Document ID: SEC-2007-1394-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2007-10-05T04:00Z

[Federal Register: October 5, 2007 (Volume 72, Number 193)]
[Notices]               
[Page 57087-57089]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc07-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56587; File No. SR-NSX-2007-10]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Extend the Effective Period for Rule 2.12 Regarding Third-Party Routing 
Services in Respect of Orders Entered into NSX BLADE\SM\

October 1, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 28, 2007, the National Stock Exchange, Inc. (``NSX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by NSX. The 
Exchange filed the proposal as a ``non-controversial'' 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 
receipt of this filing by the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to extend the effective period for Rule 
2.12, which describes the terms under which the Exchange provides 
routing services procured from a third party with respect to orders 
entered into its trading system, NSX BLADE\SM\. The text of the 
proposed rule change is available at NSX, the Commission's Public 
Reference Room, and http://www.nsx.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 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
    The Exchange is proposing to amend Exchange Rules 2.11 and 2.12 to 
extend the effective period for Rule 2.12 (relating to the Exchange's 
use of a third party to provide outbound routing of orders from the 
Exchange to other trading centers (``Routing Services'') through March 
31, 2008, and to delay the effectiveness of Rule 2.11 (relating to the 
outbound routing function of the Exchange's affiliate, NSX Securities, 
LLC) until April 1, 2008.
    Rule 2.11 provides for certain terms and conditions under which NSX 
Securities, LLC (``NSX Securities''), an affiliate of the Exchange, 
will provide Routing Services. Rule 2.11 was approved by the Commission 
in connection with the approval of the Exchange's new trading rules 
relating to NSX BLADE on August 31, 2006.\5\ The Exchange filed and 
received approval for the addition of Rule 2.12, which provides for 
terms and conditions of the Exchange's use of a third party to provide 
Routing Services.\6\ The Exchange subsequently filed to extend the 
effective period for Rule 2.12.\7\
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    \5\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006) (SR-NSX-2006-08).
    \6\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006) (SR-NSX-2006-15).
    \7\ See Securities Exchange Act Release Nos. 55624 (April 12, 
2007), 72 FR 19732 (April 19, 2007) (SR-NSX-2007-04) and 56067 (July 
13, 2007), 72 FR 39650 (July 19, 2007) (SR-NSX-2007-08).
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    Rule 2.12 currently provides that it is effective through September 
30, 2007, with Rule 2.11 becoming effective on October 1, 2007. In 
connection with the rule filing adding Rule 2.12,\8\ the

[[Page 57088]]

Exchange requested this finite period of effectiveness so that the 
Exchange could offer routing services through NSX BLADE while NSX 
Securities completed its registration process as a broker-dealer with 
the National Association of Securities Dealers, Inc. (and thus became 
available to provide routing services),\9\ and while the Exchange 
evaluated its options for providing routing services to ETP Holders.
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    \8\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006) (SR-NSX-2006-15).
    \9\ In January 2007, NSX Securities' application for 
registration as a broker-dealer was approved by the National 
Association of Securities Dealers, Inc. (n/k/a the Financial 
Industry Regulatory Authority, Inc. (``FINRA'')). To date, the 
Exchange has not used NSX Securities for routing services.
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    In the instant rule filing, the Exchange is proposing to extend the 
effectiveness of Rule 2.12 through March 31, 2008, and to delay the 
effectiveness of Rule 2.11 until April 1, 2008, in order to allow the 
Exchange more time to evaluate its options for providing routing 
services to ETP Holders. The ability to route orders entered into NSX 
BLADE to away markets for execution at the best available prices is a 
key feature of NSX's new system.
    The Exchange intends to provide routing services in accordance with 
Rule 2.12 until March 31, 2008, unless the Exchange, with the 
Commission's approval, amends Rule 2.12 before such date. During such 
time period, the Exchange intends to evaluate its options for providing 
routing services. At the conclusion of such time period, the Exchange 
may decide to (i) continue the approach provided for in Rule 2.12 on a 
permanent basis, and not use NSX Securities as the outbound router (by 
filing a proposed rule change to delete Rule 2.11 and renumbering Rule 
2.12); (ii) use the Exchange's original approach of NSX Securities as 
an outbound router and discontinue the approach provided for in Rule 
2.12 (by filing a proposed rule change to delete Rule 2.12) or (iii) 
file a proposed rule change to allow ETP Holders to use either NSX 
Securities or the approach provided for in proposed Rule 2.12 for 
outbound routing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\10\ in general, and 
Section 6(b)(5) of the Act,\11\ in particular, which requires, among 
other things, that the rules of an exchange be designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Normally, a proposed rule change filed under 19b-4(f)(6) may not 
become operative prior to 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay.\15\ The Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would permit the Exchange to immediately update the effective dates for 
NSX Rules 2.11 and 2.12. For this reason, the Commission designates the 
proposed rule change to be operative upon filing with the 
Commission.\16\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ In addition, Rule 19b-4(f)(6)(iii) requires that a self-
regulatory organization submit to the Commission written notice of 
its intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Commission is exercising its authority to designate a shorter time, 
and notes that the Exchange provided the Commission with written 
notice of its intention to file the proposed rule change on 
September 25, 2007.
    \16\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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 rule-comments@sec.gov. Please include 

File Number SR-NSX-2007-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-NSX-2007-10. This file 
number should be included in the subject line if e-mail is used. To 
help the Commission process and review 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

[[Page 57089]]

the principal office of NSX. 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 available publicly. All submissions should refer to 
File Number SR-NSX-2007-10 and should be submitted on or before October 
26, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-19671 Filed 10-4-07; 8:45 am]

BILLING CODE 8011-01-P