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Prospective CHX Participants

On February 9, 2005, the demutualization plan of the Chicago Stock Exchange, Inc. ("CHX" or the "Exchange") received approval from the Securities and Exchange Commission. All CHX memberships were extinguished as part of the demutualization transaction. Since that time, the term CHX Participant has been used to refer to broker-dealers registered under the Securities Exchange Act of 1934 who previously would have been called CHX members.

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. A trading permit does not confer any ownership rights on the holder.

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 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 1, 2 and 3 of the CHX Rules and the trading permit process is administered by the CHX's Participant Services Department. 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.

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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:

  • Trading Permit Application Fee: $2000 per Trading Permit, which is a non-refundable payment.
  • Trading Permit Termination Fee: $1,200 or, if less, $600/month for remainder of the one year term

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.

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