Document ID: SEC-2007-1662-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2007-12-07T05:00Z

[Federal Register: December 7, 2007 (Volume 72, Number 235)]
[Notices]               
[Page 69269-69271]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07de07-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56883; File No. SR-NSX-2007-11]

 
Self-Regulatory Organizations; The National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change as 
Modified by Amendment Nos. 1 and 2 Thereto, To Modify Rebate Programs 
for Automatic Execution Transactions in Certain Designated ETFs

December 3, 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 October 1, 2007, the National Stock Exchange, Inc. (``NSX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On October 31, 2007 NSX filed Amendment No. 1 to the proposed 
rule change. On November 13, 2007 NSX filed Amendment No. 2 to the 
proposed rule change. The Exchange filed the proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders it 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

    NSX is proposing a change to its Rules and Fee Schedule to modify 
its market data rebate program and its liquidity provider rebate 
program for transactions that are executed through NSX BLADE\SM\, the 
Exchange's trading platform, effective October 1, 2007. The Exchange 
wishes to modify these rebate programs for only those transactions in 
certain Designated ETF Shares in which the User effecting such order 
has chosen the automatic execution mode of order interaction as set 
forth in Exchange Rule 11.13(b)(1). The text of the proposed rule 
change is available at the Exchange's Web site, http://www.nsx.com, the 

Exchange and 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, 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
    Pursuant to Exchange Rule 16.1(a), the Exchange maintains a Fee 
Schedule that contains its current fees, dues and other charges 
applicable to transactions in NSX BLADE (the ``NSX BLADE Fee 
Schedule''). Currently, the NSX BLADE Fee Schedule provides for a 
rebate of $0.0030 per share for adding liquidity into NSX BLADE through 
transactions in which ETP Holders have selected the Automatic Execution 
mode of order interaction (``AutoEx''), regardless of which symbol such 
transaction involves. Similarly, orders that are AutoEx at less than 
$1.00 per share will result in a rebate for a dollar amount equal to 
0.3% of the price per share, multiplied by the number of shares 
executed. The Exchange also currently provides a 100% pro rata 
transaction credit of gross Tape ``A'', ``B'' and ``C'' market data 
revenue associated with

[[Page 69270]]

trading regardless of the symbol that is the subject of such trades.\5\
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    \5\ See Securities Exchange Act Release No. 56008 (July 3, 
2007), 72 FR 37809 (July 11, 2007) (SR-NSX-2007-07).
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    The Exchange is proposing that the NSX BLADE Fee Schedule be 
modified to include the concept of Designated ETF Shares, which are 
certain Exchange Traded Funds and Exchange Traded Notes (hereinafter 
``ETF Shares'') that the Exchange has determined should be subject to 
different liquidity providing and market data rebates than other 
symbols. These Designated ETF Shares are generally all Exchange Traded 
Funds and Exchange Traded Notes that are eligible to trade on the 
Exchange except for the Nasdaq-100 Index, more commonly referred to as 
the QQQQs. The Designated ETF Shares are listed by the Exchange on 
Exhibit A to the NSX BLADE Fee Schedule.
    ETP Holders providing liquidity using AutoEx in Designated ETF 
Shares will receive a rebate of $0.0035 per share executed. Similarly, 
ETP Holders providing liquidity on orders executed at less than $1.00 
per share using AutoEx in Designated ETF Shares will result in a rebate 
for a dollar amount equal to 0.35% of the price per share, multiplied 
by the number of shares executed. However, trades using AutoEx in 
Designated ETF Shares would no longer be eligible for market data 
revenue transaction credits as reflected in the amendments to Exchange 
Rule 16.2(b). The change in the liquidity provider and market data 
rebates is being proposed in order to increase trading volume in these 
Designated ETF Shares. There is no need to provide a similar incentive 
to increase trading volume in the securities that are not contained in 
the Exhibit A. These changes would be effective October 1, 2007.
    The same trades in non-Designated ETF Shares using AutoEx, as well 
as all trades using the Order Delivery mode of order interaction as set 
forth in Exchange Rule 11.13(b)(2) (``Order Delivery''), would continue 
to receive the current rebate. Thus, for orders executed at $1.00 or 
more per share for non-Designated ETF shares, the liquidity provider 
rebate remains $0.0030 per share executed and, for all orders executed 
at a $1.00 or more per share using Order Delivery, the liquidity 
provider rebate remains $0.0028 per share executed.\6\ These trades 
will continue to receive market data revenue transaction credits.
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    \6\ For orders executed at less than $1.00 per share, the rebate 
for non-Designated ETF shares using AutoEx remains 0.30% of the 
price per share, multiplied by the number of shares executed and the 
rebate for all trades using Order Delivery remains 0.28% of the 
price per share, multiplied by the number of shares executed.
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    The Exchange is also proposing to delete the provision relating to 
ITS Transactions in the Fee Schedule as the Intermarket Trading System 
Plan has expired and therefore, the provision is no longer applicable.
    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 NSX BLADE Fee Schedule and will provide a copy of the 
rule filing on the Exchange's Web site (http://www.nsx.com).

    The Exchange liquidity provider rebates and market data rebates 
have been designed in this manner in order to ensure that the Exchange 
can continue to fulfill its obligations under the Act. Moreover, the 
proposed liquidity provider and market data rebates are not 
discriminatory in that all ETP Holders are eligible to trade in 
Designated ETF Shares listed on Exhibit A using AutoEx and may do so at 
their discretion.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\7\ in general, and 
Section 6(b)(4) of the Act,\8\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges. NSX believes that the change is consistent with an equitable 
allocation of fees, because decreased market data revenue sharing for 
liquidity providers is offset by enhanced liquidity provider credits 
for the same market participants, which allows a more direct and 
readily calculated incentive for liquidity provision. Moreover, the 
proposed liquidity provider and market data rebates are not 
discriminatory in that all ETP Holders are eligible to trade in 
Designated ETF Shares listed on Exhibit A using AutoEx and may do so at 
their discretion.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

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 foregoing proposed rule change is filed pursuant to Section 
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \10\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by a 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ 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 the period 
to commence on November 13, 2007, the date on which NSX filed 
Amendment No. 2. 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-2007-11 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-2007-11. 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

[[Page 69271]]

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 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-2007-11 and should be submitted on 
or before December 28, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-23753 Filed 12-6-07; 8:45 am]

BILLING CODE 8011-01-P