Document ID: SEC-2008-1409-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-10-10T04:00Z

[Federal Register: October 10, 2008 (Volume 73, Number 198)]
[Notices]               
[Page 60377-60378]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc08-145]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58731; File No. SR-NSX-2008-17]

 
 Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Exchange Rule 16 and NSX Fee Schedule Concerning Liquidity--
Adding Rebates and Market Data Credits for Order Delivery Transactions

October 3, 2008.
    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 September 22, 2008, National Stock Exchange, Inc. (``NSX'' or 
the ``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 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 Substance 
of the Proposed Rule Change

    National Stock Exchange, Inc. (``NSX'' or ``Exchange'') is 
proposing to amend Exchange Rule 16 and the NSX Fee and Rebate Schedule 
(the ``Fee Schedule'') in order to (i) reduce the rebate for adding 
liquidity in Order Delivery mode of order interaction for those 
securities trading at one dollar or more and (ii) eliminate the trade 
and quote market data revenue credit in Order Delivery mode for all 
Tape A securities.
    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 the 
Statutory Basis for, the Proposed Rule Change

Purpose
    With this rule change, the Exchange is proposing to reduce the 
liquidity adding rebates and market data revenue credits in Order 
Delivery mode of order interaction (``Order Delivery Mode'').\3\ In 
particular, this rule change proposes to reduce the rebate for adding 
liquidity in securities trading at or above one dollar in Order 
Delivery Mode to a flat rebate of $0.0023 per share executed for Tape 
A, and to $0.0025 per share executed for Tapes B and C. In addition, 
the Exchange is proposing to eliminate the trade and quote market data 
revenue credit for all Tape A securities executed in Order Delivery 
Mode.
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    \3\ This rule change proposes no changes to the fees and rebates 
applicable to securities executed in the Automatic Execution (``Auto 
Ex'') mode of order interaction under NSX Rule 16.2(b)(1).
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Reduction of Rebate for Adding Liquidity in Order Delivery Mode
    With respect to securities traded at one dollar or more in Order 
Delivery Mode, the instant filing proposes simplifying the Fee Schedule 
by reducing the per share executed rebate to a flat rate of $0.0023 for 
Tape A securities and to $0.0025 for Tapes B and C securities. 
Currently, the per share rebate for adding liquidity across all tapes 
in Order Delivery Mode for securities executed at one dollar or more is 
$0.0027 if ``Executed ADV'' is equal to or greater than 60 million, and 
$0.0026 if ``Executed ADV'' is less than 60 million. As set forth in 
explanatory endnote number 6 to the Fee Schedule (which endnote is 
proposed to be deleted as no longer necessary), ``Executed ADV'' means, 
with respect to an ETP Holder, ``the number of shares such ETP Holder 
has executed on average per trading day (excluding partial trading days 
and securities under one dollar) across all tapes on NSX for the 
calendar month in which the executions occurred.'' The instant filing 
proposes to simplify the Fee Schedule by eliminating the tiered rebate 
structure in Order Delivery Mode based on ``Executed ADV'' and 
replacing it with a flat fee based solely on whether the security is 
Tape A, B or C. The instant filing will affect the calculation of the 
``Executed ADV'' for the month of September, 2008. Accordingly, the 
``Executed ADV'' will be calculated based on the average per trading 
day (excluding partial trading days and securities under one dollar) 
across all tapes on NSX for the period beginning September 1, 2008 and 
ending September 22, 2008, the period when the old Fee Schedule (prior 
to the instant modification) was in effect. Notice will be provided to 
ETP Holders respecting the calculation of the Executed ADV.
    The instant rule filing proposes no changes to the liquidity adding 
rebates applicable to securities trading at less than one dollar in 
Order Delivery Mode.\4\
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    \4\ Securities which trade under one dollar in Order Delivery 
Mode and which add liquidity currently receive a rebate of 0.10% of 
the trade value, where ``trade value'' means a dollar amount equal 
to the price per share multiplied by the number of shares executed.
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Elimination of Market Data Revenue Credit for Tape A Securities in 
Order Delivery Mode
    With respect to Tape A securities in Order Delivery Mode, the 
instant filing proposes to eliminate the market data revenue credit in 
both trades and quotes. Currently in Order Delivery Mode, ETP Holders 
receive a credit of 50% of both trade and quote market data revenues 
across all tapes. This credit is proposed to be eliminated for all Tape 
A securities in Order Delivery Mode, regardless of price.
No Changes to Auto Ex
    For purposes of clarity, the proposed rule change proposes no 
modifications to the fees and rebates relating to any trades in Auto 
Ex.
Rationale
    The Exchange has determined that these changes are necessary to 
increase the revenue of the Exchange and to adequately fund its 
regulatory and general business functions. The proposed modification is 
reasonable and equitably allocated to those ETP Holders that opt to 
provide liquidity in Order Delivery Mode, and is not discriminatory 
because ETP Holders are free to elect whether to send orders in

[[Page 60378]]

all tapes through the Order Delivery Mode, through Auto Ex, and as 
liquidity providing trades and quotes. Based upon the information 
above, the Exchange believes that the proposed rule change is 
consistent with the protection of investors and the public interest.
Operative Date and Notice
    The Exchange intends to make the proposed credit and rebate 
structure effective on filing of this proposed rule for trading on 
September 23, 2008. 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 Fee Schedule and will provide 
a copy of the rule filing on the Exchange's Web site (http://
www.nsx.com).
Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\5\ in general, and 
Section 6(b)(4) of the Act,\6\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges among its members and other persons using the facilities of the 
Exchange. Moreover, the proposed fee and rebate structure is not 
discriminatory in that all ETP Holders are eligible to submit (or not 
submit) liquidity adding trades and quotes in Order Delivery Mode in 
all tapes and may do so at their discretion.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 
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

    The proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 
19b-4 \8\ thereunder, because, as provided in (f)(2), it ``changes a 
due, fee or other charge imposed by the Exchange applicable only to a 
member'' (known on the Exchange as an ETP Holder). At any time within 
sixty (60) days of the filing of such 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4 [sic].
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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-2008-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSX-2008-17. 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, 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 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-2008-17 and should be 
submitted on or before October 31, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-24118 Filed 10-9-08; 8:45 am]

BILLING CODE 8011-01-P