[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]
[Page 15742-15744]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-123]
[[Page 15742]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55541; File No. SR-NSX-2007-01]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto to Modify Fees for Transactions Executed
Through NSTS and ITS Plans
March 27, 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 February 5, 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, II,
and III below, which Items have been substantially prepared by the
Exchange. On March 19, 2007, NSX submitted Amendment No. 1 to the
proposed rule change. NSX has filed the proposal pursuant to Section
19(b)(3)(A) 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).
\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 is proposing various amendments to its fees for
transactions executed through National Securities Trading System
(``NSTS''), the Exchange's legacy trading system, so that this fee
schedule will correspond more closely to the existing fees for
transactions executed through NSX BLADE, the Exchange's new trading
platform. These amendments involve proposed changes to old NSX Rule
11.10(A) (which is applicable to NSTS transactions), and the associated
NSTS Fee Schedule. The Exchange is also proposing corresponding changes
to its Fee Schedule applicable to transactions under the Intermarket
Trading System Plan and/or the Plan for the purpose of Creating and
Operating an Intermarket Communications Linkage (``ITS Plans'') for
transactions executed through the ITS Plans (``ITS Transactions''). 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
Background
The Exchange has created a new state of the art trading platform,
known as NSX BLADE, which utilizes a strict price/time priority system
as the ultimate replacement for NSTS. The Exchange is in the midst of
phasing in NSX BLADE. NSX BLADE was launched on October 23, 2006. As of
the date of the initial filing of this proposed rule change, all Tape
``C'' securities have been phased into NSX BLADE from NSTS, and the
Exchange plans to transition all Tape ``A'' and Tape ``B'' securities
from NSTS to NSX BLADE in the near future.
During this transitional period of phasing in various securities to
NSX BLADE, the Exchange will be operating both NSTS and NSX BLADE.
Until such securities are phased into NSX BLADE, Tape ``A'' and ``B''
securities will continue to be traded via NSTS.
Rule Set
During this transitional period of phasing in various securities to
NSX BLADE, the Exchange is operating both NSTS and NSX BLADE.
Accordingly, the Exchange is operating under two sets of rules during
this phase-in period. All transactions in NSTS are operating under the
rules pertaining to NSTS (old Rule 11.9 (National Securities Trading
System) and old Rule 11.10 (National Securities Trading System Fees)
and any associated Fee Schedule) while all transactions in NSX BLADE
are operating under the NSX BLADE trading rules approved in SR-NSX-
2006-03 and the new fee rules in Chapter XVI of the Exchange Rules.
When the phase-in is complete and NSTS is no longer operational, old
Rules 11.9 and 11.10 (and any associated NSTS Fee Schedule) 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,\5\ and will issue a Notice advising them of the fee changes with
this rule change. During this interim period, the Exchange has created
a Fee Schedule applicable to NSTS Rules (``NSTS Fee Schedule'') under
the authority of NSX Rule 16.1.\6\ Further, while the Fee Schedule for
ITS Transactions is identical to the Fee Schedule for identical
transactions entered in NSTS, the Exchange has decided to create a Fee
Schedule for ITS Transactions to make it easier for parties to identify
the specific fees associated with the ETP Holder's transactions.
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\5\ Regulatory Circular 06-011, issued on October 19, 2006.
\6\ On November 14, 2006, a new NSTS Fee Schedule became
effective. See Securities Exchange Act Release No. 54753 (November
14, 2006), 71 FR 67678 (November 22, 2006) (SR-NSX-2006-14).
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Fee Proposal
In the instant rule filing, the Exchange is proposing amendments to
old Rule 11.10(A) and the associated NSTS Fee Schedule relating to
transactions in Tape ``A'' and ``B'' securities on NSTS, and is
proposing corresponding amendments to its Fee Schedule for ITS
Transactions. As amended, old Rule 11.10(A) and the associated NSTS Fee
Schedule would provide for an execution fee of $0.0030 per share for
removing liquidity from NSTS (in other words, a charge for taking
liquidity against an order in NSTS), and a rebate of $0.0030 per share
executed for adding liquidity into NSTS (in other words, a rebate for
the addition of liquidity to NSTS, provided that it results in an
execution through NSTS). Thus, ETP Holders taking liquidity against an
order in NSTS will be charged a fee of $0.0030 per share executed, and
ETP Holders providing liquidity into NSTS will be paid a rebate of
$0.0030 per share executed. In connection with this rule change,
language is also proposed to be added to the NSTS Fee Schedule stating
that with respect to ITS Transactions executed through NSTS, the
Exchange will pay the applicable liquidity provider rebate only after
it receives payment of the liquidity taker fee applicable to the
execution.
This liquidity taker fee and liquidity provider rebate are proposed
to replace the current transaction fees applicable to transactions in
Tape ``A'' and ``B'' securities on NSTS. Currently, old Rule 11.10(A)
provides for a variety of fees for executions in Tape ``A'' securities,
and the NSTS Fee Schedule provides for
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a $0.0030 per share liquidity taker fee and a $0.0027 per share
liquidity provider rebate for executions in Tape ``B'' securities.
These fees and rebates are proposed to be removed and replaced with the
fee structure described herein.\7\ In connection with this filing, the
Exchange also proposes to remove $50,000 monthly transaction fee cap
for transactions on NSTS that is currently provided for in old Rule
11.10(A)(i), and the quotation fee that is currently provided for in
old Rule 11.10(A)(s). The Exchange is proposing these changes to its
fees for NSTS transactions in order to harmonize its NSTS fees with the
fees applicable to transactions executed through NSX BLADE. One of the
proposed changes described above--the proposed new language in the NSTS
Fee Schedule relating to the timing of liquidity provider rebate
payments on ITS Transactions--is a policy change and, as of the date of
the initial filing of this rule change, similar language was not
contained in the Fee Schedule applicable to transactions executed
through NSX BLADE.
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\7\ All Tape ``C'' securities have been transitioned to NSX
BLADE, so there will be no Tape ``C'' transactions on NSTS.
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The liquidity taker fee and liquidity provider rebate described
above are contained in the NSTS Fee Schedule. The NSTS Fee Schedule
supplements the fees and rebates contained in old NSX Rule 11.10. If
the NSTS Fee Schedule does not contravene any fees stated in old NSX
Rule 11.10, the ETP Holder effecting a transaction via NSTS will be
charged the fees noted in old NSX Rule 11.10.
Changes are also being proposed to the Fee Schedule for ITS
Transactions, to provide for a corresponding $0.0030 per share
liquidity taker fee for ITS Transactions executed through NSTS. Thus
ETP Holders taking liquidity will be charged under the NSTS Fee
Schedule, and executions through an ITS Plan will be charged under the
Fee Schedule for ITS Transactions (although the rates of the two
execution fees are identical). The Exchange bills non-ETP Holders using
the facilities of the Exchange for ITS Transactions under the Fee
Schedule for ITS Transactions.
Pursuant to 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 and others, including self-regulatory
organizations that are the subject of exchange-to-exchange billing,
using the Exchange will be advised of these fees through the Exchange's
Web site. In addition, ETP Holders will, simultaneously with this
filing, be notified through the issuance of a Regulatory Circular of
the changes to the Fee Schedules applicable to transactions through
NSTS and the ITS Plans.
The fees have been designed in this manner in order to ensure that
the Exchange can continue to fulfill its obligations under the Act.
2. Statutory Basis
NSX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\8\ in general, and with Sections
6(b)(4) of the Act,\9\ in particular, in that the proposal provides for
the equitable allocation of reasonable dues, fees, and other charges.
In addition, NSX believes that the proposed rule change furthers the
objectives of Section 6(b)(1) of the Act \10\ 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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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
\10\ 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 will
result in 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of Rule 19b-4
thereunder \12\ because it establishes or changes a due, fee, or other
charge applicable only to a member imposed by the self-regulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. 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 the protection of investors, or
otherwise in furtherance of the purposes of the Act.\13\
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
\13\ 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 March
19, 2007, 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 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-2007-01 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-2007-01. 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 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-
2007-01 and should
[[Page 15744]]
be submitted on or before April 23, 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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-5984 Filed 3-30-07; 8:45 am]
BILLING CODE 8010-01-P