Document ID: SEC-2007-0486-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2007-04-02T04:00Z

[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]               
[Page 15744-15745]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-124]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55542; File No. SR-NSX-2007-02]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto to Amend the Exchange's Tape Rebate 
Programs for Transactions Through NSTS to Establish an Equivalent Tape 
A Rebate Program

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 15, 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 and 
II below, which Items have been prepared substantially by NSX. NSX 
amended the proposed rule change on March 19, 2007.\3\ NSX filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act\4\ and 
Rule 19b-4(f)(6) thereunder,\5\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6). The Commission considers the 60-day 
abrogation period to have commenced on March 19, 2007, the date NSX 
filed Amendment No. 1.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend old NSX Rule 11.10(A)(1), which 
is applicable to transactions through the Exchange's legacy trading 
system, National Securities Trading System (``NSTS''), to provide for a 
rebate program for Tape A securities that is equivalent to the 
Exchange's current Tape A rebate program applicable to transactions 
executed through the Exchange's new trading system, NSX BLADE. This 
proposed Tape A rebate program is also equivalent to the Exchange's 
current Tape B and Tape C rebate programs applicable to NSTS an NSX 
BLADE transactions.
    The text of the proposed rule change is available at NSX, http://www.nsx.com
, 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
    NSX proposes to amend old Exchange Rule 11.10(A)(1), which is 
applicable to transactions through NSTS, to provide for a rebate 
program for Tape A securities that is equivalent to the Exchange's 
current Tape A rebate program applicable to transactions executed 
through NSX BLADE. This proposed Tape A rebate program is also 
equivalent to the Exchange's current Tape B and Tape C rebate programs 
applicable to NSTS and NSX BLADE transactions.
    The Exchange has created a new trading platform, known as NSX 
BLADE, which uses 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 Tape B 
securities will continue to be traded via NSTS.
    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 
the phase-in period. All transactions in the NSTS System are operating 
under the rules pertaining to NSTS (old Exchange Rule 11.9 (National 
Securities Trading System) and old Exchange 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\6\ and the new fee rules in Chapter 
XVI. When the phase-in is complete and NSTS is no longer operational, 
old Rules 11.9 and 11.10 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,\7\ and will issue a Notice 
advising them of the fee changes with this proposed rule change.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 53963 (June 8, 
2006), 71 FR 34660 (June 15, 2006) (order) (SR-NSX-2006-034).
    \7\ Regulatory Circular 06-011, issued on October 19, 2006.
---------------------------------------------------------------------------

    Additionally, the Exchange currently offers rebate programs for 
Tape A, B and C transactions executed through NSX BLADE, each 
consisting of a 50 percent transaction credit on revenues generated by 
transactions executed through NSX BLADE in Tape A, B or C securities, 
respectively. Old Rule 11.10(A)(1), which is applicable to transactions 
executed through NSTS, currently provides for equivalent 50 percent 
Tape B and C rebate programs for transactions executed through NSTS. 
Under each of the Exchange's current rebate programs, the credit is 
allocable to ETP Holders on a pro rata basis based upon Tape A, B or C 
revenue generated by an ETP Holder's transactions on NSX BLADE or NSTS, 
as applicable.
    With the instant proposed rule change, the Exchange is proposing to 
adopt a rebate program for NSTS transactions in Tape A securities that 
is equivalent to the Exchange's current Tape A rebate program 
applicable to NSX BLADE transactions. As with the Exchange's other tape 
rebate programs, this proposed Tape A rebate program will provide a 50 
percent transaction credit on revenues generated by transactions 
executed through NSTS in Tape A securities, and will be allocable to 
ETP Holders on a pro rata basis based upon the Tape A revenue generated 
by such ETP Holder's transactions on NSTS. The Exchange believes that 
there

[[Page 15745]]

is no regulatory reason to distinguish Tape A transactions on NSTS from 
Tape A transactions on NSX BLADE, and is therefore proposing an 
equivalent rebate program. As with the Exchange's other tape rebate 
programs, to the extent that market data revenue from Tape A 
transactions is subject to any adjustment, credits provided under the 
Tape A program may be adjusted accordingly.
    The Exchange believes the proposed rule change is consistent with 
the protection of investors and the public interest because it lowers 
the cost of trading and market data to broker-dealers and the investing 
public, and because it enhances competition in the trading of Tape A 
securities.
2. Statutory Basis
    NSX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ in particular, in that it is designed to provide 
for the equitable allocation of reasonable dues, fees and other charges 
by crediting members on a pro rata basis.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4)
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NSX 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

    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) of the Act \10\ and 
Rule 19b-4(f)(6) thereunder.\11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Exchange has asked that the Commission waive the 30-day 
operative delay contained in Rule 19b-4(f)(6)(iii) under the Act.\12\ 
The Commission believes waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest, 
because the proposed rule change contains no novel regulatory issues, 
and is designed to enhance competition in the trading of Tape A 
securities. Accordingly, the Commission designates the proposed rule 
change to be effective and operative upon filing with the 
Commission.\13\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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-2007-02 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-2007-02. 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 inspection 
and copying in the Commission's Public Reference Room. 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-2007-02 and should be submitted on or before April 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5985 Filed 3-30-07; 8:45 am]

BILLING CODE 8010-01-P