Document ID: SEC-2006-1568-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Stock Exchange, Inc.
Posted Date: 2006-12-06T05:00Z

[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Notices]               
[Page 70822-70824]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de06-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54829; File No. SR-NSX-2006-13]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto To Implement a Fee Schedule Under NSX Rule 
16.1(a) and 16.1(c) for Transactions Executed Through NSX BLADE

November 29, 2006.
    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 October 23, 2006, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. On November 17, 2006, NSX submitted Amendment No. 1 to the 
proposed rule change. The Exchange has designated this proposal as one 
establishing or changing a due, fee, or other charge applicable only to 
a member imposed by the Exchange under Section 19(b)(3)(A)(ii) 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, as 
amended, 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)(ii).
    \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 fee schedule pursuant to the 
newly approved Chapter XVI of the Exchange Rules. The Fee Schedule 
would apply to executions through NSX's new trading system, NSX BLADE. 
The fees for executions through the Exchange's current trading system, 
National Securities Trading System (``NSTS''), during the phase-in 
period of NSX BLADE are the fees contained in old Exchange Rule 11.10. 
Below is the text of the proposed rule change, as amended. Proposed new 
language is in italics.

NATIONAL STOCK EXCHANGE, INC. FEE SCHEDULE

For Executions via NSX BLADE\SM\ as of October, 2006

    The following reflects the Schedule of Fees (pursuant to Rule 
16.1(a) and Rule 16.1(c)) for all transactions executed via the 
National Stock Exchange System known as NSX BLADE\SM\ (the ``System''):
    1. Order Matching. Orders in Tape C securities that are matched in 
the System will be subject to the following rebates and execution fees 
(computed on a monthly basis):
    A. Rebate for adding liquidity (per share executed):

------------------------------------------------------------------------
                                                            Rebate for
                                                              Adding
       Average Daily Shares of Liquidity Provided         Liquidity (Per
                                                               Share
                                                             Executed)
------------------------------------------------------------------------
Greater than 30 million.................................         $0.0028
30 million or less......................................         $0.0027
------------------------------------------------------------------------

    B. Execution fee for removing liquidity: $0.0030 per share 
executed.
    2. Order Routing. Orders that are routed through the System and 
executed in another market center shall be charged $0.0040 per share 
executed.
* * * * *

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, as 
amended, 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
    In anticipation of the approval of the new trading rules,\5\ the 
Exchange

[[Page 70823]]

recently amended its rules to add a Chapter XVI to set forth, in its 
own chapter, rules relating to fees, dues, assessments, and the tape 
rebate program. The rule change, SR-NSX-2006-10, was filed pursuant to 
Section 19(b)(3)(A) of the Act,\6\ which rendered it effective upon 
filing.\7\
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    \5\ See Securities Exchange Act Release No. 54391 (August 31, 
2006), 71 FR 52836 (September 7, 2006) (order approving File No. SR-
NSX-2006-08).
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ See Securities Exchange Act Release No. 54194 (July 24, 
2006), 71 FR 43258 (July 31, 2006) (notice of filing and immediate 
effectiveness of File No. SR-NSX-2006-10). SR-NSX-2006-10 was 
effective upon filing on July 13, 2006. NSX 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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    As part of the instant rule change, the Exchange is filing a Fee 
Schedule under NSX Rule 16.1(a) and 16.1(c) for executions through NSX 
BLADE.\8\ This Fee Schedule provides for, in connection with NSX BLADE 
transactions in Nasdaq-listed securities, an execution fee for removing 
liquidity from NSX BLADE (i.e., charging ETP Holders for taking 
liquidity against an order in the NSX BLADE System) of $0.0030 per 
share executed on NSX BLADE and a rebate for adding liquidity in NSX 
BLADE (i.e., providing a rebate to any ETP Holder that adds liquidity 
to the NSX BLADE System). The rebate for adding liquidity would depend 
upon the amount of liquidity added by the ETP Holder as set forth in 
the Fee Schedule. If the ETP Holder provides 30 million shares or less 
of added liquidity, the Exchange would provide a rebate of $0.0027 per 
share for all shares of liquidity provided that were executed on NSX 
BLADE. For those ETP Holders who provide, on an average daily basis, 
liquidity in excess of 30 million shares, the Exchange would rebate 
$0.0028 per share for all shares (including the first 30 million) of 
liquidity provided that were executed on NSX BLADE. The Fee Schedule 
also provides for an order routing fee of $0.0040 per share executed.
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    \8\ 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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    While SR-NSX-2006-10 was effective upon filing, NSX Rule 16.3 
allows the Exchange to delay the effectiveness of the Rule until it 
gives written notice to its ETP Holders. This was done to allow the 
Exchange to file its rules while awaiting the launch of NSX BLADE. It 
is anticipated that NSX BLADE will be phased in gradually--first with a 
small group of Nasdaq-listed securities over several weeks until all 
Nasdaq-listed securities have been transitioned to the new system. Once 
all Nasdaq-listed securities have been transitioned to NSX BLADE, the 
Exchange will then transition all non-Nasdaq-listed securities.\9\ The 
phase-in of NSX BLADE commenced on October 23, 2006 with the trading of 
one security.\10\
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    \9\ The NSX BLADE Fee Schedule will be amended to reflect fees 
for executions for Tape A and B (non-NASDAQ ) securities prior to 
the time those securities are transitioned to NSX BLADE.
    \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 
the NSX BLADE System, the Exchange will be operating both NSTS and the 
NSX BLADE Systems. Accordingly, the Exchange will be operating under 
two sets of rules during the phase-in period. All transactions in the 
NSTS System will still operate under the rules pertaining to NSTS (old 
NSX Rule 11.9 (National Securities Trading System) and old NSX Rule 
11.10 (National Securities Trading System Fees)) while all transactions 
in NSX BLADE will operate under the new trading rules approved in SR-
NSX-2006-08 and the new fee rules in Chapter XVI.\11\ When the phase-in 
period has expired and NSTS is no longer operational, old NSX 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 Schedule and rule change.
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    \11\ The Fee Schedule filed in SR-NSX-2006-12 is applicable to 
any transaction through an ITS Plan, regardless of whether the 
transaction was done through NSTS or NSX BLADE.
    \12\ Regulatory Circular 06-011 issued on October 19, 2006.
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    Since NSX will first begin transitioning Nasdaq-listed securities, 
the fees contained in the NSX BLADE Fee Schedule apply only to Nasdaq-
listed securities. Until transitioned to NSX BLADE, any transaction in 
Nasdaq-listed securities and non-Nasdaq-listed securities through the 
NSTS System will be charged the fees contained in old Exchange Rule 
11.10.
    Pursuant to newly approved NSX Rule 16.1(c), the Exchange will 
``provide ETP Holders with notice of all relevant dues, fees, 
assessments and charges of the Exchange.'' ETP Holders using the 
Exchange will be advised 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 NSX 
BLADE Fee Schedule.
    NSX states 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 the proposed rule change, as amended, 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, in 
that it is designed to provide for the equitable allocation of 
reasonable dues, fees, and other charges. The Exchange also believes 
that the proposed rule change, as amended, furthers the objectives of 
Section 6(b)(1) of the Act \16\ in that it helps to assure that the 
Exchange is so organized and has the capacity to be able to carry out 
the purposes of the Act and to comply, and to enforce compliance by its 
ETP Holders with the Act.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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

    The Exchange neither solicited nor received comments on the 
proposed rule change, as amended.

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

    The foregoing proposed rule change, as amended, has been designated 
as a fee change pursuant to Section 19(b)(3)(A)(ii) of the Act \17\ and 
Rule 19b-4(f)(2) \18\ thereunder, because it establishes or changes a 
due, fee, or other charge applicable only to a member imposed by the 
Exchange. Accordingly, the proposal will take effect upon filing with 
the Commission. 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,

[[Page 70824]]

or otherwise in furtherance of the purposes of the Act.\19\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 17 CFR 240.19b-4(f)(2).
    \19\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on 
November 17, 2006, the date on which the Exchange submitted 
Amendment No. 1.
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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, as amended, 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-2006-13 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-2006-13. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office 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-2006-13 and should be submitted on or before 
December 27, 2006.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
Nancy M. Morris,
Secretary.
[FR Doc. E6-20628 Filed 12-5-06; 8:45 am]

BILLING CODE 8011-01-P