Document ID: SEC-2007-0481-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rulechanges: National Stock Exchange, Inc.
Posted Date: 2007-04-02T04:00Z

[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]               
[Page 15742-15744]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-123]                         

[[Page 15742]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55541; File No. SR-NSX-2007-01]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto to Modify Fees for Transactions Executed 
Through NSTS and ITS Plans

March 27, 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 February 5, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On March 19, 2007, NSX submitted Amendment No. 1 to the 
proposed rule change. NSX has 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, as amended, 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).
    \4\ 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

    The Exchange is proposing various amendments to its fees for 
transactions executed through National Securities Trading System 
(``NSTS''), the Exchange's legacy trading system, so that this fee 
schedule will correspond more closely to the existing fees for 
transactions executed through NSX BLADE, the Exchange's new trading 
platform. These amendments involve proposed changes to old NSX Rule 
11.10(A) (which is applicable to NSTS transactions), and the associated 
NSTS Fee Schedule. The Exchange is also proposing corresponding changes 
to its Fee Schedule applicable to transactions under the Intermarket 
Trading System Plan and/or the Plan for the purpose of Creating and 
Operating an Intermarket Communications Linkage (``ITS Plans'') for 
transactions executed through the ITS Plans (``ITS Transactions''). 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, NSX 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. NSX 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
Background
    The Exchange has created a new state of the art trading platform, 
known as NSX BLADE, which utilizes a strict price/time priority system 
as the ultimate replacement for NSTS. The Exchange is in the midst of 
phasing in NSX BLADE. NSX BLADE was launched on October 23, 2006. As of 
the date of the initial filing of this proposed rule change, all Tape 
``C'' securities have been phased into NSX BLADE from NSTS, and the 
Exchange plans to transition all Tape ``A'' and Tape ``B'' securities 
from NSTS to NSX BLADE in the near future.
    During this transitional period of phasing in various securities to 
NSX BLADE, the Exchange will be operating both NSTS and NSX BLADE. 
Until such securities are phased into NSX BLADE, Tape ``A'' and ``B'' 
securities will continue to be traded via NSTS.
Rule Set
    During this transitional period of phasing in various securities to 
NSX BLADE, the Exchange is operating both NSTS and NSX BLADE. 
Accordingly, the Exchange is operating under two sets of rules during 
this phase-in period. All transactions in NSTS are operating under the 
rules pertaining to NSTS (old Rule 11.9 (National Securities Trading 
System) and old Rule 11.10 (National Securities Trading System Fees) 
and any associated Fee Schedule) while all transactions in NSX BLADE 
are operating under the NSX BLADE trading rules approved in SR-NSX-
2006-03 and the new fee rules in Chapter XVI of the Exchange Rules. 
When the phase-in is complete and NSTS is no longer operational, old 
Rules 11.9 and 11.10 (and any associated NSTS Fee Schedule) will be 
extinguished. The Exchange has issued a Notice to ETP Holders to advise 
them of the different trading systems and rules and fees applicable to 
each,\5\ and will issue a Notice advising them of the fee changes with 
this rule change. During this interim period, the Exchange has created 
a Fee Schedule applicable to NSTS Rules (``NSTS Fee Schedule'') under 
the authority of NSX Rule 16.1.\6\ Further, while the Fee Schedule for 
ITS Transactions is identical to the Fee Schedule for identical 
transactions entered in NSTS, the Exchange has decided to create a Fee 
Schedule for ITS Transactions to make it easier for parties to identify 
the specific fees associated with the ETP Holder's transactions.
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    \5\ Regulatory Circular 06-011, issued on October 19, 2006.
    \6\ On November 14, 2006, a new NSTS Fee Schedule became 
effective. See Securities Exchange Act Release No. 54753 (November 
14, 2006), 71 FR 67678 (November 22, 2006) (SR-NSX-2006-14).
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Fee Proposal

    In the instant rule filing, the Exchange is proposing amendments to 
old Rule 11.10(A) and the associated NSTS Fee Schedule relating to 
transactions in Tape ``A'' and ``B'' securities on NSTS, and is 
proposing corresponding amendments to its Fee Schedule for ITS 
Transactions. As amended, old Rule 11.10(A) and the associated NSTS Fee 
Schedule would provide for an execution fee of $0.0030 per share for 
removing liquidity from NSTS (in other words, a charge for taking 
liquidity against an order in NSTS), and a rebate of $0.0030 per share 
executed for adding liquidity into NSTS (in other words, a rebate for 
the addition of liquidity to NSTS, provided that it results in an 
execution through NSTS). Thus, ETP Holders taking liquidity against an 
order in NSTS will be charged a fee of $0.0030 per share executed, and 
ETP Holders providing liquidity into NSTS will be paid a rebate of 
$0.0030 per share executed. In connection with this rule change, 
language is also proposed to be added to the NSTS Fee Schedule stating 
that with respect to ITS Transactions executed through NSTS, the 
Exchange will pay the applicable liquidity provider rebate only after 
it receives payment of the liquidity taker fee applicable to the 
execution.
    This liquidity taker fee and liquidity provider rebate are proposed 
to replace the current transaction fees applicable to transactions in 
Tape ``A'' and ``B'' securities on NSTS. Currently, old Rule 11.10(A) 
provides for a variety of fees for executions in Tape ``A'' securities, 
and the NSTS Fee Schedule provides for

[[Page 15743]]

a $0.0030 per share liquidity taker fee and a $0.0027 per share 
liquidity provider rebate for executions in Tape ``B'' securities. 
These fees and rebates are proposed to be removed and replaced with the 
fee structure described herein.\7\ In connection with this filing, the 
Exchange also proposes to remove $50,000 monthly transaction fee cap 
for transactions on NSTS that is currently provided for in old Rule 
11.10(A)(i), and the quotation fee that is currently provided for in 
old Rule 11.10(A)(s). The Exchange is proposing these changes to its 
fees for NSTS transactions in order to harmonize its NSTS fees with the 
fees applicable to transactions executed through NSX BLADE. One of the 
proposed changes described above--the proposed new language in the NSTS 
Fee Schedule relating to the timing of liquidity provider rebate 
payments on ITS Transactions--is a policy change and, as of the date of 
the initial filing of this rule change, similar language was not 
contained in the Fee Schedule applicable to transactions executed 
through NSX BLADE.
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    \7\ All Tape ``C'' securities have been transitioned to NSX 
BLADE, so there will be no Tape ``C'' transactions on NSTS.
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    The liquidity taker fee and liquidity provider rebate described 
above are contained in the NSTS Fee Schedule. The NSTS Fee Schedule 
supplements the fees and rebates contained in old NSX Rule 11.10. If 
the NSTS Fee Schedule does not contravene any fees stated in old NSX 
Rule 11.10, the ETP Holder effecting a transaction via NSTS will be 
charged the fees noted in old NSX Rule 11.10.
    Changes are also being proposed to the Fee Schedule for ITS 
Transactions, to provide for a corresponding $0.0030 per share 
liquidity taker fee for ITS Transactions executed through NSTS. Thus 
ETP Holders taking liquidity will be charged under the NSTS Fee 
Schedule, and executions through an ITS Plan will be charged under the 
Fee Schedule for ITS Transactions (although the rates of the two 
execution fees are identical). The Exchange bills non-ETP Holders using 
the facilities of the Exchange for ITS Transactions under the Fee 
Schedule for ITS Transactions.
    Pursuant to NSX Rule 16.1(c), the Exchange will ``provide ETP 
Holders with notice of all relevant dues, fees, assessments and charges 
of the Exchange.'' ETP Holders and others, including self-regulatory 
organizations that are the subject of exchange-to-exchange billing, 
using the Exchange will be advised of these fees through the Exchange's 
Web site. In addition, ETP Holders will, simultaneously with this 
filing, be notified through the issuance of a Regulatory Circular of 
the changes to the Fee Schedules applicable to transactions through 
NSTS and the ITS Plans.
    The fees have been designed in this manner in order to ensure that 
the Exchange can continue to fulfill its obligations under the Act.
2. Statutory Basis
    NSX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\8\ in general, and with Sections 
6(b)(4) of the Act,\9\ in particular, in that the proposal provides for 
the equitable allocation of reasonable dues, fees, and other charges. 
In addition, NSX believes that the proposed rule change furthers the 
objectives of Section 6(b)(1) of the Act \10\ in that it helps to 
assure that the Exchange is so organized and has the capacity to be 
able to carry out the purposes of the Act and to comply, and to enforce 
compliance by its ETP Holders with the Act.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(1).
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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 
result in 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

    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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \12\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by the self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. 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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
    \13\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on March 
19, 2007, the date on which the Exchange submitted Amendment No. 1.
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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-2007-01 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 Number SR-NSX-2007-01. 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. Copies of the filing 
also will be available for inspection and copying at 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-
2007-01 and should

[[Page 15744]]

be submitted on or before April 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5984 Filed 3-30-07; 8:45 am]

BILLING CODE 8010-01-P