[Federal Register Volume 75, Number 125 (Wednesday, June 30, 2010)]
[Notices]
[Pages 37861-37863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15822]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62358; File No. SR-NSX-2010-06]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Implement an Equity Rights Program
June 22, 2010.
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 June 15, 2010, National Stock Exchange, Inc. (``NSX[supreg]''
or ``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 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
NSX is proposing to implement an equity rights program pursuant to
which warrants may be purchased that would allow equity in the
Exchange's parent holding company to be acquired based on, among other
things, a participating ETP Holder's payment of an initial purchase
price for the warrants and achievement of certain liquidity adding
volume thresholds on the Exchange over a six month measuring period.
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 implement an
equity rights program pursuant to which warrants for common stock of
the Exchange's parent holding company, NSX Holdings, Inc.
(``Holdings''), will be issued to each ETP Holder who participates in
the program in exchange for such ETP Holder participant's initial cash
capital contribution of $250,000, and with such warrants being
exercisable upon the achievement by the participating ETP Holder of the
following liquidity adding volume thresholds (measured as a percentage
of total consolidated average daily volume) on the Exchange during a
six month measurement period commencing June 15, 2010:
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Participating ETP holder's
liquidity adding ADV as % of total Participating ETP holder's total
consolidated ADV exercisable warrants
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Tier 1:............................... > 15 basis points.................. 4,575
Tier 2:............................... > 25 and < 30 basis points......... 19,575
Tier 3:............................... > 30 and < 35 basis points......... 22,075
Tier 4:............................... > 35 and < 40 basis points......... 24,575
Tier 5:............................... > 40 basis points.................. 24,575 plus participation in bonus
pool.
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For purposes of the program, the term ``Liquidity Adding ADV''
means, with respect to a participating ETP Holder, the number of shares
such ETP Holder has executed as a liquidity provider on average per
trading day (excluding partial trading days) across all tapes on NSX
for the measuring period in which the executions occurred. The term
``Total Consolidated ADV'' means average daily volume reported by all
exchanges and trade reporting facilities to the consolidated
transaction reporting plans for Tape A, B and C securities. For
purposes of calculating an ETP Holder's Liquidity Adding ADV as a
percentage of Total Consolidated ADV over the measuring period, the 10
days during the measuring period constituting that ETP Holder's lowest
ratio of liquidity adding volume to total consolidated volume will be
excluded. In addition, the number of shares executed by ETP Holders
under common ownership and control may be aggregated for purposes of
calculating average daily volumes.
Total Bonus Pool shares shall equal the number of warrant holders
achieving Tier 5 multiplied by 10,000. Each warrant holder eligible for
participation in the Bonus Pool shall be
[[Page 37862]]
entitled to exercise its Bonus Pool warrants for a number of Bonus Pool
shares determined by the following formula: number of shares in Bonus
Pool multiplied by a fraction, the numerator of which is the eligible
holder's Liquidity Adding ADV in excess of 40 basis points of Total
Consolidated ADV and the denominator of which is the total of all
eligible holders' Liquidity Adding ADV in excess of 40 basis points of
Total Consolidated ADV.
The maximum number of shares issued under the program will be
103,724. The number of shares that would otherwise be issued to warrant
holders if in excess of this limit will, at the time of warrant
exercise, be reduced for each warrant on a pro rata basis. Warrant
exercise will not be permitted to the extent that exercise would result
in a warrant holder's pro forma ownership in Holdings exceeding 19.9%
or any lower percentage cap that is applicable to such warrant holder
due to legal or regulatory limitations. The warrants are not
transferrable, and all shares issued pursuant to the terms of the
warrants are subject to ownership and voting limits and transfer
restrictions as stated in Holding's Certificate of Incorporation and
By-laws.
Each participating ETP Holder will also receive the option to
participate in any second rights program made by the Exchange and
Holdings covering a six month measuring period shortly following the
current measuring period, on the same terms and conditions as all other
participants in such program, but with the new cash contribution
required for participation in such program fixed at $250,000. All other
participants in any such second program will pay a cash contribution
that is the same for each such participant, in an amount that is based
on a determination made by Holdings at the time of announcement of any
such program.
Participants must have executed the definitive documentation
(including a Warrant Purchase Agreement) and tendered the minimum cash
investment by June 30, 2010. All program terms, rights and obligations
are subject to final documentation to be executed by participating ETP
Holders, which final documentation may contain terms that supplement
those summarized herein.
In addition to the payment of the purchase price and the execution
of the purchase agreement, participating ETP Holders must qualify as
``accredited investors'' (as such term is defined in Regulation D of
the Securities Act of 1933). All participating ETP Holders will
participate on the same terms, conditions and restrictions. This filing
shall not constitute an offer to sell or a solicitation of an offer to
buy securities.
Measurement Period and Notice
The Exchange intends to commence the six month measurement period
for the equity award program on June 15, 2010. The Exchange will
provide ETP Holders with notice of the implementation of this program
through the issuance of a Regulatory Circular and will post a copy of
this rule filing on the Exchange's Web site (http://www.nsx.com). Any
ETP Holder that is interested in participating in this program may
contact John J. McCoy, Chief Legal Officer of the Exchange, at (201)
499-1854, for more information and legal documentation. Execution among
the parties of a non-disclosure agreement regarding such additional
program information will be required.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act,\3\ in general, and
Section 6(b)(4) of the Act,\4\ 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 rule change is not discriminatory in
that all ETP Holders are eligible to participate (or elect to not
participate) in the program on the same terms and conditions.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
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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 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 \5\ and subparagraph (f)(2) of Rule
19b-4 \6\ 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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\5\ 15 U.S.C. 78s(b)(3)(A)(ii).
\6\ 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 e-mail to [email protected]. Please include
File Number SR-NSX-2010-06 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-2010-06. 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 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
a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the principal office of the self-regulatory
organization. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You
[[Page 37863]]
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-NSX-2010-06
and should be submitted on or before July 21, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15822 Filed 6-29-10; 8:45 am]
BILLING CODE 8010-01-P