------------------------------------------------------------------

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

    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and credits to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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. In fact, the Exchange 
believes that the proposed change will promote Participant Firms to 
provide liquidity on the Exchange regardless of their type or size, for 
example. Those Participant Firms who conduct more trading specifically 
on the Exchange will qualify for the port charge cap regardless of firm 
type or size. Even if the rule was construed to favor firms that may 
have the capacity to provide large amounts of liquidity, the Exchange 
believes that encouraging trading in a marketplace through fee caps is 
not an undue burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act as the marketplace will 
benefit from the increased liquidity. Further, the Exchange believes 
that, aside from encouraging liquidity on the Exchange, the 
establishment of ports in both data centers by Participant Firms in 
order to qualify for the port charge caps will promote disaster 
preparedness among Participant Firms that provides a benefit to the 
industry. The Exchange believes by diversifying the number of access 
ports to the Exchange, Participant Firms will be better prepared in the 
event of potential disaster situations.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by CHX.
---------------------------------------------------------------------------

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

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

[[Page 4182]]

    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend 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 email to [email protected]. Please include 
File Number SR-CHX-2012-19 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-2012-19. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 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-2012-19 and should be 
submitted on or before February 8, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01027 Filed 1-17-13; 8:45 am]
BILLING CODE 8011-01-P