[Federal Register Volume 75, Number 11 (Tuesday, January 19, 2010)]
[Notices]
[Pages 2914-2915]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-799]
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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.
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\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).
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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.
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\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).
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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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
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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
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.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 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 e-mail to rule-comments@sec.gov. 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.
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\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