[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