[Federal Register Volume 70, Number 114 (Wednesday, June 15, 2005)]
[Notices]
[Pages 34805-34806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3080]



[[Page 34805]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51805; File No. SR-NSX-2005-05]


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

June 8, 2005.
    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 May 26, 2005, the National Stock Exchange (``NSX'' or ``Exchange'') 
\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 Exchange 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 the proposed rule change 
effective upon filing with the Commission.\6\ The Commission is 
publishing this notice to solicit 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\ The Exchange 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).
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ The Exchange provided the Commission with written notice of 
its intention to file the proposed rule change on May 20, 2005. The 
Commission received the Exchange's submission, and asked the 
Exchange to file the instant proposed rule change, pursuant to Rule 
19b-4(f)(6) under the Act. 17 CFR 240.19-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange established a liquidity provider rebate and fee pilot 
program (``Program'') in SR-CSE-2002-16.\7\ The Program is currently in 
effect and is scheduled to expire June 30, 2005.\8\ With the instant 
proposed rule change, the Exchange extends the Program through June 30, 
2006. The Exchange is making no substantive changes to the Program, 
other than extending its operation through June 30, 2006. The text of 
the proposed rule change is available on the NSX's Web site (http://www.nsx.com), at the NSX's principal office, and at the Commission's 
Public Reference Room.
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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 was originally set to expire on March 31, 2003. 
It has been extended four times, with the most recent extension due 
to expire on June 30, 2005. See Securities Exchange Act Release Nos. 
47596 (March 28, 2003), 68 FR 16594 (April 4, 2003)(SR-CSE-2003-
03)(extending the pilot until September 30, 2003); 48584 (October 2, 
2003), 68 FR 58368 (October 9, 2003)(SR-CSE-2003-13)(extending the 
pilot until December 31, 2003); 48891 (December 8, 2003), 68 FR 
69738 (December 15, 2003) (SR-CSE-2003-14)(extending the pilot until 
June 30, 2004); and 49792 (June 2, 2004), 69 FR 32389 (June 9, 
2004)(SR-NSX-2004-05)(extending the pilot until June 30, 2005).
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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 parts of such 
statements.

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

1. Purpose
    In SR-CSE-2002-16,\9\ the Exchange established the Program, which 
provides a transaction credit for liquidity providers that is paid by 
liquidity takers on each intra-Exchange execution \10\ in Nasdaq 
securities. To establish the Program, the Exchange amended Exchange 
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, allowing the Exchange to retain $0.001 per share. With the 
instant proposed rule change, the Exchange is extending the Program 
through June 30, 2006.\11\ The Exchange is making no other changes to 
the Program as it currently operates.
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    \9\ See Original Pilot, supra note 7.
    \10\ An ``intra-Exchange execution'' (referred to in the 
original filing 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.
    \11\ The Exchange understands that the Commission's Regulation 
NMS (``Reg NMS'') may have an impact on the Program. Accordingly, 
the Exchange will undertake to work with the Commission to ensure 
that the Program would be consistent with the rules and regulations 
contained in Reg NMS when they become effective.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \12\ in general, and furthers the objectives of 
Section 6(b)(5) \13\ 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,\14\ 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 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 either solicited or received.

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6) 
thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    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.

[[Page 34806]]

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 [email protected]. Please include 
File Number SR-NSX-2005-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NSX-2005-05. 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 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 available publicly. All submissions should refer to 
File Number SR-NSX-2005-05 and should be submitted on or before July 6, 
2005.

    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3080 Filed 6-14-05; 8:45 am]
BILLING CODE 8010-01-P