Document ID: SEC-2009-0796-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Stock Exchange, Inc.
Posted Date: 2009-06-15T04:00Z

[Federal Register: June 15, 2009 (Volume 74, Number 113)]
[Notices]               
[Page 28305-28307]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn09-145]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60068; File No. SR-NSX-2009-04]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Fee and Rebate Schedule To (i) Increase From 50,000 to 5 
Million the Liquidity Adding Average Daily Volume Thresholds in the 
Automatic Execution Mode of Order Interaction (``AutoEx''); (ii) 
Include Securities Less Than One Dollar in the Calculation of Liquidity 
Adding and Total Average Volume Thresholds in AutoEx; and (iii) 
Eliminate the Two Lower Tiers With Respect to the AutoEx Liquidity 
Adding Zero Display Order Rebate

June 8, 2009.
    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 May 29, 2009, National Stock Exchange, Inc. 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

    National Stock Exchange, Inc. (``NSX[supreg]'' or ``Exchange'') is 
proposing to amend the Fee and Rebate Schedule (the ``Fee Schedule'') 
issued pursuant to Exchange Rule 16.1(c) in order to (i) increase from 
50,000 to 5 million the liquidity adding average daily volume 
thresholds in the Automatic Execution Mode of order interaction 
(``AutoEx''); (ii) include securities less than one dollar in the 
calculation of liquidity adding and total average volume thresholds in 
AutoEx; and (iii) eliminate the two lower tiers with respect to the 
AutoEx liquidity adding zero display order rebate.
    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

Purpose
    With this rule change, the Exchange is proposing to make three 
changes to the Fee Schedule, in each case only with respect to 
AutoEx.\3\
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    \3\ The Exchange's two modes of order interaction are described 
in NSX Rule 11.13(b).
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    First, the liquidity adding average daily volume (``Liquidity 
Adding ADV'') thresholds in AutoEx that are currently set at 50,000 are 
proposed to be increased to 5 million. This threshold is used to 
determine both the amount of the liquidity taking fee in AutoEx and 
eligibility for receipt of the liquidity adding zero display order 
rebate in AutoEx. Under the Fee Schedule in effect prior to 
effectiveness of the instant proposed rule change, an ETP Holder needs 
to achieve a Liquidity Adding ADV \4\ of 50,000 in order to obtain a 
reduced liquidity taking fee from $0.0030 to $0.0028 per share. The 
instant rule filing proposes to increase the Liquidity Adding ADV used 
with respect to AutoEx liquidity taking fees from 50,000 to 5 million. 
In addition, under the Fee Schedule in effect prior to effectiveness of 
the instant proposed rule change, an ETP Holder needs to achieve a 
Liquidity Adding ADV of 50,000 in order to become eligible to receive 
rebates for submitting liquidity adding Zero Display Orders \5\ in 
AutoEx. If an ETP Holder fails to achieve a Liquidity Adding ADV of 
50,000, such ETP Holder is not eligible to receive a liquidity adding 
Zero Display Order rebate. The instant rule filing proposes to increase 
the Liquidity Adding ADV used with respect to eligibility to receive a 
liquidity adding Zero Display

[[Page 28306]]

Order rebate in AutoEx from 50,000 to 5 million.
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    \4\ Explanatory Endnote 3 of the Fee Schedule contains the 
definition of ``Liquidity Adding ADV.''
    \5\ \\ ``Zero Display Orders'' means ``Zero Display Reserve 
Orders'' as specified in NSX Rule 11.11(c)(2)(A).
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    Second, the instant rule change proposes to include securities less 
than one dollar in the calculation of Liquidity Adding ADV and Total 
ADV.\6\ Prior to effectiveness of the instant rule change, securities 
less than one dollar were excluded from such calculations except only 
with respect to the volume tier thresholds relative to the AutoEx 
liquidity adding displayed order rebate for Tape A and C securities.\7\ 
The instant rule change would include sub-dollar securities in all 
calculations of both Liquidity Adding ADV and Total ADV.
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    \6\ \\ ``Total ADV'' is used to determine the amount, if any, of 
an ETP Holder's liquidity adding Zero Display Order rebate in 
AutoEx. See Explanatory Endnote 5 of the Fee Schedule.
    \7\ See SR-NSX-2009-03 (filed My [sic] 15, 2009).
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    Third, the two lower of the three tiers used to determine the 
amount, if any, of an ETP Holder's rebate for liquidity adding Zero 
Display Orders in AutoEx would be eliminated under the proposed rule 
change. Under the Fee Schedule prior to effectiveness of the instant 
proposed rule change, progressively higher rebates may be awarded where 
an ETP Holder achieves Total ADV of 1 million,\8\ 15 million \9\ and 30 
million \10\ shares. The instant rule change proposes to eliminate the 
1 million and 15 million tiers (together with the associated lesser 
rebate amounts of $0.0022 and $0.0023 per share, respectively), such 
that the sole remaining Total ADV tier would be 30 million, for which 
the associated rebate would remain $0.0025 per share.
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    \8\ The first tier is $0.0022 per share (applicable to shares 
executed in AutoEx which added liquidity as Zero Display Orders), 
where Total ADV is greater than or equal to 1 million and less than 
15 million.
    \9\ \\ The second tier is $0.0023 per share (applicable to 
shares executed in AutoEx which added liquidity as Zero Display 
Orders), where Total ADV is greater than or equal to 15 million and 
less than 30 million.
    \10\ The third tier is $0.0025 per share (applicable to shares 
executed in AutoEx which added liquidity as Zero Display Orders), 
where Total ADV is greater than or equal to 30 million.
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    The proposed rule change would not modify other calculations of 
average daily volume, volume tiers, or associated fees that are 
included in the Fee Schedule.
Rationale
    The Exchange has determined that these changes are necessary to 
increase the volume of liquidity adding and sub-dollar orders in AutoEx 
for the purpose of increasing the revenue of the Exchange and 
adequately funding its regulatory and general business functions. The 
proposed modifications are reasonable and equitably allocated to those 
ETP Holders that opt to provide liquidity adding and sub-dollar orders 
in AutoEx, and are not discriminatory because ETP Holders are free to 
elect whether or not to send such orders. Based upon the information 
above, the Exchange believes that the proposed rule change is 
consistent with the protection of investors and the public interest.
Operative Date and Notice
    The Exchange intends to utilize the proposed volume thresholds 
effective June 1, 2009. 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 a 
Regulatory Circular of the changes to the Fee Schedule and will post a 
copy of the rule filing on the Exchange's Web site (http://
www.nsx.com).
Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\11\ in general, and 
Section 6(b)(4) of the Act,\12\ in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees and 
other charges among its members and other persons using the facilities 
of the Exchange. Moreover, the proposed fee and rebate structure is not 
discriminatory in that all ETP Holders are eligible to submit (or not 
submit) liquidity adding and sub-dollar trades and quotes, and may do 
so at their discretion in the daily volumes they choose during the 
course of the measurement period.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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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 has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \13\ and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because, as provided in (f)(2), it changes ``a 
due, fee or other charge applicable only to a member'' (known on the 
Exchange as an ETP Holder). 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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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4 [sic].
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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-2009-04 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-2009-04. 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 will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. All comments received will be posted without change; the

[[Page 28307]]

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-
2009-04 and should be submitted on or before July 6, 2009.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13973 Filed 6-12-09; 8:45 am]

BILLING CODE 8010-01-P