[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75203-75206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29493]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73814; File No. SR-CHX-2014-19]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
to Amend the Applicability of Certain Fees and Credits Provided Under
the Fee Schedule
December 11, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\, and Rule 19b-4\2\ thereunder, notice is hereby given that
on December 4, 2014, the Chicago Stock Exchange, Inc. (``CHX'' or the
``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 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\ 17 CFR 240.16b-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 the applicability of certain fees and credits
provided under the Fee Schedule of the CHX (``Fee Schedule'') and to
clarify other provisions throughout the Fee Schedule. The text of this
proposed rule change is available on the Exchange's Web site at
(www.chx.com) and in 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 CHX included statements
concerning the purpose of and basis for the proposed rule changes 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 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
The Exchange proposes to expand the scope of Section E.1 of the Fee
Schedule to include executions resulting from single-sided orders for
securities that trade in Round Lots of less than 100 shares.\3\
Moreover, the Exchange proposes to amend various provisions throughout
the Fee Schedule for clarification and stylistic consistency. Aside
from the proposed amendment of the scope of Section E.1, the Exchange
does not propose to substantively modify any other fees, assessments,
credits or rebates.
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\3\ CHX Article 1, Rule 2(f)(3) defines ``Round Lot'' as ``an
order of 100 shares, unless otherwise determined by the Committee on
Exchange Procedure.''
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Proposed Elimination of Obsolete ``Effective'' and ``Operative'' Dates
and Capitalization of Defined Terms
Initially, the Exchange proposes certain non-substantive global
amendments to the Fee Schedule. Specifically, the Exchange proposes to
delete references to obsolete ``effective'' and ``operative'' dates
throughout the Fee Schedule, specifically found under:
Sections B through E;
[[Page 75204]]
Section J;
Section L; and
Sections O and P.
Similarly, the Exchange also proposes to eliminate obsolete
language under Section D stating that ``no monthly charges will be
assessed under this section D. for CHX's Equinix NY4 data center
location under April 1, 2012.''
Moreover, the Exchange proposes to capitalize the terms
``Institutional Broker,'' ``Odd Lot,'' ``Round Lot'' and ``Clearing
Participant'' throughout the Fee Schedule as they are defined terms
under CHX Rules.\4\ In addition, the Exchange proposes to delete the
hyphen in between certain references to Odd Lots because the term, as
defined under CHX Rules, does not contain a hyphen.\5\ Specifically,
the Exchange proposes to amend Section E.1(a), which includes a
reference to Institutional Brokers; Sections E.3 and E.4, which include
references to Odd Lots; Section E.8(a), which includes a reference to
Round Lot; and Section F.2, which includes references to Institutional
Broker and Clearing Participant.
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\4\ See CHX Article 1, Rule 1(n) defining ``Institutional
Broker;'' see also CHX Article 1, Rule 1(ee) defining ``Clearing
Participant;'' see also CHX Article 1, Rule 2(f)(3) defining Round
Lot; see also CHX Article 1, Rule 2(f)(2) defining ``Odd Lot.''
\5\ See CHX Article 1, Rule 2(f)(2).
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Amended Section E.1
Section E.1 provides liquidity removing fees and liquidity
providing credits for executions resulting from ``one-sided orders of
100+ shares,'' which describes a Round Lot or more for all but a
handful of securities currently traded on the Exchange.\6\ Thus, the
Exchange does not currently apply Section E.1 fees and credits to
executions resulting from orders in securities that trade in Round Lots
of less than 100 shares. Instead, such executions are currently
assessed fees pursuant to Section E.4, which apply to executions
resulting from orders submitted as Odd Lots.\7\
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\6\ As of the date of this filing, the Exchange permits the
trading of ten securities in Round Lots of less than 100 shares,
none of which have a primary listing on the Exchange. The Round Lot
size for a security is determined by the Exchange and is identical
to the round lot size set by the primary listing market.
\7\ See supra note 5.
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In the interest of clarity and consistency, the Exchange proposes
to expand the scope of Section E.1 to apply to executions ``resulting
from orders submitted as at least a Round Lot,'' which would include
securities that trade in Round Lots of less than 100 shares.\8\ To this
end, the Exchange proposes to amend the headline to Section E.1 by
deleting the phrase ``single-sided order'' and replacing the phrase
``(one-sided orders of 100+ shares)'' with the phrase ``resulting from
single-sided orders submitted as at least a Round Lot.'' Incidentally,
the proposed headline clarifies that the Section E.1 fees and credits
are assessed based on the size of the contra-side orders executed and
not the size of the execution itself.\9\ The proposed amended headline
would state as follows:
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\8\ See supra note 3; see also supra note 6.
\9\ For example, where there is an execution between an incoming
buy order submitted as an Odd Lot and a resting sell order submitted
as a Round Lot, the buy side will be assessed fees pursuant to
Section E.4 and the sell side will be given a credit pursuant to
Section E.1.
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Matching System executions resulting from single-sided orders
submitted as at least a Round Lot
Moreover, the Exchange proposes the following clarifying and
stylistic amendments to Section E.1:
In the first full paragraph under Section E.1:
Replace the phrase ``rebates paid'' with ``credits
attributed'' to be consistent with the term ``liquidity providing
credit'' utilized in the fees and credits chart;
delete ``(Executions through an Institutional Broker
Registered with the Exchange Under Article 17 (All Sessions)),'' as the
Exchange proposes to amend the headline to Section E.3, as discussed
below; and
replace citation to ``Section E.3.a.'' with ``Section
E.3(a)'' to be consistent with the existing taxonomical structure of
the Fee Schedule, as described below in the proposed amendments to
Section E.3.
Amended Section E.2-E.5 and E.7
The Exchange proposes to make additional clarifying and stylistic
amendments to Section E. The Exchange proposes the following amendments
to E.2:
Amend the headline to Section E.2 to be stylistically
consistent with the proposed amended headline to Section E.1 and to
replace the term ``All Sessions'' with the more descriptive ``all
trading sessions,'' which is a phrase currently used under the fees and
credits chart of Section E.1. Thus, the proposed amended headline would
state as follows:
Matching System executions resulting from two-sided orders (cross
orders) of any number of shares (all trading sessions)\10\
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\10\ CHX Article 1, Rule 2(a)(2) defines ``cross order,'' in
pertinent part, as ``an order to buy and sell the same security at a
specific price better than the best bid and offer displayed in the
Matching System and which would not constitute a trade-through under
Reg NMS (including all applicable exceptions and exemptions).''
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The Exchange proposes the following amendments to Section E.3:
Amend the headline to be stylistically consistent with the
proposed amended headlines to Sections E.1 and E.2. Thus, the proposed
amended headline would state as follows:
Matching System executions resulting from orders submitted by
Institutional Brokers registered with the Exchange under Article 17
(all trading sessions)
In the second to last paragraph under Section E.3:
insert the term ``Section'' before ``E.4.,'' as the
current citation is to Section E.4, and delete the period after
``E.4''; and
replace ``see (1) and (2) above'' with the more accurate
``see Sections E.1 and E.2 above.''
Replace paragraph ``a.'' and ``b.'' with ``(a)'' and
``(b),'' respectively, to be consistent with the existing taxonomical
structure of the Fee Schedule, which utilizes parentheses to denote all
subparagraphs under the first paragraph denoted by an Arabic numeral.
Thus, the Exchange also proposes to amend Section E.3(b) to replace a
citation to ``Section E.3.a.'' with ``Section E.3(a).''
Under Section E.3(a), insert the number ``0'' in front of
the period within ``$.003/share'' and after ``3'' and insert the term
``fee'' after ``$.003/share,'' so as to state ``$0.0030/share fee.''
Under Section E.3(b), insert the number ``0'' in front of
the period within ``$.0007/share'' and after ``7'' and insert the term
``fee'' after ``$.0007/share,'' so as to state ``$0.00070/share fee.''
The Exchange proposes the following amendments to Section E.4:
Amend the headline to Section E.4 to be stylistically
consistent with the proposed amended headlines to Sections E.1-3. Thus,
the proposed amended headline would state as follows:
Matching System executions resulting from single-sided orders
submitted as Odd Lots (all trading sessions)
Insert the number ``0'' in front of the period within
``$.0040/share'' and insert the term ``fee'' after ``$.0040/share,'' so
as to read ``$0.0040/share fee.''
The Exchange proposes to amend the headline to Section E.5 to
replace ``All Sessions'' with the more descriptive and consistent ``all
trading sessions.''
The Exchange proposes the following amendments to Section E.7:
Amend the headline to replace the term ``All Sessions''
with the more
[[Page 75205]]
descriptive and consistent ``all trading sessions.''
Insert the number ``0'' in front of the period within
``$.003/share'' and after ``3'' and insert the term ``fee'' after
``$.003/share,'' so as to read ``$0.0030/share fee.''
Amended Section F
The Exchange proposes the following clarifying and stylistic
amendments to Section F:
Under Section F.2, delete the period placed after
reference to ``Section E.7'' to be consistent with the current
taxonomical and related citation structure of the Fee Schedule.
Under Section F.4, amend obsolete citations to various
credits that are no longer offered by the Exchange. Currently, the only
credits available pursuant to Section F are the Institutional Broker
credits, described under current Section F.2. Thus, the Exchange
proposes to replace all citations to specific paragraphs under Section
F with citations to ``Section F.2'' only.\11\
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\11\ Aside from the Institutional Broker credits under Section
F.2, Section F.4 does not apply to any other credits, fee caps or
rebates offered by the Exchange.
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Operative Date
The Exchange proposes to make all changes proposed herein operative
January 2, 2015. Participants will be notified of the proposed changes
pursuant to a Legal Notice that will be issued immediately after this
proposed rule change is filed.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \12\ in general, and furthers the
objectives of Sections 6(b)(1) \13\ and (b)(4) \14\ of the Act, in
particular. Specifically, the proposed amended Section E.1 will
continue to apply equally to all Participants that submit single-sided
orders to the Matching System, in furtherance of Sections 6(b)(4), as
the proposed rule provides for the equitable allocation of reasonable
dues, fees and other charges among members and other persons using its
facilities. Moreover, the Exchange believes that the proposed amended
Section E.1 simplifies the Fee Schedule by applying to executions
resulting from all Round Lot orders, as opposed to merely those that
result from orders for 100 or more shares, and the other amendments to
the Fee Schedule would provide clarity and stylistic consistency to the
Fee Schedule, both in furtherance of Section 6(b)(1), as the proposed
rule would better enable the Exchange to be so organized as to have the
capacity to be able to carry out the purposes of the Act and to comply,
and to enforce compliance by its Participants with the provisions of
the Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(1).
\14\ 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. Given that the proposed
amendment to Section E.1 would impact an extremely small number of
securities traded on the Exchange and the proposed clarifying and
stylistic amendments do not substantively modify the Fee Schedule, the
proposed rule change would have no burden on competition. To the
contrary, the Exchange believes that the proposed rule change would
promote competition by widening the scope of executions that would be
subject to lower fees and eligible for credits and providing additional
clarity to the Fee Schedule.
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 rule change is effective upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act \15\ and subparagraph(f)(2) of Rule
19b-4 thereunder \16\ because it establishes or changes a due, fee or
other charge imposed by the Exchange.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 No. SR-CHX-2014-19 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
All submissions should refer to File No. SR-CHX-2014-19. 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 changes 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 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 No. SR-CHX-2014-19 and should be
submitted on or before January 7, 2015.
[[Page 75206]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29493 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P