[Federal Register Volume 69, Number 82 (Wednesday, April 28, 2004)]
[Notices]
[Pages 23243-23244]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9628]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49586; File No. SR-NSX-2004-03]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Stock Exchange 
Amending Its Fee Schedule To Cap Members Monthly Transaction Fees and 
Reduce the Designated Dealer's Principal Activity Fees

April 21, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on March 31, 2004, the National Stock Exchange\SM\ (the 
``Exchange'' or ``NSX''\SM\) \3\ 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 prepared by the 
Exchange. The Commission is publishing this notice to solicit comment 
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 recently changed its name and was formerly 
known as The Cincinnati Stock Exchange or ``CSE.'' See Securities 
Exchange Act Release No. 48774 (November 12, 2003), 68 FR 65332 
(November 19, 2003) (SR-CSE-2003-12).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its fee schedule to place a cap of 
$200,000 per member on monthly transaction fees and to reduce the 
charge for Designated Dealers' principal activity from $0.0025 to 
$0.001 per share for non-Nasdaq securities.
    The text of the proposed rule change appears below. New text is in 
italics. Deleted text is in brackets.
* * * * *
Rule 11.10. National Securities Trading System Fees
A. Trading Fees
* * * * *
    (g) Proprietary ([p]Principal) Transactions.
    (1)(A) All Designated Dealers in securities other than Nasdaq 
securities, except those acting as Preferencing Dealers or Contributing 
Dealers, will be charged $0.001[0.0025] per share ($0.1[0.25]/100 
shares) for principal transactions.
* * * * *
    (i) [Reserved.]Transaction Fee Cap. The monthly transaction fees 
charged to each member shall be equal to the lesser of (1) the amounts 
assessed pursuant to Paragraphs (A)(a) through (A)(h) of this Rule 
11.10 or (2) $200,000.
* * * * *

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
    The Exchange is proposing two changes to its fee schedule. First, 
the Exchange proposes to introduce a cap on the total monthly 
transaction fees assessed to each member. There is currently no limit 
to the overall amount of transaction fees that may be charged. However, 
under the new fee provision, the monthly transaction fee will now be 
capped at $200,000 per member. Second, the Exchange proposes to reduce 
the charge for a Designated Dealer trading in non-Nasdaq securities 
when not acting as a Preferencing Dealer or Contributing Dealer.\4\ The 
current fee is $0.0025 per share for principal transactions. The 
Exchange proposes to reduce this fee to $0.001 per share, which is the 
equivalent of the Exchange's current charge for Intermarket Trading 
System or ``ITS'' transactions.
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    \4\ A Preferencing Dealer trades against public agency market or 
marketable limit orders which the Dealer presents as agent in 
accordance with the Exchange's price-time and agency/principal 
priority rules. See Exchange Rule 11.9(u). A Contributing Dealer is 
a member that must maintain certain minimum net capital, be 
registered with the Exchange with respect to one or more securities, 
and provide regular bids and offers for round lots of securities in 
which it is registered. See Exchange Rule 11.9(a)(6).
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    The Exchange believes that the implementation of these changes will 
allow for a reduction in the overall level of fees paid by members 
while ensuring that each member pays an equitable share of the costs 
associated with operating the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\5\ in general, and with section 6(b)(4) 
of the Act,\6\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges. The 
Exchange also believes that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \7\ in that it is 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. The 
Exchange believes that the proposed changes will create incentives for 
members to use the Exchange trading system, thereby increasing 
competition, which, in turn, will enhance the National Market System.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 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 the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received in connection 
with the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has become effective pursuant to 
section 19(b)(3)(A)(ii) of the Act \8\ Rule 19b-4(f)(2) \9\ thereunder, 
because it changes a due, fee or other charge imposed by the Exchange. 
At any time within 60 days of the filing of such 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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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.

[[Page 23244]]

Comments may be submitted by any of the following methods:
    Electronic comments:
     Use the Commission's Internet comment for 
(http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please 
include File Number SR-NSX-2004-03 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NSX-2004-03. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
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-
2004-03 and should be submitted on or before May 19, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-9628 Filed 4-27-04; 8:45 am]
BILLING CODE 8010-01-P