Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Bidding and Offering in Sub-penny Increments, 6298-6300 [E6-1616]
Download as PDF
<![CDATA[
6298
Federal Register / Vol. 71, No. 25 / Tuesday, February 7, 2006 / Notices
notice that it will hold a public meeting
on Tuesday, February 21, 2006, in
Multi-Purpose Room L006 of the
Commission’s headquarters, 100 F
Street, NE., Washington, DC 20549,
beginning at 9 a.m. The meeting is
expected to last until approximately 4
p.m., with a lunch break from
approximately noon to 1 p.m. The
meeting will be audio webcast on the
Commission’s Web site at https://
www.sec.gov.
The agenda for the meeting includes
a discussion of a proposal to publish a
draft of the Advisory Committee’s Final
Report for public comment. The
Advisory Committee may also discuss
written statements received and other
matters of concern. The public is invited
to submit written statements for the
meeting.
DATES: Written statements should be
received on or before February 15, 2006.
ADDRESSES: Written statements may be
submitted by any of the following
methods:
erjones on PROD1PC68 with NOTICES
Electronic Statements
• Use the Commission’s Internet
submission form (https://www.sec.gov/
info/smallbus/acspc.shtml); or
• Send an e-mail message to rulecomments@sec.gov. Please include File
Number 265–23 on the subject line; or
Paper Statements
• Send paper statements in triplicate
to Nancy M. Morris, Committee
Management Officer, Securities and
Exchange Commission, 100 F Street,
NE., Washington, DC 20549–1090.
All submissions should refer to File No.
265–23. This file number should be
included on the subject line if e-mail is
used. To help us process and review
your statement more efficiently, please
use only one method. The Commission
staff will post all statements on the
Advisory Committee’s Web site (https://
www.sec.gov/info/smallbus/
acspc.shtml).
Statements also will be available for
public inspection and copying in the
Commission’s Public Reference Room,
100 F Street, NE., Room 1580,
Washington, DC 20549. All statements
received will be posted without change;
we do not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT:
Kevin M. O’Neill, Special Counsel, at
(202) 551–3260, Office of Small
Business Policy, Division of Corporation
Finance, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–3628.
VerDate Aug<31>2005
15:23 Feb 06, 2006
Jkt 208001
In
accordance with Section 10(a) of the
Federal Advisory Committee Act, 5
U.S.C.–App. 1, section 10(a), and the
regulations thereunder, Gerald J.
Laporte, Designated Federal Officer of
the Committee, has ordered publication
of this notice.
SUPPLEMENTARY INFORMATION:
Dated: February 1, 2006.
Nancy M. Morris,
Committee Management Officer.
[FR Doc. E6–1619 Filed 2–6–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold the following meeting during
the week of February 6, 2006:
A closed meeting will be held on
Thursday, February 9, 2006 at 2 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c), (3), (4), (5), (7), (8),
(9)(B), and (10) and 17 CFR 200.402(a),
(3), (4), (5), (7), (8), 9(ii) and (10) permit
consideration of the scheduled matters
at the closed meeting.
Commissioner Nazareth, as duty
officer, voted to consider the items
listed for the closed meeting in closed
session.
The subject matter of the Closed
Meeting scheduled for Thursday,
February 9, 2006 will be:
Formal orders of investigations;
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings of an
enforcement nature; and
Regulatory matters regarding financial
institutions.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact: The Office of the Secretary at
(202) 551–5400.
PO 00000
Frm 00050
Fmt 4703
Sfmt 4703
Dated: February 2, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. 06–1164 Filed 2–3–06; 12:54 pm]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53194; File No. SR–CHX–
2006–01]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Regarding
Bidding and Offering in Sub-penny
Increments
January 30, 2006.
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
17, 2006, the Chicago Stock Exchange,
Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with
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. The CHX
has filed this proposal pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposal effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules to confirm that, beginning with the
compliance date for Rule 612 of
Regulation NMS,5 Exchange
participants (a) may bid or offer in subpenny increments in the trading of
Nasdaq/NM securities where those bids
or offers are less than $1.00, and (b) may
bid or offer in sub-penny increments in
the trading of other securities where an
exemption from the provisions of Rule
612 is granted by the Commission and
where the Exchange’s Board of Directors
agrees to allow that sub-penny quoting.
The text of this proposed rule change is
available on the Exchange’s Web site
(https://www.chx.com/rules/
proposed_rules.htm), at the principal
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 17 CFR 242.612.
2 17
E:\FR\FM\07FEN1.SGM
07FEN1
Federal Register / Vol. 71, No. 25 / Tuesday, February 7, 2006 / Notices
office of the Exchange, 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 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 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
erjones on PROD1PC68 with NOTICES
Under the Exchange’s existing trading
rules, the Exchange’s participants
generally may not bid or offer in
increments below $0.01.6 Through this
filing, the Exchange seeks to amend its
rules to confirm that, beginning with the
compliance date for Rule 612,7
Exchange participants (a) may bid or
offer in sub-penny increments in the
trading of Nasdaq/NM securities where
those bids or offers are less than $1.00,
and (b) may bid or offer in sub-penny
increments in the trading of other
securities where an exemption from the
provisions of Rule 612 is granted by the
Commission and where the Exchange’s
Board of Directors agrees to allow that
sub-penny quoting.8
As noted above, the proposed rule
change first would confirm that an
Exchange participant may submit bids
or offers, for Nasdaq/NM securities, in
sub-penny increments of at least
$0.0001 where the bids or offers are less
than $1.00. Sub-penny quoting at prices
less than $1.00 is permitted, but not
required, by the provisions of Rule 612,
and the Exchange believes that it would
be appropriate to allow its participants
6 The Exchange does not currently have a rule
that sets a minimum increment at which trades can
occur. Its rule relating to minimum variations
specifically refers to variations at which bids or
offers may be made on the Exchange. See CHX
Article XX, Rule 22.
7 The compliance date for Rule 612 is January 31,
2006. See Securities Exchange Act Release No.
52196 (Aug. 2, 2005), 70 FR 45529 (Aug. 8, 2005).
8 The Exchange has filed a separate proposal to
permit its participants to execute trades in subpenny increments. See Securities Exchange Act
Release No. 52953 (Dec. 14, 2005) 70 FR 76088
(Dec. 22, 2005) (noticing SR–CHX–2005–36).
VerDate Aug<31>2005
15:23 Feb 06, 2006
Jkt 208001
to engage in this practice in the trading
of Nasdaq/NM securities.9
Additionally, the proposed rule
change would permit an Exchange
participant to bid or offer in sub-penny
increments in the trading of any
securities where an exemption from the
provisions of Rule 612 is granted by the
Commission and where the Exchange’s
Board of Directors agrees to allow that
sub-penny quoting. The Exchange,
however, currently does not intend to
more generally permit its participants to
bid or offer in sub-penny increments in
the trading of listed securities.
The Exchange’s MAX system will
reject any orders in minimum variations
that cannot be displayed as bids or
offers on the Exchange pursuant to CHX
Rule 22.10
This proposed rule change would
apply only in the Exchange’s current
trading model. The Exchange will readdress issues associated with subpenny trading as part of the soon-to-befiled package associated with its new
trading model.
2. Statutory Basis
The CHX believes the proposal is
consistent with the requirements of the
Act and the rules and regulations
thereunder that are applicable to a
national securities exchange, and, in
particular, with the requirements of
Section 6(b).11 The Exchange believes
that the proposed rule change is
consistent with Section 6(b)(5) of the
Act,12 because it would promote just
and equitable principles of trade,
remove impediments to, and perfect the
9 The Exchange currently permits its participants
to send sub-penny-priced orders, in Nasdaq/NM
securities, to the Exchange. These orders are
rounded to a penny increment for quoting purposes
pursuant to exemptive relief from the Commission
that will expire on the compliance date of Rule 612.
See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37556–57 n. 547 (June
29, 2005) (‘‘Regulation NMS Adopting Release’’).
10 The MAX system, however, will accept
inbound ITS commitments that are priced in
variations smaller than the minimum variation set
out in CHX Rule 22, and its specialists may execute
those commitments, so long as the minimum
variation is permitted by Rule 612 and so long as
the specialist adheres to all other Exchange rules in
executing the commitment. A specialist, among
other things, should be cognizant when executing
an inbound sub-penny-priced ITS commitment of
its obligations under CHX Article XXX, Rule 2,
Interpretation and Policy .06 with regard to
‘‘stepping ahead’’ of orders resting on the
specialist’s book. However, as of January 30, 2006,
the CHX understands that no ITS participant
intends to display, rank, or send commitments via
ITS priced in sub-pennies. Telephone conversation
between Ellen Neely, President and General
Counsel, CHX, and Michael Gaw, Assistant
Director, and Sara Gillis, Attorney, Division of
Market Regulation, Commission, dated January 30,
2006.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00051
Fmt 4703
Sfmt 4703
6299
mechanism of, a free and open market
and a national market system, and, in
general, protect investors and the public
interest by permitting Exchange
participants to bid and offer in subpenny increments in the trading of
specific groups of securities.
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.
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
Because the proposed rule change: (i)
Does not significantly affect the
protection of investors or the public
interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
days after the date of the filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14 The Exchange has
asked the Commission to waive the 30day operative delay and allow the
proposed rule change to become
operative on January 31, 2006, the
compliance date for Rule 612. The
Commission hereby grants that
request.15 The Commission believes that
waiving the operative delay is
consistent with the protection of
investors and the public interest. The
Commission previously has considered
whether, for NMS stocks, quoting below
$1.00 in sub-penny increments should
be permitted. The Commission
determined that it should and codified
that view in Rule 612(b) of Regulation
NMS.16 The CHX’s proposal to permit
its participants to make bids or offers—
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required by Rule
19b–4(f)(6)(iii) under the Act, the Exchange also
provided with the Commission with written notice
of its intent to file the proposed rule change, along
with a brief description and text of the proposed
rule change, at least five business days prior to the
date of the proposed rule change.
15 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
16 See Regulation NMS Adopting Release, 70 FR
at 37555.
14 17
E:\FR\FM\07FEN1.SGM
07FEN1
6300
Federal Register / Vol. 71, No. 25 / Tuesday, February 7, 2006 / Notices
in NMS stocks that are listed on
Nasdaq—priced below $1.00 in
increments as small as $0.0001 is
consistent with Rule 612(b) and raises
no new regulatory issues.
At any time within 60 days of the
filing of the proposed 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
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:
erjones on PROD1PC68 with NOTICES
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–CHX–2006–01 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–CHX–2006–01. 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 will also 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
VerDate Aug<31>2005
15:23 Feb 06, 2006
Jkt 208001
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–CHX–2006–01 and should
be submitted on or before February 28,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Nancy M. Morris,
Secretary.
[FR Doc. E6–1616 Filed 2–6–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53203; File No. SR–NASD–
2006–016]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Establish a
Mechanism for Handling Sub-Penny
Orders in Securities Listed on the New
York Stock Exchange or the American
Stock Exchange
January 31, 2006.
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
31, 2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by Nasdaq. Nasdaq filed
this proposal pursuant to Section
19(b)(3)(A) of the Act 3 and Rule 19b–
4(f)(6) thereunder,4 which renders the
proposed rule change effective
immediately upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to establish a
mechanism for handling sub-penny
orders in securities listed on the New
York Stock Exchange (‘‘NYSE’’) or the
American Stock Exchange (‘‘Amex’’)
due to readiness issues at those two
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
PO 00000
Frm 00052
Fmt 4703
Sfmt 4703
exchanges and to make another minor
adjustment in the related rule language.
The text of the proposed rule change is
below. Proposed new language is in
italics; proposed deletions are in
[brackets].5
*
*
*
*
*
6330. Obligations of CQS Market
Makers
(a) through (c) No change
(d) Minimum Price Variation
(1) No change
(2) [When a quotation properly (not in
violation of paragraph (1) above) priced
in an increment of less than $0.01 is
routed for execution via the ITS System
to a market that does not accept
quotations in increments of less than
$0.01, such a quotation is rounded
down (for bids) or up (for offers) to the
nearest $0.01 increment.] A quotation
for a security listed on the New York
Stock Exchange or the American Stock
Exchange and properly (not in violation
of paragraph (1) above) priced in an
increment of less than $0.01 will be
adjusted by the Nasdaq Market Center
down (for bids) or up (for offers) to the
nearest $0.01 increment prior to display,
execution or routing. A quotation so
adjusted will have no price priority over
equivalent quotations that did not
require adjustment under this
paragraph.
*
*
*
*
*
4962. Minimum Quotation Increment
The minimum quotation increment in
the INET System for quotations of $1.00
or above in Nasdaq-listed securities and
in securities listed on a national
securities exchange shall be $0.01. The
minimum quotation increment in the
INET System for quotations below $1.00
in Nasdaq-listed securities and in
securities listed on a national securities
exchange shall be $0.0001. However, if
the Securities and Exchange
Commission (‘‘SEC’’) permits, with
respect to any security, the display, rank
or acceptance of quotations priced at or
above $1.00 per share in an increment
smaller than $0.01, then the minimum
quotation increment for such a security
shall be the minimum permitted by the
SEC or $0.0001, whichever is greater.
*
*
*
*
*
5 Changes are marked to the rule text that appears
in the electronic NASD Manual found at
www.nasd.com. Prior to the date when The
NASDAQ Stock Market LLC (‘‘NASDAQ LLC’’)
commences operations, NASDAQ LLC will file a
conforming change to the rules of NASDAQ LLC
approved in Securities Exchange Act Release No.
53128 (January 13, 2006), 71 FR 3550 (January 23,
2006).
E:\FR\FM\07FEN1.SGM
07FEN1
]]>Agencies
[Federal Register Volume 71, Number 25 (Tuesday, February 7, 2006)]
[Notices]
[Pages 6298-6300]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-1616]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53194; File No. SR-CHX-2006-01]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding Bidding and Offering in Sub-penny Increments
January 30, 2006.
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 17, 2006, the Chicago Stock Exchange, Inc. (``CHX'' or
``Exchange'') filed with 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. The CHX has filed
this proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to confirm that, beginning
with the compliance date for Rule 612 of Regulation NMS,\5\ Exchange
participants (a) may bid or offer in sub-penny increments in the
trading of Nasdaq/NM securities where those bids or offers are less
than $1.00, and (b) may bid or offer in sub-penny increments in the
trading of other securities where an exemption from the provisions of
Rule 612 is granted by the Commission and where the Exchange's Board of
Directors agrees to allow that sub-penny quoting. The text of this
proposed rule change is available on the Exchange's Web site (https://
www.chx.com/rules/proposed_rules.htm), at the principal
[[Page 6299]]
office of the Exchange, and in the Commission's Public Reference Room.
---------------------------------------------------------------------------
\5\ 17 CFR 242.612.
---------------------------------------------------------------------------
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 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
Under the Exchange's existing trading rules, the Exchange's
participants generally may not bid or offer in increments below
$0.01.\6\ Through this filing, the Exchange seeks to amend its rules to
confirm that, beginning with the compliance date for Rule 612,\7\
Exchange participants (a) may bid or offer in sub-penny increments in
the trading of Nasdaq/NM securities where those bids or offers are less
than $1.00, and (b) may bid or offer in sub-penny increments in the
trading of other securities where an exemption from the provisions of
Rule 612 is granted by the Commission and where the Exchange's Board of
Directors agrees to allow that sub-penny quoting.\8\
---------------------------------------------------------------------------
\6\ The Exchange does not currently have a rule that sets a
minimum increment at which trades can occur. Its rule relating to
minimum variations specifically refers to variations at which bids
or offers may be made on the Exchange. See CHX Article XX, Rule 22.
\7\ The compliance date for Rule 612 is January 31, 2006. See
Securities Exchange Act Release No. 52196 (Aug. 2, 2005), 70 FR
45529 (Aug. 8, 2005).
\8\ The Exchange has filed a separate proposal to permit its
participants to execute trades in sub-penny increments. See
Securities Exchange Act Release No. 52953 (Dec. 14, 2005) 70 FR
76088 (Dec. 22, 2005) (noticing SR-CHX-2005-36).
---------------------------------------------------------------------------
As noted above, the proposed rule change first would confirm that
an Exchange participant may submit bids or offers, for Nasdaq/NM
securities, in sub-penny increments of at least $0.0001 where the bids
or offers are less than $1.00. Sub-penny quoting at prices less than
$1.00 is permitted, but not required, by the provisions of Rule 612,
and the Exchange believes that it would be appropriate to allow its
participants to engage in this practice in the trading of Nasdaq/NM
securities.\9\
---------------------------------------------------------------------------
\9\ The Exchange currently permits its participants to send sub-
penny-priced orders, in Nasdaq/NM securities, to the Exchange. These
orders are rounded to a penny increment for quoting purposes
pursuant to exemptive relief from the Commission that will expire on
the compliance date of Rule 612. See Securities Exchange Act Release
No. 51808 (June 9, 2005), 70 FR 37496, 37556-57 n. 547 (June 29,
2005) (``Regulation NMS Adopting Release'').
---------------------------------------------------------------------------
Additionally, the proposed rule change would permit an Exchange
participant to bid or offer in sub-penny increments in the trading of
any securities where an exemption from the provisions of Rule 612 is
granted by the Commission and where the Exchange's Board of Directors
agrees to allow that sub-penny quoting. The Exchange, however,
currently does not intend to more generally permit its participants to
bid or offer in sub-penny increments in the trading of listed
securities.
The Exchange's MAX system will reject any orders in minimum
variations that cannot be displayed as bids or offers on the Exchange
pursuant to CHX Rule 22.\10\
---------------------------------------------------------------------------
\10\ The MAX system, however, will accept inbound ITS
commitments that are priced in variations smaller than the minimum
variation set out in CHX Rule 22, and its specialists may execute
those commitments, so long as the minimum variation is permitted by
Rule 612 and so long as the specialist adheres to all other Exchange
rules in executing the commitment. A specialist, among other things,
should be cognizant when executing an inbound sub-penny-priced ITS
commitment of its obligations under CHX Article XXX, Rule 2,
Interpretation and Policy .06 with regard to ``stepping ahead'' of
orders resting on the specialist's book. However, as of January 30,
2006, the CHX understands that no ITS participant intends to
display, rank, or send commitments via ITS priced in sub-pennies.
Telephone conversation between Ellen Neely, President and General
Counsel, CHX, and Michael Gaw, Assistant Director, and Sara Gillis,
Attorney, Division of Market Regulation, Commission, dated January
30, 2006.
---------------------------------------------------------------------------
This proposed rule change would apply only in the Exchange's
current trading model. The Exchange will re-address issues associated
with sub-penny trading as part of the soon-to-be-filed package
associated with its new trading model.
2. Statutory Basis
The CHX believes the proposal is consistent with the requirements
of the Act and the rules and regulations thereunder that are applicable
to a national securities exchange, and, in particular, with the
requirements of Section 6(b).\11\ The Exchange believes that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\12\
because it would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system, and, in general, protect investors and
the public interest by permitting Exchange participants to bid and
offer in sub-penny increments in the trading of specific groups of
securities.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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.
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
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest, the proposed rule change has
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
Rule 19b-4(f)(6) thereunder.\14\ The Exchange has asked the Commission
to waive the 30-day operative delay and allow the proposed rule change
to become operative on January 31, 2006, the compliance date for Rule
612. The Commission hereby grants that request.\15\ The Commission
believes that waiving the operative delay is consistent with the
protection of investors and the public interest. The Commission
previously has considered whether, for NMS stocks, quoting below $1.00
in sub-penny increments should be permitted. The Commission determined
that it should and codified that view in Rule 612(b) of Regulation
NMS.\16\ The CHX's proposal to permit its participants to make bids or
offers--
[[Page 6300]]
in NMS stocks that are listed on Nasdaq--priced below $1.00 in
increments as small as $0.0001 is consistent with Rule 612(b) and
raises no new regulatory issues.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). As required by Rule 19b-
4(f)(6)(iii) under the Act, the Exchange also provided with the
Commission with written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of the
proposed rule change.
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\16\ See Regulation NMS Adopting Release, 70 FR at 37555.
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed 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 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CHX-2006-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CHX-2006-01. 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 will also 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-2006-01 and should be submitted on or before
February 28, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-1616 Filed 2-6-06; 8:45 am]
BILLING CODE 8010-01-P
