[Federal Register Volume 78, Number 191 (Wednesday, October 2, 2013)]
[Notices]
[Pages 60954-60956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24016]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70525; File No. SR-NSX-2013-18]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Amend its Fee and Rebate Schedule
September 26, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act '') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 23, 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) in order to
change two of the stocks on the list of five select securities (the
``Select Securities'') for which the Exchange pays a rebate of $0.0045
per executed share to Equity Trading Permit (``ETP'') \3\ Holders that
direct Double Play Orders \4\ in those securities to the CBOE Stock
Exchange, Inc. (``CBSX''). The Exchange is proposing no other changes
to the Fee Schedule except to amend the list of Select Securities.
Specifically, the Exchange proposes to remove Advanced Micro Devices,
Inc., (``AMD'') and Micron Technology, Inc. (``MU'') from the list of
Select Securities, and replace them with Apple Inc. (``AAPL'') and
Google Inc. (``GOOG'') \5\ AMD and MU will revert to the fee and rebate
programs applicable for all other securities that trade on the
Exchange, which provide for a rebate of $0.0015 for Double Play Orders,
other than those in the Select Securities, routed to and executed on
CBSX.
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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) defines a ``Double Play Order'' as
market or limit orders for which an ETP Holder instructs the System
to route to designated away Trading Centers which are approved by
the Exchange from time to time without first exposing the order to
the NSX Book. A Double Play Order that is not executed in full after
routing away receives a new time stamp upon return to the Exchange
and is ranked and maintained in the NSX Book in accordance with Rule
11.14(a).
\5\ The Exchange previously filed for immediate effectiveness
amendments to its Fee Schedule, effective July 1, 2013, that: (i)
Established the $0.0045 per share rebate for executions of Double
Play Orders in the Select Securities on CBSX; (ii) clarified that
the unexecuted portion of a Double Play Order that is returned to
NSX after its initial route to CBSX and subsequently executed on the
NSX or routed away in accordance with NSX Rule 11.15(a)(ii) is
subject to the standard Fee Schedule; and (iii) clarified that the
$0.0030 per share routing fee applies only to orders routed by the
Exchange in accordance with NSX Rule 11.15(a)(ii). In addition to
AMD and MU, the Select Securities identified were Bank of America
Corp. (``BAC''), Nokia Corporation (``NOK''), and Sirius XM Radio
Inc. (``SIRI''). See Exchange Act Release No. 34-69941; 78 FR 41966;
SR-NSX-2013-14 [sic].
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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 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 IIIA of its Fee Schedule to
change two of the five stocks on the list of Select Securities that
will receive a rebate of $0.0045 per executed share to ETP Holders that
direct Double Play Orders to CBSX. A Double Play Order is a market or
limit order for which the ETP Holder instructs the NSX System \6\ to
bypass the NSX Book \7\ and route the order to a designated away
Trading Center(s) \8\ that has been approved by
[[Page 60955]]
the Exchange.\9\ The NSX System will provide any unexecuted portion of
a Double Play Order with a new timestamp upon return to the Exchange,
and the order will be processed in the manner described in NSX Rule
11.14 (Priority of Orders).
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\6\ Under NSX Rule 1.5, the term ``System'' is defined as ``the
electronic securities communications and trading facility. , .
through which orders of Users are consolidated for ranking and
execution.''
\7\ Under NSX Rule 1.5, the term ``NSX Book'' is defined as
``the System's electronic file of orders.''
\8\ NSX Rule 2.11(a) defines a Trading Center as other
securities exchanges, facilities of securities exchanges, automated
trading systems, electronic communications networks or other brokers
or dealers.
\9\ See NSX Rule 11.11(c)(10).
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Under the revised Fee Schedule, symbols AAPL and GOOG will replace
symbols AMD and MU. CBSX has determined to change these two Select
Securities in its fee schedule.\10\ The Exchange intends to pass
through the rebates to ETP Holders that direct Double Play Orders in
the Select Symbols to the CBSX and, accordingly, is making this
conforming change to the Fee Schedule in order to pass through the
rebates received from CBSX to ETP Holders that direct Double Play
Orders in the Select Securities to CBSX. The Exchange notes that its
proposed amendment to the Fee Schedule to substitute two symbols on the
list of Select Securities does not affect the amount of the rebate
applicable to Double Play orders in such securities routed to CBSX, for
the select securities and for all other securities.
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\10\ Exchange Act Release No. 34-70382; 78 FR 57247; SR-CBOE-
2013-86 [sic].
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The removal of AMD and MU from the list of Select Securities and
the addition of AAPL and GOOG is proposed as a means to increase the
liquidity in AAPL and GOOG. AMD and MU had been included in the Select
Symbols in an attempt to attract greater liquidity in both symbols, but
increased liquidity has not occurred. By returning those symbols to the
fee and rebate structure applicable to all other securities, and
substituting AAPL and GOOG, the Exchange hopes to attract greater
liquidity provision in AAPL and GOOG. AAPL and GOOG are higher-priced
stocks that typically have larger spreads than other products, and it
is anticipated that the enhanced rebate structure may result in more
liquidity in these symbols.
2. Statutory Basis
The Exchange believes that the proposed change to the list of
Select Symbols to which the increased rebate for Double Play Orders
routed away and executed on the CBSX will apply is consistent with the
provisions of Section 6(b) of the Act in general, and Sections 6(b)(4)
\11\ and 6(b)(5) \12\ of the Act in particular. The Exchange submits
that increased rebate is consistent with Section 6(b)(4) of the Act in
that it provides for the equitable allocation of reasonable dues and
fees among ETP Holders, issuers and persons using the Exchange's
facilities. All ETP Holders are eligible to submit (or not submit)
Double Play Orders in the Select Securities at their discretion.
Providing ETP Holders with the enhanced rebate for directing Double
Play Orders in the Select Securities to the CBSX is a reasonable method
to increase order flow handled by the Exchange, and the periodic
substitution of securities on the list of Select Securities is
responsive to whether the enhanced rebate structure is attaining the
anticipated results in these symbols, and whether changes to the list
of Select Securities should be made to provide new opportunities for
ETP Holders and their customers to benefit from increased liquidity in
these symbols that the enhanced rebates were designed to encourage.
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\11\ 15 U.S.C. 78f(b)(4).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange notes that its proposed amendment to the Fee Schedule
to substitute two symbols on the list of Select Securities does not
affect the amount of the rebate applicable to Double Play orders in
such securities routed to CBSX. The Exchange's proposal mirrors that of
the CBSX, which is proposing to amend its fee schedule to effect the
same change to the list of Select Securities, to be effective as of
September 3, 2013. The Exchange intends to merely pass through rebates
to ETP Holders that direct Double Play Orders in the Select Symbols to
the CBSX and, accordingly, is making this conforming change to the Fee
Schedule in order to pass through the rebates received from CBSX to ETP
Holders that direct Double Play Orders in the Select Securities to
CBSX.
As noted by the Exchange in its initial filing to implement the
enhanced rebate schedule in the Select Securities, \13\ the liquidity
profiles of the Select Securities are different from those for other
symbols and the rebate structure for the Select Securities is intended
to incentivize the trading in the Select Securities and thus provide a
greater pool of liquidity. The substitution of two symbols meeting this
profile for two other symbols that did not attain the increased
liquidity levels is a reasonable means of attracting greater liquidity
in these symbols to the Exchange. The rebates for the Select Securities
apply equally to all market participants. The Exchange submits that the
rebate structure for the Select Securities constitutes an equitable
allocation of reasonable fees and other charges among ETP Holders,
issuers and other persons using the facilities of the Exchange, and the
substitution of two symbols on the current list of five is consistent
with the [sic] of Section 6(b)(4) of the Act.
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\13\ Id. at footnote 5.
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The Exchange believes that the fee and rebate structure for the
Select Securities is consistent with Section 6(b)(5) of the Act in that
it does not permit unfair discrimination between ETP Holders, issuers
and customers, and substituting two symbols on the list of Select
Securities does not affect the non-discriminatory nature of the
enhanced rebate program. ETP Holders and their customers will continue
to choose to send Double Play Orders in the Select Securities to NSX to
be eligible for the enhanced rebate schedule and they will also
continue to have a choice of other execution venues with different
pricing mechanisms as well. By offering the enhanced rebate structure
in the Select Securities, the Exchange is providing alternatives to ETP
Holders and their customers, while also striving to increase the
liquidity in the Select Securities on the Exchange.
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. The Exchange submits that
the enhanced rebate in the Select Securities promotes competition by
potentially attracting additional liquidity to the Exchange and
providing access to liquidity on the CBSX. The increased rebate is
designed to encourage ETP Holders to use Double Play Orders and
increase the number of shares handled by the Exchange and CBSX. To this
extent, the Exchange submits that the proposed substitution of AAPL and
GOOG for AMD and MU on the list of Select Securities is responsive to
the competitive forces that impact liquidity and order flow and are
intended to enhance competition for order flow in these securities.
Moreover, as the Exchange has previously noted, it does not believe
that passing through the rebate received from the CBSX to ETP Holders
imposes a burden on competition for any other Exchange-approved Trading
Center to which ETP Holders may direct orders since other Trading
Centers may offer other competitive functions or features such as low
cost executions, increased levels of liquidity or faster executions.
The ETP Holder may choose which offering is most attractive and the
increased rebate is one factor which an ETP Holder may consider.
[[Page 60956]]
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 \14\ and subparagraph
(f)(2) of Rule 19b-4.\15\ 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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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 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-2013-18 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-2013-18. 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, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 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-2013-18 and should be
submitted on or before October 23, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24016 Filed 10-1-13; 8:45 am]
BILLING CODE 8011-01-P