| The Participant Services
Department reviews and approves applications of prospective participants
on the Exchange, establishes trading give-ups for approved participants;
distributes weekly posting notices of nominees assigned to trading
permits, registers clerical staff and maintains a database of historical
information on trading permits, participants, nominees, voting designees
and floor clerks. Participants must be United States or foreign
broker-dealers registered under the Securities Exchange Act of 1934.
To become a participant, a broker-dealer must submit an application
to the Participant Services Department. Assuming that all criteria
are satisfied, the Participant Services Department will issue a
Trading Permit. A CHX trading permit provides access to the Exchange
and its trading systems, as well as to other marketplaces through
the Intermarket Trading System and other intermarket connections.
A trading
permit does not confer any ownership rights on the holder. Previously,
the Exchange had been constituted as a membership organization in
which a "seat" on the Exchange conferred both a fractional
ownership interest as well as
the privilege to trade on the floor. On February 9, 2005, the
demutualization plan of the Chicago Stock Exchange ("CHX"
or the "Exchange") received approval from the Securities
and Exchange Commission. All CHX memberships were extinguished as
part of the demutualization transaction.
Types Of Participants:
There are four basic types of CHX participants. Each such user
must obtain a Trading Permit.
Floor Brokers. Floor brokers buy and sell orders
on behalf of outside investors and institutions.
Order-Sending Firms. These firms may (1) receive
orders from their customers and route them to the Exchange for execution
or (2) send orders on a proprietary basis to the Exchange.
Specialists. Specialists are assigned specific
stocks; no two specialists trade the same stock. Accountable to
both the investing public and the Exchange, specialists are required
maintain a fair and orderly market.
Market Makers. Market makers work with specialists
to provide added depth and liquidity to the issues they trade, making
it easier for investors to buy and sell stocks.
General Information About Trading Permits
Each trading permit constitutes a revocable license that will allow
the holder of the permit (referred to as a "participant"
or "participant firm") to access the CHX's trading facilities,
as well as other marketplaces through the Intermarket Trading Systems
and other intermarket connections.
Persons holding CHX trading permits will be "members"
of CHX for purposes of the Securities Exchange Act of 1934 and will
be characterized as "participants" in CHX subject to CHX's
regulatory jurisdiction, but they will not have any ownership interest
in the Exchange or in CHX Holdings by virtue of their trading permits.
Trading permits are governed by Articles I, II and III of the CHX
Rules and the trading permit process is administered by the CHX
Department of Participant Services. Summarized generally below are
some key provisions relating to trading permits.
Applying For Trading Permits
Persons and firms who seek to obtain a trading permit will be required
to complete appropriate application materials and registration forms,
satisfy regulatory requirements and pay processing charges and application
fees. This process will be substantially similar to the pre-demutualization
membership application process.
Please refer to Application documents
for more information.
Additional Information About Trading Permits
A trading permit will be required for each person transacting business
on the Exchange. Each firm that sends orders to the Exchange for
execution, and each person who trades on the floor as a co-specialist,
floor broker, market maker or odd-lot dealer, must have a trading
permit. As an example, a CHX specialist firm with 10 co-specialists
will be required to obtain 10 trading permits and to register each
co-specialist as a nominee on a trading permit.
Once issued, a trading permit will be effective for one year following
its issuance date and will automatically renew for an additional
one-year term on each anniversary of the issuance date. A trading
permit may not be sold, leased or otherwise transferred, except
between nominees within the same
participant firm. No person may operate as an approved lessor or
otherwise lease trading access to the Exchange.
Fees and charges
The following fees apply to the issuance of trading permits:
- Trading Permit Application Fee: $200 per Trading
Permit.
- Intrafirm Nominee Name Change: $200 per Trading Permit.
- Trading Permit Termination Fee: $200 per Trading
Permit.
In addition, all participants and participant firms will be subject
to an annual trading permit fee of $6,000 per year, payable in equal
monthly installments, for each trading permit. |
