[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Notices]
[Pages 41880-41882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20871]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40274; File No. SR-CSE-98-01]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the Cincinnati Stock Exchange, Inc. To Amend Existing and to Institute
New Trading Fees
July 29, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 41881]]
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 2, 1998, the Cincinnati Stock Exchange, Inc. (``CSE'' 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 prepared by the Exchange. On July
15, 1998, the Exchange submitted to the Commission Amendment No. 1 to
the proposed rule change.\3\ The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 corrected typographical errors in the
filing. Letter from Adam W. Gurwitz, Vice President Legal, CSE to
Kelly McCormick, Attorney, Division of Market Regulation.
Commission, dated July 14, 1998.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to amend CSE Rule 11.10, which contains the
Exchange's schedule of fees, to more equitably distribute technology
enhancement costs amoung its members. The text of the proposed rule
change is available at the Office of the Secretary, CSE and at the
Commission.
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 CSE 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 CSE 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 is revising its fee structure, delineated in CSE Rule
11.10, to more equitably distribute technology costs among members. The
CSE has incurred significant expense in enhancing its computer systems,
including a migration to the TCP/IP protocol. The Exchange believes
that these enhancements will improve the CSE's electronic trading
environment and provide members with improved services. The new fee
structure will partially offset these expenses and is intended to
apportion the enhancement costs fairly.
Specifically, the proposed rule change will increase the Designated
Dealer Book fee from $15.00 to $25.00 per issue. This is a per issue
fee paid by specialists to make markets on the CSE. By increasing the
fee, the Exchange intends partially to offset increased technology
costs by charging specialists who enjoy the benefits of this new
technology on an issue by issue basis. To create an incentive for
Designated Dealer to increase the number of issues traded on the
Exchange, however, this fee will be lowered to $5.00 per issue where a
Designated Dealer is the sole specialist. Moreover, the fee will
decrease as a Designated Dealers increases the number of issues it
trades on the Exchange.
The proposed rule change will also alter the Exchange's port fee.
In light of the Exchange's migration to the TCP/IP protocol, the
proposed rule change will define the term ``Port'' as a TCP/IP address
for purposes of the CSE's port charge. This charge will change from
$100.00 to $200.00 per month to partially offset the software and
hardware expenses incurred by the Exchange in the conversion.
In addition, the CSE will add a new ``technology fee'' of $300.000
per month applicable to all members. As the nation's only entirely
electronic exchange, the CSE devotes significant resources to improving
and enhancing its computerized environment. This fee will help offset
expenses incurred by the Exchange in implementing new and improved
technology, including migration to the TCP/IP protocol.
Finally, the proposed rule change will increase the Exchange's
transaction fee caps, that is, the level above which a member's
transactions are no longer charged, for both agency and preferenced
transactions, from 1,750,001 shares per day to 2,000,001 shares per day
and will eliminate the $3.75 cap on non-preferenced Designated Dealer
activity. Like other fee changes, additional revenue from these charges
will partially offset the CSE's technology expenses.
2. Basis
The proposed rule change is consistent with section 6(b) of the Act
\4\ in general, and furthers the objectives of section 6(b)(5) \5\ in
particular in that it is designated to promote just and equitable
principles of trade and 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. It is also
consistent with section 6(b)(4) \6\ in that it is designed to provide
for the equitable allocation of reasonable dues, fees, and other
charges among Exchange members by apportioning technology costs more
fairly.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(5).
\6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The CSE does not believe that the proposed rule change will impose
any inappropriate 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
The proposed rule change has become effective on filing, pursuant
to section 19(b)(3)(A) of the Act \7\ and Rule 19b-4(e)(2) \8\
thereunder because it revises member fees. 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.\9\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(e)(2).
\9\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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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 proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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
[[Page 41882]]
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 CSE. All
submissions should refer to File No. SR-CSE-98-01 and should be
submitted by August 26, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-20871 Filed 8-4-98; 8:45 am]
BILLING CODE 8010-01-M
