Document ID: SEC-2011-0483-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2011-04-12T04:00Z

[Federal Register Volume 76, Number 70 (Tuesday, April 12, 2011)]
[Notices]
[Pages 20412-20414]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8630]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64208; File No. SR-NSX-2011-02]

Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the NSX Fee and Rebate Schedule and NSX Rule 16.4

April 6, 2011.
    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 March 29, 2011, National Stock Exchange, Inc. 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 National Stock Exchange, Inc. (``NSX[supreg] '' or the 
``Exchange'') is proposing a rule change, operative at commencement of 
trading on April 1, 2011, which proposes to amend the NSX Fee and 
Rebate Schedule (the ``Fee Schedule'') to adjust certain liquidity 
taking rebates and fees in the Automatic Execution Mode of order 
interaction, eliminate the Exchange's market data rebate in the Order 
Delivery Mode of order interaction and establish an exchange regulatory 
fee.
    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 aspects 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 the Fee 
Schedule and related text of Rule 16 in four respects. First, the 
proposed rule change would increase the highest rebate, and adjust the 
tier thresholds, for liquidity adding displayed orders in the Automatic 
Execution Mode of order interaction (``AutoEx'') \3\ priced at least 
one dollar. Certain conforming changes are also proposed for rebates 
for liquidity adding Zero Display Orders \4\ in AutoEx priced at least 
one dollar. Second, the proposed rule change would eliminate the 
$0.0028 taker fee on orders that take liquidity in AutoEx for 
securities one dollar and above. Third, the proposed rule change would 
eliminate the market data revenue rebate currently available in the 
Order Delivery Mode of order interaction (``Order Delivery''). Finally, 
the proposed rule change would establish a monthly exchange regulatory 
fee. Each of the proposed changes is further addressed below.
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    \3\ The Exchange's two modes of order interaction are described 
in NSX Rule 11.13(b).
    \4\ ``Zero Display Orders'' means ``Zero Display Reserve 
Orders'' as specified in NSX Rule 11.11(c)(2)(A).
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AutoEx Liquidity Adding Rebate for Securities Priced at Least One 
Dollar
    Currently, for displayed orders in securities priced one dollar and 
above that provide liquidity in AutoEx, the Fee Schedule provides a 
(``Tier 1'') rebate of $0.0026 per share if an ETP Holder's liquidity 
adding average daily volume (as such term is defined in Endnote 3 of 
the Fee Schedule, ``Liquidity Adding ADV'') is less than 20 basis 
points of Total Consolidated Average Daily Volume (as defined in 
Endnote 13 of the Fee Schedule,

[[Page 20413]]

``TCADV''), and a (``Tier 2'') rebate of $0.0028 per share if Liquidity 
Adding ADV is at or above 20 basis points of TCADV.
    The instant rule change modifies the AutoEx liquidity adding rebate 
thresholds described above by increasing the Tier 2 rebate from $0.0028 
to $0.0029 per share. In addition, the instant rule change eliminates 
the measurement of TCADV and replaces it with a tier of 10 million 
shares of Liquidity Adding ADV, where such measurement includes only 
liquidity providing Tape A and C securities in AutoEx priced at least 
one dollar. With respect to the rebate for Zero Display Orders that add 
liquidity in AutoEx that are priced at least one dollar, the 
calculation of an ETP Holder's Liquidity Adding ADV would be made 
consistent with the rebate calculation for liquidity adding displayed 
orders priced at least one dollar in AutoEx.
    The proposed edits discussed above are reflected in Section I of 
the Fee Schedule under the header ``Securities $1 and Above'' and 
across from the header ``Displayed Orders that Add Liquidity'' and in 
corresponding Endnotes 3 and 13.
AutoEx Taker Fee for Securities Priced at Least One Dollar
    The Exchange is also proposing to modify the Fee Schedule's taker 
fee structure with respect to orders that take liquidity in AutoEx. 
Prior to the effective date of the proposed rule change, the Exchange 
charges a taker fee of $.0028 per share on securities one dollar or 
above from all tapes that take liquidity if an ETP Holder's Liquidity 
Adding ADV is at least 50,000 (``Tier 1''), and a fee of $0.0030 per 
share if Liquidity Adding ADV is less than 50,000 (``Tier 2''). In the 
proposed rule change, the Exchange is proposing to eliminate Tier 1 and 
all volume thresholds. Accordingly, after the effective date, a taker 
fee of $0.0030 per share, on all securities one dollar or above on all 
orders that take liquidity on all tapes, will be charged in AutoEx, 
regardless of the ETP Holder's Liquidity Adding ADV.
    The proposed edits discussed above are reflected in Section I of 
the Fee Schedule, under the header ``Securities $1 and Above'' and 
across from the header ``Orders That Take Liquidity''.
Order Delivery Market Data Rebate
    The Exchange is also proposing to eliminate the market data rebate 
in Order Delivery. Prior to the effective date of the proposed rule 
change, under the Fee Schedule and NSX Rule 16.4, an ETP Holder that 
has selected the Order Delivery mode of order interaction is eligible 
(depending on achievement of volume thresholds) to receive a rebate of 
a specified percentage of Tape ``A'', ``B'', and ``C'' market data 
revenue attributable to such ETP Holder's trading and quoting of non-
Zero Display Reserve Orders priced at or above one dollar in Order 
Delivery Mode.\5\ Under the proposed rule change, the Exchange is 
proposing to eliminate the current market data rebate. Accordingly, 
reference to rebates of market data revenue would be deleted from 
Section II of the Fee Schedule (together with Endnote 8), and NSX Rule 
16.4 would be deleted in its entirety.
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    \5\ NSX Rule 16.4(b).
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    To the extent that the Consolidated Tape Association or the Nasdaq 
Securities Information Processor subsequently adjusts any Tape A, Tape 
B or Tape C revenue earned by the Exchange for any period(s) during 
which the tape revenue rebate program was in effect, rebates provided 
to ETP Holders would be adjusted, as necessary, in accordance with Rule 
16.4 (c) as in effect during the period such rebates accrued. 
Similarly, current Exchange Rules 16.4(d) (De Minimis Rebates) and 
16.4(e) (Quarterly Payments) will apply to any market data rebates 
based on an ETP Holder's trading activity pursuant to Rule 16.4(b) 
prior to the effective date of the instant rule filing eliminating the 
market data rebate.
Regulatory Fee
    Finally, the Exchange is proposing to establish a monthly 
regulatory fee payable by each ETP Holder on a monthly basis. Prior to 
the effective date of the proposed rule change, NSX did not impose a 
regulatory fee. After the effective date, a monthly regulatory fee of 
$500 per ETP Holder will be charged, payable monthly. New text has been 
added as Section IV of the Fee Schedule to reflect this charge.
Rationale
    The Exchange has determined that these changes are necessary to 
increase the revenues of the Exchange for the purpose of continuing to 
adequately fund its regulatory and general business functions. The 
Exchange believes that these changes will not impair the Exchange's 
ability to fulfill its regulatory responsibilities.
    The proposed modifications are reasonable and equitably allocated 
to ETP Holders that submit orders in AutoEx and Order Delivery, as 
either display or non-display orders and as liquidity taking or 
liquidity providing, and are not discriminatory because ETP Holders are 
free to elect whether or not to submit such 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.
Operative Date and Notice
    The Exchange intends to make the proposed modifications, which are 
effective on filing of this proposed rule, operative as of commencement 
of trading on April 1, 2011. 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 post 
a copy of the rule filing on the Exchange's website (http://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,\6\ in general, and 
Section 6(b)(4) of the Act,\7\ 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 rule change is not discriminatory in 
that all qualified ETP Holders are eligible to submit (or not submit) 
trades and quotes at any price in AutoEx and Order Delivery in all 
tapes, as either displayed or undisplayed and as liquidity adding or 
liquidity taking, and may do so at their discretion.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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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

    The proposed rule change has taken effect upon filing pursuant to 
Section

[[Page 20414]]

19(b)(3)(A)(ii) of the Act\8\ and subparagraph (f)(2) of Rule 19b-4\9\ 
thereunder, because, as provided in (f)(2), it changes ``a due, fee or 
other charge applicable only to a member'' (known on the Exchange as an 
ETP Holder). At any time within 60 days of the filing of the 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4.
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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-2011-02 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-2011-02. 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 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 
a.m. and 3 p.m. Copies of such filing 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 No. SR-NSX-2011-02 and should be 
submitted on or before May 3, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8630 Filed 4-11-11; 8:45 am]
BILLING CODE 8011-01-P