[Federal Register Volume 72, Number 116 (Monday, June 18, 2007)]
[Notices]
[Pages 33551-33553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11627]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55893; File No. SR-NSX-2007-05]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change To Modify Chapter VII of the 
Exchange's Rules Regarding Suspensions of an ETP Holder by Certain 
Exchange Officers

June 11, 2007.
    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 9, 2007, National Stock Exchange, Inc. (``NSX'' or the 
``Exchange'') 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 substantially prepared by the 
Exchange. 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.
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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 modify Chapter VII of the Exchange's 
rules to provide that the Chairman of the Exchange's Board of Directors 
(``Chairman'') or the Exchange's Chief

[[Page 33552]]

Regulatory Officer, or their respective designees, would have the 
authority to summarily suspend or place limitations or conditions on an 
ETP Holder, or summarily suspend a person from access to Exchange 
services in certain circumstances. That authority currently rests with 
the Chairman or the Exchange's President. The text of the proposed rule 
change is below. Proposed new language is in italics; proposed 
deletions are enclosed in brackets.
RULES OF NATIONAL STOCK EXCHANGE, INC.
* * * * *
CHAPTER VII
Suspension by Chairman [or President] or Chief Regulatory Officer
Rule 7.1. Imposition of Suspension
    (a) An ETP Holder which fails or is unable to perform any of its 
contracts, or is insolvent or is unable to meet the financial 
responsibility requirements of the Exchange, shall immediately inform 
the Secretary in writing of such fact. Upon receipt of said notice, or 
whenever it shall appear to the Chairman of the Board or [President] 
Chief Regulatory Officer, or their respective designees, (after such 
verification and with such opportunity for comment by the ETP Holder as 
the circumstances reasonably permit) that an ETP Holder has failed to 
perform its contracts or is insolvent or is in such financial or 
operational condition or is otherwise conducting its business in such 
financial or operational condition or is otherwise conducting its 
business in such a manner that it cannot be permitted to continue in 
business with safety to its customers, creditors and other ETP Holders 
of the Exchange, the Chairman or [President] Chief Regulatory Officer, 
or their respective designees, may summarily suspend the ETP Holder or 
may impose such conditions and restrictions upon the ETP Holder as are 
reasonably necessary for the protection of investors, the Exchange, the 
creditors and the customers of such ETP Holder.
    (b) No Change.
    (c) In the event of suspension of an ETP Holder, the Exchange shall 
give prompt notice of such suspension to the ETP Holders of the 
Exchange. Unless the Chairman or the Chief Regulatory Officer, or their 
respective designees, [President] shall determine that lifting the 
suspension without further proceedings is appropriate, such suspension 
shall continue until the ETP Holder is reinstated as provided in Rule 
7.3. of this Chapter.
    Rules 7.2.-7.5. No Change.
Rule 7.6. Summary Suspension of Exchange Services
    The Chairman [or President] of the Board or Chief Regulatory 
Officer, or their respective designees, (after such verification with 
such opportunity for comment as the circumstances reasonably permit) 
may summarily limit or prohibit: (i) Any person from access to services 
offered by the Exchange, if such person has been and is expelled or 
suspended from any self-regulatory organization or barred or suspended 
from being associated with an ETP Holder of any self-regulatory 
organization or is in such financial or operating difficulty that the 
Exchange determines that such person cannot be permitted to do business 
with safety to investors, creditors, Exchange ETP Holders or the 
Exchange; or (ii) a person who is not an ETP Holder from access to 
services offered by the Exchange, if such person does not meet the 
qualification requirements or other pre-requisites for such access and 
if such person cannot be permitted to continue to have access with 
safety to investors, creditors, ETP Holders and the Exchange. Any 
person aggrieved by any such summary action may seek review under the 
provisions of the Exchange Rules relating to adverse action.
    Rule 7.7. 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
    The Exchange is proposing to modify Chapter VII of the Exchange's 
rules regarding suspensions of an ETP Holder by certain Exchange 
officers. Specifically, the proposal provides that the Chairman or the 
Chief Regulatory Officer, or their respective designees, would now have 
the authority to summarily suspend or place limitations or conditions 
on an ETP Holder under Rule 7.1, and lift suspensions pursuant to Rule 
7.1(c) without further proceedings. The proposal also provides that the 
Chairman or the Chief Regulatory Officer, or their respective 
designees, shall also have the authority to summarily limit or suspend 
Exchange services to certain persons under Rule 7.6. In both cases, 
that authority currently rests with the Chairman or the President.
    The proposal also provides that in the event either the Chairman or 
the Chief Regulatory Officer is not available, a person may be 
designated to act in their place for purposes of Chapter VII. The 
designee for the Chairman would be the Chairman of the Exchange's 
Regulatory Oversight Committee (``ROC''), a member of the ROC, or 
another comparable member of the Exchange's Board of Directors who is 
an Independent Director,\3\ in that order of priority. The designee for 
the Chief Regulatory Officer would be an officer in the Regulatory 
Services Division of the Exchange. This provision would provide 
continuity in the event the Chairman or the Chief Regulatory Officer is 
unavailable.
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    \3\ Section 1.1. I of the NSX By-Laws defines Independent 
Director as a member of the Board that the Board has determined to 
have no material relationship with the Exchange or any affiliate of 
the Exchange, or any ETP Holder or any affiliate of any such ETP 
Holder, other than as a member of the Board.
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    This rule change proposal would impact who has authority to act 
under Chapter VII but in no way changes the substantive provisions of 
this Chapter VII.
2. Statutory Basis
    The proposed rule change is consistent with the Act and the rules 
and regulations under the Act applicable to a national securities 
exchange and, in particular, the requirements of Section 6(b) \4\ of 
the Act. Specifically, the Exchange believes the proposed rule change 
is consistent with the requirements of Section 6(b)(5) \5\ of the Act 
that the rules of an exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts and 
practices, and, in general, to protect investors and the public 
interest.
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    \4\ 15 U.S.C. Sec.  78f(b).
    \5\ 15 U.S.C. Sec.  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 inappropriate burden on

[[Page 33553]]

competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2007-05. This file 
number should be included in 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 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 the File 
Number SR-NSX-2007-05 and should be submitted on or before July 9, 
2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
Nancy M. Morris,
Secretary.
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    \6\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E7-11627 Filed 6-15-07; 8:45 am]
BILLING CODE 8010-01-P