[Federal Register Volume 73, Number 224 (Wednesday, November 19, 2008)]
[Notices]
[Pages 69703-69704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27428]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58935; File No. SR-ndash;NSX-2008-19]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Exchange Rule 16 and the NSX Fee Schedule for Order Delivery Mode 
Transactions

November 13, 2008.
    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 November 5, 2008, 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 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 amend Exchange Rule 16.2(b) and the 
NSX Fee and Rebate Schedule (the ``Fee Schedule'') issued pursuant to 
Exchange Rule 16.1(c) in order to (i) eliminate the rebate for adding 
liquidity in Order Delivery mode of order interaction for all 
securities and (ii) eliminate the trade and quote market data revenue 
credit in Order Delivery mode for all securities.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nsx.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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
    With this rule change, the Exchange is proposing to eliminate all 
liquidity adding rebates and market data revenue credits in Order 
Delivery mode of order interaction (``Order Delivery Mode'').\3\ In 
particular, for securities in Order Delivery Mode, this rule change 
proposes to reduce the rebate for adding liquidity to zero across all 
Tapes and regardless of the price at which the securities are 
trading.\4\
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    \3\ This rule change proposes no changes to the fees and rebates 
applicable to securities executed in the Automatic Execution (``Auto 
Ex'') mode of order interaction under current NSX Rule 11.13(b)(1).
    \4\ In particular, for securities trading at or above one dollar 
in Order Delivery Mode, this rule change proposes to reduce to zero 
the rebate for adding liquidity from $0.0023 per share executed for 
Tape A, and from $0.0025 per share executed for Tapes B and C. For 
securities which trade under one dollar in Order Delivery Mode, this 
rule change proposes to reduce to zero the rebate for adding 
liquidity from 0.10% of the trade value, where ``trade value'' means 
a dollar amount equal to the price per share multiplied by the 
number of shares executed.
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    In addition, with respect to Tape B and C securities in Order 
Delivery Mode, the instant filing proposes to eliminate the market data 
revenue credit in both trades and quotes. Currently in Order Delivery 
Mode, ETP Holders receive a credit of 50% of both trade and quote 
market data revenues for Tape B and C securities, regardless of price. 
This credit is proposed to be eliminated for all Tape B and C 
securities executed in Order Delivery Mode, regardless of price, which 
effectively eliminates tape revenue sharing in Order Delivery Mode.\5\
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    \5\ Pursuant to SR-NSX-2008-17, the Exchange previously 
eliminated the tape revenue sharing credit program for all Tape A 
securities in Order Delivery Mode.
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    Because as a result of the proposed rule change there would be no 
tape credit sharing program under either Order Delivery Mode or 
Automatic Execution mode of order interaction (``AutoEx''), the instant 
rule filing proposes to simplify Rule 16.2 by eliminating the text of 
Rule 16.2(b) (``Tape Credits'') in its entirety. To the extent that the 
Consolidated Tape Association or the Nasdaq Securities Information 
Processor subsequently adjusts any Tape A, Tape B or Tape C revenue 
earned by the Exchange for any period(s) during which the tape revenue 
credit program was in effect, credits paid to ETP Holders would be 
adjusted, as necessary, in accordance with the rules in effect during 
such period, including the ``De Minimis Credits'' rule under current 
Rule 16.2(b)(5) which establishes an eligibility threshold of $250 per 
calendar quarter for participation in the tape credit program.

No Changes to Automatic Execution Mode

    For purposes of clarity, the proposed rule change proposes no 
modifications to the fees and rebates relating to any trades in AutoEx.

Rationale

    The Exchange has determined that these changes are necessary to 
increase the revenue of the Exchange and to adequately fund its 
regulatory and general business functions. The proposed modification is 
reasonable and equitably allocated to those ETP Holders that opt to 
provide liquidity in Order Delivery Mode, and is not discriminatory 
because ETP Holders are free to elect whether to send orders in all 
tapes through the Order Delivery Mode, through AutoEx, and as liquidity 
providing trades and quotes. Based upon the information above, the 
Exchange believes that the proposed rule change is consistent with the 
protection of investors and the public interest.

Operative Date and Notice

    The Exchange intends to make the proposed credit and rebate 
structure effective on filing of this proposed rule for trading on 
November 6, 2008. Pursuant to Exchange Rule 16.1(c), the Exchange will 
``provide ETP Holders with notice of all relevant dues, fees, 
assessments and charges of the Exchange'' through the issuance of a 
Regulatory Circular of the changes to the Fee Schedule and will post a 
copy of the rule filing on the Exchange's Web site (www.nsx.com).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the

[[Page 69704]]

Act,\6\ in general, and Section 6(b)(4) of the Act,\7\ in particular, 
in that it is designed to provide for the equitable allocation of 
reasonable dues, fees and other charges among its members and other 
persons using the facilities of the Exchange. Moreover, the proposed 
fee and rebate structure is not discriminatory in that all ETP Holders 
are eligible to submit (or not submit) liquidity adding trades and 
quotes in Order Delivery Mode or AutoEx in all tapes and may do so at 
their discretion.

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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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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

    The proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 
19b-4 \9\ thereunder, because, as provided in (f)(2), it changes ``a 
due, fee or other charge applicable only to a member'' (known on the 
Exchange as an ETP Holder). 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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    \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. 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-2008-19 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSX-2008-19. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the 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-2008-19 and should be 
submitted on or before December 10, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-27428 Filed 11-18-08; 8:45 am]
BILLING CODE 8011-01-P