Document ID: SEC-2012-1059-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2012-07-05T04:00Z

[Federal Register Volume 77, Number 129 (Thursday, July 5, 2012)]
[Notices]
[Pages 39767-39768]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16523]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67319; File No. SR-NSX-2012-09]

Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the NSX Fee and Rebate Schedule

June 29, 2012.
    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 June 28, 2012, National Stock Exchange, Inc. 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 by the National Stock Exchange, Inc. 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[supreg]'' or ``Exchange'') is 
proposing to amend its Fee and Rebate Schedule (the ``Fee Schedule'') 
issued pursuant to Exchange Rule 16.1(c) to increase the rebates for 
certain orders executed in the Exchange's Order Delivery Mode.
    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

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 to amend the Fee 
Schedule with respect to the rebates applicable to liquidity adding 
order executions in securities priced at least one dollar in the 
Exchange's Order Delivery Mode of order interaction (``Order 
Delivery''). The proposed changes are further addressed below.
Rebates for Executions of Displayed Orders of Securities Priced at 
Least One Dollar in Order Delivery
    As reflected in Section II of the Fee Schedule, for all liquidity 
adding displayed orders of securities priced at least one dollar in 
Order Delivery, the Exchange currently offers four tiers of 
progressively greater rebates in the amounts of $0.0008 per share (tier 
1), $0.0024 per share (tier 2), $0.0027 per share plus 25% of market 
data revenues attributable to such orders (tier 3), or $0.0027 per 
share plus 50% of market data revenues attributable to such orders 
(tier 4). The applicable rebate tier depends on an ETP Holder's ADV. 
Endnote 3 provides that ``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) in AutoEx or Order 
Delivery, as applicable, across all tapes in securities priced at least 
one dollar on NSX for the calendar month (or partial month, as 
applicable) in which the executions occurred. Endnote 3 further 
clarifies that ``ADV'' as used with respect to the Exchange's Automatic 
Execution mode of order interaction (``AutoEx'') shall mean only those 
executed shares of the ETP Holder that are submitted in AutoEx mode, 
and that ADV as used with respect to Order Delivery shall mean only 
those executed shares of the ETP Holder that are submitted in Order 
Delivery mode.
    Specifically, the current Fee Schedule provides that a $0.0008 per 
share rebate (with no market data revenue sharing) applies to an ETP 
Holder's Order Delivery, dollar or higher displayed order executions 
that add liquidity where the ETP Holder's ADV is less than 15,000,000 
shares; a $0.0024 per share rebate (with no market data revenue 
sharing) applies to an ETP Holder's Order Delivery, dollar or higher 
displayed order executions that add liquidity where the ETP Holder's 
ADV is at least 15,000,000 shares but less than 25,000,000 shares; a 
$0.0027 per share rebate (plus 25% market data revenue sharing) applies 
to an ETP Holder's Order Delivery, dollar or higher displayed order 
executions that add liquidity where the ETP Holder's ADV is at least 
25,000,000 shares but less than 30,000,000 shares; and a $0.0027 per 
share rebate (plus 50% market data revenue sharing) applies to an ETP 
Holder's Order Delivery, dollar or higher displayed order executions 
that add liquidity where the ETP Holder's ADV is at least 30,000,000 
shares. Currently, an ETP Holder's ``ADV'' with respect to the rebate 
in Order Delivery for securities priced at least one dollar is 
calculated to include only the ETP Holder's volumes in Order Delivery, 
and excludes sub-dollar securities.
    The proposed rule change provides that each of the above-referenced 
four rebate dollar amounts in Order Delivery may be increased by 
$0.0003 per share (to the amounts of $0.0011 per share in tier 1, 
$0.0027 per share in tier 2, or $0.0030 per share in each of tiers 3 
and 4) if an ETP Holder achieves, in the same measurement period, a 
combined ADV in both AutoEx and Order Delivery of at least 11.5 million 
shares, of which at least one million five hundred thousand are Order 
Delivery ADV. Endnote 5, which is proposed to apply to each of the four 
rebate tiers in Order Delivery, provides that an ETP Holder shall 
receive an additional $0.0003 per share rebate (with respect to 
executions of Displayed Orders in Order Delivery that are priced at 
least $1) in the event such ETP Holder achieves an Order Delivery ADV 
of at least 1,500,000 and an AutoEx ADV (in the same period) of at 
least 10,000,000. No changes are proposed to the market data sharing 
program component that is applicable to the third and fourth tier.
    A conforming edit adding the clause ``except as otherwise noted'' 
is proposed to be made to the definition of ADV in Endnote 3 to allow 
for explicit exceptions (as is contained in proposed Endnote 5) to the 
general definition of ADV as set forth in Endnote 3. In addition, 
certain non-substantive formatting edits (rearranging the header ``All 
Tapes'') are proposed to the headers in Section I for the purpose of 
streamlining the text of the Fee Schedule.
Rationale
    The proposed increase to the dollar amounts of the rebates 
applicable to displayed liquidity providing Order

[[Page 39768]]

Delivery executions in securities priced at least one dollar is a 
reasonable method to incentivize ETP Holders that use Order Delivery to 
submit increased volumes in both Order Delivery and AutoEx, and 
ultimately to increase the revenues of the Exchange for the purpose of 
continuing to adequately fund its regulatory and general business 
functions. The Exchange believes that the proposed rebate changes will 
not impair its ability to carry out its regulatory responsibilities. 
The modifications are reasonable and equitably allocated among those 
ETP Holders that opt to submit orders in Order Delivery and AutoEx, and 
are not unfairly discriminatory because qualified ETP Holders are free 
to elect whether or not to send such orders to the Exchange. Based upon 
the information above, the Exchange believes that the adjustments to 
the Fee Schedule are consistent with the protection of investors and 
the public interest.
Operative Date and Notice
    The Exchange currently intends to make the proposed modifications, 
which are effective on filing of this proposed rule, operative as of 
commencement of trading on July 2, 2012. 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 post a copy of the rule filing on the Exchange's Web 
site (www.nsx.com).
2. Statutory Basis
    The Exchange believes that the rule changes as described herein are 
consistent with the provisions of Section 6(b) of the Act, in general, 
and Section 6(b)(4) of the Act,\3\ in particular in that each change 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.
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    \3\ 15 U.S.C. 78f(b)(4).
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    The changes to the rebates payable for executions in securities 
priced at least one dollar in Order Delivery are reasonable because 
they are designed to incentivize the submission of such orders as well 
as displayed orders of at least one dollar in AutoEx, and to generally 
increase order volume on the Exchange. The changes are equitably 
allocated and not unfairly discriminatory because all qualified ETP 
Holders are eligible to submit (or not submit) displayed liquidity 
providing orders of securities priced at least one dollar in Order 
Delivery and AutoEx on the Exchange. The rebate adjustments are 
reasonable methods to incentivize the submission of such orders. All 
similarly situated members are subject to the same fee structure, and 
access to the Exchange is offered on terms that are not unfairly 
discriminatory.

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 rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \4\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\5\ At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend 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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    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-NSX-2012-09 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSX-2012-09. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing 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-2012-09 and should be 
submitted on or before July 26, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16523 Filed 7-3-12; 8:45 am]
BILLING CODE 8011-01-P