48414 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

5NSCC’s proposed ‘‘Policy Statement on the 

Admission of Non-U.S. Entities as Direct Clearing 

Corporation Members’’ is attached as Exhibit 5 to 

its filing, which can be found at http:// 

www.dtcc.com/downloads/legal/rule_filings/2007/ 

nscc/2007-15.pdf . 

6 In the Policy Statement, NSCC has reserved the 

right to waive certain of the criteria where such 

criteria are inappropriate to a particular applicant 

or class of applicants (e.g., a foreign government or 

international securities clearing corporation). 

7NSCC reserves the right to require the entity to 

deposit additional amounts to the clearing fund and 

to post a letter of credit in an instance where NSCC, 

in its sole discretion, believes the entity presents 

legal risk. 8 15 U.S.C. 78q–1(b)(3)(F). 

9 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

U.S.C. 78c(f). 

10 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(2). 

The proposed rule change adds a new 

Policy Statement 5 to NSCC’s Rules that 

in addition to requiring execution of the 

standard NSCC Membership Agreement 

requires a foreign entity to enter into a 

series of undertakings and agreements 

that are designed to address 

jurisdictional concerns and to assure 

that NSCC is provided with audited 

financial information that is acceptable 

to NSCC.6 These include that a 

premium on the financial requirements 

for a member that submits audited 

financial statements prepared in other 

than U.S. generally accepted account 

principles (‘‘GAAP’’). The premiums are 

as follows: 

(i) For financial statements prepared 

in accordance with International 

Financial Reporting Standards (‘‘IFRS’’), 

the Companies Act of 1985 (‘‘UK 

GAAP’’), or Canadian GAAP—a 

premium of 11⁄2 times the existing 

requirement; 

(ii) For financial statements prepared 

in accordance with a European Union 

(‘‘EU’’) country GAAP other than UK 

GAAP—a premium of 5 times the 

existing requirement; and 

(iii) For financial statements prepared 

in accordance with any other type of 

GAAP a premium of 7 times the existing 

requirement. 

The requirements in the Policy 

Statement also include that each nonU.S. entity agree to certain conditions 

with respect to actions brought by NSCC 

to enforce the entity’s obligations under 

NSCC’s Members Agreement, such as 

irrevocably waiving all immunity from 

NSCC’s attachment of the entity’s assets 

in the U.S. Each non-U.S. entity will 

also be required to obtain an opinion of 

reputable foreign counsel satisfactory to 

NSCC providing, among other things, 

that the agreements described in the 

Policy Statement may be enforced 

against the foreign entity in the courts 

of its home country or other 

jurisdictions where the entity or its 

property may be found.7 Each non-U.S. 

entity would have to be subject to 

regulation in its home country and its 

home country regulator must have 

entered into a Bilateral Information 

Sharing Arrangement or Memoranda of 

Understanding with the U.S. Securities 

and Exchange Commission regarding 

the sharing or exchange of information 

and each non-US entity must be in 

compliance with the financial reporting 

and responsibility standards of its home 

country regulator. Finally, the Policy 

Statement requires that each non-U.S. 

entity must provide sufficient 

information to NSCC in order to 

evaluate AML risk, including whether 

the non-U.S. entity is subject to 

comparable AML requirements to those 

imposed in the U.S. in its home country 

jurisdiction. 

III. Discussion 

Section 17A(b)(3)(F) of the Act 

provides that the rules of a clearing 

agency should be designed to promote 

the prompt and accurate clearance and 

settlement of securities transactions and 

to safeguard securities and funds which 

are in the custody or control of the 

clearing agency or for which it is 

responsible.8 By expanding the types of 

entities that are eligible for membership 

in NSCC, the proposed rule change will 

increase the direct access to and use of 

NSCC’s clearance and settlement 

services and therefore should promote 

the prompt and accurate clearance and 

settlement of securities transactions. 

However, because these entities are 

organized outside of the U.S. and are 

not subject to U.S. regulation, the Policy 

Statement includes a number of 

requirements that are designed to 

address legal, financial, and information 

sharing risk that may result from the 

entity’s non-U.S. status. These 

requirements include (1) the entity 

make certain waivers and agreements, 

including a foreign legal opinion, to 

ensure that NSCC may enforce the 

member’s obligations under its Members 

Agreement; (2) the entity provide 

audited financial statements prepared in 

accordance with generally accepted 

accounting principles (‘‘GAAP’’), with 

an increase to the member’s minimum 

financial requirements where non-U.S. 

GAAP is used; and (3) the entity is 

subject to regulation in its home 

country, there is an information sharing 

agreement with the home country 

regulator and the Commission, and the 

entity is in compliance with the 

financial reporting and responsibility 

standards of its home country regulator. 

The Commission believes that the 

additional requirements in the Policy 

Statement are designed to address the 

legal, financial, and information sharing 

risks presented by non-U.S. members 

and that, therefore, the proposed rule 

change is designed to assure the 

safeguarding of securities and funds 

which are in NSCC’s control or for 

which it is responsible. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular Section 17A of the Act and 

the rules and regulations thereunder.9

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that the 

proposed rule change (File No. SR–

NSCC–2006–15) be and hereby is 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19128 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58342; File No. SR–NSX–

2008–14] 

Self-Regulatory Organizations; 

National Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change To Amend 

the NSX BLADESM Fee Schedule To 

Reduce Routing Fees 

August 11, 2008. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 8, 

2008, the National Stock Exchange, Inc. 

(the ‘‘Exchange’’ or the ‘‘NSX’’) 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 Exchange. 

The NSX filed the proposal pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder,4 which renders 

the proposal effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 


ebenthall on PRODPC60 with NOTICES
Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 48415 

5 15 U.S.C. 78f(b). 

6 15 U.S.C. 78f(b)(4). 

7 15 U.S.C. 78s(b)(3)(A)(ii). 

8 17 CFR 19b–4(f)(2). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

the NSX BLADESM Fee and Rebate 

Schedule (the ‘‘Fee Schedule’’) issued 

pursuant to Exchange Rule 16.1(c) in 

order to modify the fees associated with 

routing transactions to away market 

centers. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nsx.com, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

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 

Exchange 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 

Exchange 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 

With this rule change, the Exchange is 

proposing to modify certain fees with 

respect to outbound routing. 

Specifically, with respect to securities 

traded at one dollar or more, the instant 

filing proposes reducing the per share 

executed routing fee across all tapes 

from $0.0040 to $0.0029. With respect to 

securities traded at less than one dollar, 

the instant filing proposes reducing the 

per share executed routing fee across all 

tapes from $0.0040 to 0.3 percent (0.3%) 

of the trade value. As with the fees and 

rebates currently applicable to trades of 

securities under one dollar, ‘‘trade 

value’’ means a dollar amount equal to 

the price per share multiplied by the 

number of shares executed. 

In addition, the Exchange is 

proposing in the instant rule filing to 

eliminate the reference to the term 

‘‘NSX BLADESM’’ in the Fee Schedule. 

Rationale 

The Exchange has determined that 

this change is necessary for competitive 

reasons. Under the current Fee 

Schedule, the charge for routed 

executions at the Exchange is $0.0040 

per share, which is higher than the 

routing fee currently charged by other 

exchanges and ECN alternatives. 

Consequently, many ETP Holders do not 

send orders to the Exchange that are 

‘‘routable’’ in order to avoid the current 

NSX routing charge. The instant 

proposal seeks to offer competitive 

routing fees in order to attract more 

routable orders. The Exchange is able to 

reduce this routing fee as a result of the 

activation of NSX Securities, LLC as the 

Exchange’s outbound router. In 

addition, the proposed rule change is 

intended to increase the amount of 

order flow on the Exchange, regardless 

of whether a given trade in fact executes 

at an away exchange or other market 

center. 

NSX notes that it operates in a highly 

competitive market in which market 

participants can readily direct order 

flow to competing venues if they deem 

fee levels at a particular venue to be 

more attractive. Accordingly, the 

proposed modification attempts to keep 

the fees reflected in the Fee Schedule 

competitive with fees charged by other 

venues and to continue to be reasonable 

and equitably allocated to those ETP 

Holders that opt to route orders. Based 

upon the information above, the 

Exchange believes that the proposed 

rule change is consistent with the 

protection of investors and the public 

interest. 

In addition, the Exchange proposes to 

delete the term ‘‘NSX BLADESM’’ in the 

Fee Schedule in order to eliminate 

potential confusion. NSX currently has 

only one trading platform and therefore 

does not need to distinguish between 

NSX BLADE and any other platform. 

For purposes of clarity, the instant rule 

filing therefore proposes to delete 

reference to ‘‘NSX BLADESM’’ and to 

rename the fee schedule referenced in 

Rule 16.1(c) as simply the ‘‘Fee and 

Rebate Schedule.’’

Operative Date and Notice 

The Exchange intends to make the 

proposed fee structure for routed trades 

operative on August 8, 2008. Pursuant 

to Exchange Rule 16.1(c), the Exchange 

will ‘‘provide ETP Holders with notice 

of all relevant dues, fees, assessments 

and charges of the Exchange’’ through 

the issuance of a Regulatory Circular of 

the changes to the Fee Schedule and 

will provide a copy of the rule filing on 

the Exchange’s Web site (www.nsx.com). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) of the 

Act,5 in general, and Section 6(b)(4) of 

the Act,6 in particular, in that it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

other persons using the facilities of the 

Exchange. Moreover, the proposed 

routing fees are not discriminatory in 

that all ETP Holders are eligible to 

submit (or not submit) trades for routing 

and may do so at their discretion. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change has taken 

effect upon filing pursuant to Section 

19(b)(3)(A)(ii) of the Act 7 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder,8 because, as provided in 

(f)(2), it ‘‘changes a due, fee or other 

charge imposed by the Exchange 

applicable only to a member’’ (known 

on the Exchange as an ETP Holder). At 

any time within sixty (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. 

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. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NSX–2008–14 on the 

subject line. 


ebenthall on PRODPC60 with NOTICES
48416 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

9 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Display Book system is an order 

management and execution facility. The Display 

Book system receives and displays orders to the 

specialists, contains the Book, and provides a 

mechanism to execute and report transactions and 

publish the results to the Consolidated Tape. The 

Display Book system is connected to a number of 

other Exchange systems for the purposes of 

comparison, surveillance, and reporting 

information to customers and other market data and 

national market systems. 

6See Securities Exchange Release No. 56588 

(October 1, 2007), 72 FR 57366 (October 9, 2007) 

(SR–NYSE–2007–92). 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NSX–2008–14. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make publicly available. All 

submissions should refer to File 

Number SR–NSX–2008–14 and should 

be submitted on or before September 9, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19114 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58351; File No. SR–NYSE–

2008–73] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

NYSE Rule 104(b) To Provide for an 

Automated Opening Message That Will 

Be Effectuated Through the Specialist 

Application Programmed Interface To 

Allow Specialists To Automatically 

Open a Security on a Trade 

August 13, 2008. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 5, 

2008, New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. NYSE has filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Rule 104(b) to provide for an 

automated opening message that will be 

effectuated through the Specialist 

Application Programmed Interface 

(‘‘Specialist APISM’’ or ‘‘SAPI’’) to allow 

specialists to automatically open a 

security on a trade. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.com. 

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 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange 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 Exchange is proposing to amend 

NYSE Rule 104(b) to provide for an 

automated opening message that will be 

effectuated through the SAPI to allow 

specialists to automatically open a 

security on a trade. 

Background 

Pursuant to NYSE Rule 104, Exchange 

specialists, in their capacity as dealers 

for their assigned securities, maintain 

systems that use proprietary algorithms, 

based on predetermined parameters, to 

electronically participate in the 

Exchange market (‘‘Specialist 

Algorithm’’). The Specialist Algorithm 

communicates with the NYSE Display 

Book system 5 via the SAPI. The 

Specialist Algorithm is intended to 

replicate electronically some of the 

activities specialists are permitted to 

engage in on the Floor in the auction 

market and to facilitate the specialists’

ability to fulfill their obligation to 

maintain a fair and orderly market. 

Specialists on the Exchange are 

responsible for initiating trading (the 

‘‘opening’’) in their assigned securities. 

Pursuant to NYSE Rule 123D, it ‘‘is the 

responsibility of each specialist to 

ensure that registered stocks open as 

close to the opening bell as possible, 

while at the same time not unduly 

hasty, particularly when at a price 

disparity from the prior close.’’

Specialist Algorithms may generate 

quoting and trading messages as 

prescribed by NYSE Rule 104(b)(i). 

Specialists may either open trading in 

their assigned securities with a manual 

transaction or, pursuant to NYSE Rule 

104(b), with an automated quote.6


ebenthall on PRODPC60 with NOTICES