Document ID: SEC-2007-1223-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2007-08-31T04:00Z

[Federal Register: August 31, 2007 (Volume 72, Number 169)]
[Notice]               
[Page 50429-50431]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31au07-153]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56305; File No. SR-NSX-2007-09]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Amendment of Its Rules in Light of Amendments to SEC 
Rule 10a-1 and Regulation SHO

August 22, 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 July 3, 2007 and July 6, 2007, National Stock Exchange, Inc. 
(``NSX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change and 
their corresponding amendments, as described in Items I and II below, 
which Items have been substantially prepared by the Exchange. NSX has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under 
the Act,\3\ which renders the proposal effective upon receipt of this 
filing by the Commission. The Commission is publishing this notice to 
solicit comment on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3 \ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend NSX Rules 11.21and 14.2(b)(7) in 
light of the Commission's short sale regulation, Regulation SHO under 
the Securities Exchange Act of 1934. Certain provisions of Regulation 
SHO adopted in the Commission's 2007 release regarding the price test 
\4\ supercede the above NSX Rules related to short sales. As a result, 
the Exchange is filing this rule change to bring those rules in line 
with Regulation SHO, as now in effect. The text of the proposed rule 
change is below. Additions are italicized and deletions are bracketed.
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    \4\ Securities Exchange Act Release No. 55970 (June 28, 2007), 
72 FR 36348 (July 3, 2007) (``Price Test Adopting Release'').
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RULES OF NATIONAL STOCK EXCHANGE, INC.

* * * * *

[[Page 50430]]

CHAPTER XI

Trading Rules
* * * * *

Rule 11.21 Short Sales

    All short sale orders shall be identified as [either] a short sale 
[or short sale exempt] when entered into the System. [Any marketable 
order entered in the System that, if matched for execution, would 
violate the short sale provisions of the Act or the rules and 
regulations thereunder should be cancelled. The foregoing shall not be 
in limitation of the Exchange's ability to adopt additional Rules, 
interpretations or policies relating to short sales.]
* * * * *

CHAPTER XIV

Intermarket Trading System Plan
* * * * *

Rule 14.2 Intermarket Trading System Application

    (a) No change.
    (b) Any commitment to trade which is transmitted to a User to 
another participating market center shall be firm and irrevocable for 
the period of time following transmission as was chosen by the sender 
of the commitment, and shall, at a minimum:
    (1)-(6) No change.
    (7) Reserved. [designate the commitment ``short'' or ``short 
exempt'' whenever it is a commitment to sell short which, if it should 
result in an execution in the market of the receiving market center, 
would result in a short sale to which the provisions of paragraph (a) 
of Rule 10a-1 under the Act would apply]; and
    (8) No change.
    (c)-(j) No change.
* * * * *

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
    On July 28, 2004, the Commission adopted certain provisions of a 
new short sale regulation, designated Regulation SHO. On June 28, 2007, 
the Commission amended Regulation SHO and also repealed Rule 10a-1 
under the Act.\5\ We have reviewed the NSX Rules to eliminate those 
rules which we believe are duplicative of, inconsistent with, or 
otherwise superceded by, Regulation SHO and the repeal of Rule 10a-1 
under the Act.\6\ Therefore, the Exchange is filing this proposed rule 
change to amend those NSX rules that are affected by the Commission's 
amended approach to short sale regulation.
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    \5\ Price Test Adopting Release.
    \6\ Please note that NSX does not have any ETP Holder that is 
not a member of another self-regulatory organization nor is NSX a 
designated examining authority or a designated self-regulatory 
organization for any ETP Holder. Accordingly, it does not subject 
its members to short interest reporting that is mandated by the 
other markets.
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    First, in addition to the repeal of Rule 10a-1 under the Act, the 
Commission added Rule 201(b) to Regulation SHO, prohibiting any SRO 
from having a short sale price test. The Commission also amended Rule 
200(g) of Regulation SHO to remove the requirement that a broker-dealer 
mark a sell order of an equity security as ``short exempt,'' if the 
seller is relying on an exception from a price test. Accordingly, the 
Exchange proposes to amend NSX Rule 11.21 to remove the reference to 
``short exempt.'' Additionally, the Exchange proposes to remove the 
second sentence respecting the cancellation of violative orders because 
there would be no ability to violate a rule that no longer exists. 
Finally, the Exchange is eliminating the savings clause as duplicative 
and restating an inherent authority of the Exchange.
    Further, the Exchange notes that NSX Rule 14.2(b)(7) regarding the 
Intermarket Trading System Plan (the ``ITS Plan'') describes marking 
requirements necessary to comply with Rule 10a-1 under the Act.\7\ In 
light of the repeal of Rule 10a-1, the Exchange proposes to eliminate 
this provision from its Rules.
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    \7\ The Exchange will be filing a separate rule change to 
eliminate the entire chapter respecting the ITS Plan.
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    As noted below, the Exchange is filing the proposed rule change for 
immediate effectiveness, with an operative date of July 6, 2007, which 
is the same date as the effective date of Rule 201 and revised Rule 
200(g) of Regulation SHO as well as the elimination of Rule 10a-1 under 
the Act.\8\
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    \8\ See Price Test Adopting Release.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6(b) of the Act \9\ in general and 
furthers the objectives of section 6(b)(5) \10\ in particular in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest. NSX believes 
that the proposed rule change is necessary and appropriate to comply 
with the amendments to SEC Rule 10a-1 and Regulation SHO.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 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.

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 30 days from the date on which it was filed, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 19b-4(f)(6).
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    NSX has asked the Commission to waive the 30-day operative delay. 
The Commission believes such waiver is consistent with the protection 
of investors and the public interest because it would allow the 
proposed rule change to be effective on July 6, 2007, the compliance 
date for the amendments to Rule 10a-1 and

[[Page 50431]]

Regulation SHO.\13\ For this reason, the Commission designates the 
proposal to be operative upon filing with the Commission.
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    \13\ For purposes only of waiving the 30-day pre-operative 
period, the Commission has considered the proposed rule change's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
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    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 protection of investors, or otherwise in 
furtherance of the purposes of the Act.

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-2007-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy Morris, 
Secretary, Securities and Exchange Commission, 100 F. Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2007-09. This file 
number should be included in the subject line if e-mail is used. To 
help the Commission process and review 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 statement 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 filings 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 number SR-NSX-2007-09 and should be 
submitted on or before September 21, 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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Nancy M. Morris,
Secretary.
 [FR Doc. E7-17228 Filed 8-30-07; 8:45 am]

BILLING CODE 8010-01-P