Document ID: SEC-2005-0217-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange
Posted Date: 2005-11-09T05:00Z

[Federal Register: November 9, 2005 (Volume 70, Number 216)]
[Notices]               
[Page 68124-68126]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no05-121]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52713; File No. SR-NSX-2005-08]

 
Self-Regulatory Organizations; National Stock Exchange; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change and 
Amendments No. 1 and 2 Thereto Relating to Manual Processing Fee

November 1, 2005.
    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, 2005, National Stock ExchangeSM 
(``Exchange'' or ``NSXSM'') 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. On October 21, 2005, the Exchange filed Amendment No. 
1 to the proposed rule change.\3\ On October 31, 2005, the Exchange 
filed Amendment No. 2 to the proposed rule change.\4\ The Exchange 
filed the proposed rule change pursuant Section 19(b)(3)(A)(ii) of the 
Act \5\ and Rule 19b-4(f)(2) \6\ thereunder, which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchanged (1) clarified who may 
phone orders into the NSX Control Room, (2) defined ``cross'' and 
``meet,'' and (3) made other technical changes.
    \4\ In Amendment No. 2, the Exchange made a correction to the 
rule text.
    \5\15 U.S.C. 78s(b)(3)(A)(ii).
    \6\17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NSX proposes to amend its manual processing fee for crosses and 
meets phoned into the NSX Control Room and the book fees charged to its 
Designated Dealers.
    The text of the proposed rule change is reproduced below. Additions 
are indicated by italics. Deletions are contained within the brackets.
RULES OF NATIONAL STOCK EXCHANGE
* * * * *
CHAPTER XI
Trading Rules
* * * * *
Rule 11.10 National Securities Trading System Fees
    A. Trading Fees
    (a)-(d) No change.
    (e) Crosses and Meets
    (1)-(3) No change.
    (4) Users executing crosses and meets in Tape A, B or C securities 
through the Exchange's System Supervisory Center shall be charged [$15 
per contra-party] $.0025 per share, up to a maximum of $75 per side of 
transaction. This transaction fee shall be in lieu of any transaction 
fee otherwise applicable under Paragraphs (A)(e)(1) through (A)(e)(3) 
above.
    (f)-(l) No change.
    (m) DD Issue/Book Fees. Designated Dealers will be charged a 
monthly book fee based on the following incremental schedule:

------------------------------------------------------------------------
                                                                Fee per
                       Number of issues                          issue
------------------------------------------------------------------------
0 to 150.....................................................     $30.00
151 to 300...................................................      20.00
301 to 500...................................................      15.00

[[Page 68125]]

501 and higher...............................................       2.00
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    Notwithstanding the above, any Designated Dealer that has been 
approved as a designated dealer in excess of 500 issues will be charged 
a monthly book fee based on the number of issues it traded for the 
prior month.
* * * * *

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
    Currently, orders can be entered on the Exchange either via an 
electronic connection or by phoning the NSX Control Room.\7\ For orders 
phoned into the NSX Control Room, NSX currently charges a manual 
processing fee of $15 per contra-party, with a cap of $75 per side, on 
every cross or meet.\8\ The Exchange has been billing on a per contra 
basis because the number of contra-parties determines the time it takes 
to process a trade and the cost of the trade. The Exchange's member 
firms, however, are more accustomed to being billed on a per share 
basis and have asked the Exchange to consider billing on such basis to 
keep firm billing in line with all of the other business lines. The 
Exchange believes that the implementation of this manual processing fee 
on a per share basis is reasonable and ensures that each NSX member 
pays an equitable share of the costs associated with operating the 
Exchange.
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    \7\ Orders may be phoned into the NSX Control Room (or the 
Exchange's Systems Supervisory Center) by ``Users.'' ``Users'' are 
defined in NSX Rule 11.9(a)(7) as ``a Member of the Exchange or an 
Approved Dealer. Access Participant Members are considered to be 
Users in their limited capacity of executing transactions through 
the facilities of a Proprietary Member.''
    \8\ A ``cross'' is a transaction in which one Member represents 
both the buyer and the seller of a security. A ``meet'' is a 
transaction in which a Member represents the buyer or seller of a 
security and other Members represent the contra parties.
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    With respect to the book fee, the Exchange currently charges a 
monthly fee for the number of registered issues for each Designated 
Dealer. Some firms are beginning to change their business models to 
solicit fewer, larger size orders across a significant number of 
securities. This new model requires the firms to be registered in a 
significant number of securities to attract order flow even though they 
may not receive order flow for some time. The Exchange believes that 
the proposed change would initially reduce the cost to these firms 
while they are expanding their coverage of securities by charging the 
per issue fee based upon the issues that are traded for any Designated 
Dealer that has registered in excess of 500 issues. The Exchange 
believes that the implementation of this proposed fee would encourage 
Designated Dealers to trade more issues and be charged on the basis of 
what they actually traded.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and Section 6(b)(4),\10\ 
in particular, in that it is designed to provide an equitable 
allocation of reasonable dues, fees, and other charges. The Exchange 
believes that the proposed change is also consistent with Section 
6(b)(5) of the Act \11\ in that it is 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. Further, the 
Exchange believes that the proposed change would create incentives for 
NSX members to electronically connect to the Exchange's trading system, 
thereby increasing efficiency and competition, which, in turn, would 
enhance the national market system.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \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 would 
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

    No written comments were solicited or received in connection with 
the proposed rule change.

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

    The proposed rule change, as amended, has become effective pursuant 
to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 19b-4(f)(2)\13\ 
thereunder, because it involves a member due, fee, or other charge. 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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers that period 
to commence on October 31, 2005, the date the Exchange filed 
Amendment No. 2 to the proposed rule change. See 15 U.S.C. 
78s(b)(3)(C).
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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-2005-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-9303.
    All submissions should refer to File No. SR-NSX-2005-08. 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

[[Page 68126]]

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 Section, 100 F Street NE., Washington, DC 20549. 
Copies of such filings will also 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-2005-08 and should be submitted on 
or before November 30, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to the delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-22294 Filed 11-8-05; 8:45 am]

BILLING CODE 8010-01-P