[Federal Register Volume 73, Number 147 (Wednesday, July 30, 2008)]
[Notices]
[Pages 44305-44307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-17412]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58217; File No. SR-NSX-2008-12]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Provide for a Post Intermarket Sweep Order
July 24, 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 July 18, 2008, National Stock Exchange, Inc. (``NSX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.
NSX filed the proposal pursuant to Section 19(b)(3)(A) of the Act \3\
and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-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 is proposing to amend NSX Rule 11.11(c)(8) to allow
ETP Holders the option of designating an intermarket sweep order
(``ISO'') as a ``Post Intermarket Sweep Order'' (``Post ISO''). The
text of the proposed rule change is below. Proposed new language is in
italics, and the proposed deletions are enclosed in brackets:
Rules of National Stock Exchange, Inc.
Chapter XI. Trading Rules
* * * * *
Rule 11.11. Orders and Modifiers
Users may enter into the System the types of orders listed in this
Rule 11.11, subject to the limitations set forth in this Rule or
elsewhere in these Rules.
(a)-(b) No change.
(c) Other Types of Orders and Order Modifiers.
(1)-(7) No change.
(8) [Incoming] Intermarket Sweep Order (``ISO'').
(i) Incoming ISO. The System will accept incoming intermarket sweep
orders (as such term is defined in Regulation NMS) from other trading
centers. In order to be eligible for treatment as an intermarket sweep
order, the order must be marked ``ISO,'' and the User entering the
order must simultaneously route one or more additional limit orders
marked ``ISO,'' as necessary, to away markets to execute against the
full displayed size of any protected quotation for the security with a
price that is superior to the limit price of the intermarket sweep
order entered in the System. Such orders, if they meet the requirements
of the foregoing sentence, will be considered immediate-or-cancel (IOC)
and will be executed without regard to protected quotations at away
markets consistent with Regulation NMS.
(ii) Post ISO. A User may designate an ISO as a ``Post ISO.'' In
order to be eligible for treatment as a Post ISO, the order must be
marked ``Post ISO,'' and in submitting such an order the User entering
the order represents that such User has simultaneously routed one or
more additional limit orders marked ``ISO,'' as necessary, to away
markets to execute against the full displayed size of any protected
quotation for the security with a price that is superior or equal to
the limit price of the Post ISO entered in the System. Such order, if
it meets the requirements of the foregoing sentence and is not a Post
Only Order pursuant to Rule 11.11(c)(5), will be executed without
regard to protected quotations at away markets consistent with
Regulation NMS by sweeping the NSX Book up to and including its limit
price. A Post ISO which is designated by the User as a Post Only Order
pursuant to Rule 11.11(c)(5) will be rejected without execution if,
when entered, it is immediately marketable against displayed orders in
the NSX Book. Any unfilled portion of a Post ISO that meets the
requirements of Rule 11.22(d)(3) will be posted at the entered limit
price.
(9) No change.
(d) 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,
[[Page 44306]]
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 amend Exchange Rules 11.11(c)(8) to
allow ETP Holders the option of posting an order designated as an ISO.
Under current Rule 11.11(c)(8), the System will accept incoming
intermarket sweep orders (as such term is defined in Regulation NMS)
from other trading centers. In order to be eligible for treatment as an
intermarket sweep order, the order must be marked ``ISO,'' and the User
entering the order must simultaneously route one or more additional
limit orders marked ``ISO,'' as necessary, to away markets to execute
against the full displayed size of any protected quotation for the
security with a price that is superior to the limit price of the
intermarket sweep order entered in the System. Such orders, if they
meet the requirements of the foregoing sentence, will be considered
immediate-or-cancel (IOC) and will be executed without regard to
protected quotations at away markets consistent with Regulation NMS.
Under the proposed rule change, by designating an ISO as a ``Post
ISO,'' the ETP Holder represents to the Exchange that the ETP Holder
has simultaneously routed one or more additional limit orders marked
``ISO,'' as necessary, to away markets to execute against the full
displayed size of any protected quotation for the security with a price
that is superior or equal to the limit price of the intermarket sweep
order entered in the System. The incoming Post ISO (unless marked
``post only'') will sweep the NSX Book up to its limit price. Unlike a
standard ISO (which is considered IOC), if residual shares of the Post
ISO are available, they will be posted at the entered limit price
(similar to existing ``Sweep and Post'' orders under Rule
11.11(c)(7)(ii)(A)). Any unfilled portion of a Post ISO order following
the sweep of the NSX Book will be posted in the NSX Book and will be
ineligible for routing.
If an incoming Post ISO is marked as ``Post Only'' pursuant to Rule
11.11(c)(5) and is marketable (within NSX), it will be rejected.
Otherwise, Post Only Post ISOs will be accepted and posted in the NSX
Book at its limit price providing liquidity.
Similar to ISOs under the current Rules, Users sending a Post ISO
must simultaneously route one or more additional limit orders marked
``ISO,'' as necessary, to away markets to execute against the full
displayed size of any protected quotation for the security with a price
that is superior or equal to the limit price of the intermarket sweep
order entered in the System in accordance with Regulation NMS' Order
Protection Rule Rules 610 and 611. Post ISOs may therefore lock or
cross protected quotes at away market centers that were sent ISOs equal
to the limit price, consistent with Rule 11.22(d)(3), but may not lock
or cross the NSX Top of Book, and are not routable, subject to their
compliance with this rule and Rule 11.22(d)(3).
Post ISOs may be entered as odd, round or mixed lots. Only
displayed orders (and displayed orders with reserves) may be designated
as Post ISOs. Post ISO for Order Delivery will be processed in the same
way as other order types supported today.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\6\ in particular, which
requires, among other things, that the rules of an exchange be designed
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 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 competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange states that written comments on the proposed rule
change were neither solicited nor 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) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange fulfilled this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requests that the Commission waive
the 30-day operative delay.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.\9\
Previously, the Commission approved an order type similar to the one
proposed,\10\ and this proposal does not raise any novel issues. For
these reasons, the Commission designates the proposed rule change as
operative upon filing.
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\9\ For purposes only of waiving the 30-day operative delay, the
Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\10\ See Securities Exchange Act Release No. 54549 (September
29, 2006), 71 FR 59179 (October 6, 2006) (SR-NYSEArca-2006-59)
(approving NYSE Arca Equities Rule 7.31(w)).
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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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing,
[[Page 44307]]
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-2008-12 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-2008-12. 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-2008-12 and should be
submitted on or before August 20, 2008.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17412 Filed 7-29-08; 8:45 am]
BILLING CODE 8010-01-P