The Participant Services Department reviews and approves applications of prospective participants on the Exchange, establishes trading give-ups for approved participants; distributes weekly notices of approved participants who have been assigned trading permits, and maintains a database of historical information on trading permits, participants, registration of issues for Market Maker participants and voting designees. 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 three basic types of CHX participants. Each such user must obtain a Trading Permit.
Institutional Brokers. Institutional 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.
Market Makers. Market makers 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.
Individuals or firms 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
Individuals 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
One trading permit will be required for each firm that sends orders to the Exchange for execution.
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. 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:
In addition, all participants and participant firms will be subject to an annual trading permit fee of $7,200 per year, payable in equal monthly installments, for each trading permit.