Document ID: SEC-2009-1626-0001
Agency: sec
Document Type: Notice
Title: 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 Exclude
Posted Date: 2009-11-17T05:00Z

[Federal Register: November 17, 2009 (Volume 74, Number 220)]
[Notices]               
[Page 59297-59298]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17no09-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60979; File No. SR-NSX-2009-06]

 
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 Exclude, for Purposes of 
Calculating the Automatic Execution Mode of Order Interaction 
(``AutoEx'') Liquidity Adding Displayed Order Rebate, An ETP Holder's 
Lowest Full Trading Day's Liquidity Adding Volume From The 
Determination of The ETP Holder's ``Liquidity Adding Average Daily 
Volume''

November 10, 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 October 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 exclude, for 
purposes of calculating the Automatic Execution Mode of order 
interaction (``AutoEx'') liquidity adding displayed order rebate with 
respect to each ETP Holder during each measurement period, such ETP 
Holder's lowest full trading day's liquidity adding volume from the 
determination of the ETP Holder's ``liquidity adding average daily 
volume.''
    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
    With this rule change, the Exchange is proposing to make a change 
to the Fee and Rebate Schedule (the ``Fee Schedule'') solely with 
respect to calculation of the rebate for Displayed Orders that add 
liquidity in 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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    An ETP Holder's liquidity adding average daily volume (``Liquidity 
Adding ADV'') is used, among other things, to determine the amount of 
an ETP Holder's liquidity adding Displayed Order rebate in AutoEx 
(``AutoEx Displayed Order Liquidity Adding Rebate''). Explanatory 
Endnote 3 of the Fee Schedule currently defines ``Liquidity Adding 
ADV'' as, ``with respect to an ETP Holder \11\, the number of shares 
such ETP Holder has executed as a liquidity provider on average per 
trading day (excluding partial trading days) across all tapes on NSX 
for the calendar month (or partial month, as applicable) in which the 
executions occurred.'' The instant rule filing proposes to modify this 
definition to exclude from such calculation, solely for purposes of 
calculating the AutoEx Displayed Order Liquidity Adding Rebate, an ETP 
Holder's lowest full trading day's liquidity adding volume during each 
measurement period. Thus, solely for purposes of calculating the AutoEx 
Displayed Order Liquidity Adding Rebate, the ratio used to determine an 
ETP Holder's Liquidity Adding ADV during each measurement period would 
be adjusted by (x) excluding from the numerator the ETP Holder's lowest 
full trading day's volume of shares executed as a liquidity provider, 
and (y) reducing the denominator by one day.
    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.

[[Page 59298]]

Rationale
    The Exchange has determined that these changes are necessary to 
accommodate for situations where, due to unusual circumstances \4\ 
during a measurement period, an ETP Holder obtains abnormally low 
liquidity adding executions at the Exchange. By omitting one day per 
measurement period which, as a volume outlier, skews downward an ETP 
Holder's average daily volume for purposes of calculating the AutoEx 
Displayed Order Liquidity Adding Rebate, the Exchange is responding to 
the needs of its customers and the realities of order flow.
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    \4\ Abnormally low liquidity adding volumes may be caused by a 
variety of factors, including internal problems with an ETP Holder's 
systems, connections or other technology, as well by occasional 
abnormally low overall market volumes.
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    The Exchange believes that the proposed modification will enhance 
the Exchange's reputation within the industry as highly responsive to 
its customers' needs, will assist in attracting additional customers, 
and will ultimately cause increased volumes of liquidity adding orders 
at the Exchange, all of which shall serve to increase the revenue of 
the Exchange and its ability to adequately fund its regulatory and 
general business functions. The proposed modifications are reasonable 
and equitably allocated to those ETP Holders that opt to provide 
liquidity adding orders in AutoEx, and are not discriminatory because 
such terms apply to all ETP Holders, who 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 revised definition as 
of November 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).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\5\ in general, and 
Section 6(b)(4) of the Act,\6\ 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 trades and quotes on the same basis, and may 
do so at their discretion in the daily volumes they choose during the 
course of the measurement period.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 \7\ and subparagraph (f)(2) of Rule 
19b-4 \8\ 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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-2009-06 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-2009-06. 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 
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-
2009-06 and should be submitted on or before December 8, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
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    \9\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-27505 Filed 11-16-09; 8:45 am]

BILLING CODE 8011-01-P