July 1, 2005

VIA FACSIMILE AND U.S. MAIL

Ellen J. Neely
President & General Counsel
The Chicago Stock Exchange, Incorporated
One Financial Place
440 S. LaSalle Street
Chicago, IL 60605-1070

Re: Display of Rounded Prices in Public Quotes

Dear Ms. Neely:

In your letter dated June 27, 2005, on behalf of the Chicago Stock Exchange, Incorporated (“CHX” or “Exchange”), you requested that the Commission extend an exemption from Rules 11Ac1-1, 11Ac1-2, and 11Ac1-4 under the Securities Exchange Act of 1934 initially granted by the Commission in 2001.¹ This exemption would permit CHX, its members, and the vendors that disseminate CHX quote information to display their quotes for Nasdaq National Market securities in rounded, penny increments without a rounding identifier while trading in subpenny increments. The Commission reinstated and extended the exemption on July 15, 2004.² You have requested that the Commission extend the exemption until the effective date of Rule 612 of Regulation NMS.³

Based on the representations in your letter, the Commission finds that the requested exemption is consistent with the public interest, the protection of investors, and the removal of impediments to, and perfection of the mechanism of, a national market system. The Commission hereby grants an extension of the exemption until August 29, 2005, the effective date for Rule 612 of Regulation NMS.⁴ This exemption is expressly contingent upon CHX’s continuing compliance with the conditions stated in the Initial Exemption Letter. In light of the implementation of Rule 612, the Commission does not intend to grant additional extensions of this exemption.

¹ See Letter from Annette L. Nazareth, Director, Division of Market Regulation, Securities and Exchange Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated April 6, 2001 (“Initial Exemption Letter”).

² See Letter from David S. Shillman, Associate Director, Division, Commission, to Ellen J. Neely, Senior Vice President and General Counsel, CHX, dated July 15, 2004 (“July 2004 Letter”); see also Letter from Annette L. Nazareth, Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated July 5, 2001 (extending the relief through November 5, 2001); Letter from Annette L. Nazareth, Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated November 2, 2001 (extending relief through January 14, 2002); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated April 11, 2002 (extending relief through September 30, 2002); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated September 30, 2002 (extending relief through January 31, 2003); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated January 31, 2003 (extending relief through May 31, 2003); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Paul O’Kelly, Chief Operating Officer, CHX, dated May 30, 2003 (extending relief through December 1, 2003); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Ellen J. Neely, Senior Vice President and General Counsel, CHX, dated December 1, 2003 (extending relief through June 30, 2004).

³ See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).

⁴ In the July 2004 Letter, the Commission stated that the Commission may modify, withdraw, or extend the exemption, depending upon the action taken by the Commission on proposed Regulation NMS. On June 29, 2005, Regulation NMS was published in the Federal Register. Rule 612 of Regulation NMS as adopted will, among other things, prohibit market participants from displaying, ranking, or accepting quotations in NMS stocks that are priced in an increment of less than $0.01 per share, unless the price of the quotation is less than $1.00. If the price of the quotation is less than $1.00, the minimum increment is $0.0001. See id.

Incoming Letter:

The Incoming Letter is in Acrobat format.

http://www.sec.gov/divisions/marketreg/mr-noaction/chx070105.htm