[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]
[Page 15744-15745]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-124]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55542; File No. SR-NSX-2007-02]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto to Amend the Exchange's Tape Rebate
Programs for Transactions Through NSTS to Establish an Equivalent Tape
A Rebate Program
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 15, 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 and
II below, which Items have been prepared substantially by NSX. NSX
amended the proposed rule change on March 19, 2007.\3\ NSX filed the
proposed rule change pursuant to Section 19(b)(3)(A) of the Act\4\ and
Rule 19b-4(f)(6) thereunder,\5\ which renders it 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\ See Amendment No. 1.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6). The Commission considers the 60-day
abrogation period to have commenced on March 19, 2007, the date NSX
filed Amendment No. 1.
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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 old NSX Rule 11.10(A)(1), which
is applicable to transactions through the Exchange's legacy trading
system, National Securities Trading System (``NSTS''), to provide for a
rebate program for Tape A securities that is equivalent to the
Exchange's current Tape A rebate program applicable to transactions
executed through the Exchange's new trading system, NSX BLADE. This
proposed Tape A rebate program is also equivalent to the Exchange's
current Tape B and Tape C rebate programs applicable to NSTS an NSX
BLADE transactions.
The text of the proposed rule change is available at NSX, http://www.nsx.com
, and 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, 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
NSX proposes to amend old Exchange Rule 11.10(A)(1), which is
applicable to transactions through NSTS, to provide for a rebate
program for Tape A securities that is equivalent to the Exchange's
current Tape A rebate program applicable to transactions executed
through NSX BLADE. This proposed Tape A rebate program is also
equivalent to the Exchange's current Tape B and Tape C rebate programs
applicable to NSTS and NSX BLADE transactions.
The Exchange has created a new trading platform, known as NSX
BLADE, which uses 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 Tape B
securities will continue to be traded via NSTS.
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
the phase-in period. All transactions in the NSTS System are operating
under the rules pertaining to NSTS (old Exchange Rule 11.9 (National
Securities Trading System) and old Exchange 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\6\ and the new fee rules in Chapter
XVI. When the phase-in is complete and NSTS is no longer operational,
old 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,\7\ and will issue a Notice
advising them of the fee changes with this proposed rule change.
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\6\ See Securities Exchange Act Release No. 53963 (June 8,
2006), 71 FR 34660 (June 15, 2006) (order) (SR-NSX-2006-034).
\7\ Regulatory Circular 06-011, issued on October 19, 2006.
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Additionally, the Exchange currently offers rebate programs for
Tape A, B and C transactions executed through NSX BLADE, each
consisting of a 50 percent transaction credit on revenues generated by
transactions executed through NSX BLADE in Tape A, B or C securities,
respectively. Old Rule 11.10(A)(1), which is applicable to transactions
executed through NSTS, currently provides for equivalent 50 percent
Tape B and C rebate programs for transactions executed through NSTS.
Under each of the Exchange's current rebate programs, the credit is
allocable to ETP Holders on a pro rata basis based upon Tape A, B or C
revenue generated by an ETP Holder's transactions on NSX BLADE or NSTS,
as applicable.
With the instant proposed rule change, the Exchange is proposing to
adopt a rebate program for NSTS transactions in Tape A securities that
is equivalent to the Exchange's current Tape A rebate program
applicable to NSX BLADE transactions. As with the Exchange's other tape
rebate programs, this proposed Tape A rebate program will provide a 50
percent transaction credit on revenues generated by transactions
executed through NSTS in Tape A securities, and will be allocable to
ETP Holders on a pro rata basis based upon the Tape A revenue generated
by such ETP Holder's transactions on NSTS. The Exchange believes that
there
[[Page 15745]]
is no regulatory reason to distinguish Tape A transactions on NSTS from
Tape A transactions on NSX BLADE, and is therefore proposing an
equivalent rebate program. As with the Exchange's other tape rebate
programs, to the extent that market data revenue from Tape A
transactions is subject to any adjustment, credits provided under the
Tape A program may be adjusted accordingly.
The Exchange believes the proposed rule change is consistent with
the protection of investors and the public interest because it lowers
the cost of trading and market data to broker-dealers and the investing
public, and because it enhances competition in the trading of Tape A
securities.
2. Statutory Basis
NSX believes that the proposed rule change is consistent with the
provisions of Section 6(b) of the Act,\8\ in general, and with Section
6(b)(4) of the Act,\9\ in particular, in that it is designed to provide
for the equitable allocation of reasonable dues, fees and other charges
by crediting members on a pro rata basis.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4)
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B. Self-Regulatory Organization's Statement on Burden on Competition
NSX 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
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 for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and
Rule 19b-4(f)(6) thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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The Exchange has asked that the Commission waive the 30-day
operative delay contained in Rule 19b-4(f)(6)(iii) under the Act.\12\
The Commission believes waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest,
because the proposed rule change contains no novel regulatory issues,
and is designed to enhance competition in the trading of Tape A
securities. Accordingly, the Commission designates the proposed rule
change to be effective and operative upon filing with the
Commission.\13\
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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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-2007-02 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-2007-02. 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 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-2007-02 and should 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. E7-5985 Filed 3-30-07; 8:45 am]
BILLING CODE 8010-01-P