Document ID: SEC-2010-0659-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2010-05-04T04:00Z

[Federal Register: May 4, 2010 (Volume 75, Number 85)]
[Notices]               
[Page 23829-23830]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04my10-137]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61996; File No. SR-NSX-2010-04]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Fee and Rebate Schedule Issued Pursuant to Exchange Rule 
16.1(c) With Respect to the Liquidity Adding Rebate for Securities 
Priced Under One Dollar

April 28, 2010.
    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 April 9, 2010, National Stock Exchange, Inc. 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 by the Exchange. 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 the 
Substance of the Proposed Rule Change

    National Stock Exchange, Inc. (``NSX[supreg] '' or ``Exchange'') is 
proposing to amend the Fee and Rebate Schedule (the ``Fee Schedule'') 
issued pursuant to Exchange Rule 16.1(c) to adjust the liquidity adding 
rebate for securities priced under one dollar.
    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
    With this rule change, the Exchange is proposing to modify the Fee 
Schedule to adjust the liquidity adding rebate for securities priced 
under one dollar in both the Automatic Execution mode of order 
interaction (``AutoEx'') and the Order Delivery mode of order 
interaction (``Order Delivery'').\3\
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    \3\ The Exchange's two modes of order interaction are described 
in NSX Rule 11.13(b).
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AutoEx Liquidity Adding Rebate For Securities Priced Under One Dollar
    For orders in securities priced under one dollar that provide 
liquidity in AutoEx, the Fee Schedule currently provides that an ETP 
Holder receives a rebate of 0.25% of trade value, where ``trade value'' 
is defined as the dollar amount equal to the price per share multiplied 
by the number of shares executed.\4\ The proposed rule change adjusts 
such rebate to be the lesser of the foregoing amount and 25% of the 
quote spread, where ``quote spread'' is defined as the dollar amount 
equal to the number of shares executed multiplied by the difference at 
the time of execution between (x) the price per share of the national 
best bid, and (y) the price per share of the national best offer.\5\
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    \4\ See Explanatory Endnote (6) to the Fee Schedule.
    \5\ See Explanatory Endnote (12) to the Fee Schedule.
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Order Delivery Liquidity Adding Rebate For Securities Priced Under One 
Dollar
    For orders in securities priced under one dollar that provide 
liquidity in Order Delivery, the Fee Schedule currently provides that 
an ETP Holder receives a rebate of 0.20% of trade value. The proposed 
rule change adjusts such rebate to be the lesser of 0.20% of trade 
value and 20% of the quote spread.
    In both Order Delivery and AutoEx, no quote spread rebate is 
payable in the event of locked or crossed quotations. Finally, the 
proposed rule change modifies for purposes of internal consistency the 
language in the Fee Schedule to make clear that Zero

[[Page 23830]]

Display Reserve Orders of sub-dollar securities in both AutoEx and 
Order Delivery remain ineligible to receive the liquidity adding 
rebate.\6\
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    \6\ Specifically, the parenthetical ``(except for Zero Display 
Orders)'' is deleted in the Fee Schedule text describing the amounts 
of the sub-dollar liquidity adding rebates and, consistent with the 
discussion of dollar-and-higher securities, the word ``Displayed'' 
is being added to the types of orders under discussion. The net 
result (that Zero Display Reserve Orders are not eligible to receive 
rebates for adding liquidity in sub-dollar securities) remains 
unchanged.
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Rationale
    The Exchange has determined that these changes are necessary to 
maintain an appropriate incentive for ETP Holders to submit increased 
order volumes of sub-dollar securities in AutoEx and Order Delivery 
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 has further determined that the 
proposed fee adjustments are necessary for competitive reasons. The 
Exchange believes that these rebate changes will not impair the 
Exchange's ability to fulfill its regulatory responsibilities.
    The proposed modifications are reasonable and equitably allocated 
to those ETP Holders that opt to submit orders of sub-dollar 
securities, and are not discriminatory because ETP Holders are free to 
elect whether or not to send such orders. The proposed modifications 
continue to incentivize ETP Holders to submit liquidity adding 
displayed orders over Zero Display Reserve Orders, and AutoEx orders 
over orders in Order Delivery. Based upon the information above, the 
Exchange believes that the proposed rule change is consistent with the 
protection of investors and the public interest.
Operative Date and Notice
    The Exchange intends to make the proposed modifications, which are 
effective on filing of this proposed rule, operative for trading on 
April 12, 2010. 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 (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,\7\ in general, and 
Section 6(b)(4) of the Act,\8\ in particular, in that it 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. Moreover, the proposed fee rule change is not discriminatory 
in that all ETP Holders are eligible to submit (or not submit) trades 
and quotes at any price in AutoEx and Order Delivery in all tapes, as 
either displayed or undisplayed, liquidity adding or liquidity taking 
and sub-dollar or dollar-and-above, and may do so at their discretion.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 
19b-4 \10\ thereunder, because, as provided in (f)(2), it changes ``a 
due, fee or other charge applicable only to a member'' (known on the 
Exchange as an ETP Holder). At any time within sixty (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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4.
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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-2010-04 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-2010-04. 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 Web site 
viewing and printing 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 offices 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-2010-04, and should be submitted on or before May 
25, 2010.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-10363 Filed 5-3-10; 8:45 am]
BILLING CODE 8011-01-P