Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Make Administrative Changes to Its Routing Rules, 6232-6233 [E8-1787]

Download as PDF 6232 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is effective upon filing pursuant to Section 19(b)(3)(A)(ii) 7 of the Act and Rule 19b– 4(f)(2) 8 thereunder because it establishes or changes a due, fee, or other charge applicable only to a member imposed by the Exchange. 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: mstockstill on PROD1PC66 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–CBOE–2008–06 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–CBOE–2008–06. 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 on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. 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–CBOE– 2008–06 and should be submitted on or before February 22, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–1789 Filed 1–31–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57203; File No. SR–CHX– 2007–18] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Make Administrative Changes to Its Routing Rules January 25, 2008. 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 July 6, 2007, 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, II, and III below, which Items have been substantially prepared by the CHX. On January 22, 2008, the Exchange filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 7 15 U.S.C. 78s(b)(3)(A)(ii). 8 17 CFR 240.19b–4(f)(2). VerDate Aug<31>2005 18:22 Jan 31, 2008 1 15 Jkt 214001 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The CHX proposes to amend its rules to make administrative changes that are designed to allow third-party routers to provide better service to their customers. The text of this proposed rule change is available at the CHX, on the Exchange’s Web site at https:// www.chx.com/rules/ proposed_rules.htm, 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 Under the Exchange’s rules, the Exchange’s Matching System will not execute an order if its execution would be improper under Rule 611 of Regulation NMS under the Act (an ‘‘improper trade-through’’).3 Similarly, the Exchange’s Matching System will not display an order if its display would improperly lock or cross other markets.4 In these situations, the Exchange either cancels the order back to the participant that submitted it or routes the order to the destination of the participant’s choice, all at the direction of the participant.5 Under this proposal, the Exchange seeks to make three administrative changes to its routing rules to permit these third-party routers to provide better service to their customers. The 3 See Article 20, Rule 5. Article 20, Rule 6. 5 The participant is responsible for ensuring that it has a relationship with its chosen destination to permit the requested access. The Exchange is not involved in the execution of the order—any execution of the order is the responsibility of the destination to which the order was sent. The Exchange, however, reports any execution or cancellation of the order by the other destination to the participant that submitted the order and notifies the other venue of any cancellations or changes to the order submitted by the order-sending participant. See Article 20, Rule 5, Interpretation and Policy .03(b). 4 See E:\FR\FM\01FEN1.SGM 01FEN1 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Notices mstockstill on PROD1PC66 with NOTICES first proposed change would allow a participant and a routing destination to request that the CHX flip any executions into the participant’s account and report that second leg of the away-market transaction to clearing.6 This service would give the order-sending participant the option of consolidating its clearing reports in specific locations. The second proposed change would allow the CHX (and a routing destination) to determine whether additional agreements with CHX participants are needed to implement the routing functionality for all orders, except a cross with satisfy or an outbound ISO.7 While the CHX believes that most routing destinations will require that order-senders sign additional agreements for any services that the destinations might provide, the CHX wants to provide flexibility for destinations to make choices appropriate to their business models. Finally, the third proposed change would allow a participant to ask its chosen destination to use the participant’s own give-up (rather than the routing destination’s give-up) when routing orders to other markets as part of a cross with satisfy or an outbound ISO.8 We believe that some participants—that already have good give-ups in other markets—might prefer that the routing service use those giveups rather than its own. The Exchange believes that these proposed changes do not substantially change the existing routing process, but instead simply provide additional flexibility to the third-party routing services that participants might desire to use.9 6 For example, if the Exchange routes a participant’s buy order to the participant’s chosen destination (Router ABC) and Router ABC gets an execution of that order in another market against market maker XYZ, the first leg of the transaction (ABC buying from XYZ) will be reported to clearing by the other market. The Router ABC would send an execution report back to the Exchange (for routing to the original order-sending participant). Under this proposal, if the participant and Router ABC had requested, the Exchange would take the execution report and create a clearing-only record, flipping the execution from Router ABC’s account to the account of the order-sending participant (ABC selling to the order-sending participant). 7 The routing of an outbound ISO or a cross with satisfy will be provided pursuant to the agreements described in section (c)(1) of Interpretation .03 to Rule 5, to the extent that the agreements are applicable to a specific routing decision. See Article 20, Rule 5, Proposed Interpretation and Policy .03(c)(1). 8 See Article 20, Rule 5, Proposed Interpretation and Policy .03(c). 9 Because these proposals do not make substantive changes to the Exchange’s routing structure, the Exchange believes that its routing of orders to a participant’s chosen destination would continue to be a facility of the Exchange, but the destinations chosen by each participant would not constitute Exchange facilities. VerDate Aug<31>2005 18:22 Jan 31, 2008 Jkt 214001 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).10 The proposed rule change is consistent with Section 6(b)(5) of the Act 11 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 allowing the Exchange to provide additional flexibility to its participants and the destinations to which the Exchange should route their orders. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes 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 Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 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: • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CHX–2007–18 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–2007–18. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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–2007–18 and should be submitted on or before February 22, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–1787 Filed 1–31–08; 8:45 am] BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or 10 15 11 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00125 Fmt 4703 12 17 Sfmt 4703 6233 E:\FR\FM\01FEN1.SGM CFR 200.30–3(a)(12). 01FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 22 (Friday, February 1, 2008)]
[Notices]
[Pages 6232-6233]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-1787]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57203; File No. SR-CHX-2007-18]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 
1 Thereto, To Make Administrative Changes to Its Routing Rules

January 25, 2008.
    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 July 6, 2007, 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, II, 
and III below, which Items have been substantially prepared by the CHX. 
On January 22, 2008, the Exchange filed Amendment No. 1 to the proposed 
rule change. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CHX proposes to amend its rules to make administrative changes 
that are designed to allow third-party routers to provide better 
service to their customers. The text of this proposed rule change is 
available at the CHX, on the Exchange's Web site at https://www.chx.com/
rules/proposed_rules.htm, 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
    Under the Exchange's rules, the Exchange's Matching System will not 
execute an order if its execution would be improper under Rule 611 of 
Regulation NMS under the Act (an ``improper trade-through'').\3\ 
Similarly, the Exchange's Matching System will not display an order if 
its display would improperly lock or cross other markets.\4\ In these 
situations, the Exchange either cancels the order back to the 
participant that submitted it or routes the order to the destination of 
the participant's choice, all at the direction of the participant.\5\
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    \3\ See Article 20, Rule 5.
    \4\ See Article 20, Rule 6.
    \5\ The participant is responsible for ensuring that it has a 
relationship with its chosen destination to permit the requested 
access. The Exchange is not involved in the execution of the order--
any execution of the order is the responsibility of the destination 
to which the order was sent. The Exchange, however, reports any 
execution or cancellation of the order by the other destination to 
the participant that submitted the order and notifies the other 
venue of any cancellations or changes to the order submitted by the 
order-sending participant. See Article 20, Rule 5, Interpretation 
and Policy .03(b).
---------------------------------------------------------------------------

    Under this proposal, the Exchange seeks to make three 
administrative changes to its routing rules to permit these third-party 
routers to provide better service to their customers. The

[[Page 6233]]

first proposed change would allow a participant and a routing 
destination to request that the CHX flip any executions into the 
participant's account and report that second leg of the away-market 
transaction to clearing.\6\ This service would give the order-sending 
participant the option of consolidating its clearing reports in 
specific locations.
---------------------------------------------------------------------------

    \6\ For example, if the Exchange routes a participant's buy 
order to the participant's chosen destination (Router ABC) and 
Router ABC gets an execution of that order in another market against 
market maker XYZ, the first leg of the transaction (ABC buying from 
XYZ) will be reported to clearing by the other market. The Router 
ABC would send an execution report back to the Exchange (for routing 
to the original order-sending participant). Under this proposal, if 
the participant and Router ABC had requested, the Exchange would 
take the execution report and create a clearing-only record, 
flipping the execution from Router ABC's account to the account of 
the order-sending participant (ABC selling to the order-sending 
participant).
---------------------------------------------------------------------------

    The second proposed change would allow the CHX (and a routing 
destination) to determine whether additional agreements with CHX 
participants are needed to implement the routing functionality for all 
orders, except a cross with satisfy or an outbound ISO.\7\ While the 
CHX believes that most routing destinations will require that order-
senders sign additional agreements for any services that the 
destinations might provide, the CHX wants to provide flexibility for 
destinations to make choices appropriate to their business models.
---------------------------------------------------------------------------

    \7\ The routing of an outbound ISO or a cross with satisfy will 
be provided pursuant to the agreements described in section (c)(1) 
of Interpretation .03 to Rule 5, to the extent that the agreements 
are applicable to a specific routing decision. See Article 20, Rule 
5, Proposed Interpretation and Policy .03(c)(1).
---------------------------------------------------------------------------

    Finally, the third proposed change would allow a participant to ask 
its chosen destination to use the participant's own give-up (rather 
than the routing destination's give-up) when routing orders to other 
markets as part of a cross with satisfy or an outbound ISO.\8\ We 
believe that some participants--that already have good give-ups in 
other markets--might prefer that the routing service use those give-ups 
rather than its own.
---------------------------------------------------------------------------

    \8\ See Article 20, Rule 5, Proposed Interpretation and Policy 
.03(c).
---------------------------------------------------------------------------

    The Exchange believes that these proposed changes do not 
substantially change the existing routing process, but instead simply 
provide additional flexibility to the third-party routing services that 
participants might desire to use.\9\
---------------------------------------------------------------------------

    \9\ Because these proposals do not make substantive changes to 
the Exchange's routing structure, the Exchange believes that its 
routing of orders to a participant's chosen destination would 
continue to be a facility of the Exchange, but the destinations 
chosen by each participant would not constitute Exchange facilities.
---------------------------------------------------------------------------

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).\10\ The proposed rule change is 
consistent with Section 6(b)(5) of the Act \11\ 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 allowing the Exchange to provide additional flexibility to 
its participants and the destinations to which the Exchange should 
route their orders.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 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 changes 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-18 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-2007-18. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-2007-18 and should be 
submitted on or before February 22, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-1787 Filed 1-31-08; 8:45 am]
BILLING CODE 8011-01-P

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