Document ID: SEC-2008-0970-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-07-14T04:00Z

[Federal Register: July 14, 2008 (Volume 73, Number 135)]
[Notices]               
[Page 40411-40412]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14jy08-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58112; File No. SR-NSX-2008-11]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change as 
Modified by Amendment Nos. 1, 2, and 3 Thereto Relating to the 
Termination of the Intermarket Trading System Plan and to a Technical 
Change to Rule 8.15

July 7, 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 June 19, 2008, the National Stock Exchange (``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 substantially prepared by the Exchange. On June 27, 2008, the 
Exchange filed Amendment Nos. 1 and 2 to the proposal. On July 2, 2008, 
the Exchange filed Amendment No. 3 to the proposal. The Exchange filed 
the proposal pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder, 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Due to the termination of the Intermarket Trading System (``ITS'') 
Plan, the Exchange is proposing to eliminate all references to the ITS 
Plan in its Rules and Fee Schedules, and to otherwise make technical 
and conforming changes related to the termination of ITS, as well as a 
minor technical change to Rule 8.15 (``Imposition of Fines for Minor 
Violation(s) of Rules'').
    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
    Chapter XIV (``Intermarket Trading System Plan'') of the NSX Rules 
provides the rules relating to the ITS Plan under which the Exchange 
conducted intermarket trading in exchange-listed equity securities with 
those market centers that were linked under the ITS Plan.\3\ In 
connection with the implementation of Regulation NMS,\4\ the ITS Plan 
was officially eliminated.\5\ Because elimination of ITS has rendered 
Chapter XIV obsolete, the Exchange now proposes to eliminate Chapter 
XIV, the Fee Schedule for ITS Transactions, and all other references to 
Chapter XIV and the ITS Plan in the NSX Rules.
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    \3\ See Securities Exchange Act Release No. 19456 (January 27, 
1983), 48 FR 4938 (February 3, 1983)(File No. 4-208).
    \4\ 17 CFR 242.600 et al.
    \5\ See Securities Exchange Act Release No. 55397 (March 5, 
2007), 72 FR 11066 (March 12, 2007)(File No. 4-208).
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    In addition, the Exchange proposes to make a technical and 
conforming change to Interpretation .01 to Rule 8.15, which has been 
renumbered due to the deletion of ITS related provisions. The Exchange 
also proposes that the Rule cited in this Interpretation be changed 
from Rule 11.9(c) to Rule 11.8(a)(1). This change is required as Rule 
11.9(c), relating to the Exchange's legacy trading system, has been 
functionally replaced by Rule 11.8(a)(1) relating to the Exchange's new 
trading system, NSX BLADE.\6\
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    \6\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006) (SR-NSX-2006-08).
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    Finally, the Exchange proposes to amend NSX Rule 11.3(a)(ii) to 
allow

[[Page 40412]]

sub-penny bids, offers, orders and indications of interest (hereinafter 
``orders'') in all securities where such orders are priced less than 
$1.00 per share. Due to programming issues relating to ITS, the rule 
previously only permitted sub-penny price increments for securities 
priced below $1.00 per share that were listed on the Nasdaq Stock 
Market. Now that the ITS Plan has terminated, and consistent with 
Regulation NMS, the Exchange proposes to allow sub-penny increments for 
all securities traded on the Exchange for orders priced less than $1.00 
per share, regardless of the listing exchange.\7\
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    \7\ 17 CFR 242.612.
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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received by the 
Exchange.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
Because the foregoing proposed rule change does not:
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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    (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, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ 
and Rule 19b-4(f)(6) thereunder.\13\ As required under Rule 19b-
4(f)(6)(iii) under the Act,\14\ the Exchange provided the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, at 
least five business days prior to the date of the filing of the 
proposed rule change.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\15\ 
However, Rule 19b-4(f)(6)(iii) \16\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay and render the proposed 
rule change operative immediately. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Waiver of the 30-day operative delay 
would enable the Exchange to: eliminate all references to the ITS Plan 
in its Rules and Fee Schedules and to otherwise make technical and 
conforming changes required as a result of the termination of the ITS 
Plan as quickly as possible and eliminate any potential confusion. The 
waiver would also allow sub-penny bids, offers, orders in all 
securities where such orders are priced less than $1.00 per share, 
which would enable investors to expand their trading options. 
Accordingly, the Commission designates the proposal to be operative 
upon filing with the Commission.\17\
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    \15\ Id.
    \16\ Id.
    \17\ For purposes of waiving the operative date of this proposal 
only, the Commission has considered the impact of the proposed rule 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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.

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-2008-11 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-2008-11. 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 the 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-
2008-11 and should be submitted on or before August 4, 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,
Acting Secretary.
[FR Doc. E8-15887 Filed 7-11-08; 8:45 am]

BILLING CODE 8010-01-P