Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Order Granting Approval of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto, To Clarify That Specialists May Not Charge Commissions With Respect to the Execution of CHXpress Orders, 28969-28970 [E5-2504]
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Federal Register / Vol. 70, No. 96 / Thursday, May 19, 2005 / Notices
orders for automatic execution. As a
result of that rule change, MarketMakers, DPMs, eDPMs and RMMs
(collectively, ‘‘CBOE Market-Makers’’)
for the first time have the ability to
submit orders that are eligible to execute
automatically against resting orders in
the electronic book in hybrid options
classes (i.e., all equity options classes,
the CBOE Mini-NDX index option
classes (‘‘MNX’’), the option classes
based on the Nasdaq-100’s Depository
Receipts (‘‘QQQQ’’), the Reduced Value
Russell 2000 index option classes,9 and
the option classes based on Standard &
Poor’s Depository Receipts (‘‘SPDRs
options’’)). An order submitted for
automatic execution by a CBOE MarketMaker is marked with an ‘‘M’’ origin
code.
As part of a marketing campaign to
make CBOE Market-Makers aware of the
benefits of this improved access to
orders in the book, the Exchange
proposes to waive May 2005 member
dues for CBOE Market-Makers who
automatically execute 2000 contracts or
more (through the use of ‘‘M’’ orders)
during May 2005 in hybrid options
classes. Qualifying members would
receive a rebate of member dues. The
rebate will be processed in June as a
credit on billing statements produced at
month-end.
The Exchange believes that the
proposed dues waiver will be successful
in attracting additional liquidity to the
CBOE.
2.Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the
Act,10 in general, and furthers the
objectives of Section 6(b)(4) of the Act,11
in particular, in that it is designed to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among CBOE’s members.
B.Self-Regulatory Organization’s
Statement on Burden on Competition
The CBOE does not believe that the
proposed rule change, as amended, 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 with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change, as
amended, establishes or changes a due,
fee, or other charge imposed by the
Exchange, it has become effective
pursuant to Section 19(b)(3)(A)(ii) of the
Act 12 and subparagraph (f)(2) of Rule
19b–4 thereunder.13 Accordingly, the
proposal will take effect upon filing
with the Commission.
At any time within 60 days of the
filing of the proposed rule change, as
amended, 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 purposes of the Act.14
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2005–36 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–CBOE–2005–36. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
12 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
14 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change, as amended,
under Section 19(b)(3)(C) of the Act, the
Commission considers the period to commence on
May 5, 2005, the date on which the Exchange
submitted Amendment No. 2. See 15 U.S.C.
78s(b)(3)(C).
13 17
Remote Market-Maker and a floor broker
representing orders in the trading crowd.
9 See Amendment No. 1, Supra note 3.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(4).
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28969
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, as amended, 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 the filing also will be
available for inspection and copying at
the principal office of the CBOE. 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–CBOE–2005–36 and should
be submitted on or before June 9, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–2500 Filed 5–18–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51692; File No. SR–CHX–
2005–04]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Order
Granting Approval of Proposed Rule
Change and Amendment Nos. 1 and 2
Thereto, To Clarify That Specialists
May Not Charge Commissions With
Respect to the Execution of CHXpress
Orders
May 12, 2005.
On March 1, 2005, the Chicago Stock
Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’),
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change pursuant to
section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 to amend its rules to
clarify that a CHX specialist is not
permitted to charge a commission for
the execution of CHXpress(tm) orders.
15 17
CFR 200.30–3(a)(12).
15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
11
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28970
Federal Register / Vol. 70, No. 96 / Thursday, May 19, 2005 / Notices
On March 21, 2005 and March 30, 2005,
the Exchange filed Amendment Nos. 1
and 2, respectively, to the proposal. The
proposed rule change, as amended, was
published for comment in the Federal
Register on April 7, 2005.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change, as amended.
The Exchange is rolling out a new,
automated functionality, CHXpress,
which, according to the Exchange, is
designed to provide additional
opportunities for the Exchange’s
participants to seek and receive
liquidity through automated executions
of orders at the Exchange.4 With a few
exceptions, CHXpress orders will be
executed immediately and
automatically against same or betterpriced orders in the specialist’s book, or
against the specialist’s quote (when
CHXpress is available).5 If a CHXpress
order cannot be immediately executed,
it will be placed in the specialist’s book
for display or later execution.6 The
handling of CHXpress orders within the
Exchange’s systems is entirely
automatic. CHX specialists do not
provide CHXpress orders with the
execution guarantees that might
otherwise be available to agency limit
orders,7 and CHX specialists also would
not be required to seek liquidity for
CHXpress orders in other markets. This
proposal clarifies that a CHX specialist
would not be permitted to charge a
commission in connection with the
execution of a CHXpress order.
The Commission has reviewed
carefully the proposed rule change, as
amended, and finds that it is consistent
with the requirements of Section 6 of
the Act 8 and the rules and regulations
thereunder applicable to a national
securities exchange.9 In particular, the
3 See
Securities Exchange Act Release No. 51465
(April 1, 2005), 70 FR 17743.
4 See Securities Exchange Act Release No. 50481
(September 30, 2004); 69 FR 60197 (October 7,
2004) (SR–CHX–2004–12).
5 See CHX Article XX, Rule 37(b)(11)(C).
6 A CHXpress order will be instantaneously and
automatically displayed when it constitutes the best
bid or offer in the CHX book. See CHX Article XX,
Rule 37(b)(11)(D).
7 See CHX Article XX, Rule 37(b)(11)(E)–(F).
8 15 U.S.C. 78f.
9 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f). The Commission notes that it
previously approved similar proposed rule changes
filed by the New York Stock Exchange, Inc.
(‘‘NYSE’’) to prohibit a specialist on the NYSE from
charging ‘‘floor brokerage’’ (i.e., a commission
imposed on exchange floor brokers) for the
execution of an order received by the specialist via
the NYSE’s automated order routing system, known
as SuperDot. See Securities Exchange Act Release
Nos. 42727 (April 27, 2000), 65 FR 26258 (May 5,
2000); 42694 (April 17, 2000), 65 FR 24245 (April
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Commission finds that the proposed
rule change is consistent with sections
6(b)(5) and 6(e)(1) of the Act,10 because
it is designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and is not designed to
impose any schedule or fix rates of
commissions, allowances, discounts, or
other fees to be charged by its members.
The Commission also believes that the
proposed rule change is consistent with
section 11(A)(a)(1)(C) of the Act,11
which states that it is in the public
interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure, among other things,
economically efficient execution of
securities transactions, and fair
competition among brokers and dealers,
among exchange markets, and between
exchange markets and markets other
than exchange markets.
The Commission believes that the
Exchange’s proposal is consistent with
section 6(e) of the Act.12 Section 6(e) of
the Act 13 was adopted by Congress in
1975 to statutorily prohibit the fixed
minimum commission rate system. As
noted in a report of the House of
Representatives, one of the purposes of
the legislation was to ‘‘reverse the
industry practice of charging fixed rates
of commissions for transactions on the
securities exchanges.’’ 14 The fixed
minimum commission rate system
allowed exchanges to set minimum
commission rates that their members
had to charge their customers, but
allowed members to charge more. CHX’s
proposal, by contrast, does not establish
a minimum commission rate, but
instead prohibits commissions in
circumstances in which the CHX
specialist does not handle the order.
Accordingly, the Commission does not
believe that the Exchange’s proposal to
limit the fees charged by CHX
specialists constitutes fixing
commissions, allowances, discounts, or
other fees for purposes of Section 6(e)(1)
of the Act.15 In addition, the
Commission believes that the
Exchange’s proposal is reasonable
because it prohibits a CHX specialist
from charging a commission for an order
executed without assistance or handling
by the CHX specialist. In this regard, the
Commission notes that it has not viewed
a self-regulatory organization’s limits on
fees that its members may charge, even
when a member acts as agent, as
inconsistent with section 6(e) of the
Act.16 In addition, the Exchange’s limits
on fees that CHX specialists may charge
applies only to members who choose to
be specialists on the Exchange.
Therefore, CHX is not fixing fees
generally; it is merely imposing a
condition, which is consistent with the
Act, on a member’s appointment as a
specialist.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities exchange, and, in particular,
with sections 6(b)(5) and 6(e)(1) of the
Act.17 It is therefore ordered, pursuant
to section 19(b)(2) of the Act,18 that the
proposed rule change (SR–CHX–2005–
04), as amended, is approved.
25, 2000); and 42184 (November 30, 1999), 64 FR
68710 (December 8, 1999). In addition, the
Commission recently approved a proposed rule
change submitted by the Chicago Board Options
Exchange (‘‘CBOE’’) to prohibit Designated Primary
Market Makers (‘‘DPMs’’) from charging a brokerage
commission for an order, or the portion of an order:
(i) For which the DPM was not the executing
broker, which includes any portion of the order that
is automatically executed through a CBOE system;
(ii) that is automatically cancelled; or (iii) that is not
executed, and not cancelled. See Securities
Exchange Act Release No. 51235 (February 22,
2005), 70 FR 9687 (February 28, 2005).
10 15 U.S.C. 78f(b)(5) and 78f(e)(1).
11 15 U.S.C. 78k–1(a)(1)(C).
12 15 U.S.C. 78f(e).
13 Id.
14 H.R. Rep. No. 94–123, 94th Cong., 1st Sess. 42
(1975).
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Delay Implementation
Date of Revisions to the Series 4
Examination Program
PO 00000
Frm 00070
Fmt 4703
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For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–2504 Filed 5–18–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51688; File No. SR–NASD–
2005–053]
May 12, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
15 15
U.S.C. 78f(e)(1).
U.S.C. 78f(e)(1).
17 15 U.S.C. 78f(b)(5) and 78f(e)(1).
18 15 U.S.C. 78s(b)(2).
19 17 CFR 200.30–3(a)(12).
16 15
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]]>Agencies
[Federal Register Volume 70, Number 96 (Thursday, May 19, 2005)]
[Notices]
[Pages 28969-28970]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2504]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51692; File No. SR-CHX-2005-04]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Order Granting Approval of Proposed Rule Change and Amendment Nos. 1
and 2 Thereto, To Clarify That Specialists May Not Charge Commissions
With Respect to the Execution of CHXpress Orders
May 12, 2005.
On March 1, 2005, the Chicago Stock Exchange, Inc. (``CHX'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ to amend its rules to clarify that a CHX specialist is
not permitted to charge a commission for the execution of CHXpress(tm)
orders.
[[Page 28970]]
On March 21, 2005 and March 30, 2005, the Exchange filed Amendment Nos.
1 and 2, respectively, to the proposal. The proposed rule change, as
amended, was published for comment in the Federal Register on April 7,
2005.\3\ The Commission received no comments on the proposal. This
order approves the proposed rule change, as amended.
---------------------------------------------------------------------------
\1\ 1 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 51465 (April 1,
2005), 70 FR 17743.
---------------------------------------------------------------------------
The Exchange is rolling out a new, automated functionality,
CHXpress, which, according to the Exchange, is designed to provide
additional opportunities for the Exchange's participants to seek and
receive liquidity through automated executions of orders at the
Exchange.\4\ With a few exceptions, CHXpress orders will be executed
immediately and automatically against same or better-priced orders in
the specialist's book, or against the specialist's quote (when CHXpress
is available).\5\ If a CHXpress order cannot be immediately executed,
it will be placed in the specialist's book for display or later
execution.\6\ The handling of CHXpress orders within the Exchange's
systems is entirely automatic. CHX specialists do not provide CHXpress
orders with the execution guarantees that might otherwise be available
to agency limit orders,\7\ and CHX specialists also would not be
required to seek liquidity for CHXpress orders in other markets. This
proposal clarifies that a CHX specialist would not be permitted to
charge a commission in connection with the execution of a CHXpress
order.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 50481 (September 30,
2004); 69 FR 60197 (October 7, 2004) (SR-CHX-2004-12).
\5\ See CHX Article XX, Rule 37(b)(11)(C).
\6\ A CHXpress order will be instantaneously and automatically
displayed when it constitutes the best bid or offer in the CHX book.
See CHX Article XX, Rule 37(b)(11)(D).
\7\ See CHX Article XX, Rule 37(b)(11)(E)-(F).
---------------------------------------------------------------------------
The Commission has reviewed carefully the proposed rule change, as
amended, and finds that it is consistent with the requirements of
Section 6 of the Act \8\ and the rules and regulations thereunder
applicable to a national securities exchange.\9\ In particular, the
Commission finds that the proposed rule change is consistent with
sections 6(b)(5) and 6(e)(1) of the Act,\10\ because it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest; and is not designed to impose any schedule or fix rates of
commissions, allowances, discounts, or other fees to be charged by its
members. The Commission also believes that the proposed rule change is
consistent with section 11(A)(a)(1)(C) of the Act,\11\ which states
that it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure,
among other things, economically efficient execution of securities
transactions, and fair competition among brokers and dealers, among
exchange markets, and between exchange markets and markets other than
exchange markets.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f.
\9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f). The Commission notes that it previously
approved similar proposed rule changes filed by the New York Stock
Exchange, Inc. (``NYSE'') to prohibit a specialist on the NYSE from
charging ``floor brokerage'' (i.e., a commission imposed on exchange
floor brokers) for the execution of an order received by the
specialist via the NYSE's automated order routing system, known as
SuperDot. See Securities Exchange Act Release Nos. 42727 (April 27,
2000), 65 FR 26258 (May 5, 2000); 42694 (April 17, 2000), 65 FR
24245 (April 25, 2000); and 42184 (November 30, 1999), 64 FR 68710
(December 8, 1999). In addition, the Commission recently approved a
proposed rule change submitted by the Chicago Board Options Exchange
(``CBOE'') to prohibit Designated Primary Market Makers (``DPMs'')
from charging a brokerage commission for an order, or the portion of
an order: (i) For which the DPM was not the executing broker, which
includes any portion of the order that is automatically executed
through a CBOE system; (ii) that is automatically cancelled; or
(iii) that is not executed, and not cancelled. See Securities
Exchange Act Release No. 51235 (February 22, 2005), 70 FR 9687
(February 28, 2005).
\10\ 15 U.S.C. 78f(b)(5) and 78f(e)(1).
\11\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------
The Commission believes that the Exchange's proposal is consistent
with section 6(e) of the Act.\12\ Section 6(e) of the Act \13\ was
adopted by Congress in 1975 to statutorily prohibit the fixed minimum
commission rate system. As noted in a report of the House of
Representatives, one of the purposes of the legislation was to
``reverse the industry practice of charging fixed rates of commissions
for transactions on the securities exchanges.'' \14\ The fixed minimum
commission rate system allowed exchanges to set minimum commission
rates that their members had to charge their customers, but allowed
members to charge more. CHX's proposal, by contrast, does not establish
a minimum commission rate, but instead prohibits commissions in
circumstances in which the CHX specialist does not handle the order.
Accordingly, the Commission does not believe that the Exchange's
proposal to limit the fees charged by CHX specialists constitutes
fixing commissions, allowances, discounts, or other fees for purposes
of Section 6(e)(1) of the Act.\15\ In addition, the Commission believes
that the Exchange's proposal is reasonable because it prohibits a CHX
specialist from charging a commission for an order executed without
assistance or handling by the CHX specialist. In this regard, the
Commission notes that it has not viewed a self-regulatory
organization's limits on fees that its members may charge, even when a
member acts as agent, as inconsistent with section 6(e) of the Act.\16\
In addition, the Exchange's limits on fees that CHX specialists may
charge applies only to members who choose to be specialists on the
Exchange. Therefore, CHX is not fixing fees generally; it is merely
imposing a condition, which is consistent with the Act, on a member's
appointment as a specialist.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(e).
\13\ Id.
\14\ H.R. Rep. No. 94-123, 94th Cong., 1st Sess. 42 (1975).
\15\ 15 U.S.C. 78f(e)(1).
\16\ 15 U.S.C. 78f(e)(1).
---------------------------------------------------------------------------
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange, and, in
particular, with sections 6(b)(5) and 6(e)(1) of the Act.\17\ It is
therefore ordered, pursuant to section 19(b)(2) of the Act,\18\ that
the proposed rule change (SR-CHX-2005-04), as amended, is approved.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b)(5) and 78f(e)(1).
\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-2504 Filed 5-18-05; 8:45 am]
BILLING CODE 8010-01-P
