[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]
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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.
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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 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.
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\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.
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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.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
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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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(2).
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[[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\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01027 Filed 1-17-13; 8:45 am]
BILLING CODE 8011-01-P