Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange, Inc., Relating to Transaction and Book Fees

[Federal Register Volume 64, Number 67 (Thursday, April 8, 1999)]
[Notices]
[Pages 17204-17206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8682]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41238; File No. SR-CSE-99-03]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by The Cincinnati Stock Exchange, 
Inc., Relating to Transaction and Book Fees

March 31, 1999.
    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 March 1, 1999, the Cincinnati Stock Exchange,

[[Page 17205]]

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

    The CSE proposes to amend its schedule of books and transaction 
fees. The text of the proposed rule change is as follows (additions are 
italicized; deletions are in brackets):
    Rule 11.10 National Securities Trading System Fees
    A. Trading Fees
    (a)-(i) No Change.
    (j) Tape B Transactions. The CSE will not impose a transaction fee 
on Consolidated Tape B securities. In addition, Members will receive a 
50 per cent pro rata transaction credit of Tape B revenue.\3\ [based on 
the following schedule:
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    \3\ Telephone conversation between David Colker, President and 
Chief Operating Officer, CSE, and Daniel M. Gray, Special Counsel, 
Division of Market Regulation, Commission, on March 31, 1999.

------------------------------------------------------------------------
                                                           Percentage of
      Average Quarterly Exchange Tape B Transaction       Tape B Revenue
                                                             Credited
------------------------------------------------------------------------
1-2.99%.................................................              10
3-4.99%.................................................              25
5-6.99%.................................................              30
7% and..................................................              40
greater.................................................  ..............
------------------------------------------------------------------------

    (k) DD Issue/Book Fees. Designated Dealers will be charged a 
monthly book fee based on the following incremental schedule:

------------------------------------------------------------------------
                    Number of Issues                       Fee Per Issue
------------------------------------------------------------------------
0 to 150 [500]..........................................  $20.00 [25.00]
[500] 151 to 300 [750]..................................           10.00
[751] 301 and higher....................................            5.00
------------------------------------------------------------------------

    [The DD Issue/Book Fee shall be $5.00 per issue where there is only 
one Designated Dealer in that issue.]
    (l)-(n) No Change.
    B. Membership Fees.
    No Change.
* * * * *

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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The CSE is modifying its book fees and is implementing an 
improvement to its CTA Network B (``Tape B'') transaction credit in 
order to create additional incentives to trade on the Exchange. These 
actions are consistent with the CSE's ongoing efforts to remain the 
low-cost provider of exchange services in the National Market System. 
Book fees are charged to Designated Dealers for each issue in which 
they are registered as a specialist. The fee for the first tier of 
issues is reduced from $25 per issue to $20 per issue, and the upper 
limit of the first tier is reduced from 500 issues to 150 issues. 
Although the fee per issue for the second and third tiers will remain 
the same, the number of issues covered by the second tier is now 151 to 
300, and the number of issues covered by the third tier is now 301 and 
higher. Finally, the limitation of the fee per issue to $5 for issues 
in which there is only Designated Dealer is deleted. Under the revised 
Tape B program, member firms will receive fifty percent (50%) of all 
Tape B revenue on a pro rata without regard to market share 
prerequisites.
2. Statutory Basis
    The CSE believes 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 designed to promote 
just and equitable principles of trade, 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. 
In addition, the Exchange believes that the proposed rule change is 
consistent with section 6(b)(4) of the Act \6\ in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges among Exchange members by crediting members on a pro rata 
basis.
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    \4\ 15 U.S.C. 78f(b).
    \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 comments were solicited in connection with the proposed rule 
change.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \7\ and subparagraph (f) of Rule 19b-4 
thereunder \8\ because it establishes or changes a due, fee, or other 
charge. At any time within 60 days of the filing of such 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
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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.\9\ Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. 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.
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    \9\ In reviewing the proposed rule change, the Commission 
considered its potential impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
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    Copies of such filings will also be available for inspection and 
copying at the principal office of the CSE. All submissions should 
refer to File No. SR-CSE-99-03 and should be submitted by April 29, 
1999.


[[Page 17206]]


    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. 99-8682 Filed 4-7-99; 8:45 am]
BILLING CODE 8010-01-M