Document ID: SEC-2008-0596-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-04-21T04:00Z

[Federal Register: April 21, 2008 (Volume 73, Number 77)]
[Notices]               
[Page 21395-21397]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ap08-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57664; File No. SR-NSX-2008-09]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NSX Rule 16.2(b) and the NSX BLADE\SM\ Fee and Rebate Schedule To 
Reflect the Availability and Pricing of the Zero Display Reserve Order 
Type Previously Approved by the Commission

April 15, 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 April 11, 2008, National Stock Exchange, Inc. (``NSX'' or 
``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 substantially prepared by NSX. NSX 
filed the proposal pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) \4\ thereunder, as establishing or changing a due, 
fee, or other charges applicable to a member, which renders the 
proposed rule change effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments 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.
    \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 NSX Rule 16.2(b)(2) and the NSX BLADE\SM\ Fee 
and Rebate Schedule (``Fee Schedule'') in order to reflect the 
availability and pricing of the Zero Display Reserve Order \5\ type 
previously approved by the Commission.\6\
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    \5\ As specified in NSX Rule 11.11(c)(2)(A).
    \6\ See Securities Exchange Act Release No. 57311 (February 12, 
2008), 73 FR 9148 (February 19, 2008) (SR-NSX-2008-03).
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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

[[Page 21396]]

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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Description
    With this rule change, the Exchange is proposing to amend NSX Rule 
16.2(b)(2) and the NSX Fee Schedule to reflect the rollout of the Zero 
Display Reserve Order \7\ type previously approved by the 
Commission.\8\ Specifically, Zero Display Reserve Orders are proposed 
to be excluded from the liquidity provider rebate structure payable to 
ETP Holders \9\ in the Automatic Execution mode of order interaction 
(``AutoEx'').\10\ Accordingly, ETP Holders will receive no rebate for 
adding liquidity with Zero Display Reserve Orders in AutoEx. In 
addition, in the Order Delivery \11\ mode of order interaction, Zero 
Display Reserve Orders are proposed under NSX Rule 16.2(b)(2) and the 
Fee Schedule to be ineligible for both liquidity provider rebates and 
market data credits. Accordingly, ETP Holders will receive no rebate 
for adding liquidity, and will receive no market data credits, with 
respect to Zero Display Reserve Orders in Order Delivery. However, like 
other order types, Zero Display Reserve Orders are subject to fees for 
taking liquidity. This proposed fee and rebate structure applies to all 
securities, regardless of price, which are Zero Display Reserve Orders.
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    \7\ See supra note 5.
    \8\ See supra note 6.
    \9\ An ETP Holder is a registered broker or dealer that has been 
issued an Equity Trading Permit (``ETP'') by the NSX. An ETP Holder 
will have the status of a ``member'' of the Exchange as that term is 
defined in Section 3 of the Act.
    \10\ As specified in NSX Rule 11.13(b)(1).
    \11\ As specified in NSX Rule 11.13(b)(2).
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    The proposed fee and rebate structure with respect to the Zero 
Display Reserve Order type is not discriminatory in that all ETP 
Holders are eligible to submit both displayed orders and/or non-
displayed orders (i.e., Zero Display Reserve Orders) at their own 
discretion.
    The instant filing also proposes to add the words ``fee,'' 
``rebate'' and ``credit'' in several places, as applicable, in the Fee 
Schedule for purposes of clarification. There are no other currently 
proposed changes to Fee Schedule.
Rationale
    The amended Fee Schedule is intended to encourage ETP Holders to 
display orders on NSX. Because Zero Display Reserve Orders are not 
displayed orders, the Exchange is proposing that orders of this type do 
not receive any liquidity provider rebate or market data credit.
    The Exchange has determined that this change is necessary for 
competitive reasons. Under the proposed Fee Schedule, the fees paid by 
a particular ETP Holder will continue to depend on a number of 
variables, including the mode of order interaction (AutoEx or Order 
Delivery), the types of securities traded through NSX BLADE\SM\ (Tapes 
A, B or C), the average daily monthly liquidity providing volume, and 
the price of the securities (with a distinction for those above and 
below $1.00). The use of Zero Display Reserve Orders and the fees and 
rebates they incur and accrue constitutes an additional variable which 
ETP Holders may take into account in allocating order flow. NSX notes 
that it operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues if they 
deem fee levels at a particular venue to be more attractive. 
Accordingly, the proposed modifications attempt to keep the fees 
reflected in the Fee Schedule competitive with fees charged by other 
venues and to continue to be reasonable and equitably allocated to 
those ETP Holders that opt to direct orders to NSX. Based upon the 
information above, the Exchange believes that the proposed rule change 
is consistent with the protection of investors and the public interest.
Effective Date and Notice
    The Exchange intends to implement the proposed Fee Schedule in 
accordance with the proposed rule change on April 15, 2008. Pursuant to 
NSX 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).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\12\ in general, and 
with Section 6(b)(4) of the Act,\13\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and issuers and other persons using its 
facilities. Moreover, the proposed fee and rebate structure with 
respect to the Zero Display Reserve Order type is not discriminatory in 
that all ETP Holders are eligible to submit displayed orders or utilize 
the new Zero Display Reserve Order type and may do so at their 
discretion.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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 become effective upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ 
and Rule 19b-4(f)(2) \15\ thereunder, because it establishes or changes 
a due, fee, or other charge applicable only to a member.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
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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 the protection of investors, or otherwise 
in furtherance of the purposes of the Act.\16\
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    \16\ See 15 U.S.C. 78s(b)(3)(C).
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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

[[Page 21397]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NSX-2008-09 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-2008-09. 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 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-2008-09 and should be 
submitted on or before May 12, 2008. 

    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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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-8584 Filed 4-18-08; 8:45 am]

BILLING CODE 8010-01-P