[Federal Register: August 31, 2007 (Volume 72, Number 169)]
[Notice]
[Page 50429-50431]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31au07-153]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56305; File No. SR-NSX-2007-09]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Amendment of Its Rules in Light of Amendments to SEC
Rule 10a-1 and Regulation SHO
August 22, 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 July 3, 2007 and July 6, 2007, National Stock Exchange, Inc.
(``NSX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') the proposed rule change and
their corresponding amendments, as described in Items I and II below,
which Items have been substantially prepared by the Exchange. NSX has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. The Commission is publishing this notice to
solicit comment on the proposed rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3 \ 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 amend NSX Rules 11.21and 14.2(b)(7) in
light of the Commission's short sale regulation, Regulation SHO under
the Securities Exchange Act of 1934. Certain provisions of Regulation
SHO adopted in the Commission's 2007 release regarding the price test
\4\ supercede the above NSX Rules related to short sales. As a result,
the Exchange is filing this rule change to bring those rules in line
with Regulation SHO, as now in effect. The text of the proposed rule
change is below. Additions are italicized and deletions are bracketed.
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\4\ Securities Exchange Act Release No. 55970 (June 28, 2007),
72 FR 36348 (July 3, 2007) (``Price Test Adopting Release'').
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RULES OF NATIONAL STOCK EXCHANGE, INC.
* * * * *
[[Page 50430]]
CHAPTER XI
Trading Rules
* * * * *
Rule 11.21 Short Sales
All short sale orders shall be identified as [either] a short sale
[or short sale exempt] when entered into the System. [Any marketable
order entered in the System that, if matched for execution, would
violate the short sale provisions of the Act or the rules and
regulations thereunder should be cancelled. The foregoing shall not be
in limitation of the Exchange's ability to adopt additional Rules,
interpretations or policies relating to short sales.]
* * * * *
CHAPTER XIV
Intermarket Trading System Plan
* * * * *
Rule 14.2 Intermarket Trading System Application
(a) No change.
(b) Any commitment to trade which is transmitted to a User to
another participating market center shall be firm and irrevocable for
the period of time following transmission as was chosen by the sender
of the commitment, and shall, at a minimum:
(1)-(6) No change.
(7) Reserved. [designate the commitment ``short'' or ``short
exempt'' whenever it is a commitment to sell short which, if it should
result in an execution in the market of the receiving market center,
would result in a short sale to which the provisions of paragraph (a)
of Rule 10a-1 under the Act would apply]; and
(8) No change.
(c)-(j) No change.
* * * * *
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
On July 28, 2004, the Commission adopted certain provisions of a
new short sale regulation, designated Regulation SHO. On June 28, 2007,
the Commission amended Regulation SHO and also repealed Rule 10a-1
under the Act.\5\ We have reviewed the NSX Rules to eliminate those
rules which we believe are duplicative of, inconsistent with, or
otherwise superceded by, Regulation SHO and the repeal of Rule 10a-1
under the Act.\6\ Therefore, the Exchange is filing this proposed rule
change to amend those NSX rules that are affected by the Commission's
amended approach to short sale regulation.
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\5\ Price Test Adopting Release.
\6\ Please note that NSX does not have any ETP Holder that is
not a member of another self-regulatory organization nor is NSX a
designated examining authority or a designated self-regulatory
organization for any ETP Holder. Accordingly, it does not subject
its members to short interest reporting that is mandated by the
other markets.
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First, in addition to the repeal of Rule 10a-1 under the Act, the
Commission added Rule 201(b) to Regulation SHO, prohibiting any SRO
from having a short sale price test. The Commission also amended Rule
200(g) of Regulation SHO to remove the requirement that a broker-dealer
mark a sell order of an equity security as ``short exempt,'' if the
seller is relying on an exception from a price test. Accordingly, the
Exchange proposes to amend NSX Rule 11.21 to remove the reference to
``short exempt.'' Additionally, the Exchange proposes to remove the
second sentence respecting the cancellation of violative orders because
there would be no ability to violate a rule that no longer exists.
Finally, the Exchange is eliminating the savings clause as duplicative
and restating an inherent authority of the Exchange.
Further, the Exchange notes that NSX Rule 14.2(b)(7) regarding the
Intermarket Trading System Plan (the ``ITS Plan'') describes marking
requirements necessary to comply with Rule 10a-1 under the Act.\7\ In
light of the repeal of Rule 10a-1, the Exchange proposes to eliminate
this provision from its Rules.
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\7\ The Exchange will be filing a separate rule change to
eliminate the entire chapter respecting the ITS Plan.
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As noted below, the Exchange is filing the proposed rule change for
immediate effectiveness, with an operative date of July 6, 2007, which
is the same date as the effective date of Rule 201 and revised Rule
200(g) of Regulation SHO as well as the elimination of Rule 10a-1 under
the Act.\8\
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\8\ See Price Test Adopting Release.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6(b) of the Act \9\ in general and
furthers the objectives of section 6(b)(5) \10\ in particular in that
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest. NSX believes
that the proposed rule change is necessary and appropriate to comply
with the amendments to SEC Rule 10a-1 and Regulation SHO.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 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
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative 30 days from the date on which it was filed, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, it has become
effective pursuant to section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 19b-4(f)(6).
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NSX has asked the Commission to waive the 30-day operative delay.
The Commission believes such waiver is consistent with the protection
of investors and the public interest because it would allow the
proposed rule change to be effective on July 6, 2007, the compliance
date for the amendments to Rule 10a-1 and
[[Page 50431]]
Regulation SHO.\13\ For this reason, the Commission designates the
proposal to be operative upon filing with the Commission.
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\13\ For purposes only of waiving the 30-day pre-operative
period, the Commission has considered the proposed rule change's
impact on efficiency, competition and capital formation. 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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 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-2007-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy Morris,
Secretary, Securities and Exchange Commission, 100 F. Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSX-2007-09. This file
number should be included in the subject line if e-mail is used. To
help the Commission process and review 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 statement 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 such filings will also 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-2007-09 and should be
submitted on or before September 21, 2007.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-17228 Filed 8-30-07; 8:45 am]
BILLING CODE 8010-01-P