Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Membership Dues and Fees, 8413-8414 [E5-661]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 33 (Friday, February 18, 2005)]
[Notices]
[Pages 8413-8414]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-661]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51192; File No. SR-CHX-2005-02]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment Nos. 1 and 2 Thereto Relating to Membership Dues and Fees

February 11, 2005.
    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 3, 2005, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in items I and 
II below, which items have been prepared by the CHX. On February 10, 
2005, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ On February 11, 2005, the Exchange filed Amendment No. 2 to 
the proposed rule change.\4\ The Exchange filed the proposed rule 
change pursuant to section 19(b)(3)(A) of the Act \5\ which renders it 
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\ Amendment No. 1 replaced the original rule filing in its 
entirety. In Amendment No. 1, CHX clarified the distinction between 
active and inactive mailboxes under the ``Technology Charges'' 
discussion and clarified the effect of the recent amendment (File 
No. CHX-2004-22) discussed in the ``Specialist Fixed Fee'' section.
    \4\ Amendment No. 2 replaced Amendment No. 1 in its entirety. In 
Amendment No. 2, CHX made technical changes to the proposed rule 
change.
    \5\ 15 U.S.C. 78s(b)(3)(A).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend its membership dues and fees schedule (``Fee 
Schedule'') to: (i) Provide for a technology charge relating to 
retention of electronic communications associated with an inactive 
mailbox, (ii) modify the Exchange's transaction fee cap provision to 
exclude certain floor broker orders, and (iii) clarify a provision 
relating to specialist fixed fees. The text of the proposed rule change 
is below. Additions are italicized; deletions are [bracketed].
* * * * *
MEMBERSHIP DUES AND FEES
A. Membership Dues and Transfer Fees--No change to text.
B. Self-Regulatory Organization Fee--No change to text.
C. Registration Fees--No change to text.
D. Specialist Assignment Fees--No change to text.
E. Specialist Fixed Fees

    Except in the case of Tape B Exemption Eligible Securities (as 
defined above in Section D), which shall be exempt from assessment of 
fixed fees, specialists will be assigned a fixed fee per assigned stock 
on a monthly basis, to be calculated as follows:

* * * * *
F. Transaction and Order Processing Fees
    1. SEC Transaction Fees--No change to text.
    2. NASD Fees on Cleared Transactions--No change to text.
    3. Order Processing Fees Odd Lots--No change to text. Open Limit 
Orders--No change to text.

    The above order processing fees shall not apply to transactions in 
NASDAQ/NMS Securities, or to transactions in the stocks comprising the 
Standard & Poor's 500 Stock Price Index executed through MAX. [These 
order processing fees also shall not apply, through June 30, 2001, to 
any transaction that takes place during the E-Session.]

    4. Transaction Fees. Transaction fees will be assessed on the 
executions of the following round-lot orders:
    a-i.--No change to text.
    j. The transaction fees set forth in Sections F.4(d), (e) and (f), 
other than transaction fees for orders that are not routed to a floor 
broker via MAX, shall be subject to the following monthly maximums:
    (i)-(iv) No change to text.
    k-l.--No change to text.
    5. Floor Broker as Principal Fees--No change to text.
G. Space Charges--No change to text.
H. Equipment, Information Services and Technology Charges
* * * * *

    Retention of electronic communications: $25 per month, per active 
mailbox; $20 per month, per inactive mailbox; $200 per disk for offline 
optical disk storage (5.2 GB), if requested; $300 per disk for offline 
optical disk storage (9.1 GB), if requested.

I. Clearing Support Fees--No change to text.
* * * * *

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 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
    The Exchange proposes to amend the Fee Schedule to: (i) Provide for 
a technology charge relating to retention of electronic communications 
associated with an inactive mailbox, (ii) modify the Exchange's 
transaction fee cap provision to exclude certain floor broker orders, 
and (iii) clarify a provision relating to specialist fixed fees.
    Technology Charges: The Fee Schedule currently contains a provision 
establishing a technology charge for the retention of electronic 
communications. Many of the Exchange's members seek to retain 
electronic communications associated with inactive mailboxes, in order 
to satisfy their record retention obligations. Accordingly, the 
Exchange believes that it is appropriate to amend its Fee Schedule to 
impose a $20 per month retention charge per inactive mailbox.\6\
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    \6\ An active mailbox becomes inactive as a matter of course 
when the user notifies the Exchange's Information Services 
department that they are terminating their CHX e-mail account. This 
may occur when the user leaves the CHX floor or establishes an 
alternative e-mail account. All users are required to submit such 
documentation when they terminate their CHX e-mail account. An 
account may only become active again if a written request is 
submitted to the CHX Information Services department, together with 
the user's written acknowledgement of CHX policies and procedures 
relating to the use of electronic mail.

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[[Page 8414]]

    Transaction Fee Cap: The Fee Schedule provides for a cap on 
transaction fees associated with certain market maker and floor broker 
agency executions. The cap is available to order-sending firms that 
execute a specified number of orders on the Exchange per day. The 
Exchange is amending the Fee Schedule to clarify that this transaction 
fee cap is not applicable to orders that are routed to a CHX floor 
broker by means other than the Exchange's automated MAX[reg] 
system. The Exchange believes that this limitation of the fee cap is 
amply warranted, because a CHX floor broker may be required to expend 
considerably more time and effort to execute an agency order that is 
received telephonically, physically, or through means other than the 
MAX system.
    Specialist Fixed Fee: Section E of The Fee Schedule was recently 
amended, in the case of fixed fees for firms trading NASDAQ/NM 
Securities, to eliminate fixed fee calculations that are contingent 
upon the definition of ``Exemption Eligible Security'' that is set 
forth in Section D of the Fee Schedule.\7\ Accordingly, the Exchange is 
further modifying Section E to clarify that the exception for Exemption 
Eligible Securities now applies only to Tape B issues (i.e., issues 
that are listed on a stock exchange other than the New York Stock 
Exchange).
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    \7\ See Securities Exchange Act Release No. 34-50616 (November 
1, 2004), 69 FR 64608 (November 5, 2004) (SR-CHX-2004-22). This rule 
change instituted a pro-rata fee calculation, and eliminated a 
volume-driven definition, in the case of Nasdaq/NM securities. 
Accordingly, the definition of Exemption Eligible Securities for 
Nasdaq/NM securities is no longer applicable when calculating the 
fixed fee for Nasdaq/NM specialists.
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    Finally, the Exchange is amending Section F of the Fee Schedule to 
eliminate an obsolete reference to transactions that take place 
``during the E-Session.'' The Exchange terminated its E-Session program 
several years ago, rendering this reference obsolete.
2. Statutory Basis
    The CHX believes that the proposed rule change is consistent with 
Section 6 of the Act,\8\ in general, and furthers the objectives of 
Section 6(b)(4) of the Act,\9\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members.
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    \8\ 15 U.S.C. 78f.
    \9\ 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 inappropriate burden on competition.

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 establishes or changes a due, fee, or 
other charge imposed by the Exchange and therefore has become effective 
pursuant to section 19(b)(3)(A) of the Act \10\ and subparagraph (f)(2) 
of Rule 19b-4 thereunder.\11\ At any time within 60 days of the filing 
of such 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 purpose of the Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposal to have been filed on February 
11, 2005, the date the CHX filed Amendment No. 2. See Rule 19b-
4(f)(6).
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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 (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-CHX-2005-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-CHX-2005-02. 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 (https://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. Copies of such 
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 Number SR-CHX-2005-02 and should be submitted on or before March 
11, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-661 Filed 2-17-05; 8:45 am]
BILLING CODE 8010-01-P