[Federal Register Volume 75, Number 149 (Wednesday, August 4, 2010)]
[Notices]
[Pages 47049-47051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19225]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62601; File No. SR-NSX-2010-09]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt Enhanced Customer Disclosure Rules Concerning Transactions
Outside of Regular Trading Hours
July 29, 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 July 29, 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 and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\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
NSX is proposing to adopt certain enhanced customer disclosure
requirements applicable to transactions outside of the Exchange's
regular trading hours trading session.
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 amend Rule 11.1
to adopt enhanced customer disclosure requirements applicable to
transactions on the Exchange during trading sessions outside of Regular
Trading Hours (as such term is defined below). In addition, the instant
rule change proposes to make certain clean-up conforming changes to
other Exchange Rules as further described below.
The instant rule filing proposes to adopt as Rule 11.1(c) certain
enhanced disclosure requirements applicable to transactions effected on
the Exchange outside of the Regular Trading Hours trading session.\5\
Specifically, Rule 11.1(c) provides that no ETP Holder may accept an
order from a non-ETP Holder for execution outside of Regular Trading
Hours without disclosing to such non-ETP Holder that extended hours
trading involves material trading risks, including the possibility of
lower liquidity, high volatility, changing prices, unlinked markets, an
exaggerated effect from news announcements, wider spreads and any other
relevant risk. The absence of an updated underlying index value or
intraday indicative value is an additional trading risk in extended
hours for UTP Derivative Security products under NSX Rule 15.9.
Proposed Rule 11.1(c) provides for the benefit of ETP Holders
disclosure language regarding the foregoing risks that would be
generally acceptable to
[[Page 47050]]
the Exchange. In addition, proposed Rule 11.1(d) provides that trades
on the Exchange executed and reported outside of Regular Trading Hours
shall be designated as ``.T'' trades. Proposed Rule 11.1(c) and (d) are
based on Arca Rule 7.34(e) and (f), respectively.\6\
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\5\ Currently, the Exchange's Regular Trading Hours, as such
term is defined in NSX Rule 1(R)(1), are from 8:30 a.m. until 3 p.m.
Central Time (9:30 a.m. until 4 p.m. Eastern Time (``ET'')). The
pre-Regular Trading Hours trading session is from 8 a.m. until 9:30
a.m. ET, and the post-Regular Trading Hours trading session is from
4 p.m. until 6:30 p.m. ET.
\6\ See also NASDAQ Rule 4631, ISE Rule 2102, Interpretation and
Policy .04 and .05, and BATS Rule 3.21.
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In addition, the proposed rule change makes clean up changes to NSX
Rule 1.5R(1) by modifying the definition of ``Regular Trading Hours''
to reflect Eastern Time instead of Central Time, consistent with the
time references in the remainder of NSX Rules. Further, for purposes of
internal consistency and clarity, the references to hours of trading in
Interpretation and Policy .01(f) of Rule 15.12 is eliminated as
obsolete, and in Rule 15.9B(2) such reference is modified consistent
with the usage of the term ``Regular Trading Hours''. Finally, the
definition of ``Day Order'' in Rule 11.11(b)(2) is modified to clarify
that Day Orders will expire at the close of the Exchange's Regular
Trading Hours trading session instead of at the close of the regular
trading session on the given security's listing exchange.\7\
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\7\ This modification constitutes no change to the Exchange's
current practices because the close of the regular trading sessions
on listing exchanges has historically also been 4 p.m. ET.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(5) \9\ in particular in that it
is designed, among other things, to promote clarity, transparency and
full disclosure, in so doing, to prevent fraudulent and manipulative
acts and practices, 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. Moreover, the proposed rule change
is not discriminatory in that all ETP Holders are eligible to
participate (or elect to not participate) in effectuating transactions
on the Exchange outside of Regular Trading Hours on the same terms and
conditions.
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\8\ 15 U.S.C. 78f(b).
\9\ 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 burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act.
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
Because the foregoing rule change does not: (1) Significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) become operative for 30
days after the date of this filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\12\
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 has requested that the
Commission waive the 30-day operative delay. The Commission notes that
the Exchange's proposal is substantially similar to the rules of other
national securities exchanges and does not raise any new substantive
issues.\13\ Based on the foregoing, the Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest and hereby designates the proposal
operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
the Commission 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 has satisfied this requirement.
\13\ See supra note 6. The Commission previously has waived the
operative delay for similar rule change proposals of other exchanges
under Rule 19b-4(f)(6) on the same basis. See, e.g., Securities
Exchange Act Release No. 59963 (May 21, 2009), 74 FR 25787 (May 29,
2009) (SR-BATS-2009-012); and Securities Exchange Act Release No.
58685 (September 30, 2008), 73 FR 58277 (October 6, 2008) (SR-ISE-
2008-73).
\14\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the 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.\15\
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\15\ 15 U.S.C. 78s(b)(3)(C).
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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-2010-09 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-2010-09. 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 should submit only information that
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you wish to make available publicly. All submissions should refer to
File Number SR-NSX-2010-09 and should be submitted on or before August
25, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
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\16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-19225 Filed 8-3-10; 8:45 am]
BILLING CODE 8010-01-P