[Federal Register: October 5, 2006 (Volume 71, Number 193)]
[Notices]
[Page 58891-58892]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc06-90]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54539; File No. SR-NSX-2006-06]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Order Approving Proposed Rule Change To Allow the Primary Market Print
Protection Rule To Be Applied on an Optional Basis
September 28, 2006.
On April 12, 2006, the National Stock Exchange, Inc. (``NSX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend NSX Rule 11.9(u), which pertains to the
preferencing of public agency limit orders that a dealer represents as
agent, to eliminate the
[[Page 58892]]
specific requirement that a Designated Dealer execute eligible limit
orders if certain conditions occur in the primary market (referred to
as the ``primary market print protection'' or the ``limit order
protection'' provision). Pursuant to the proposal, dealers and members
would still be permitted, but not required, to guarantee the execution
of a limit order as principal upon the occurrence of a transaction in
another market. The Commission published the proposed rule change for
comment in the Federal Register on June 27, 2006.\3\ The Commission
received no comments on the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 54018 (June 20,
2006), 71 FR 36576.
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After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder that are applicable to a national
securities exchange.\4\ In particular, the Commission believes that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\5\
which requires among other things, that the rules of the Exchange are
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
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\4\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\5\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the Exchange voluntarily enacted its
rule-based execution guarantees in 1996,\6\ when the guarantees were
used, among other things, as a competitive tool to attract order flow
to the Exchange. The Commission notes that it has approved a
substantially similar proposal of another national securities
exchange.\7\ In that context, the Commission discussed how the
environment had changed since the adoption of voluntary rule-based
execution guarantees and ``that consequently, the guarantees may no
longer serve to foster competition between the markets.'' \8\ The
Commission notes that the deletion of the rule-based mandate regarding
limit order protection does not in any way affect the Exchange's rules
relating to trading ahead prohibitions or best execution obligations,
or any other dealer obligations within NSX's rules. In addition, the
Commission notes that, under the proposed rule change, dealers and
members would still be permitted, but not required, to provide such
guarantees if they wished to do so.\9\
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\6\ See Securities Exchange Act Release No. 37046 (March 29,
1996), 61 FR 15322 (April 5, 1996) (File No. SR-CSE-95-03).
\7\ See Securities Exchange Act Release No. 52652 (October 21,
2005), 70 FR 62151 (October 28, 2005) (order approving File No. SR-
CHX-2004-17).
\8\ Id. at 62152.
\9\ In addition, the Commission notes that it recently approved
File No. SR-NSX-2006-08 which, among other things, adopted a new NSX
Rule 11.9 as part of a new trading system for the Exchange, which is
not yet operational. See Securities Exchange Act Release No. 54391
(August 31, 2006), 71 FR 52836 (September 7, 2006).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NSX-2006-06) be, and hereby
is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
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\11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E6-16460 Filed 10-4-06; 8:45 am]
BILLING CODE 8011-01-P