[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40788-40790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16232]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69903; File No. SR-CHX-2013-12]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Single-Sided Order Fees and Credits and the Order 
Cancellation Fee

July 1, 2012.
    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 June 26, 2013, 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.
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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 the 
Substance of the Proposed Rule Change

    CHX proposes to amend its Schedule of Participant Fees and 
Assessments (the ``Fee Schedule'') to amend the Single-Sided Order Fees 
and Credits and the Order Cancellation Fee. The Exchange proposes to 
implement the fee changes on July 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. 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
    The Exchange proposes to amend Section E of the Fee Schedule, 
effective July 1, 2013. Specifically, the Exchange proposes to 
eliminate references in Sections E.1 and E.8 to ``Derivative Securities 
Products'' (``DSPs'') and ``Non-Derivative Securities Products'' 
(``Non-DSPs'') and to eliminate references in Section E.1 to 
``Regular'' Trading Session and ``Early and Late'' Trading Sessions. 
Moreover, the Exchange proposes to amend Section E.1 to set the 
liquidity providing fee for all Tape A, B, and C securities priced 
greater than or equal to $1.00/share at $0.00250/share and the 
Liquidity Removing Fee for all Tape A, B, and C securities priced 
greater than or equal to $1.00/share at $0.0030/share.
Current Section E.1
    On November 2, 2012, the Exchange adopted current Section E.1 of 
the Fee Schedule,\4\ amended in February 2013,\5\ which permits twenty-
four (24) distinct sets of credits and fees. Specifically, the Section 
E.1 fee table distinguishes between ``Regular'' Trading Session and 
``Early and Late'' Trading Sessions and divides each trading session 
into Tape A, B, and C securities. Moreover, each Tape is divided into 
DSPs and Non-DSPs and each set of DSPs and Non-DSPs are further divided 
into securities priced greater than or equal to $1.00/share or those 
that are priced less than $1.00/share.
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    \4\ See Securities Exchange Act Release No. 68182 (November 8, 
2012), 77 FR 68167 (November 15, 2012) (SR-CHX-2012-16).
    \5\ See Securities Exchange Act Release No. 68894 (February 15, 
2013), 78 FR 11258 (February 15, 2013) (SR-CHX-2013-06).
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    With respect to the current values of the credits and fees of 
Section E.1, for transactions in Tape A and Tape B Non-DSPs priced 
greater than or equal to $1.00/share that are executed in the Regular 
Trading Session, the current Fee Schedule gives no credit for providing 
liquidity, and charges a $0.0030/share Liquidity Removing Fee. For 
transactions in Tape A and Tape B DSPs

[[Page 40789]]

priced greater than or equal to $1.00/share that are executed in the 
Regular Trading Session, the current Fee Schedule gives a credit of 
$0.0022/share for providing liquidity, and charges a $0.0030/share 
Liquidity Removing Fee. For transactions in Tape C DSPs and Non-DSPs 
priced greater than or equal to $1.00/share that are executed in the 
Regular Trading Session, the current Fee Schedule gives a credit of 
$0.0001/share for providing liquidity, and charges a $0.0006/share 
Liquidity Removing Fee. Additionally, for transactions in all 
securities priced greater than or equal to $1.00/share that are 
executed in the Early and Late Trading Session, the current Fee 
Schedule gives a credit of $0.0022/share for providing liquidity, and 
charges a $0.0030/share Liquidity Removing Fee. Finally, for 
transactions in all securities priced less than $1.00/share that are 
executed in the Regular Trading Session, or the Early and Late Trading 
Session, the current Fee Schedule gives a credit of $0.00009/share for 
providing liquidity, and charges a fee of 0.30% of trade value for 
removing liquidity.
Proposed Section E.1
    The Exchange now proposes to amend the Section E.1 fee table to 
reduce the number of distinct sets of credits and fees, to set the 
Liquidity Providing Credit for all Tape A, B, and C securities priced 
greater than or equal to $1.00/share at $0.00250/share, and to set the 
Liquidity Removing Fee for all Tape A, B, and C securities priced 
greater than or equal to $1.00/share at $0.0030/share.
    With respect to the Section E.1 fee table, the Exchange proposes to 
remove all references to DSPs and Non-DSPs, while preserving the 
distinction between Tape A, B, and C security types that are priced 
greater than or equal to $1.00/share and those priced less than $1.00/
share. In addition, the Exchange proposes to eliminate the current 
distinction between ``Regular'' Trading Session and ``Early and Late'' 
Trading Sessions, and adopt a set of credit and fee values, 
irrespective of the trading session in which the transaction occurred.
    With respect to the Liquidity Providing Credit, the Exchange 
proposes to set the credit at $0.00250/share for all Tape A, B, and C 
securities priced greater than or equal to $1.00/share. Specifically, 
the credit for Tapes A and B DSP securities will increase from 
$0.00220/share to $0.00250/share, Tapes A and B Non-DSP securities will 
increase from $0.00/share to $0.00250/share, and all Tape C securities 
will increase from $0.00010/share to $0.00250/share. For transactions 
in all security types priced less than $1.00/share, the Exchange will 
maintain the current Liquidity Providing Credit of $0.00009/share.
    With respect to the Liquidity Removing Fee, the Exchange proposes 
to set the fee at $0.0030/share for all Tape A, B, and C securities 
priced greater than or equal to $1.00/share. Specifically, the fee for 
Tapes A and B will remain the same, but the fee for Tape C will 
increase from $0.0006/share to $0.0030/share. For transactions in all 
security types priced less than $1.00/share, the Exchange will maintain 
the current Liquidity Removing Fee of 0.30% of trade value.
    Moreover, the Exchange proposes to make non-substantive changes to 
the ``Security Price'' column to amend the security prices for Tapes A, 
B, and C securities to reflect a ``$'' sign in front of ``1.00.'' Thus, 
the proposed security prices for each Tape A, B, and C securities will 
indicate ``>=$1.00/share'' for securities priced greater than or equal 
to $1.00/share and ``< $1.00/share'' for securities priced less than 
$1.00/share.
    Given these changes, the Exchange proposes to amend paragraph (b) 
to replace ``$0.0022/share'' with ``$0.0025/share'' and eliminate 
references to ``Derivative Securities Products'' and the ``Regular'' 
Trading Session. Also, the Exchange proposes to delete current 
paragraph (c) as it relates to the current Liquidity Providing Credit 
in all securities paid for orders executed in the ``Early or Late 
Trading Sessions,'' which is now obsolete. Finally, the Exchange 
proposes to change current paragraph (d) to proposed paragraph (c).
    Since its last amendment to the Fee Schedule, the Exchange has 
found that the distinction between Tape A, B, and C security types 
provides sufficient granularity. Thus, the Exchange has determined that 
differentiating between DSPs and Non-DSPs, as well as the ``Regular'' 
Trading Session and ``Early and Late'' Trading Sessions, is unnecessary 
and overly particularized. Additionally, the Exchange believes that 
this new credit and fee structure will incentivize activity by 
Participants on the Exchange's trading facilities, encourage order 
flow, and allow the Exchange to remain competitive in today's orders 
marketplace. Moreover, the Exchange submits that increasing the 
Liquidity Providing Credit from $0.00220/share to $0.00250/share will 
further promote displayed liquidity on the Exchange.
Current Section E.8
    On November 2, 2012, the Exchange adopted the current ``Order 
Cancelation Fee (Regular Trading Session only)'' section of its Fee 
Schedule,\6\ amended in June 2013,\7\ that incorporated, inter alia, 
references to Derivative and Non-Derivative Securities Products within 
Tape A, B, and C. Specifically, current Section E.8(b) provides for six 
different sets of Order Cancellation Fee values, for DSP and Non-DSPs 
in Tape A, B, and C securities.
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    \6\ See Securities Exchange Act Release No. 68219 (November 13, 
2012), 77 FR 69673 (November 20, 2012) (SR-CHX-2012-15).
    \7\ See Securities Exchange Act Release No. 69701 (June 5, 
2013), 78 FR 35082 (June 11, 2013) (SR-CHX-2013-11).
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Proposed Section E.8
    The Exchange proposes to eliminate references to ``Derivative 
Securities Products'' and ``Non-Derivative Securities Products'' within 
Section E.8.\8\ Specifically, the Exchange proposes to remove 
paragraphs titled ``Tape A Non-Derivative Securities Products,'' ``Tape 
B Non-Derivative Securities Products,'' and ``Tape C Non-Derivative 
Securities Products'' from Section E.8(b) of the Fee Schedule. 
Additionally, the Exchange proposes to delete the words ``Derivative'' 
and ``Products'' from the remaining three (3) paragraphs of Section 
E.8(b). As a result, the proposed Section E.8(b) will only make 
references to Tape A, B, and C securities, omitting any mention of DSPs 
and Non-DSPs.
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    \8\ Unlike proposed Section E.1, the Exchange proposes to 
maintain the applicability of the Order Cancellation Fee to the 
Regular Trading Session only.
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    Similar to the Section E.1, the Exchange has determined that 
differentiating between DSPs and Non-DSPs in the context of the Order 
Cancellation Fee is unnecessary and overly particularized. The Exchange 
submits that the proposed distinction between Tapes A, B, and C 
securities provides adequate granularity for the purposes of 
establishing the Order Cancellation Fee values.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act \10\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and other persons using any facility or 
system which the Exchange operates or controls, and does not unfairly 
discriminate between customers, issuers, or broker dealers.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    Specifically, with respect to Section E.1, since the proposed 
credit and fee

[[Page 40790]]

structure will continue to apply to all single-sided orders of 100 or 
more shares executed in the CHX Matching System, the Exchange believes 
that it will equitably allocate the credits and fees among Participants 
in a non-discriminatory nature, notwithstanding the omission of 
references to ``DSP'' and ``Non-DSPs,'' as well as ``Regular'' and 
``Early and Late'' Trading Sessions. Furthermore, the proposed values 
for the Liquidity Providing Credit of $0.00250/share and Liquidity 
Removing Fees of $0.0030/share for each of the security types priced 
greater than or equal to $1.00/share are reasonable, where the proposed 
Liquidity Providing Credit will be increased to the benefit of 
liquidity providers and the proposed Liquidity Removing Fee will not 
exceed the current value for Tape A and Tape B securities priced at or 
greater than $1.00/share. Moreover, the proposed fee values are 
generally similar to the fees of other exchanges, such as NASDAQ.\11\
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    \11\ NASDAQ ``Fees to Remove Liquidity, Shares Executed at or 
above $1.00'' ranges from $0.0029/share to $0.0030/share and 
``Rebate to Add Displayed Liquidity, Shares Executed at or Above 
$1.00'' ranges from $0.0020/share to $0.00305/share.
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    With respect to Section E.8, the Exchange submits that removing 
references to ``Derivative Securities Products'' and ``Non-Derivative 
Securities Products'' will allow the Order Cancellation Fee to continue 
to be equitable and reasonable, as it does not impact the Order 
Cancellation Fee values nor does it impact to whom the fee is 
applicable.
    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. Specifically, the proposed 
changes to eliminate the distinction in Section E of the Fee Schedule 
between DSPs and Non-DSPs, the different trading sessions, and to set 
an across the board Liquidity Providing Credit of $0.00250/share and 
Liquidity Removing Fees of $0.0030/share for Tapes A, B, and C 
securities priced greater than or equal to $1.00/share contributes to 
the protection of investors and the public interest by simplifying the 
schedule of credits paid and fees assessed by the Exchange. 
Consequently, the proposed rule change is necessary and 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 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 \12\ and subparagraph (f)(2) of Rule 
19b-4 thereunder \13\ because it establishes or changes a due, fee, or 
other charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
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    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.
    As fully discussed above, the Exchange believes that the proposed 
changes represent a fair and reasonable structure designed to create 
equable credit and fee amounts to incent activity among all 
Participants within the Exchange's trading facilities.

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-2013-12 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-2013-12. 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 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-2013-12, 
and should be submitted on or before July 29, 2013.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16232 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P