Document ID: SEC-2013-0457-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2013-03-08T05:00Z

[Federal Register Volume 78, Number 46 (Friday, March 8, 2013)]
[Notices]
[Pages 15065-15067]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05415]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69029; File No. SR-NSX-2013-08]

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

March 4, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act '' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on February 26, 2013, National Stock 
Exchange, Inc. (``NSX[supreg]'' 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 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 Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its Fee and Rebate Schedule (the 
``Fee Schedule'') issued pursuant to Exchange Rule 16.1(a) to charge 
Equity Trading Permit (``ETP'') Holders \3\ $0.0020 per share when 
using a Midpoint-Seeker Order \4\ in the Exchange's automatic execution 
mode of interaction (``Auto-Ex Mode'') \5\ to remove liquidity in a 
security that is priced at or above $1.00.
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    \3\ Exchange Rule 1.5 defines the term ``ETP'' as an Equity 
Trading Permit issued by the Exchange for effecting approved 
securities transactions on the Exchange's Trading Facilities.
    \4\ NSX Rule 11.11(c)(13). See also SR-NSX-2013-07.
    \5\ Under Auto-Ex mode the Exchange matches and executes like-
priced orders in accordance with the process described in Exchange 
Rule 11.13(b)(1).
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    The text of the proposed rule change is available on the Exchange's 
Web site at www.nsx.com, at the Exchange's principal office, 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 proposes to amend Section I of its Fee Schedule to 
charge ETP Holders $0.0020 per share when using a Midpoint-Seeker Order 
in the Exchange's Auto-Ex Mode to remove liquidity in a security that 
is priced at or above $1.00. The Midpoint Seeker Order is an Immediate-
or-Cancel (``IOC'') \6\ order that ETP Holders may use to execute 
against orders that are posted on the NSX Book \7\ at a price equal to 
or better than the midpoint of

[[Page 15066]]

the Protected National Best Bid or Offer (``NBBO'').\8\
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    \6\ Under Exchange Rule 11.11(b)(1), an ``Immediate-or-Cancel 
Order'' is a ``limit order that is to be executed in whole or in 
part as soon as such order is received, and the portion not so 
executed'' is to be cancelled.
    \7\ Exchange Rule 1.5. ``NSX Book'' is defined as ``System's 
electronic file of orders.''
    \8\ Exchange Rule 1.5. ``Protected NBBO'' is defined as ``the 
national best bid or offer that is a protected quotation.''
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    Under Section I of the Fee Schedule, the Exchange currently charges 
ETP Holders that do not execute at least 50,000 shares of added 
liquidity in a month using the Exchange's Auto-Ex Mode a per share fee 
of $0.0030 for any marketable order that removes liquidity. ETP Holders 
that execute more than 50,000 shares of added liquidity per month in 
Auto-Ex Mode are eligible for fees and rebates under either the 
Variable or Fixed Fee Schedules under Section I. Instead of paying the 
above described fees when removing liquidity in Auto-Ex Mode, ETP 
Holders will now pay the proposed lower fixed fee of $0.0020 per share 
when using the Midpoint-Seeker Order to remove liquidity in securities 
priced at or above $1.00.\9\ The Exchange believes the proposed fee 
will encourage (i) ETP Holders that want to interact with Midpoint-
Seeker Orders to post additional liquidity on the NSX Book, and (ii) 
ETP Holders that are seeking executions at prices better than the 
Protected NBBO to use the Midpoint-Seeker Order. The Exchange does not 
propose to amend the fee for securities priced below $1.00.
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    \9\ Executed Midpoint-Seeker Orders will be included in the ADV 
calculation but not be subject to additional fees under Section I of 
the Fee Schedule.
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Operative Date and Notice

    The Exchange intends to make the proposed modifications, which are 
effective upon filing, operative as of the commencement of trading on 
March 1, 2013. 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 an 
Information Circular 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 proposed fixed fee for Midpoint-
Seeker Orders that remove liquidity is consistent with the provisions 
of Section 6(b) of the Act,\10\ in general, and Section 6(b)(4) of the 
Act,\11\ in particular, in that it is reasonable and equitably 
allocated amongst ETP Holders because all ETP Holders are eligible to 
submit (or not submit) these types of orders, and may do so at their 
discretion during the course of the month. The lower per share fee for 
the Midpoint-Seeker Order is a reasonable method to encourage (i) ETP 
Holders that want to interact with Midpoint-Seeker Orders to post 
additional liquidity on the NSX Book, and (ii) ETP Holders that are 
seeking executions at prices better than the Protected NBBO to use the 
Midpoint-Seeker Order. The increased liquidity provided by additional 
order flow to the Exchange benefits all investors by offering 
additional potential for execution and cost savings. Furthermore, the 
Exchange believes that the proposed lower fee for Midpoint Seeker 
Orders is consistent with the provisions of Section 6(b)(5) of the 
Act,\12\ because it is not unfairly discriminatory amongst ETP Holders. 
As stated above, ETP Holders are eligible to submit (or not submit) 
these types of orders, and may do so at their discretion during the 
course of the month.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and rebates to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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. ETP Holders using the 
Midpoint-Seeker Order will be charged a lower per share fee for 
removing liquidity rather than being charged the Exchange's standard 
fees under Section I of the Fee Schedule. The lower per share fee is 
designed to increase liquidity by encouraging ETP Holders to use 
Midpoint Seeker Orders. As stated above, the Exchange operates in a 
highly competitive market in which market participants can readily 
favor competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and rebates to 
remain competitive with other exchanges.

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 Exchange Act \13\ and subparagraph 
(f)(2) of Rule 19b-4.\14\ At any time within 60 days of the filing of 
such 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-NSX-2013-08 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-2013-08. 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

[[Page 15067]]

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 10:00 
a.m. and 3:00 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-2013-08, and should be 
submitted on or before March 29, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-05415 Filed 3-7-13; 8:45 am]
BILLING CODE 8011-01-P