[Federal Register Volume 78, Number 28 (Monday, February 11, 2013)]
[Notices]
[Pages 9756-9758]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02923]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68824; File No. SR-NSX-2013-03]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Fee and Rebate Schedule

February 4, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on January 25, 2013, National Stock 
Exchange, Inc. (``NSX[supreg]'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``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.
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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 Fee and Rebate Schedule (the 
``Fee Schedule'') issued pursuant to Exchange Rule 16.1(a) to: (1) Make 
a clarifying change to Section I; and (2) amend Section III to provide 
a rebate of $0.0013 per share to Equity Trading Permit (``ETP'') 
Holders \3\ for Double Play Orders \4\ that are executed at or above 
$1.00 on an away Trading Center.\5\
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    \3\ NSX Rule 1.5 defines the term ``ETP'' as an Equity Trading 
Permit issued by the Exchange for effecting approved securities 
transactions on the Exchange's Trading Facilities.
    \4\ NSX Rule 11.11(c)(10).
    \5\ NSX Rule 2.11. A Trading Center is defined as ``other 
securities exchanges, facilities of securities exchanges, automated 
trading systems, electronic communication networks or other brokers 
or dealers.''
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    The text of the proposed rule change is available on the Exchange's 
Web site at www.nsx.com, at the Exchange's principal office, 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

[[Page 9757]]

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 proposes to amend Section I of its Fee Schedule to: 
(1) Make a clarifying change to Section I of the Fee Schedule; and (2) 
amend Section III of the Fee Schedule to provide a rebate of $0.0013 
per share to ETP Holders for Double Play Orders that are executed at or 
above $1.00 on an away Trading Center.
Clarifying Change
    Under Section I of the Fee Schedule, the Exchange currently charges 
ETP Holders that do not execute at least 50,000 shares of added 
liquidity in a month a per share fee of $0.0030 for any marketable 
order that removes liquidity in the Exchange's automatic execution mode 
of interaction (``Auto-Ex Mode'').\6\ ETP Holders that execute more 
than 50,000 shares of added liquidity per month in Auto-Ex Mode are 
eligible for fees and rebates under either the Variable or Fixed Fee 
Schedules under Section I. Endnote number three (3) in the Fee Schedule 
currently states that ``Fixed Fee Schedule'' will apply to each ETP 
Holder unless the ETP Holder elects to adopt the ``Variable Fee 
Schedule'' by sending an email indicating this preference to 
[email protected] prior to 4:00 p.m. EST on the first trading day of 
the calendar month. Rather than including this option in an endnote, 
the Exchange proposes to move this endnote to Section I so that ETP 
Holders are more easily made aware of this alternative and how to elect 
the ``Variable Fee Schedule.'' The Exchange also proposes to modify 
that language under Section I to explicitly state that ETP Holders that 
execute at least 50,000 shares of added liquidity per month would be 
subject to the ``Fixed Fee Schedule,'' unless they elected the 
``Variable Fee Schedule'' and notified the Exchange as described above. 
The Exchange simply proposes to clarify the existing volume eligibility 
requirements and does not propose any changes to those standards.
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    \6\ Under Auto-Ex Mode the Exchange matches and executes like-
priced orders in accordance with the process described in NSX Rule 
11.13(b)(1).
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Double Play Order Rebate
    The Exchange also proposes to provide ETP Holders a rebate of 
$0.0013 per share for Double Play Orders that are executed at or above 
$1.00 on an away Trading Center. The Double Play Order is a market or 
limit order that instructs the System \7\ to route the order to a 
specified away Trading Center(s) as approved by the Exchange from time 
to time.\8\ The order will not be exposed to the NSX Book \9\ before 
being routed to a specified destination or destinations. An order that 
is not executed in full after routing away would return to the 
Exchange, receive a new timestamp, and be processed in the manner 
described in NSX Rule 11.14.(a).
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    \7\ Under NSX Rule 1.5, the term ``System'' is defined as ``the 
electronic communications and trading facility * * * through which 
orders of [ETP Holders] are consolidated for ranking and 
execution.''
    \8\ NSX Rule 11.11(c)(10).
    \9\ Under NSX Rule 1.5, the term ``NSX Book'' is defined as 
``the System's electronic file of orders.''
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    Under Section III of the Fee Schedule, the Exchange charges ETP 
Holders for orders that are routed away and executed on another Trading 
Center a per share fee of $0.0030 for securities priced at or above 
$1.00 or 0.30% of the order's notional value for securities priced 
below $1.00. Instead of the existing fee for routed orders, the 
Exchange now proposes to provide ETP Holders a rebate of $0.0013 per 
share for Double Play Orders that are priced at or above $1.00 and 
executed on an away Trading Center. Any portion of a Double Play Order 
that is not executed in full after routing away and returned to the 
Exchange will not be eligible for the proposed rebate. The unexecuted 
portion of the Double Play order is, instead, subject to the existing 
fee structure under Schedules I of the Fee Schedule or the current fee 
of $0.0030 per share under Section III of the Fee Schedule if 
subsequently routed to an away Trading Center in accordance with 
Exchange Rule 11.15(a)(ii) after exhausting all eligible orders resting 
on the NSX Book and not as part of the original Double Play Order 
instructions. The Exchange does not propose to amend the fee for 
securities priced below $1.00.
    The Exchange believes the proposed rebate will increase liquidity 
by encouraging ETP Holders to use Double Play Orders since this order 
type provides an additional way to access liquidity on other market 
centers. Increased use of the Double Play Order should also increase 
liquidity at the Exchange since any unexecuted portion is returned to 
the NSX Book.
Operative Date and Notice
    The Exchange will make the proposed modifications, which are 
effective on filing of this proposed rule, operative as of commencement 
of trading on February 1, 2013. 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 
an Information 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 rebate for Double Play 
Orders routed away and executed on another Trading Center is consistent 
with the provisions of Section 6(b) of the Securities Exchange Act of 
1934 \10\ (the ``Act''), in general, and Section 6(b)(4) of the 
Act,\11\ in particular, in that it is reasonable and equitably 
allocated amongst ETP Holders because all ETP Holders are eligible to 
submit (or not submit) these types of orders, and may do so at their 
discretion during the course of the month. The Exchange notes that ETP 
Holders using the Double Play Order will receive a rebate rather than 
being charged the Exchange's standard fees for orders routed away to 
other Trading Centers. The rebate for Double Play Orders is a 
reasonable method to increase liquidity by encouraging ETP Holders to 
use Double Play Orders since this order type provides an additional way 
to access liquidity on other market centers. Increased use of the 
Double Play Order should also increase liquidity at the Exchange since 
any unexecuted portion is returned to the NSX Book. Furthermore, the 
Exchange believes that the proposed rebate for Double Play Orders is 
consistent with the provisions of Section 6(b)(5) of the Act,\12\ 
because it is not unfairly discriminatory amongst ETP Holders. As 
stated above, ETP Holders are eligible to submit (or not submit) these 
types of orders, and may do so at their discretion during the course of 
the month.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
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    Lastly, the Exchange believes that the proposed clarifications to 
Section I of the Fee Schedule are consistent with the provisions of 
Section 6(b) of the Act,\13\ in general, and Section 6(b)(4) of the 
Act,\14\ in particular, in that is reasonable because these changes 
clarify to ETP Holder what the eligibility requirements

[[Page 9758]]

are for receiving the Fixed Fee Schedule and how to notify the Exchange 
if they chose to elect the Variable Fee Schedule under Section I. The 
Exchange does not propose to change the existing eligibility volume 
requirements.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and rebates to remain 
competitive with other exchanges. For the reasons described above, the 
Exchange believes that the proposed rule change reflects this 
competitive environment.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. ETP Holders using the Double 
Play Order will receive a rebate rather than being charged the 
Exchange's standard fees for orders routed away to other Trading 
Centers. The rebate is designed to increase liquidity by encouraging 
ETP Holders to use Double Play Orders which should also increase 
liquidity at the Exchange since any unexecuted portion is returned to 
the NSX Book. As stated above, the Exchange operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and rebates to remain 
competitive with other exchanges.

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 Exchange Act \15\ and subparagraph 
(f)(2) of Rule 19b-4.\16\ At any time within 60 days of the filing of 
such proposed rule change, the Commission summarily may temporarily 
suspend 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4.
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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 email to [email protected]. Please include 
File Number SR-NSX-2013-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSX-2013-03. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2013-03, and should be submitted on or before March 
4, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02923 Filed 2-8-13; 8:45 am]
BILLING CODE 8011-01-P