Document ID: SEC-2008-1158-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2008-08-20T04:00Z

[Federal Register: August 20, 2008 (Volume 73, Number 162)]
[Notices]               
[Page 49227-49228]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au08-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58354; File No. SR-NSX-2008-15]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Operative Date of NSX Rule 2.11

August 13, 2008.
    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 August 8, 2008, National Stock Exchange, Inc. (``NSX[reg]'' or 
the ``Exchange'') 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 Substance 
of the Proposed Rule Change

    The National Stock Exchange, Inc. (``NSX'' or the ``Exchange'') is 
proposing to accelerate the effectiveness of NSX Rule 2.11 in order to 
implement outbound routing through NSX Securities, LLC (``NSX 
Securities'') and to amend NSX Rule 2.12 which relates to the 
Exchange's provision of routing services procured from a third party.
    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 accelerate the effectiveness of NSX 
Rule 2.11 in order to implement outbound routing with respect to orders 
entered in the Exchange's trading system, NSX BLADE [reg], through an 
affiliate of the Exchange, NSX Securities. In addition, the Exchange 
proposes to amend NSX Rule 2.12 which relates to the Exchange's current 
provision of outbound routing of orders from the Exchange to other 
trading centers (``Routing Services'') using a third party.
    As background, the Exchange originally planned to provide Routing 
Services for orders entered into NSX BLADE through NSX Securities. NSX 
Rule 2.11 was approved by the Securities and Exchange Commission 
(``Commission'') in connection with the approval of the Exchange's new 
trading rules relating to NSX BLADE on August 31, 2006.\3\ 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. NSX 
Rule 2.11 specifically provides for certain terms and conditions under 
which NSX Securities will provide Routing Services. Among other things, 
an ETP Holder's use of NSX Securities to route orders to another 
Trading Center is optional. ETP Holders that do not want to route 
orders through NSX Securities may submit order instructions to NSX 
under NSX Rule 11.11 such as Immediate-or-Cancel, Post Only or NSX 
Only.
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    \3\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006), File No. SR-NSX-2006-08. 
This rule change filing was filed under Section 19(b)(2) of the 
Securities Exchange Act of 1934 (the ``Act'').
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    However, as NSX Securities had not completed its registration 
process as a broker-dealer with the National Association of Securities 
Dealers, Inc. (``NASD'') (and thus would not be available to provide 
Routing Services) by the launch of NSX BLADE,\4\ the Exchange proposed 
the adoption of NSX Rule 2.12 so that the Exchange could route through 
a third party in the interim period.\5\ In the adoption of Rule 2.12, 
the Exchange requested a finite period of effectiveness so NSX 
Securities could complete its registration as a broker-dealer and the 
Exchange could evaluate its options for providing Routing Services to 
ETP Holders. The Exchange subsequently filed several rule change 
proposals to extend the effective period for NSX Rule 2.12, and to 
delay the effectiveness of NSX Rule 2.11 to certain dates, unless 
earlier amended, while the Exchange considered its options and made 
system and other changes to implement outbound routing through NSX 
Securities.\6\ Rule 2.12 currently provides that it is effective 
through September 30, 2008, with the ability to route through NSX 
Securities under Rule 2.11 becoming effective on October 1, 2008.
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    \4\ In January 2007, NSX Securities' application for 
registration as a broker-dealer was approved by the NASD. To date, 
the Exchange has not used NSX Securities for routing services.
    \5\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006), File No. SR-NSX-2006-15.
    \6\ See Securities Exchange Act Release No. 55624 (April 12, 
2007), 72 FR 19732 (April 19, 2007), File No. SR-NSX-2007-04; 
Securities Exchange Act Release No. 56067 (July 13, 2007), 72 FR 
39650 (July 19, 2007), File No. SR-NSX-2007-08; Securities Exchange 
Act Release No. 56587 (October 1, 2007), 72 FR 57087 (October 5, 
2007), File No. SR-NSX-2007-10; and Securities Exchange Act Release 
No. 57574 (March 27, 2008), 73 FR 18026 (April 2, 2008), File No. 
SR-NSX-2008-08.
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    In the instant proposed rule change, the Exchange is requesting 
that the operative date of Rule 2.11 be accelerated to August 8, 2008. 
The Exchange and NSX Securities have made all necessary changes to 
activate NSX Securities, including NSX Securities being approved as a 
broker-dealer, entering into a clearing and routing agreement, and 
making the required systems and regulatory changes. Further, because 
the current Rule 2.12 is effective until September 30, 2008, the 
Exchange proposes to amend NSX Rule 2.12 to provide that during that 
period it be operative only in the event that the Exchange is not

[[Page 49228]]

able to provide Routing Services through Rule 2.11. Thus, an 
alternative router would be available as necessary, and on an all-or-
none basis, in the course of transitioning the Routing Services to NSX 
Securities under Rule 2.11. This rule change proposal does not change 
Rule 2.12's current expiration of September 30, 2008.
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)(5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    The proposed rule change will take effect upon filing pursuant to 
Section 19(b)(3)(A)(iii) of the Act \9\ and subparagraph (f)(5) of Rule 
19b-4 \10\ thereunder, because the proposal effects a change in an 
existing order-entry system or trading system of a self-regulatory 
organization that: (i) Does not significantly affect the protection of 
investors or the public interest; (ii) does not impose any significant 
burden on competition; and (iii) does not have the effect of limiting 
the access to or availability of the system. This proposal does not 
raise these concerns as it primarily pertains to the operative date of 
a rule that has already been approved by the Commission through a rule 
change filed under Section 19(b)(2) of the Act. 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)(iii).
    \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-2008-15 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-2008-15. 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, 100 F Street, NE., 
Washington, DC 20549, 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 the self-regulatory 
organization. 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-
2008-15 and should be submitted on or before September 10, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19228 Filed 8-19-08; 8:45 am]

BILLING CODE 8010-01-P