[Federal Register Volume 69, Number 155 (Thursday, August 12, 2004)]
[Notices]
[Pages 49927-49929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18420]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50146; File No. SR-NSX-2004-08]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the National Stock Exchange 
Relating to Manual Processing Fee

August 4, 2004.
    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 June 28, 2004, National Stock Exchange\SM\ (the ``Exchange'' or 
``NSX\SM\'') filed with the Securities and Exchange Commission (the 
``Commission'') a proposed rule change. On July 15, 2004, the Exchange 
filed Amendment No. 1 to the proposed

[[Page 49928]]

rule change.\3\ The proposed rule change, as amended, is described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. The Exchange filed the proposal pursuant to Section 
19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) \5\ thereunder, 
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\ See Letter from James C. Yong, Senior Vice President, 
Regulation and General Counsel of the NSX, to Nancy Sanow, Assistant 
Director, Division of Market Regulation, Commission, dated July 14, 
2004 (``Amendment No. 1''). In Amendment No. 1, NSX made technical 
corrections to its rule text and clarified that the manual 
processing fee proposed as NSX Rule 11.10(A)(e)(4) will be in lieu 
of the fees currently assessed for crosses and meets in Tape A, Tape 
B and Tape C securities.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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 to amend its schedule of fees to 
incorporate a manual processing fee for crosses and meets phoned into 
the NSX Control Room.\6\ The Exchange implemented these proposed 
changes, as amended, on July 1, 2004.
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    \6\ The Exchange is also proposing two non-material revisions to 
its fee schedule to change one reference to the ``CSE'' (the 
Exchange was formerly known as The Cincinnati Stock Exchange or 
``CSE'') to the ``Exchange'' and to correct a typographical error. 
The Exchange represents that these changes are administrative and 
non-substantive in nature and therefore not subject to notice and 
comment. See Amendment No. 1.
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    Below is the text of the proposed rule change, as amended. Proposed 
new language is italicized; proposed deletions are in brackets.
* * * * *
RULES OF NATIONAL STOCK EXCHANGE
* * * * *
CHAPTER XI Trading Rules
* * * * *
Rule 11.10 National Securities Trading System Fees
    A. Trading Fees
    (a) No change.
    (b) Odd-Lot Transactions. Members will be charged $0.50 per odd-lot 
transaction when acting as agent or principal, except that members will 
earn a credit of $0.50 for every four round-lot transactions executed 
(agency, professional agency or principal) on the [CSE]Exchange and 
printed on the Consolidated Tape by the Exchange. Notwithstanding the 
forgoing credit, there will be a minimum charge of $0.10 per odd-lot 
transaction.
    (c)-(d) No change.
    (e) Crosses and Meets
    (1)-(3) No change.
    (4) Users executing crosses and meets in Tape A, B or C securities 
through the Exchange's System Supervisory Center shall be charged $15 
per contra-party, up to a maximum of $75 per side of transaction. This 
transaction fee shall be in lieu of any transaction fee otherwise 
applicable under Paragraphs (A)(e)(1) through (A)(e)(3) above.
    (f) No change.
    (g) Proprietary (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 $0.0025 per share ($0.10/100 shares) for 
principal transactions.
    (B) No change.
    (2)-(4) No change.
    (h)-(j) No change.
    (k) Tape ``B'' Transactions. Except as provided in Paragraph 
(A)(e)(4) above, the [The] Exchange will not impose a transaction fee 
on Consolidated Tape ``B'' securities. In addition, Members will 
receive a 50 percent pro rata transaction credit of gross Tape ``B'' 
revenue; provided that, however, calculation of the transaction credit 
will be based on net Tape ``B'' revenues in those fiscal quarters where 
the overall revenue retained by the Exchange does not offset actual 
expenses and working capital needs. To the extent market data revenue 
from Tape ``B'' transactions is subject to year-end adjustment, credits 
provided under this program may be adjusted accordingly.
    (l)-(r) No change.
    B. No change.
    C. No change.
* * * * *

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
    Currently, orders can be entered on the Exchange either via an 
electronic connection or by phoning the NSX Control Room. There is 
currently no transaction charge for Users, who are not registered as 
Qualified or Designated Dealers, executing crosses and meets in Tape B 
and C securities whether electronically or manually processed.\7\ For 
Users executing crosses and meets in Tape A securities, there is 
currently a charge of $0.0005 per share per side for average daily 
volume up to 5 million shares per day and $0.000025 per share per side 
for average daily volume above 5 million shares, with a maximum charge 
of $37.50 per firm per side of transaction, whether electronically or 
manually processed. The Exchange is proposing to introduce a manual 
processing fee of $15 per contra-party, with a cap of $75 per side, on 
every cross or meet phoned into the NSX Control Room because of the 
additional resources and expense associated with processing phoned-in 
orders. The proposed manual processing fee will be in lieu of, and not 
in addition to, the fees currently assessed for crosses and meets and 
Tape A, Tape B and Tape C securities.\8\ The Exchange believes that the 
implementation of this manual processing fee is reasonable and ensures 
that each member pays an equitable share of the costs associated with 
operating the Exchange.
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    \7\ Dealers executing crosses in Tape B securities are not 
charged a transaction fee. Dealers executing crosses in Tape C 
securities are charged a per share fee of $0.001 per share for 
average daily volume up to 5 million shares per day and $0.000025 
per share for average daily volume 5 million shares and above per 
day.
    \8\ See Amendment No. 1.
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2. Statutory Basis
    The Exchange believes the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act,\9\ in general, and with 
Section 6(b)(4) of the Act,\10\ in particular, in that it is designed 
to provide for the equitable allocation of reasonable dues, fees, and 
other charges. The Exchange believes the proposed change, as amended, 
is also consistent with Section 6(b)(5) of the Act \11\ 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

[[Page 49929]]

general, to protect investors and the public interest. The Exchange 
also believes that the proposed change, as amended, will create 
incentives for members to electronically connect to the Exchange 
trading system, thereby increasing efficiency and competition, which, 
in turn, will enhance the National Market System.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 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, as 
amended, 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

    The foregoing rule change, as amended, has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \12\ and subparagraph 
(f)(2) of Rule 19b-4 \13\ thereunder, because it involves a member due, 
fee or other charge. At any time within sixty (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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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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. Comments should 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 [email protected]. Please include 
File Number SR-NSX-2004-08 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-2004-08. 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, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filings will also be 
available for inspection and copying at the principal office of the 
Exchange. 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 
publicly available. All submissions should refer to file number SR-NSX-
2004-08 and should be submitted on or before September 2, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to the delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18420 Filed 8-11-04; 8:45 am]
BILLING CODE 8010-01-P