Document ID: SEC-2007-0981-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc
Posted Date: 2007-07-19T04:00Z

[Federal Register: July 19, 2007 (Volume 72, Number 138)]
[Notices]               
[Page 39650-39651]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19jy07-81]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56067; File No. SR-NSX-2007-08]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Effective Period for Rule 2.12 Regarding Third-Party Routing 
Services in Respect of Orders Entered Into NSX BLADE

 July 13, 2007.
    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 29, 2007, the National Stock Exchange, Inc. (``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 NSX. The 
Exchange has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it 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)(6).
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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 extend the effective period for Rule 
2.12, which describes the terms under which the Exchange provides 
routing services procured from a third party with respect to orders 
entered into its new state of the art trading system, NSX BLADE. The 
text of the proposed rule change is available at NSX, the Commission's 
Public Reference Room, and http://www.nsx.com.

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. NSX 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 is proposing to amend Exchange Rules 2.11 and 2.12 to 
extend the effective period for Rule 2.12 (relating to the Exchange's 
use of a third party to provide outbound routing of orders from the 
Exchange to other trading centers (``Routing Services'')) through 
September 30, 2007, and to delay the effectiveness of Rule 2.11 
(relating to the outbound routing function of the Exchange's affiliate, 
NSX Securities, LLC (``NSX Securities'')) until October 1, 2007.
    Rule 2.11 provides for certain terms and conditions under which NSX 
Securities, an affiliate of the Exchange, will provide Routing 
Services. Rule 2.11 was approved by the Commission in connection with 
the approval of the Exchange's new trading rules relating to NSX BLADE 
on August 31, 2006.\5\ The Exchange filed and received approval for the 
addition of Rule 2.12, which provides for terms and conditions of the 
Exchange's use of a third party to provide Routing Services.\6\ The 
Exchange subsequently filed and received approval to extend the 
effective period for Rule 2.12.\7\
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    \5\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006) (SR-NSX-2006-08).
    \6\ See Securities Exchange Act Release No. 54808 (November 21, 
2006), 71 FR 69163 (November 29, 2006) (SR-NSX-2006-15).
    \7\ See Securities Exchange Act Release No. 55624 (April 12, 
2007), 72 FR 19732 (April 19, 2007) (SR-NSX-2007-04).
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    Rule 2.12 currently provides that it is effective through June 30, 
2007, with Rule 2.11 becoming effective on July 1, 2007. In connection 
with the rule filing adding Rule 2.12,\8\ the Exchange requested this 
finite period of effectiveness so that the Exchange could offer routing 
services through NSX BLADE while NSX Securities completed its 
registration process as a broker-dealer with the National Association 
of Securities Dealers, Inc. (and thus became available to provide 
routing services),\9\ and while the Exchange evaluated its options for 
providing routing services to ETP Holders.
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    \8\ Id.
    \9\ In January 2007, NSX Securities' application for 
registration as a broker-dealer was approved by the National 
Association of Securities Dealers, Inc. To date, the Exchange has 
not used NSX Securities for routing services.
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    In the instant rule filing, the Exchange is proposing to extend the 
effectiveness of Rule 2.12 through September 30, 2007, and to delay the 
effectiveness of Rule 2.11 until October 1, 2007, in order to allow the 
Exchange more time to evaluate its options for providing routing 
services to ETP Holders. 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.
    The Exchange intends to provide routing services in accordance with 
Rule 2.12 until September 30, 2007, unless the Exchange, with the 
Commission's approval, amends Rule 2.12 before such date. During such 
time period, the Exchange intends to evaluate its options for providing 
routing services. At the conclusion of such time period, the Exchange 
may decide to (i) continue the approach provided for in Rule 2.12 on a 
permanent basis, and not use NSX Securities as the outbound router (by 
filing a proposed rule change

[[Page 39651]]

to delete Rule 2.11 and renumbering Rule 2.12); (ii) use the Exchange's 
original approach of NSX Securities as an outbound router and 
discontinue the approach provided for in Rule 2.12 (by filing a 
proposed rule change to delete Rule 2.12); or (iii) file a proposed 
rule change to allow ETP Holders to use either NSX Securities or the 
approach provided for in proposed Rule 2.12 for outbound routing.
2. Statutory Basis
    NSX believes the proposed rule change is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 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.

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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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.\14\ 
However, Rule 19b-4(f)(6)(iii) \15\ 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. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would permit the Exchange to immediately update the effective dates for 
NSX Rules 2.11 and 2.12. For this reason, the Commission designates the 
proposed rule change to be operative upon filing with the 
Commission.\16\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission 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 filing 
of the proposed rule change, or such shorter time as designated by 
the Commission. NSX has satisfied the five-day pre-filing notice 
requirement.
    \15\ Id.
    \16\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 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.

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-2007-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2007-08. 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 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-2007-08 and should be 
submitted on or before August 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-13957 Filed 7-18-07; 8:45 am]

BILLING CODE 8010-01-P