Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Eliminate the Validated Cross Trade Entry Functionality, 80870-80872 [2010-32223]

Download as PDF 80870 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices paragraph (f)(2) of Rule 19b–4 11 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend 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. available publicly. All submissions should refer to File Number SR–Phlx– 2010–177 and should be submitted on or before January 13, 2011. 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: BILLING CODE 8011–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 1. Purpose mstockstill on DSKH9S0YB1PROD 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–Phlx–2010–177 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2010–177. 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 Web site viewing and printing in the Commission’s Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the 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 11 17 CFR 240.19b–4(f)(2). VerDate Mar<15>2010 18:06 Dec 22, 2010 Jkt 223001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–32222 Filed 12–22–10; 8:45 am] [Release No. 34–63564; File No. SR–CHX– 2010–25] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Eliminate the Validated Cross Trade Entry Functionality December 16, 2010. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 10, 2010, the Chicago Stock Exchange, Inc. (the ‘‘Exchange’’ or ‘‘CHX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The CHX proposes to amend its rules to eliminate the Validated Cross Trade Entry Functionality for Exchangeregistered Institutional Brokers. The text of this proposed rule change is available on the Exchange’s Web site at (https:// www.chx.com) 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 12 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 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. The Exchange proposes to amend its rules relating to the submission and execution of certain cross orders by CHX-registered Institutional Brokers (‘‘Institutional Brokers’’) by eliminating the ability of an Institutional Broker to execute trades on the Exchange’s trading facilities outside of the Exchange’s Matching System.4 Institutional Brokers represent a voluntary registration category of Exchange Participants and the provisions of Article 17 of the Exchange’s Rules apply specifically to them. Institutional Brokers are deemed to be trading on the facilities of the Exchange.5 Institutional Brokers are the successors to the previous Floor Broker category and they largely handle orders from their customers on a manual basis.6 With the adoption and implementation of Regulation NMS (‘‘Reg NMS’’), the Exchange transitioned from its traditional floor-based, auction trading archetype to its current electronic trading model.7 In order to facilitate the handling and execution of orders by Institutional Brokers, Article 17 has provided a means by which Institutional Brokers could attempt to manually execute and report transactions outside the CHX Matching System while complying with the tradethrough prohibitions of Reg NMS and the order priority rules of the 4 See, Article 20 for rules relating to the operation of the CHX Matching System. 5 See, Securities Exchange Act Rel. No. 54550 (Sept. 29, 2006), 71 FR 59563 (October 10, 2006) (SR–CHX–2006–05) at Section II.C. (Institutional Broker), note 65 and accompanying text. 6 For example, an Institutional Broker Representative (‘‘IBR’’) may receive an order instruction from a customer over the telephone or some electronic means of communication (e.g., e-mail or instant message). The IBR is then responsible for entering the terms of the order into an electronic database (for the purpose of facilitating automated surveillance of such activity. See, Article 11, Rule 3) and seeking execution thereof. 7 See, Securities Exchange Act Rel. No. 54550 (Sept. 29, 2006), 71 FR 59563 (October 10, 2006) (SR–CHX–2006–05). E:\FR\FM\23DEN1.SGM 23DEN1 mstockstill on DSKH9S0YB1PROD with NOTICES Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices Exchange.8 The Exchange’s Brokerplex order entry system, which is available for use by all Institutional Brokers, includes a functionality known as ‘‘Validated Cross.’’ The Validated Cross functionality allows an Institutional Broker to electronically validate whether a proposed cross transaction would constitute an improper tradethrough under Reg NMS and/or violate the Exchange’s priority rules before the trade can be consummated and reported. The purpose of the Validated Cross functionality has been to permit an Institutional Broker to receive an execution instruction from a customer, to immediately validate it within Brokerplex for compliance with applicable regulations and complete the full transaction reporting within a timeframe which is consistent with industry standards. By using this functionality, the broker and its customers could avoid being disadvantaged simply because the IBR was not able to type the trade data into the system before the National Best Bid or Offer (‘‘NBBO’’) and/or CHX order book changed. Despite these apparent advantages, reliance on and usage of the Validated Cross functionality by Institutional Brokers has declined over time. Additionally, the Exchange has conducted an analysis of whether the Validated Cross allows Institutional Broker to submit trades which would be blocked if submitted as a regular cross order and has concluded that the Validated Cross is effective for that purpose only in a very small percentage of instances. Even though we are proposing to get rid of the Validated Cross functionality, Institutional Brokers will continue to have the ability to submit other cross orders to the CHX Matching System for execution. Given the additional systems and regulatory costs to maintaining the Validated Cross functionality, the Exchange is proposing to eliminate it within the Brokerplex trading application and delete the associated rule text. Since the Validated Cross was the only means by which an Institutional Broker could execute and report a trade on our facilities outside of the Matching System, the Exchange is also proposing to eliminate the clause in section (a) of Article 9, Rule 13 which referred to trades executed outside the Matching System by an Institutional Broker. 8 See, Reg NMS Rule 611 (Order Protection Rule); Article 20, Rule 8 (Operation of the Matching System). VerDate Mar<15>2010 18:06 Dec 22, 2010 Jkt 223001 80871 2. Statutory Basis Electronic Comments The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act in general,9 and furthers the objectives of Section 6(b)(5) in particular,10 in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transaction in securities, to remove impediments and perfect the mechanisms of a free and open market, and, in general, to protect investors and the public interest. The elimination of the Validated Cross functionality available to Institutional Brokers will simplify the order entry process, eliminate certain regulatory concerns presented by the Validated Cross and reduce the burden on the Exchange to maintain overlapping order entry functionality. • 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–2010–25 on the subject line. 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 Change Received From Members, Participants, or Others No written comments were solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 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 self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–CHX–2010–25. 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 Web site viewing and printing 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 such filing also will be available for inspection and copying at the principal office of the CHX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–CHX–2010–25 and should be submitted on or before January 13, 2011. IV. Solicitation of Comments V. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change 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: After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.11 In 11 In approving the proposed rule change, the Commission notes that it has considered the 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). PO 00000 Frm 00086 Fmt 4703 Continued Sfmt 4703 E:\FR\FM\23DEN1.SGM 23DEN1 80872 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Notices particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act,12 which requires, among other things, that the Exchange’s rules be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general, to protect investors and the public interest. The Commission agrees with the Exchange that the elimination of the Validated Cross functionality will simplify CHX’s order entry process, eliminate certain regulatory concerns presented by the Validated Cross functionality, and reduce the burden on the Exchange to maintain overlapping order entry functionality.13 The Commission finds good cause, pursuant to Section 19(b)(2) of the Act,14 for approving the proposed rule change prior to the 30th day after publication of notice in the Federal Register. The Exchange represents that accelerated approval will allow the Exchange to implement these changes prior to the application of its customary end-of-the-year software change freeze, and thereby minimize the systems and operational risks it says are inherent to coding changes made late in the year. Further, accelerated approval of the proposed rule change will allow the Exchange to more quickly address certain regulatory concerns associated with the Validated Cross functionality. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,15 that the proposed rule change (SR–CHX–2010– 25) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Florence E. Harmon, Deputy Secretary. mstockstill on DSKH9S0YB1PROD with NOTICES [FR Doc. 2010–32223 Filed 12–22–10; 8:45 am] BILLING CODE 8011–01–P proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(5). 13 See supra Section II.A.2. 14 15 U.S.C. 78s(b)(2). 15 15 U.S.C.78s(b)(2). 16 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 18:06 Dec 22, 2010 Jkt 223001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63566; File No. SR–CBOE– 2010–115] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify How Odd-Lots Are Handled on CBSX December 16, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 14, 2010, the Chicago Board Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. 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 modify how odd-lot orders are handled on the CBOE Stock Exchange (‘‘CBSX’’). The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.org/Legal), at the Exchange’s principal office, and on the Commission’s Web site at https:// www.sec.gov/rules/sro.shtml. 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 self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, CBSX handles and executes round lot orders differently 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00087 Fmt 4703 Sfmt 4703 from the manner in which it handles and executes odd lot and mixed lot orders.3 If CBSX is not displaying the NBBO and step-up is not achieved pursuant to the CBSX flash process in Rule 52.6, the round lot order is then routed to the exchange displaying the NBBO for execution. Odd lot orders, however, currently are not routed to the exchange displaying the NBBO for execution. The proposed change will ensure that odd and mixed lot orders will be handled and executed in a more consistent manner with round lot orders. Under the proposed rule change, OddLot orders will be matched by the CBSX System against interest at the best price in the CBSX Book. Odd-Lot orders (or the odd-lot portion of a mixed lot order) that are not marketable will be maintained in the System so that they may trade against later submitted orders (they will be traded using CBSX’s matching rules). Marketable Odd-lot orders will be handled similar to round lot orders. If fulfilling an Odd-Lot order would result in an impermissible tradethrough of another exchange, the order will be routed to other exchanges to be filled at prices better than the CBSX disseminated price. If an execution is not attained at the away exchange(s), the returned order is eligible for execution on CBSX. We note that the flash process utilized by CBSX prior to routing away orders will not be employed for Odd-lot orders. If an incoming Odd-lot order trades against a quote in the CBSX Book, the new quantity remaining in the quote will be rounded down to the nearest lower round-lot amount (zero or multiple of 100) for display purposes, with the remaining Odd-Lot amount being cancelled. If an incoming order trades against a limit order resting on the CBSX Book and an Odd-Lot amount remains from the limit order resting on the CBSX Book, that Odd-Lot amount will remain in the system eligible for execution but will not be displayed. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) 4 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.5 Specifically, the Exchange believes the 3 A ‘‘round lot’’ order is an order for a quantity that is a multiple of 100 (100, 200, 300, etc.). An ‘‘odd lot’’ order is an order for a quantity that is less than 100. A ‘‘mixed lot’’ order is an order for a quantity that is greater than 100 but not a multiple of 100 (135, 372, 1126, etc.). 4 15 U.S.C. 78s(b)(1). 5 15 U.S.C. 78f(b). E:\FR\FM\23DEN1.SGM 23DEN1

Agencies

[Federal Register Volume 75, Number 246 (Thursday, December 23, 2010)]
[Notices]
[Pages 80870-80872]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32223]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63564; File No. SR-CHX-2010-25]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change To Eliminate the Validated Cross Trade Entry Functionality

December 16, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on December 10, 2010, the Chicago Stock Exchange, Inc. (the 
``Exchange'' or ``CHX'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons 
and is approving the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CHX proposes to amend its rules to eliminate the Validated 
Cross Trade Entry Functionality for Exchange-registered Institutional 
Brokers. The text of this proposed rule change is available on the 
Exchange's Web site at (https://www.chx.com) 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 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 Change

1. Purpose
    The Exchange proposes to amend its rules relating to the submission 
and execution of certain cross orders by CHX-registered Institutional 
Brokers (``Institutional Brokers'') by eliminating the ability of an 
Institutional Broker to execute trades on the Exchange's trading 
facilities outside of the Exchange's Matching System.\4\ Institutional 
Brokers represent a voluntary registration category of Exchange 
Participants and the provisions of Article 17 of the Exchange's Rules 
apply specifically to them. Institutional Brokers are deemed to be 
trading on the facilities of the Exchange.\5\ Institutional Brokers are 
the successors to the previous Floor Broker category and they largely 
handle orders from their customers on a manual basis.\6\
---------------------------------------------------------------------------

    \4\ See, Article 20 for rules relating to the operation of the 
CHX Matching System.
    \5\ See, Securities Exchange Act Rel. No. 54550 (Sept. 29, 
2006), 71 FR 59563 (October 10, 2006) (SR-CHX-2006-05) at Section 
II.C. (Institutional Broker), note 65 and accompanying text.
    \6\ For example, an Institutional Broker Representative 
(``IBR'') may receive an order instruction from a customer over the 
telephone or some electronic means of communication (e.g., e-mail or 
instant message). The IBR is then responsible for entering the terms 
of the order into an electronic database (for the purpose of 
facilitating automated surveillance of such activity. See, Article 
11, Rule 3) and seeking execution thereof.
---------------------------------------------------------------------------

    With the adoption and implementation of Regulation NMS (``Reg 
NMS''), the Exchange transitioned from its traditional floor-based, 
auction trading archetype to its current electronic trading model.\7\ 
In order to facilitate the handling and execution of orders by 
Institutional Brokers, Article 17 has provided a means by which 
Institutional Brokers could attempt to manually execute and report 
transactions outside the CHX Matching System while complying with the 
trade-through prohibitions of Reg NMS and the order priority rules of 
the

[[Page 80871]]

Exchange.\8\ The Exchange's Brokerplex order entry system, which is 
available for use by all Institutional Brokers, includes a 
functionality known as ``Validated Cross.'' The Validated Cross 
functionality allows an Institutional Broker to electronically validate 
whether a proposed cross transaction would constitute an improper 
trade-through under Reg NMS and/or violate the Exchange's priority 
rules before the trade can be consummated and reported. The purpose of 
the Validated Cross functionality has been to permit an Institutional 
Broker to receive an execution instruction from a customer, to 
immediately validate it within Brokerplex for compliance with 
applicable regulations and complete the full transaction reporting 
within a timeframe which is consistent with industry standards. By 
using this functionality, the broker and its customers could avoid 
being disadvantaged simply because the IBR was not able to type the 
trade data into the system before the National Best Bid or Offer 
(``NBBO'') and/or CHX order book changed.
---------------------------------------------------------------------------

    \7\ See, Securities Exchange Act Rel. No. 54550 (Sept. 29, 
2006), 71 FR 59563 (October 10, 2006) (SR-CHX-2006-05).
    \8\ See, Reg NMS Rule 611 (Order Protection Rule); Article 20, 
Rule 8 (Operation of the Matching System).
---------------------------------------------------------------------------

    Despite these apparent advantages, reliance on and usage of the 
Validated Cross functionality by Institutional Brokers has declined 
over time. Additionally, the Exchange has conducted an analysis of 
whether the Validated Cross allows Institutional Broker to submit 
trades which would be blocked if submitted as a regular cross order and 
has concluded that the Validated Cross is effective for that purpose 
only in a very small percentage of instances. Even though we are 
proposing to get rid of the Validated Cross functionality, 
Institutional Brokers will continue to have the ability to submit other 
cross orders to the CHX Matching System for execution. Given the 
additional systems and regulatory costs to maintaining the Validated 
Cross functionality, the Exchange is proposing to eliminate it within 
the Brokerplex trading application and delete the associated rule text. 
Since the Validated Cross was the only means by which an Institutional 
Broker could execute and report a trade on our facilities outside of 
the Matching System, the Exchange is also proposing to eliminate the 
clause in section (a) of Article 9, Rule 13 which referred to trades 
executed outside the Matching System by an Institutional Broker.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general,\9\ and furthers the objectives 
of Section 6(b)(5) in particular,\10\ in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transaction in 
securities, to remove impediments and perfect the mechanisms of a free 
and open market, and, in general, to protect investors and the public 
interest. The elimination of the Validated Cross functionality 
available to Institutional Brokers will simplify the order entry 
process, eliminate certain regulatory concerns presented by the 
Validated Cross and reduce the burden on the Exchange to maintain 
overlapping order entry functionality.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Change Received From Members, Participants, or Others

    No written comments were solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the 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-2010-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CHX-2010-25. 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 Web site viewing and 
printing 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 such filing also will be available for 
inspection and copying at the principal office of the CHX. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make publicly available. All 
submissions should refer to File Number SR-CHX-2010-25 and should be 
submitted on or before January 13, 2011.

V. Commission's Findings and Order Granting Accelerated Approval of the 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\11\ In

[[Page 80872]]

particular, the Commission finds that the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act,\12\ 
which requires, among other things, that the Exchange's rules be 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and in general, to protect investors and the public interest. 
The Commission agrees with the Exchange that the elimination of the 
Validated Cross functionality will simplify CHX's order entry process, 
eliminate certain regulatory concerns presented by the Validated Cross 
functionality, and reduce the burden on the Exchange to maintain 
overlapping order entry functionality.\13\
---------------------------------------------------------------------------

    \11\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ See supra Section II.A.2.
---------------------------------------------------------------------------

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\14\ for approving the proposed rule change prior to the 30th 
day after publication of notice in the Federal Register. The Exchange 
represents that accelerated approval will allow the Exchange to 
implement these changes prior to the application of its customary end-
of-the-year software change freeze, and thereby minimize the systems 
and operational risks it says are inherent to coding changes made late 
in the year. Further, accelerated approval of the proposed rule change 
will allow the Exchange to more quickly address certain regulatory 
concerns associated with the Validated Cross functionality.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-CHX-2010-25) be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \15\ 15 U.S.C.78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32223 Filed 12-22-10; 8:45 am]
BILLING CODE 8011-01-P
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