Document ID: SEC-2012-1993-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2012-12-05T05:00Z

[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Notices]
[Pages 72423-72425]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29281]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68317; File No. SR-NSX-2012-22]

Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt a New Order Type Called the Double Play Order

November 29, 2012.
    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 November 14, 2012, National Stock Exchange, Inc. (``NSX'' or the 
``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 prepared by the Exchange. 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.
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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 amend NSX Rule 11.11(c), entitled 
``Order and Modifiers'' to provide a new order type, a Double Play 
Order. 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
    The Exchange is proposing to amend NSX Rule 11.11(c) entitled 
``Order and Modifiers'' to provide a new order type, a Double Play 
Order. The proposed Double Play Order is a market or limit order that 
instructs the System \3\ to route the order to a specified away Trading 
Center(s) \4\ as approved by the Exchange from time to time.\5\ Such 
Trading Centers may include execution venues known as ``dark pools.'' 
The order will not be exposed to the NSX Book \6\ before being routed 
to a specified destination or destinations. An order that is not 
executed in full after routing away would return to the Exchange, 
receive a new timestamp, and be processed in the manner described in 
NSX Rule 11.14.(a).
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    \3\ Under Exchange Rule 1.5, the term ``System'' is defined as 
``the electronic communications and trading facility * * * through 
which orders of [ETP Holders] are consolidated for ranking and 
execution.''
    \4\ NSX Rule 2.11. A Trading Center is defined as ``other 
securities exchanges, facilities of securities exchanges, automated 
trading systems, electronic communication networks or other brokers 
or dealers.''
    \5\ The Exchange will not directly route orders to the Chicago 
Stock Exchange, Inc. until approved as an inbound routing facility 
of the Chicago Board Options Exchange, Inc.
    \6\ Under Exchange Rule 1.5, the term ``NSX Book'' is defined as 
``the System's electronic file of orders.''
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    The Exchange will route the Double Play Order through NSX 
Securities, Inc., an affiliate and facility of the Exchange (``Outbound 
Router'').\7\ The Outbound

[[Page 72424]]

Router will be subject to the requirements set forth in NSX Rule 2.11. 
Accordingly, the Exchange believes that routing of Double Play Orders 
is consistent with the previously approved functions of the Outbound 
Router, and the Exchange does not believe these functions are expanded 
through the addition of this order type.
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    \7\ The Outbound Router is regulated as a facility of the 
Exchange (as defined in Section 3(a)(2) of the Securities Exchange 
Act of 1934, as amended (``Exchange Act'' or ``Act'')), 15 U.S.C. 
78c(a)(2), subject to Section 6 of the Exchange Act. 15 U.S.C. 78f.
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    The Exchange notes that both the BATS Exchange, Inc.\8\ (``BATS'') 
and The Nasdaq Stock Market LLC (``Nasdaq'') \9\ have similar order 
types. Both BATS and Nasdaq members are given the option of entering an 
order that instructs the exchange to route the order to a specified 
away trading center or centers. There is no material difference between 
the BATS Modified Destination Specific Order and the NSX's Double Play 
Order. Both orders are similar in that: (1) Orders that are not 
executed in full are returned to the exchange; and (2) each receives 
new timestamps upon return to the exchange and a new time price 
priority as appropriate.\10\
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    \8\ See BATS Rule 11.9(c)(13). See also Exchange Act Release No. 
58546 (September 15, 2008) 73 FR 54440 (September 19, 2008) (SR-
BATS-2008-003).
    \9\ See Nasdaq Rule 4751(f)(9). See also Exchange Act Release 
No. 55405 (March 6, 2007) 72 FR 11069 (March 12, 2007) (SR-Nasdaq-
2007-020).
    \10\ Unlike the BATS Modified Destination Specific Order and 
NSX's proposed Double Play Order, the Nasdaq Directed Orders that 
are not executed in full are returned to the customer and not 
Nasdaq.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6 of the Exchange Act,\11\ and the rules and regulations 
thereunder and, in particular, the requirements of Section 6(b) of the 
Exchange Act.\12\ Specifically, the Exchange believes the Double Play 
Order furthers the objective of Section 6(b)(5) of the Exchange Act 
because it will enable ETP Holders to access pools of liquidity that 
may offer a faster response time and a lower fee which promotes just 
and equitable principles of trade and perfects the mechanism of a free 
and open market and a national market system. Further, the Double Play 
Order is designed to allow ETP Holders to obtain response times that 
are generally consistent with those of other market centers that offer 
order handling and routing options that are designed to facilitate 
access to two or more markets with comparable access fees. In so doing, 
the proposed rule filing promotes the protection of investors and the 
protection of the public interest.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b).
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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 burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\16\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requested that the Commission waive 
the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii),\17\ 
which would make the rule change effective and operative upon filing.
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    \16\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written 
notice of the Exchange's 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 Exchange has satisfied this requirement.
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange represented that the proposed rule is similar to and 
based on rules of other exchanges and that the waiver of the 30-day 
operative delay would allow the Exchange to immediately compete with 
other exchanges that offer a similar order type. The Exchange believes 
that the proposed rule change is consistent with the protection of 
investors and the public interest because it would give ETP Holders 
enhanced order execution opportunities for market participants by 
allowing such participants to access, at a potentially reduced fee, 
pools of liquidity in addition to orders resting on the Exchange. The 
Commission believes waiving the 30-day operative delay is consistent 
with the protection of investors and the public interest because such 
waiver would allow the Exchange to offer an order type immediately to 
market participants that is similar to an order type that has been 
offered by other exchanges. In addition, as the proposed rule change is 
similar to order types offered by other national securities exchanges, 
the Commission does not believe that the proposed rule change raises 
any novel regulatory issues. Therefore, the Commission designates the 
proposed rule change as operative upon filing with the Commission.\18\
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    \18\ For 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 sixty (60) days of the filing of such proposed 
rule change, the Commission summarily may temporarily suspend 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 email to rule-comments@sec.gov. Please include 
File Number SR-NSX-2012-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSX-2012-22. This file 
number should be included on the

[[Page 72425]]

subject line if email 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 Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE., Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the 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 available publicly. All submissions should refer to 
File Number SR-NSX-2012-22 and should be submitted on or before 
December 26, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29281 Filed 12-4-12; 8:45 am]
BILLING CODE 8011-01-P