[Federal Register Volume 76, Number 70 (Tuesday, April 12, 2011)]
[Notices]
[Pages 20412-20414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-8630]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64208; File No. SR-NSX-2011-02]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the NSX Fee and Rebate Schedule and NSX Rule 16.4
April 6, 2011.
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 March 29, 2011, National Stock Exchange, Inc. 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 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The National Stock Exchange, Inc. (``NSX[supreg] '' or the
``Exchange'') is proposing a rule change, operative at commencement of
trading on April 1, 2011, which proposes to amend the NSX Fee and
Rebate Schedule (the ``Fee Schedule'') to adjust certain liquidity
taking rebates and fees in the Automatic Execution Mode of order
interaction, eliminate the Exchange's market data rebate in the Order
Delivery Mode of order interaction and establish an exchange regulatory
fee.
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 aspects 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 modify the Fee
Schedule and related text of Rule 16 in four respects. First, the
proposed rule change would increase the highest rebate, and adjust the
tier thresholds, for liquidity adding displayed orders in the Automatic
Execution Mode of order interaction (``AutoEx'') \3\ priced at least
one dollar. Certain conforming changes are also proposed for rebates
for liquidity adding Zero Display Orders \4\ in AutoEx priced at least
one dollar. Second, the proposed rule change would eliminate the
$0.0028 taker fee on orders that take liquidity in AutoEx for
securities one dollar and above. Third, the proposed rule change would
eliminate the market data revenue rebate currently available in the
Order Delivery Mode of order interaction (``Order Delivery''). Finally,
the proposed rule change would establish a monthly exchange regulatory
fee. Each of the proposed changes is further addressed below.
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\3\ The Exchange's two modes of order interaction are described
in NSX Rule 11.13(b).
\4\ ``Zero Display Orders'' means ``Zero Display Reserve
Orders'' as specified in NSX Rule 11.11(c)(2)(A).
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AutoEx Liquidity Adding Rebate for Securities Priced at Least One
Dollar
Currently, for displayed orders in securities priced one dollar and
above that provide liquidity in AutoEx, the Fee Schedule provides a
(``Tier 1'') rebate of $0.0026 per share if an ETP Holder's liquidity
adding average daily volume (as such term is defined in Endnote 3 of
the Fee Schedule, ``Liquidity Adding ADV'') is less than 20 basis
points of Total Consolidated Average Daily Volume (as defined in
Endnote 13 of the Fee Schedule,
[[Page 20413]]
``TCADV''), and a (``Tier 2'') rebate of $0.0028 per share if Liquidity
Adding ADV is at or above 20 basis points of TCADV.
The instant rule change modifies the AutoEx liquidity adding rebate
thresholds described above by increasing the Tier 2 rebate from $0.0028
to $0.0029 per share. In addition, the instant rule change eliminates
the measurement of TCADV and replaces it with a tier of 10 million
shares of Liquidity Adding ADV, where such measurement includes only
liquidity providing Tape A and C securities in AutoEx priced at least
one dollar. With respect to the rebate for Zero Display Orders that add
liquidity in AutoEx that are priced at least one dollar, the
calculation of an ETP Holder's Liquidity Adding ADV would be made
consistent with the rebate calculation for liquidity adding displayed
orders priced at least one dollar in AutoEx.
The proposed edits discussed above are reflected in Section I of
the Fee Schedule under the header ``Securities $1 and Above'' and
across from the header ``Displayed Orders that Add Liquidity'' and in
corresponding Endnotes 3 and 13.
AutoEx Taker Fee for Securities Priced at Least One Dollar
The Exchange is also proposing to modify the Fee Schedule's taker
fee structure with respect to orders that take liquidity in AutoEx.
Prior to the effective date of the proposed rule change, the Exchange
charges a taker fee of $.0028 per share on securities one dollar or
above from all tapes that take liquidity if an ETP Holder's Liquidity
Adding ADV is at least 50,000 (``Tier 1''), and a fee of $0.0030 per
share if Liquidity Adding ADV is less than 50,000 (``Tier 2''). In the
proposed rule change, the Exchange is proposing to eliminate Tier 1 and
all volume thresholds. Accordingly, after the effective date, a taker
fee of $0.0030 per share, on all securities one dollar or above on all
orders that take liquidity on all tapes, will be charged in AutoEx,
regardless of the ETP Holder's Liquidity Adding ADV.
The proposed edits discussed above are reflected in Section I of
the Fee Schedule, under the header ``Securities $1 and Above'' and
across from the header ``Orders That Take Liquidity''.
Order Delivery Market Data Rebate
The Exchange is also proposing to eliminate the market data rebate
in Order Delivery. Prior to the effective date of the proposed rule
change, under the Fee Schedule and NSX Rule 16.4, an ETP Holder that
has selected the Order Delivery mode of order interaction is eligible
(depending on achievement of volume thresholds) to receive a rebate of
a specified percentage of Tape ``A'', ``B'', and ``C'' market data
revenue attributable to such ETP Holder's trading and quoting of non-
Zero Display Reserve Orders priced at or above one dollar in Order
Delivery Mode.\5\ Under the proposed rule change, the Exchange is
proposing to eliminate the current market data rebate. Accordingly,
reference to rebates of market data revenue would be deleted from
Section II of the Fee Schedule (together with Endnote 8), and NSX Rule
16.4 would be deleted in its entirety.
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\5\ NSX Rule 16.4(b).
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To the extent that the Consolidated Tape Association or the Nasdaq
Securities Information Processor subsequently adjusts any Tape A, Tape
B or Tape C revenue earned by the Exchange for any period(s) during
which the tape revenue rebate program was in effect, rebates provided
to ETP Holders would be adjusted, as necessary, in accordance with Rule
16.4 (c) as in effect during the period such rebates accrued.
Similarly, current Exchange Rules 16.4(d) (De Minimis Rebates) and
16.4(e) (Quarterly Payments) will apply to any market data rebates
based on an ETP Holder's trading activity pursuant to Rule 16.4(b)
prior to the effective date of the instant rule filing eliminating the
market data rebate.
Regulatory Fee
Finally, the Exchange is proposing to establish a monthly
regulatory fee payable by each ETP Holder on a monthly basis. Prior to
the effective date of the proposed rule change, NSX did not impose a
regulatory fee. After the effective date, a monthly regulatory fee of
$500 per ETP Holder will be charged, payable monthly. New text has been
added as Section IV of the Fee Schedule to reflect this charge.
Rationale
The Exchange has determined that these changes are necessary to
increase the revenues of the Exchange for the purpose of continuing to
adequately fund its regulatory and general business functions. The
Exchange believes that these changes will not impair the Exchange's
ability to fulfill its regulatory responsibilities.
The proposed modifications are reasonable and equitably allocated
to ETP Holders that submit orders in AutoEx and Order Delivery, as
either display or non-display orders and as liquidity taking or
liquidity providing, and are not discriminatory because ETP Holders are
free to elect whether or not to submit such orders. Based upon the
information above, the Exchange believes that the proposed rule change
is consistent with the protection of investors and the public interest.
Operative Date and Notice
The Exchange intends to make the proposed modifications, which are
effective on filing of this proposed rule, operative as of commencement
of trading on April 1, 2011. 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
a Regulatory Circular of the changes to the Fee Schedule and will post
a copy of the rule filing on the Exchange's website (http://www.nsx.com).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act,\6\ in general, and
Section 6(b)(4) of the Act,\7\ 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 qualified ETP Holders are eligible to submit (or not submit)
trades and quotes at any price in AutoEx and Order Delivery in all
tapes, as either displayed or undisplayed and as liquidity adding or
liquidity taking, and may do so at their discretion.
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\6\ 15 U.S.C. 78f(b).
\7\ 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
[[Page 20414]]
19(b)(3)(A)(ii) of the Act\8\ and subparagraph (f)(2) of Rule 19b-4\9\
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 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 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-2011-02 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-2011-02. 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 such filing will also 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 No. SR-NSX-2011-02 and should be
submitted on or before May 3, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8630 Filed 4-11-11; 8:45 am]
BILLING CODE 8011-01-P