[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11258-11260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03519]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68894; File No. SR-CHX-2013-06]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Alter the Circumstances Under Which Liquidity Providing Credits are 
Paid to Institutional Brokers

February 11, 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 February 6, 2013, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the

[[Page 11259]]

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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 Exchange Rules and its Schedule of 
Participant Fees and Assessments (the ``Fee Schedule'') to alter the 
circumstances under which liquidity providing credits are paid to 
Institutional Brokers. The Exchange proposes to implement the fee 
change on February 6, 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. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Through this filing, the Exchange proposes to amend its Fee 
Schedule to alter the circumstances under which liquidity providing 
credits are paid to Institutional Brokers. The Exchange proposes to 
make the fee change operative on February 6, 2013.
    Currently, for agency executions on the Exchange through an 
Institutional Broker, Section E.3.a of the Fee Schedule charges a fee 
of $.003/share, up to a maximum of $100 per side for all securities 
priced $1.00/share or more in all sessions. Liquidity removing fees are 
not charged to Institutional Brokers for single sided orders pursuant 
to Section E.1.(a) of the Fee Schedule. When a single sided order 
provides liquidity, Section E.1.(b) of the Fee Schedule specifies that 
a liquidity providing credit of $0.0022/share in all Derivative 
Securities Products priced $1.00/share or more executed in the Regular 
Trading Session shall be paid to the Institutional Broker representing 
the Participant which originated the order. Additionally, for single 
sided orders, Section E.1.(c) of the Fee Schedule specifies that a 
liquidity providing credit of $0.0022/share in all securities priced 
$1.00/share or more executed in the Early or Late Trading Sessions 
shall be paid to the Institutional Broker representing the Participant 
which originated the order. Although infrequent, this pricing structure 
can result in a scenario in which the fees charged by the Exchange are 
capped due to the $100 per side cap while the credits paid are 
uncapped, thus resulting in transaction that is revenue negative to the 
Exchange.
    The Exchange now proposes to amend Section E.1.(b) of the Fee 
Schedule to specify that a liquidity providing credit of $0.0022/share 
in all Derivative Securities Products priced $1.00/share or more 
executed in the Regular Trading Session shall be paid to the 
Institutional Broker representing the Participant which originated the 
order, unless such Institutional Broker also represents the Participant 
which originated the matched liquidity taking order. Similarly, the 
Exchange would amend Section E.1.(c) of the Fee Schedule to specify 
that a liquidity providing credit of $0.0022/share in all securities 
priced $1.00/share or more executed in the Early or Late Trading 
Sessions shall be paid to the Institutional Broker representing the 
Participant which originated the order, unless such Institutional 
Broker also represents the Participant which originated the matched 
liquidity taking order. The Exchange believes that these changes will 
allow it to continue to incent liquidity providing orders while at the 
same time limiting transactions that are revenue negative to the 
Exchange. The Exchange notes that the rates associated with the fees 
being charged and credits paid do not change as a result of this 
filing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \4\ in general, and furthers the 
objectives of Sections 6(b)(4) and 6(b)(5) of the Act \5\ in particular 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members and issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, or broker dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the change provides for the equitable 
allocation of reasonable fees because it is being proposed to address a 
specific scenario in which the fees charged by the Exchange are capped 
while the credits paid under certain circumstances are uncapped, thus 
resulting in transaction that is revenue negative to the Exchange.
    The Exchange also believes that the proposed change is not unfairly 
discriminatory because it applies equally to all CHX registered 
Institutional Brokers. The Exchange also notes that the rates 
associated with the fees being charged and credits paid do not change 
as a result of this filing.
    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. The rule change is designed 
to address a specific scenario in which the fees charged by the 
Exchange are capped while the credits paid under certain circumstances 
are uncapped, thus resulting in transaction that is revenue negative to 
the Exchange. As stated above, the rates associated with the fees being 
charged and credits paid do not change as a result of this filing.

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)(ii) of the Act \6\ and

[[Page 11260]]

subparagraph (f)(2) of Rule 19b-4 thereunder \7\ 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 the 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. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
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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 email to [email protected]. Please include 
File Number SR-CHX-2013-06 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-2013-06. 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 20549-1090, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal offices 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-
2013-06, and should be submitted on or before March 8, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03519 Filed 2-14-13; 8:45 am]
BILLING CODE 8011-01-P