Document ID: SEC-2013-0148-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2013-01-24T05:00Z

[Federal Register Volume 78, Number 16 (Thursday, January 24, 2013)]
[Notices]
[Pages 5236-5238]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01376]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68684; File No. SR-NSX-2013-01]

Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Provide for the Payment of Exchange Fees Through an Integrated Billing 
Process

January 17, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 10, 2013, National Stock Exchange, Inc. 
(``NSX[supreg]'' 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 
comment 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 the 
Substance of the Proposed Rule Change

    The Exchange is proposing to: (1) define the term ``Clearing 
Member'' under Exchange Rule 1.5; and (2) adopt Exchange Rule 16.4 to 
allow Equity Trading Permit (``ETP'') \3\ Holders to pay their Exchange 
and vendor invoices for Exchange-related services through the 
Exchange's integrated billing system (``IBS'').
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    \3\ Exchange Rule 1.5 defines the term ``ETP'' as an Equity 
Trading Permit issued by the Exchange for effecting approved 
securities transactions on the Exchange's Trading Facilities.
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    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: (1) define the term ``Clearing 
Member'' under Exchange Rule 1.5; and (2) adopt Exchange Rule 16.4 to 
allow ETP Holders to pay their Exchange and vendor invoices for 
Exchange-related services through the Exchange's IBS.
Definition of Clearing Member
    The Exchange is proposing to: (1) define the term ``Clearing 
Member'' under Exchange Rule 1.5 as ``[a]n ETP Holder that is a member 
of a Qualified Clearing Agency defined in Section Q below.'' Section Q 
of Exchange Rule 1.5 defines ``Qualified Clearing Agency'' as ``a 
clearing agency registered with the Commission pursuant to Section 17A 
of the Act that is deemed qualified by the Exchange.'' In adding a 
definition of Clearing Member to Exchange Rule 1.5, the Exchange does 
not propose to add a new category of Exchange member or alter current 
ETP Holder obligations. The Exchange simply proposes this definition to 
describe ETP Holders that may also be members of a Qualified Clearing 
Agency as a means to add clarity to the integrated billing solution

[[Page 5237]]

under proposed Exchange Rule 16.4, described below.
Integrated Billing Solution
    The Exchange also proposes to adopt Exchange Rule 16.4 to allow ETP 
Holders to pay their Exchange and vendor invoices for Exchange-related 
services through the Exchange's IBS, unless payment by check of [sic] 
bank transfer is agreed to between the Exchange and ETP Holder.\4\ In 
lieu of payment by check or bank transfer, ETP Holders will now be 
required to designate an ETP Holder that is also Clearing Member (as 
defined above) to pay their Exchange invoices via IBS. The ETP Holder 
will continue to receive monthly statements which outline their monthly 
fees and charges. The Clearing Member will pay to the Exchange on a 
timely basis any amount that the ETP holder does not dispute. The 
Exchange will obtain these payments from the Clearing Member's account 
at the Qualified Clearing Agency. The Qualified Clearing Agency will 
not be liable in connection with its forwarding to the Exchange each 
month a payment representing the total amount that the Exchange advises 
the Qualified Clearing Agency is owed to the Exchange.
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    \4\ The Exchange represents that, in the Exchange's written 
agreement with each vendor for which the Exchange will collect 
payments via IBS, the Exchange will require the vendor to include a 
provision in the vendor's written agreement with each member from 
which payments via IBS will be collected in which the member 
authorizes NSX to assess and collect from the member through NSX's 
billing procedures and automated systems, on behalf of the vendor, 
the fees assessed by the vendor to the member for the vendor's 
service. The Exchange does not currently collect payments from ETP 
Holders for vendor invoices, but may do so in the future.
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    Payment of invoices via the Exchange's IBS will increase efficiency 
and reduce financial risk by allowing the Exchange to draft against the 
Clearing Member's account the amount due rather than invoicing each ETP 
Holder separately and awaiting payment via check or bank transfer. In 
addition, the Exchange notes the Chicago Board Options Exchange, Inc. 
(``CBOE'') \5\ has implemented a similar process for the payment of 
invoices by its members. The only difference between CBOE's 
requirements and those proposed by the NSX, is that the CBOE rule 
appears to required [sic] payment via IBS as mandatory for all its 
members, while the NSX's proposed rule would allow alternative payment 
methods if agreed to with the Exchange.
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    \5\ CBOE Rule 3.23.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6 of the Act,\6\ and the rules and regulations thereunder and, 
in particular, the requirements of Section 6(b) of the Act.\7\ 
Specifically, the Exchange believes the proposed rule change furthers 
the objective of Section 6(b)(5) of the Act \8\ because allowing ETP 
Holders to pay their Exchange and vendor invoices via IBS is designed 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, and processing information with respect 
to transactions in securities, and to remove impediments to and 
perfects [sic] the mechanism of a free and open market and a national 
market system. Payment of invoices via the Exchange's IBS would 
increase efficiency and reduce financial risk by allowing the Exchange 
to draft against the Clearing Member's account the amount due, rather 
than the ETP Holder paying their invoices via check or bank transfer 
each month. Lastly, the Exchange notes that the proposed rule change is 
not unfairly-discriminatory because payment of invoices via IBS is 
voluntary and each ETP Holder is able to continue to remit payment of 
their invoices by check or bank transfer.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed definition of ``Clearing 
Member'' under Exchange Rule 1.5 is consistent with Section 6 of the 
Act,\9\ and the rules and regulations thereunder and, in particular, 
the requirements of Section 6(b) of the Act.\10\ Specifically, the 
Exchange believes the proposed definition furthers the objective of 
Section 6(b)(5) of the Act \11\ because the proposed definition of 
``Clearing Member'' is designed to describe ETP Holders who may also be 
members of a Qualified Clearing Agency, thereby adding clarity to the 
IBS under proposed Exchange Rule 16.4. Therefore, the Exchange believes 
the proposed definition of ``Clearing Member'' fosters cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
and processing information with respect to transactions in securities, 
and removes impediments to and perfect [sic] the mechanism of a free 
and open market and a national market system.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
    \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 will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
will provide ETP Holders the choice of paying their invoices through 
IBS rather than via check or bank transfer, which is designed to 
increase efficiency and reduce financial risk. The proposed definition 
of ``Clearing Member'' under Exchange Rule 1.5 is designed to add 
clarity to the integrated billing solution under proposed Exchange Rule 
16.4 and does not propose to add a new category of Exchange members or 
alter current ETP Holder obligations. Therefore, the Exchange believes 
the proposed rule change does not impose a burden on competition 
because ETP Holders are free to choose the payment method they wish.

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

    Because the foregoing 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 for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) \12\ of the Act and 
Rule 19b-4(f)(6) \13\ thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of the filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) of the Act \14\ 
normally does not become operative prior to 30 days after the date of 
the filing. However, pursuant to Rule 19b-4(f)(6)(iii) of the Act,\15\ 
the Commission may designate a shorter time if such action is 
consistent with the protection of investors and the public interest. 
The Exchange has asked the Commission to waive the 30-day operative 
delay so that ETP Holders may use the IBS system for invoicing and 
payment processing immediately. The Commission believes

[[Page 5238]]

that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will facilitate a 
more efficient method for ETP Holders to pay invoices to the Exchange 
and for the Exchange to collect undisputed payments owed by ETP Holders 
to the Exchange and to vendors.\16\ Therefore, the Commission hereby 
waives the 30-day operative delay and designates the proposed rule 
change to be operative upon filing with the Commission.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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-2013-01 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-2013-01. This file 
number should be included on the 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 on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2013-01, and should be submitted on or before 
February 14, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01376 Filed 1-23-13; 8:45 am]
BILLING CODE 8011-01-P