Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, and Amendment Nos. 1 and 2 Thereto, Regarding Two-Sided Quote Providers, 49498-49500 [E6-13943]
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49498
Federal Register / Vol. 71, No. 163 / Wednesday, August 23, 2006 / Notices
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
SCCP does not believe that the
proposed rule change would impose any
burden on competition 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
Written comments were not and are
not intended to be solicited with respect
to the proposed rule change, and none
have been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective upon filing
pursuant to Section 19(b)(3)(A)(ii) of the
Act 9 and Rule 19b–4(f)(2) 10 thereunder
because the rule establishes a due, fee,
or other charge. At any time within sixty
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:
sroberts on PROD1PC70 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–SCCP–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–SCCP–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
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal office of SCCP
and on SCCP’s Web site at https://
www.phlx.com/SCCP/
memindex_sccpproposals.html. 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–SCCP–2006–01 and should
be submitted on or before September 13,
2006.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–13933 Filed 8–22–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54326; File No. SR–CHX–
2006–24]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change, and
Amendment Nos. 1 and 2 Thereto,
Regarding Two-Sided Quote Providers
August 16, 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 June 27,
2006, the Chicago Stock Exchange, Inc.
(‘‘CHX’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I and II below, which Items have
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
9 15
U.S.C. 78s(b)(3)(A)(ii).
10 17 CFR 240.19b–4(f)(2).
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been prepared by the Exchange. On July
21, 2006, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 On August 10, 2006, the
Exchange filed Amendment No. 2 to the
proposed rule change.4 The CHX filed
the proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 5 and Rule
19b–4(f)(6) thereunder,6 which renders
it effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, 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 and Schedule of Participant Fees
and Credits (’’Fee Schedule’’) to
establish a new role and a new fee credit
for participants on the Exchange that
qualify as ‘‘Two-Sided Quote
Providers.’’ The text of the proposed
rule change is set forth below. Proposed
new language is italicized.
ARTICLE IX
Trading Rules
*
*
*
*
*
Two-Sided Quote Providers
RULE 19. a. A Participant may seek to
register with the Exchange as a TwoSided Quote Provider. A ‘‘Two-Sided
Quote Provider’’ is required to use its
own automated systems to maintain,
throughout the Exchange’s primary and
post-primary trading sessions, a
continuous two-sided quote (i.e., a bid
and an offer) in all securities that are
not traded by an Exchange specialist,
but are traded in an automated
Exchange system.
b. The Exchange will provide a credit,
as described in the Fee Schedule, to the
first three Participants that demonstrate
their ability and willingness to serve in
this role.
c. If a Two-Sided Quote Provider does
not provide a continuous two-sided
quote as required above, the Exchange
shall not pay the Two-Sided Quote
Provider for the day in which the quotes
were not maintained and shall end the
Participant’s role as a Two-Sided Quote
Provider as of the end of the month in
3 In Amendment No. 1 the CHX removed
language from its Fee Schedule to reflect that the
proposal was effective upon filing, not an earlier
date.
4 In Amendment No. 2 the CHX made two nonsubstantive corrections to the numbering used in
the proposed rule text.
5 15 U.S.C. 78s(b)(3)(A).
6 17 CFR 240.19b–4(f)(6).
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Federal Register / Vol. 71, No. 163 / Wednesday, August 23, 2006 / Notices
which the failure to provide continuous
two-sided quotes occurred.
*
*
*
*
*
PARTICIPANT FEES AND CREDITS
*
*
*
*
*
M. Credits
1.–3. No change to text.
4. Through October 31, 2006, total
monthly fees owed by a Two-Sided
Quote Provider will be reduced (and
these participants will be paid each
month for any unused credits) by a
credit of $3,000 per month.
*
*
*
*
*
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 regarding the
proposal. 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
Changes
sroberts on PROD1PC70 with NOTICES
1. Purpose
The purpose of the proposed rule
change is to allow participant firms to
register as ‘‘Two-Sided Quote
Providers’’ and to provide a credit of
$3,000 per month for firms that fulfill
that role.7 The credit would be available
through October 31, 2006.
Under the proposed rule, a Two-Sided
Quote Provider would be an Exchange
participant that uses its own automated
systems to maintain, throughout the
Exchange’s primary and post-primary
trading sessions, a continuous two-sided
quote (i.e., a bid and an offer) in all
securities that are not traded by an
Exchange specialist, but are traded in an
automated Exchange system.8 If the
7 The Exchange originally filed this proposal
simply as an addition to its Fee Schedule. See SR–
CHX–2006–15. The Exchange withdrew that filing
concurrently with the submission of the original
version of this proposal, which would establish a
new rule and a change to the Exchange’s Fee
Schedule.
8 The Exchange plans to provide the $3,000
credit, on a first-come, first-served basis, to the first
three participants that demonstrate their ability and
willingness to serve in this role. The Exchange does
not believe that these firms would need to register
as market makers in the Exchange’s electronic book
(where many securities that are not traded by a
specialist are traded) or on the Exchange (where
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16:04 Aug 22, 2006
Jkt 208001
Two-Sided Quote Provider does not
provide a continuous two-sided quote as
required above, the Exchange would not
pay the Two-Sided Quote Provider for
the day in which the quotes were not
maintained and would end the
participant’s role as a Two-Sided Quote
Provider as of the end of the month in
which the failure occurred.9 A TwoSided Quote Provider would continue to
be subject to all the CHX rules that
apply to its trading on the Exchange,
including, but not limited to the firm
quote rule, the electronic book’s clearly
erroneous rule, the rules prohibiting
trading ahead of customer orders and
the Intermarket Trading System (‘‘ITS’’)
rules.10
According to the Exchange, its
proposal is designed to provide an
appropriate incentive to up to three
participant firms to ensure that a twosided quote is continuously displayed
on the Exchange in securities that are
traded on the Exchange.11
2. Statutory Basis
The Exchange believes that 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) of the
Act.12 In particular, the Exchange
believes that the proposal is consistent
with Section 6(b)(5) of the Act,13
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
some listed securities have not yet been
transitioned to trading in the electronic book),
because the Exchange does not seek to impose any
requirement that these firms maintain fair and
orderly markets.
9 The Exchange also would consider a failure to
provide these quotes as a violation of the
Exchange’s rules. The Exchange could exercise its
discretion in determining whether or not to pursue
a further fine or penalty from a participant for a
violation of this rule based on applicable facts and
circumstances.
10 Registration as a Two-Sided Quote Provider
does not allow a participant to avoid the
application of any CHX trading rule that would
otherwise apply to its activities as a CHX floor
broker, market maker, specialist or order-sending
firm.
11 Under the current Intermarket Trading System
Plan (‘‘ITS Plan ’’), a member in any market that is
an ITS Plan participant may use the ITS System to
trade a particular security only if the market
maintains continuous two-sided quotations in that
security. See ITS Plan, Section 6(a)(i). This
proposed credit would help ensure, among other
things, that a continuous two-sided quote is
displayed on the Exchange in all securities that
qualify for trading under the ITS Plan.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
PO 00000
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49499
interest by permitting the Exchange to
allow its participants to register as TwoSided Quote Providers to help ensure,
among other things, that a continuous
two-sided quote is displayed on the
Exchange in all securities that qualify
for trading under the ITS Plan.
B. Self-Regulatory Organization’s
Statement of 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.
C. Self-Regulatory Organization’s
Statement on Comments Regarding the
Proposed Rule Changes Received From
Members, Participants or Others
The CHX has neither solicited nor
received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Changes and Timing for
Commission Action
Because the foregoing proposed rule
change: (1) Does not significantly affect
the protection of investors or the public
interest; (2) does not impose any
significant burden on competition; and
(3) by its terms does not become
operative for 30-days after the date on
which it was filed, 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 14 and Rule 19b–4(f)(6)
thereunder.15
As required under Rule 19b–
4(f)(6)(iii), the CHX provided the
Commission with written notice of its
intention to file the proposed rule
change at least 5 business days prior to
filing the proposal with the
Commission. A proposed rule change
filed under Rule 19b–4(f)(6) 16 normally
does not become operative prior to 30days after the date of filing. However,
Rule 19b–4(f)(6)(iii) permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The CHX has asked the
Commission to waive the 30-day
operative delay.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest,
because it may ensure that a continuous
two-sided quote is displayed on the
14 15
15 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
16 Id.
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49500
Federal Register / Vol. 71, No. 163 / Wednesday, August 23, 2006 / Notices
Exchange in securities that are traded on
the Exchange.17 Furthermore, the
Commission notes that the proposed
rule change, as amended, is similar to
Pacific Exchange Rule 7.58, Compliance
with Two-Sided Quote Requirement in
ITS Plan, which provides that the
Archipelago Securities, LLC is
responsible for entering two-sided
orders in all stocks eligible for trading
on the NYSE Arca Marketplace for
purposes of fulfilling the two-sided
quote requirement found in Section
6(a)(i)(B) of the ITS Plan. Accordingly,
the Commission designates the
proposed rule change, as amended, as
effective and operative immediately
upon filing with the Commission.
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.18
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal, as
amended, 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
No. SR–CHX–2006–24 on the subject
line.
sroberts on PROD1PC70 with NOTICES
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
No. SR–CHX–2006–24. 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
17 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
18 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
August 10, 2006, the date on which the CHX
submitted Amendment No. 2. See 15 U.S.C.
78s(b)(3)(C).
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16:04 Aug 22, 2006
Jkt 208001
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 No.
SR–CHX–2006–24 and should be
submitted on or before September 13,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Nancy M. Morris,
Secretary.
[FR Doc. E6–13943 Filed 8–22–06; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Order 2006–7–3; Docket OST–2006–25307]
Notice of Order Extending Comment
Period for Show-Cause; International
Air Transport Association Tariff
Conference Proceeding
Office of the Secretary,
Department of Transportation.
SUMMARY: The Department has directed
all interested persons to show cause
why it should not issue an order
withdrawing its approval under 49
U.S.C. 41309 for an International Air
Transport Association (‘‘IATA’’)
agreement, the Provisions for the
Conduct of the IATA Traffic
Conferences, insofar as that agreement
establishes tariff conferences whereby
IATA’s member carriers discuss and
agree upon passenger fares and cargo
rates for U.S.-Australia/Europe markets.
The Department is extending the due
date for comments on that order from
AGENCY:
19 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00090
Fmt 4703
Sfmt 4703
August 21 to October 20, 2006. Replies
will be due November 20, 2006.
DATES: Objections must be submitted on
or before October 20. Answers to
objections must be filed by November
20, 2006.
ADDRESSES: Objections and answers to
objections must be filed in Docket
number OST–2006–25307 by one of the
following means:
(1) By mail to the Docket Management
Facility, U.S. Department of
Transportation, room PL–401, 400
Seventh Street SW., Washington, DC
20590–0001.
(2) By hand delivery to room PL–401
on the Plaza level of the Nassif Building,
400 Seventh Street SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The telephone number is 202–366–
9329.
(3) Electronically through the Webs
site for the Docket Management System
at https://www.dms.dot.gov. Comments
must be filed in Docket OST–2006–
25307.
John
Kiser, Pricing & Multilateral Affairs
Division (X–43, Room 6424), U.S.
Department of Transportation, 400
Seventh St. SW., Washington, DC
20590, (202) 366–2435; or Thomas Ray,
Office of the General Counsel (C–30,
Room 4102), U.S. Department of
Transportation, 400 Seventh St. SW.,
Washington, DC 20590, (202) 366–4731.
FOR FURTHER INFORMATION CONTACT:
Dated: August 16, 2006.
Michael W. Reynolds,
Acting Assistant Secretary for Aviation and
International Affairs.
[FR Doc. E6–13958 Filed 8–22–06; 8:45 am]
BILLING CODE 4910–9X–P
DEPARTMENT OF TRANSPORTATION
Federal Motor Carrier Safety
Administration
Sunshine Act Meetings; Unified Carrier
Registration Plan Board of Directors
Pursuant to the Government in the
Sunshine Act (Pub. L. 94–409) (5 U.S.C.
552b).
Federal Motor Carrier Safety
Administration (FMCSA), DOT.
TIMES AND DATES: August 22, 2006, 1
p.m. to 5 p.m., and August 23, 2006, 8
a.m. to 12 p.m.
PLACE: Hilton Chicago O’Hare Airport,
O’Hare International Airport, Chicago,
IL 60666.
STATUS: Open to the public.
MATTERS TO BE CONSIDERED: An
overview of the Unified Carrier
AGENCY:
E:\FR\FM\23AUN1.SGM
23AUN1
]]>Agencies
[Federal Register Volume 71, Number 163 (Wednesday, August 23, 2006)]
[Notices]
[Pages 49498-49500]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-13943]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54326; File No. SR-CHX-2006-24]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change,
and Amendment Nos. 1 and 2 Thereto, Regarding Two-Sided Quote Providers
August 16, 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 June 27, 2006, the Chicago Stock Exchange, Inc. (``CHX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. On July 21,
2006, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ On August 10, 2006, the Exchange filed Amendment No. 2 to
the proposed rule change.\4\ The CHX filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \5\ and Rule 19b-4(f)(6) thereunder,\6\ which renders it
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change, as
amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1 the CHX removed language from its Fee
Schedule to reflect that the proposal was effective upon filing, not
an earlier date.
\4\ In Amendment No. 2 the CHX made two non-substantive
corrections to the numbering used in the proposed rule text.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 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 and Schedule of
Participant Fees and Credits (''Fee Schedule'') to establish a new role
and a new fee credit for participants on the Exchange that qualify as
``Two-Sided Quote Providers.'' The text of the proposed rule change is
set forth below. Proposed new language is italicized.
ARTICLE IX
Trading Rules
* * * * *
Two-Sided Quote Providers
RULE 19. a. A Participant may seek to register with the Exchange as
a Two-Sided Quote Provider. A ``Two-Sided Quote Provider'' is required
to use its own automated systems to maintain, throughout the Exchange's
primary and post-primary trading sessions, a continuous two-sided quote
(i.e., a bid and an offer) in all securities that are not traded by an
Exchange specialist, but are traded in an automated Exchange system.
b. The Exchange will provide a credit, as described in the Fee
Schedule, to the first three Participants that demonstrate their
ability and willingness to serve in this role.
c. If a Two-Sided Quote Provider does not provide a continuous two-
sided quote as required above, the Exchange shall not pay the Two-Sided
Quote Provider for the day in which the quotes were not maintained and
shall end the Participant's role as a Two-Sided Quote Provider as of
the end of the month in
[[Page 49499]]
which the failure to provide continuous two-sided quotes occurred.
* * * * *
PARTICIPANT FEES AND CREDITS
* * * * *
M. Credits
1.-3. No change to text.
4. Through October 31, 2006, total monthly fees owed by a Two-Sided
Quote Provider will be reduced (and these participants will be paid
each month for any unused credits) by a credit of $3,000 per month.
* * * * *
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 regarding the proposal. 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 Changes
1. Purpose
The purpose of the proposed rule change is to allow participant
firms to register as ``Two-Sided Quote Providers'' and to provide a
credit of $3,000 per month for firms that fulfill that role.\7\ The
credit would be available through October 31, 2006.
---------------------------------------------------------------------------
\7\ The Exchange originally filed this proposal simply as an
addition to its Fee Schedule. See SR-CHX-2006-15. The Exchange
withdrew that filing concurrently with the submission of the
original version of this proposal, which would establish a new rule
and a change to the Exchange's Fee Schedule.
---------------------------------------------------------------------------
Under the proposed rule, a Two-Sided Quote Provider would be an
Exchange participant that uses its own automated systems to maintain,
throughout the Exchange's primary and post-primary trading sessions, a
continuous two-sided quote (i.e., a bid and an offer) in all securities
that are not traded by an Exchange specialist, but are traded in an
automated Exchange system.\8\ If the Two-Sided Quote Provider does not
provide a continuous two-sided quote as required above, the Exchange
would not pay the Two-Sided Quote Provider for the day in which the
quotes were not maintained and would end the participant's role as a
Two-Sided Quote Provider as of the end of the month in which the
failure occurred.\9\ A Two-Sided Quote Provider would continue to be
subject to all the CHX rules that apply to its trading on the Exchange,
including, but not limited to the firm quote rule, the electronic
book's clearly erroneous rule, the rules prohibiting trading ahead of
customer orders and the Intermarket Trading System (``ITS'') rules.\10\
---------------------------------------------------------------------------
\8\ The Exchange plans to provide the $3,000 credit, on a first-
come, first-served basis, to the first three participants that
demonstrate their ability and willingness to serve in this role. The
Exchange does not believe that these firms would need to register as
market makers in the Exchange's electronic book (where many
securities that are not traded by a specialist are traded) or on the
Exchange (where some listed securities have not yet been
transitioned to trading in the electronic book), because the
Exchange does not seek to impose any requirement that these firms
maintain fair and orderly markets.
\9\ The Exchange also would consider a failure to provide these
quotes as a violation of the Exchange's rules. The Exchange could
exercise its discretion in determining whether or not to pursue a
further fine or penalty from a participant for a violation of this
rule based on applicable facts and circumstances.
\10\ Registration as a Two-Sided Quote Provider does not allow a
participant to avoid the application of any CHX trading rule that
would otherwise apply to its activities as a CHX floor broker,
market maker, specialist or order-sending firm.
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According to the Exchange, its proposal is designed to provide an
appropriate incentive to up to three participant firms to ensure that a
two-sided quote is continuously displayed on the Exchange in securities
that are traded on the Exchange.\11\
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\11\ Under the current Intermarket Trading System Plan (``ITS
Plan ''), a member in any market that is an ITS Plan participant may
use the ITS System to trade a particular security only if the market
maintains continuous two-sided quotations in that security. See ITS
Plan, Section 6(a)(i). This proposed credit would help ensure, among
other things, that a continuous two-sided quote is displayed on the
Exchange in all securities that qualify for trading under the ITS
Plan.
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2. Statutory Basis
The Exchange believes that 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) of the Act.\12\ In particular,
the Exchange believes that the proposal is consistent with Section
6(b)(5) of the Act,\13\ 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 the Exchange to
allow its participants to register as Two-Sided Quote Providers to help
ensure, among other things, that a continuous two-sided quote is
displayed on the Exchange in all securities that qualify for trading
under the ITS Plan.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of 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.
C. Self-Regulatory Organization's Statement on Comments Regarding the
Proposed Rule Changes Received From Members, Participants or Others
The CHX has neither solicited nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30-days after the
date on which it was filed, 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 \14\ and Rule 19b-4(f)(6)
thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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As required under Rule 19b-4(f)(6)(iii), the CHX provided the
Commission with written notice of its intention to file the proposed
rule change at least 5 business days prior to filing the proposal with
the Commission. A proposed rule change filed under Rule 19b-4(f)(6)
\16\ normally does not become operative prior to 30-days after the date
of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The CHX has asked the
Commission to waive the 30-day operative delay.
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\16\ Id.
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it may ensure that a continuous two-sided quote is displayed on
the
[[Page 49500]]
Exchange in securities that are traded on the Exchange.\17\
Furthermore, the Commission notes that the proposed rule change, as
amended, is similar to Pacific Exchange Rule 7.58, Compliance with Two-
Sided Quote Requirement in ITS Plan, which provides that the
Archipelago Securities, LLC is responsible for entering two-sided
orders in all stocks eligible for trading on the NYSE Arca Marketplace
for purposes of fulfilling the two-sided quote requirement found in
Section 6(a)(i)(B) of the ITS Plan. Accordingly, the Commission
designates the proposed rule change, as amended, as effective and
operative immediately upon filing with the Commission.
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\17\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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.\18\
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\18\ 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 August 10, 2006, the date on
which the CHX submitted Amendment No. 2. See 15 U.S.C. 78s(b)(3)(C).
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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 proposal, as
amended, 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 No. SR-CHX-2006-24 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 No. SR-CHX-2006-24. 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 No. SR-CHX-2006-24 and should be submitted on or before September
13, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-13943 Filed 8-22-06; 8:45 am]
BILLING CODE 8010-01-P
