[Federal Register Volume 68, Number 240 (Monday, December 15, 2003)]
[Notices]
[Pages 69738-69739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30835]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48891; File No. SR-CSE-2003-14]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by National Stock Exchange To 
Extend Its Liquidity Provider Fee and Rebate Pilot Program

December 8, 2003
    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 December 3, 2003, National Stock Exchange (``Exchange'')\3\ 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 by the Exchange. The Exchange filed this proposal 
pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6)\5\ 
thereunder, which renders the proposal effective upon filing with the 
Commission.\6\ The Commission is publishing this notice to solicit 
comments 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.
    \3\ The Exchange was formerly known as The Cincinnati Stock 
Exchange. See Securities Exchange Act Release No. 48774 (November 
12, 2003), 68 FR 65332 (November 19, 2003)(SR-CSE-2003-12).
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ The Exchange gave the Commission written notice of its 
intention to file the proposed rule change on November 21, 2003. The 
Exchange asked the Commission to waive the 30-day operative delay. 
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 has a Liquidity Provider Fee and Rebate Program 
(``Program''), which was originally proposed in SR-CSE-2002-16,\7\ that 
is currently in effect and is set to expire on December 31, 2003.\8\ 
Through this proposed rule change the Exchange seeks to extend the 
Program through June 30, 2004. The Exchange proposes no other 
substantive changes to the Program at this time. The text of the 
proposed rule change is available at the Exchange and at the 
Commission.
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    \7\ Securities Exchange Act Release No. 46848 (November 19, 
2002, 67 FR 70793 (November 26, 2002)(''Original Pilot'').
    \8\ The Program, which was originally set to expire on March 31, 
2003, was subsequently extended until September 30, 2003, and 
extended again until December 31, 2003. Securities Exchange Act 
Release Nos. 47596 (March 28, 2003), 68 FR 16594 (April 4, 2003)(SR-
CSE-2003-03)(extending the Program until September 30, 2003) and 
48584 (October 2, 2003), 68 FR 58368 (October 9, 2003)(SR-CSE-2003-
13)(extending the Program until December 31, 2003).
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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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On October 22, 2002, the Exchange filed SR-CSE-2002-16,\9\ which 
proposed to establish a pilot transaction credit for liquidity 
providers that is paid by liquidity takers on each intra-Exchange 
execution \10\ in Nasdaq securities. Under the Program, the Exchange 
amended its Rule 11.10A(g)(1) by adding subparagraph (B) to charge the 
liquidity taker, i.e., the party executing against a previously 
displayed quote/order, $0.004 per share. The Exchange then passes on to 
the liquidity provider, i.e., the party providing the displayed quote/
order, $0.003 per share with the exchange retaining $0.001 per share. 
With this proposed rule change, the Exchange is extending the Program 
through June 30, 2004.
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    \9\ See Original Pilot, supra note 7.
    \10\ An ``intra-Exchange execution'' (referred to in the 
Original Pilot as an ``intra-CSE execution'') is any transaction 
that is executed on the Exchange for which the executing member on 
the buy-side of the transaction differs from the executing member on 
the sell-side of the transaction. Id. at 70793.
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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,\11\ in general, and 
Section 6(b)(5) of the Act,\12\ in particular, in that it is designed 
to promote just and equitable principles of trade and to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, generally, in that it protects investors 
and the public interest. The Exchange believes that the proposed rule 
change is also consistent with Section 6(b)(4) of the Act,\13\ in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among Exchange members by crediting 
members on a pro rata basis.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 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

    No written comments were solicited or received in connection with 
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 \14\ and 
Rule 19b-4(f)(6)\15\ thereunder. 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that such waiver is consistent 
with the protection of investors and the public interest, for it will 
allow the Program to continue without interruption. For these reasons, 
the Commission designates the

[[Page 69739]]

proposal to be effective and operative upon filing with the 
Commission.\16\
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    \16\ For purposes only of accelerating the operative date of the 
proposed rule change, 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-CSE-2003-14. 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, comments should be sent in 
hardcopy or by e-mail but not by both methods. 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 will also be available for 
inspection and copying at the principal office of the Exchange. All 
submissions should refer to file number SR-CSE-2003-14 and should be 
submitted by January 5, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-30835 Filed 12-11-03; 8:45 am]
BILLING CODE 8010-10-P