Document ID: SEC-2007-0051-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2007-01-11T05:00Z

[Federal Register: January 11, 2007 (Volume 72, Number 7)]
[Notices]               
[Page 1356-1358]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja07-72]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55041; File No. SR-NSX-2006-17]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify a Fee Schedule for Transactions Executed Through NSX 
BLADESM and To Modify a Fee Schedule for ITS Transactions

January 4, 2007.
    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 December 13, 2006, National Stock Exchange, Inc. (``NSX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared 
substantially by the Exchange. The Exchange filed the proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(2) thereunder,\4\ which renders the proposal 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).
    \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

    The Exchange proposes to implement a liquidity provider rebate and 
liquidity taker fee for transactions executed in Tape A and Tape B 
securities through NSX BLADESM (``NSX BLADE''), the 
Exchange's new trading system, and to modify its Fee Schedule 
applicable to transactions executed in Tape C securities through NSX 
BLADE.\5\ The Exchange also proposes corresponding changes to the 
Exchange's ITS Transactions Fee Schedule. The text of the proposed rule 
change is is available at http://www.nsx.com/RulesFilings.asp, NSX, and the 

Commission's Public Reference Room.
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    \5\ Securities are being transitioned from the Exchange's legacy 
system, National Securities Trading System (``NSTS'') to NSX BLADE. 
Securities will only be traded on one system; once transitioned, 
that security will only be traded on NSX BLADE. As of December 22, 
2006, all Tape C securities have been transitioned to NSX BLADE, and 
the Exchange anticipates that all Tape A and Tape B securities will 
be transitioned to NSX BLADE in mid-January 2007. Until 
transitioned, Tape A and Tape B securities will continue to be 
traded on NSTS exclusively. See e-mail from Lori A. Ragus, Senior 
Regulatory Counsel, NSX, to Joseph P. Morra, Special Counsel, SEC, 
dated December 22, 2006.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NSX 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 aspects 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 has created NSX BLADE, a new trading platform that 
utilizes a strict price/time priority system as the ultimate 
replacement for the Exchange's current system, NSTS.\6\ In connection 
with the new trading platform, the Exchange filed a rule change 
proposing new trading rules for NSX BLADE.\7\ The Exchange also amended 
its rules to add a Chapter XVI to set forth, in its own chapter, rules 
relating to fees, dues, assessments and a tape rebate program. The rule 
change adding Chapter XVI was filed pursuant to Section 19(b)(3)(A) of 
the Act, which rendered it effective upon filing.\8\
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    \6\ See footnote 5, supra.
    \7\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006) (SR-NSX-2006-08) (approval 
order).
    \8\ See Securities Exchange Act Release No. 54194 (July 24, 
2006), 71 FR 43258 (July 31, 2006)(SR-NSX-2006-10). SR-NSX-2006-10 
was effective upon filing on July 13, 2006. Rule 16.3 provides that 
the new Chapter XVI would become effective upon written notice by 
the Exchange to the ETP Holders. Notice was provided declaring 
Chapter XVI effective on October 2 and 19, 2006 respecting ITS 
transactions and transactions in NSX BLADE, respectively.
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    In the instant rule filing, the Exchange is filing a proposed Fee 
Schedule under Rule 16.1(a) and 16.1(c) of Chapter XVI for executions 
in Tape A, B and C

[[Page 1357]]

securities through NSX BLADE.\9\ The proposed Fee Schedule provides for 
an execution fee for removing liquidity from NSX BLADE, and a rebate 
for adding liquidity into NSX BLADE, of $0.0030 per share executed. 
Thus, ETP Holders taking liquidity against an order in the NSX BLADE 
System will be charged a fee of $0.0030 per share executed, and ETP 
Holders providing liquidity into the NSX BLADE System will be paid a 
rebate of $0.0030 per share executed. The current Fee Schedule provides 
a rebate and execution fee for transactions only in Tape C securities, 
whereas this proposed Fee Schedule seeks to expand the rebate and 
execution fee to include all securities classified as Tape A, B or C 
securities. In addition, the proposed Fee Schedule modifies the 
liquidity provider fee paid under the current Fee Schedule from a 
scaled rebate for Tape C securities of $0.0027 to $0.0028 per share 
executed to a flat fee of $0.0030 per share executed.
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    \9\ As set forth in SR-NSX-2006-10, the Exchange proposed to 
maintain a separate fee schedule that contains its current fees, 
dues and other charges, instead of including all of its specific 
fees, dues and charges in the text of its rules, as it formerly did 
prior to the adoption of Chapter XVI.
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    The Exchange also is proposing corresponding changes to the 
Exchange's ITS Transactions Fee Schedule, which is applicable to 
transactions pursuant to the Plan for the Purpose of Creating and 
Operating an Intermarket Communications Linkage or the Intermarket 
Trading System Plan (hereinafter the ``ITS Plans''). With the 
implementation of an execution fee for transactions executed through 
NSX BLADE, the Exchange is proposing to apply the same fee to 
transactions executed pursuant to the ITS Plans. The Exchange believes 
that this would eliminate the potential for preferential treatment to 
those accessing the Exchange pursuant to the ITS Plans, instead of 
executing transactions directly through NSX BLADE.
    Moreover, the Exchange is proposing a technical and corresponding 
change to the Exchange's ITS Transactions Fee Schedule to delete the 
liquidity provider rebate fee because the ITS transactions only take 
liquidity from the Exchange, but cannot provide liquidity. The Exchange 
states that all orders to NSX BLADE or NSTS pursuant to the ITS Plans 
are immediate or cancel orders and are not capable of being posted. As 
such, these orders do not provide liquidity, and cannot earn a 
liquidity provider fee.
    The Exchange is in the process of phasing in NSX BLADE. NSX BLADE 
was launched on October 23, 2006, with Tape C securities currently 
being phased into NSX BLADE from NSTS. Once all Tape C securities have 
been transitioned to NSX BLADE, the Exchange is planning to transition 
all Tape A and Tape B securities at one time.\10\
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    \10\ NSX plans to monitor this implementation and adjust the 
schedule as needed to maintain an orderly transition.
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    During this transitional period of phasing in various securities to 
NSX BLADE, the Exchange is operating both NSTS and NSX BLADE. 
Accordingly, the Exchange is operating under two sets of rules during 
this phase-in period. All transactions in the NSTS System are operating 
under the rules pertaining to NSTS (old Rule 11.9 (National Securities 
Trading System) and old Rule 11.10 (National Securities Trading System 
Fees) and any associated Fee Schedule) while all transactions in NSX 
BLADE are operating under the NSX BLADE trading rules approved in SR-
NSX-2006-08 and the new fee rules in Chapter XVI.\11\ When the phase-in 
system has expired and NSTS is no longer operational, old Rules 11.9 
and 11.10 will be extinguished. The Exchange has issued a Notice to ETP 
Holders to advise them of the different trading systems and rules and 
fees applicable to each,\12\ and will issue a Notice advising them of 
the new Fee Schedules filed with this rule change.
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    \11\ The ITS Transactions Fee Schedule is applicable to any 
transaction pursuant to the ITS Plans, regardless whether the 
transaction was executed through NSTS or NSX BLADE.
    \12\ See NSX Regulatory Circular 06-011 issued on October 19, 
2006.
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    Pursuant to newly approved CHX Rule 16.1(c), the Exchange will 
``provide ETP Holders with notice of all relevant dues, fees, 
assessments and charges of the Exchange.'' The Exchange will advise ETP 
Holders using the Exchange of these fees through the Exchange's Web 
site. In addition, the ETP Holders will, simultaneous with the filing, 
be notified through the issuance of a Regulatory Circular of the new 
Fee Schedules.
    The Exchange believes that the fees have been designed in this 
manner in order to ensure that the Exchange can continue to fulfill its 
obligations under Section 6(b) of the Act.\13\
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    \13\ 15 U.S.C. 78f(b).
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2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\15\ in particular, regarding 
the equitable allocation of reasonable dues, fees, and other charges 
among exchange members and other persons using exchange facilities.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will not 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

    The Exchange has neither solicited nor received 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 become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \16\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\17\ because it establishes or changes a due, fee, or other 
charge imposed by NSX. 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.
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    \16\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \17\ 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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-NSX-2006-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NSX-2006-17. This 
file number should be included on the subject line if e-mail is used. 
To help the

[[Page 1358]]

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. Copies of such filing also will be 
available for inspection and copying at the principal offices 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-2006-17 
and should be submitted on or before February 1, 2007.

    For the Commission, by the Division of Market Regulation, 
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. 4 8
 [FR Doc. E7-236 Filed 1-10-07; 8:45 am]

BILLING CODE 8011-01-P