[Federal Register Volume 77, Number 221 (Thursday, November 15, 2012)]
[Notices]
[Pages 68167-68169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27715]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68182; File No. SR-CHX-2012-16]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Single-Sided Orders Fees and Rebates
November 8, 2012
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 November 2, 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 Exchange. CHX has
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 the
Substance of the Proposed Rule Change
The CHX proposes to amend its Schedule of Fees and Assessments (the
``Fee Schedule''), effective November 2, 2012, to create a separate fee
and rebate structure for each derivative and non-derivative Tape A, B
and C security, with respect to single-sided order executions of 100 or
more shares. The text of this proposed rule change is available on the
Exchange's Web site at http://www.chx.com/rules/proposed_rules.htm and
in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549.
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 CHX included statements
concerning the purpose of and basis for the proposed rule changes and
discussed any comments it received regarding the proposal. The text of
these statements may be examined at the places specified in Item IV
below. The CHX 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 proposes to amend its Schedule of
Fees and Assessments (the ``Fee Schedule''), effective November 2,
2012, to amend Section E.1 of the Fee Schedule, which concerns single-
sided order executions of 100 or more shares, to establish fees and
rebates specific to each derivative and non-derivative Tape A, B and C
security type.
Current Section E.1
On January 9, 2012, the Exchange adopted the current Fee Schedule
that incorporated, inter alia, a separate fee and rebate structure for
Derivative Securities Products (``DSPs'') \5\ and removed references to
Tape A, B and C securities throughout its Fee Schedule.\6\
Specifically, with respect to Section E.1, the Exchange eliminated the
distinction in the fee and rebate structure for Tape A, B and C
securities \7\ and replaced it with a structure based on DSPs and non-
DSPs.
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\5\ Per Section E.1 of the current Fee Schedule, ``Derivative
Securities Product'' is defined as any type of option, warrant,
hybrid securities product or any other security, other than a single
equity option or a security futures product, whose value is based,
in whole or in part, upon the performance of, or interest in, an
underlying instrument. This definition is drawn from Rule 19b-4(e).
See 17 CFR 240.19b-4(e).
\6\ See Exchange Act. Release No. 66139 (January 11, 2012), 77
F.R. 2583 (January 18, 2012) (SR-CHX-2012-01).
\7\ Tape A securities are those securities for which the New
York Stock Exchange, Inc. is the primary listing market. Tape C
securities are those securities for which the NASDAQ Stock Exchange,
Inc. is the primary listing center. Tape B securities are those
securities for which some other national securities exchange is the
primary listing market.
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With respect to the current fees and rebates of Section E.1, for
transactions in DSPs priced greater than or equal to $1.00/share that
are executed in the Regular Trading Session, the current Fee Schedule
charges a fee of $0.003/share for removing liquidity and gives a rebate
of $0.0022/share for providing liquidity. For transactions in non-DSPs
priced equal to or greater than $1.00/share that are executed in the
Regular Trading Session, the current Fee Schedule charges a fee of
$0.003/share for removing liquidity, but gives no rebate for providing
liquidity. For transactions in all securities priced equal to or less
than $1.00/share that are executed in the Early and Late Trading
Sessions, the current Fee Schedule charges a fee of $0.003/share for
removing liquidity and gives a rebate of $0.0022/share for providing
liquidity. For transactions in all securities priced less than $1.00/
share, the current Fee Schedule charges a fee of 0.30% of trade value
for removing liquidity and gives a rebate of $0.00009/share for
providing liquidity.
Proposed Section E.1
The Exchange now proposes to amend Section E.1 to reincorporate
references to Tape A, B and C securities, while maintaining the
distinction between DSPs and non-DSPs, so as to establish fees and
rebates specific to each derivative and non-derivative Tape A, B and C
security type and to maintain the current rebate and fee values, but
for two exceptions. Specifically, the Exchange proposes to distinguish
between ``Regular'' and ``Early and Late'' trading sessions. Each
trading session will be further divided into six categories, one for
each derivative and non-derivative Tape A, B and C security. Finally,
each one of the six security-types will be then divided into securities
priced greater than or equal to $1.00/share or priced less than $1.00/
share. At this point, each security-type will be assigned a specific
fee and rebate value, resulting in a total of twenty-four (24) distinct
sets of fees and rebates.
With respect to the actual values of the fees and rebates of
proposed Section E.1, the Exchange proposes to mostly adopt the fee and
rebate values currently in Section E.1. Specifically, for transactions
in Tape A and B Non-DSP securities priced greater than or equal to
$1.00/share executed during the Regular Trading Session, the
[[Page 68168]]
Exchange proposes to maintain no liquidity providing rebate and a
$0.0030/share liquidity removing fee. Also, for transactions in Tapes A
and B DSP securities priced greater than or equal to $1.00/share
executed during the Regular Trading Session and all Tapes DSP and Non-
DSP securities priced greater than or equal to $1.00 executed during
the Early or Late Trading Session, the Exchange proposes to maintain a
liquidity providing rebate of $0.0020/share and a liquidity removing
fee of $0.0030/share. Furthermore, for transactions in all Tapes Non-
DSP securities priced less than $1.00/share executed in the Regular,
Early or Late Trading Sessions, the Exchange proposes to maintain a
liquidity providing rebate of $0.00009/share and a liquidity removing
fee of 0.30% of trade value.
However, the Exchange proposes a new fee and rebate for Tape C DSP
and Non-DSP securities priced greater than or equal to $1.00/share
executed in the Regular Trading Session. Currently, for transactions in
Tape C non-DSP securities priced greater than or equal to $1.00/share
executed in the Regular Trading Session, there is no liquidity
providing rebate and a $0.0030/share liquidity removing fee. Moreover,
for transactions in Tape C DSP securities priced greater than or equal
to $1.00/share executed in the Regular Trading Session, there is
currently a liquidity providing rebate of $0.0020/share and a liquidity
removing fee of $0.0030/share. In lieu of these current values, the
Exchange now proposes a liquidity providing rebate of $0.00010/share
and a liquidity removing fee of $0.0006/share, for both of these
security types. The Exchange submits that the imposition of these new
fee and rebate values is necessary to promote order flow in Tape C
securities to the Exchange.
Generally speaking, the purpose of this new fee and rebate
structure is to create greater granularity in the Exchange's billing
structure, which will in turn provide it with greater flexibility in
setting fees and rebates.\8\ This granularity will allow the Exchange
to make fine-tuned adjustments, through future proposed fee filings
pursuant to Rule 19b-4, to incentivize order flow in a specific group
of securities, such as in Tape C securities, without affecting other
fees or rebates associated with orders in other groups of securities
that the Exchange does not wish to impact. That is, such flexibility
will allow the Exchange to adapt to fast-paced changes in today's
orders marketplace and will, in turn, allow the Exchange to remain
competitive for such orders.
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\8\ The Exchange endeavors to incorporate this new security-type
specific fee structure throughout its Fee Schedule, to the extent
applicable, through proposed rule filings, such as this one and SR-
CHX-2012-15. SR-CHX-2012-15 proposes the adoption of a similar
security-type specific fee structure in the context of order
cancellation fees.
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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. Specifically, since the
proposed fee and rebate structure will 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 fees and rebates among
Participants in a non-discriminatory nature. In addition, because
quoting and trading activity is different among certain categories of
securities, such as DSPs, as well as those securities on different
Tapes, the Exchange believes that it is fair and reasonable to impose
specific fees and rebates for each of the six security-types in order
to better incent activity by Participants on the Exchange's trading
facilities in those particular categories. Furthermore, the proposed
values for the liquidity removing fees for each of the security types
are reasonable where such values will either remain the same as the
current fees or will decrease (in the case of transactions in Tape C
DSP and Non-DSP securities priced greater than or equal to $1.00/share
executed in the Regular Trading Session) and where the proposed fee
values are generally similar to the fees of other exchanges, such as
NASDAQ.\11\
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4).
\11\ NASDAQ pricing provides for a flat fee of $0.0030/share to
remove liquidity for transactions in all Tape securities priced
greater than or equal to $1.00/share and a fee of 0.30% of total
dollar volume for transactions in securities priced less than $1.00/
share.
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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 solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is to take effect 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 applicable to the Exchange's members and non-members, which
renders the proposed rule change effective upon filing.
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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.
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-2012-16 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-2012-16. 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
[[Page 68169]]
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 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 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-2012-16, and should be
submitted on or before December 6, 2012.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27715 Filed 11-14-12; 8:45 am]
BILLING CODE 8011-01-P