Document ID: SEC-2008-0346-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-03-05T05:00Z

[Federal Register: March 5, 2008 (Volume 73, Number 44)]
[Notices]               
[Page 11971-11973]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05mr08-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57390; File No. SR-NSX-2008-02]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto Relating to the Pass-Through of Certain 
Costs to ETP Holders

February 27, 2008.
    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 5, 2008, the 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 substantially by the 
Exchange. On February 27, 2008, NSX filed Amendment No. 1 to the 
proposed rule change to make certain clarifying changes to the 
description of its proposal. NSX has designated this proposal as one 
establishing or changing a member due, fee, or other charge imposed by 
NSX under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposal 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)(ii).
    \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 proposes to amend the NSX BLADE \SM\ Fee and Rebate Schedule to 
give the Exchange the explicit authority to pass through to a specific 
ETP Holder costs that are assessed to the Exchange by a third party 
that are attributable to that particular ETP Holder for its use of the 
facilities of the Exchange. The text of the proposed rule change is 
available at www.nsx.com, the principal offices of 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, 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. 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
    With this rule change, the Exchange is proposing that the NSX BLADE 
Fee Schedule be amended to give the Exchange the explicit authority to 
pass through to a specific ETP Holder \5\ costs that are assessed to 
the Exchange by a third party vendor that are attributable to that 
particular ETP Holder for its use of the facilities of the Exchange. 
These costs include line connectivity and other technological charges 
and/or upgrades assessed for the ETP Holder's communications with the 
Exchange, in connection with the Cross Connect service defined below.
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    \5\ An ETP Holder is a registered broker or dealer that has been 
issued an Equity Trading Permit (``ETP'') by NSX. An ETP Holder will 
have the status of a ``member'' of the Exchange as that term is 
defined in Section 3(a)(3) of the Act (15 U.S.C. 78c(a)(3)).
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    The Exchange currently offers ETP Holders the option of connecting 
to the Exchange through a direct connection, a service provider or 
through an extranet provider. ETP Holders electing a direct connection 
to the Exchange that do not utilize a circuit/line obtained from the 
third party vendor that houses the Exchange's data center must be 
connected to the Exchange through a line or circuit provided by that 
vendor (hereinafter the ``Cross Connect'' service). The third party 
vendor charges fees associated with this Cross Connect service (the 
``Cross Connect Fee Schedule''). It should be noted that the third 
party vendor does not charge a Cross Connect fee for any ETP Holder 
that utilizes the vendor's circuits.
    The Cross Connect Fee Schedule includes a one-time installation 
charge per circuit or line, and monthly fees which vary depending on 
the different

[[Page 11972]]

circuit levels selected. These circuit options include a T-1, T-3 and 
Ethernet circuit lines. The vendor also offers this service to connect 
to the Exchange's primary and back-up data centers. Thus, to establish 
connectivity, the ETP Holder must select the preferred circuit/line 
size, number of lines desired and location preferences. In all cases, 
the ETP Holder selects the service that it desires, and thus, is 
apprised of and in fact exercises control over the fees associated with 
this connectivity to the Exchange.
    The current Cross Connect Fee Schedule provides for a one-time 
installation charge for a router of $150 and a one-time installation 
charge ranging between $100 and $275 per circuit depending on the 
circuit selected. In addition, the current Cross Connect Fee Schedule 
provides for monthly fees ranging between $50 and $375 per circuit per 
location. While these costs are determined between the ETP Holder and 
vendor, the Exchange represents that it will maintain a current 
schedule of fees from the third-party vendor, and will provide this 
Cross Connect Fee Schedule to ETP Holders upon request and/or otherwise 
make it available on the Exchange's Web site.
    It should be noted that these costs could be directly billed to the 
ETP Holder by the third party vendor, but for administrative ease, the 
Exchange has agreed to act as an intermediary. Because the Exchange has 
an existing contractual relationship with the third party vendor, the 
latter prefers to charge the Exchange rather than the ETP Holder 
directly. These charges are limited to those that are incurred by the 
Exchange from a third party on behalf of a particular ETP Holder for 
that ETP Holder's benefit and use of the facilities of the Exchange. In 
addition, as stated, the ETP Holder would be notified of any charges 
which would be subject to this pass through provision prior to the 
charge being incurred.
    This provision is intended to capture those costs relating to 
services that directly benefit and are requested by ETP Holders for 
certain services and do not include the general operating expenses of 
the Exchange. Moreover, the Exchange proposes to pass through such 
costs without any markup or premium imposed by the Exchange.
    The Exchange has determined that this change is necessary for 
competitive reasons. The cumulative amount of such costs, without the 
ability to pass them through to the ETP Holders who benefit from and in 
fact request the services giving rise to such costs, puts the Exchange 
at a competitive disadvantage. The Exchange believes that the proposed 
rule change is consistent with the protection of investors and the 
public interest.
    The Exchange intends to pass through costs to ETP Holders in 
accordance with the proposed rule change immediately upon filing of 
this proposed rule change with the Commission for the time period 
covered by the February invoice.
    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''. The Exchange will issue 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).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\6\ in general, and with 
Section 6(b)(4) of the Act,\7\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges.
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    \6\ 15 U.S.C. 78f.
    \7\ 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 foregoing proposed rule change has been designated as a fee 
change pursuant to Section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-
4(f)(2)\9\ thereunder, because it establishes or changes a due, fee, or 
other charge imposed on members by the Exchange. Accordingly, the 
proposal is effective upon filing with the Commission. 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\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ 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 February 27, 2008, the date on which NSX filed 
Amendment No. 1.
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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-2008-02 on the subject line.

Paper comments

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

All submissions should refer to File Number SR-NSX-2008-02. 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, 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 publicly available. All 
submissions should refer to File

[[Page 11973]]

Number SR-NSX-2008-02 and should be submitted on or before March 26, 
2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E8-4175 Filed 3-4-08; 8:45 am]

BILLING CODE 8011-01-P