Document ID: SEC-2008-0504-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-04-02T04:00Z

[Federal Register: April 2, 2008 (Volume 73, Number 64)]
[Notices]               
[Page 18026-18028]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap08-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57574; File No. SR-NSX-2008-08]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Extend the Effective Period for Rule 2.12, Regarding Third-Party 
Routing Services in Respect of Orders Entered into NSX BLADE

March 27, 2008.
    Pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 
1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 24, 2008, the National Stock Exchange, Inc. (``NSX'' or 
``Exchange''), 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 Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 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 extend the effective period for Rule 
2.12, which describes the terms under which the Exchange provides 
routing services procured from a third party with respect to orders 
entered into its trading system, NSX BLADE. The Exchange is also 
proposing to extend the delay in effectiveness of Rule 2.11, which 
relates to the outbound routing function of the Exchange's affiliate, 
NSX Securities, LLC (``NSX 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend Exchange Rules 2.11 and 2.12 to 
extend the effective period for Rule 2.12 (relating to the Exchange's 
use of a third party to provide outbound routing of orders from the 
Exchange to other trading centers (``Routing Services'')) through 
September 30, 2008, and to delay the effectiveness of Rule 2.11 
(relating to the outbound routing function of the Exchange's affiliate, 
NSX Securities) until October 1, 2008.
    Rule 2.11 provides for certain terms and conditions under which NSX 
Securities, an affiliate of the Exchange, will provide Routing 
Services. Rule 2.11 was approved by the Commission in connection with 
the approval of the Exchange's new trading rules relating to NSX BLADE 
on August 31, 2006.\5\ The Exchange filed and received approval for the 
addition of Rule 2.12, which provides for terms and conditions of the 
Exchange's use of a third party to provide Routing Services.\6\ The 
Exchange subsequently filed to extend the effective period for Rule 
2.12.\7\
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    \5\ See Securities Exchange Act Release No. 54391, 71 FR 52836 
(September 7, 2006) (SR-NSX-2006-08).
    \6\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006) (SR-NSX-2006-15)
    \7\ See Securities Exchange Act Release Nos. 55624 (April 12, 
2007), 72 FR 19732 (April 19, 2007) (SR NSX 2007-04); 56067 (July 
13, 2007), 72 FR 39650 (July 19, 2007) (SR-NSX-2007-08); and 56587 
(October 1, 2007), 72 FR 57087 (October 5, 2007) (SR-NSX-2007-10).
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    Rule 2.12 currently is effective through March 31, 2008, with Rule 
2.11 becoming effective on April 1, 2008. In connection with the rule 
filing adding Rule 2.12,\8\ the Exchange requested this finite period 
of effectiveness so that the Exchange could offer routing services 
through NSX BLADE while NSX Securities completed its registration 
process as a broker-dealer with the National Association of Securities 
Dealers, Inc. (and thus became available to provide routing 
services),\9\ and while

[[Page 18027]]

the Exchange evaluated its options for providing routing services to 
ETP Holders.
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    \8\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006) (SR-NSX-2006-15).
    \9\ In January 2007, NSX Securities' application for 
registration as a broker-dealer was approved by the National 
Association of Securities Dealers, Inc. To date, the Exchange has 
not used NSX Securities for routing services.
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    In the instant rule filing, the Exchange is proposing to extend the 
effectiveness of Rule 2.12 through September 30, 2008,\10\ and to delay 
the effectiveness of Rule 2.11 until October 1, 2008, in order to allow 
the Exchange more time to evaluate its options for providing routing 
services to ETP Holders and make any system changes, if necessary. The 
ability to route orders entered into NSX BLADE to away markets for 
execution at the best available prices is a key feature of NSX's new 
system.
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    \10\ The Exchange is requesting an additional six month 
extension as an outer time limit so as to limit the need for any 
further extensions.
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    The Exchange intends to provide routing services in accordance with 
Rule 2.12 until September 30, 2008, unless the Exchange, with the 
Commission's approval, amends Rule 2.12 before such date. During such 
time period, the Exchange intends to evaluate its options for providing 
routing services and make any necessary system changes. At the 
conclusion of such time period, the Exchange may decide to (i) Continue 
the approach provided for in Rule 2.12 on a permanent basis, and not 
use NSX Securities as the outbound router (by filing a proposed rule 
change to delete Rule 2.11 and renumbering Rule 2.12); (ii) use the 
Exchange's original approach of NSX Securities as an outbound router 
and discontinue the approach provided for in Rule 2.12 (by filing a 
proposed rule change to delete Rule 2.12); or (iii) file a proposed 
rule change to allow ETP Holders to use either NSX Securities or the 
approach provided for in proposed Rule 2.12 for outbound routing.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\11\ in general, and 
Section 6(b)(5) of the Act,\12\ in particular, which requires, among 
other things, that the rules of an exchange be designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 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 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

    Because the foregoing rule does not (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 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, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date of 
filing of the proposed rule change or such shorter time as designated 
by the Commission,\13\ the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) 
thereunder.\15\ At any time within 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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    \13\ NSX fulfilled this requirement.
    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    Under Rule 19b-4(f)(6) of the Act,\16\ the proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange has requested that 
the Commission waive the 30-day operative delay, so that the proposal 
may take effect upon filing, which will allow Rule 2.12 to remain in 
effect, and the effectiveness of Rule 2.11 to continue to be delayed, 
without interruption. The Commission believes that the proposal raises 
no new issues and that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay so 
that the proposal may take effect upon filing.\17\
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    \16\ Id.
    \17\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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-2008-08 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-2008-08. 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, 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 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

[[Page 18028]]

should refer to File Number SR-NSX-2008-08 and should be submitted on 
or before April 23, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-6776 Filed 4-1-08; 8:45 am]

BILLING CODE 8011-01-P