[Federal Register: July 2, 2008 (Volume 73, Number 128)] [Notices] [Page 38001-38003] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr02jy08-119] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58021; File No. SR-NSX-2008-10] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NSX Rules To Provide for an Optional Limit Cap Price on Any Pegged Zero Display Reserve Order June 25, 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 June 17, 2008, the National Stock Exchange (``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 prepared by the Exchange. The NSX designated the proposed rule change as ``non-controversial'' under Section 19(b)(3)(A)(iii) 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to amend NSX Rules 11.11(c)(2) and 11.14 to [[Page 38002]] allow ETP holders the option of submitting a limit cap price on any pegged Zero Display Reserve Order. The text of the proposed rule change is available at the Exchange, the Commission's Public Reference Room, and http://www.nsx.com. 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 NSX 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)(2) and 11.14 to allow ETP Holders the option of submitting a limit cap price on any pegged Zero Display Reserve Order. Under current Rule 11.11(c)(2), Zero Display Reserve Orders may be entered with either a limit price or with a ``peg,'' which, at the ETP Holder's discretion, is pegged to the buy-side, sell-side, or mid-point of the Protected Best Bid or Offer (``PBBO''). Under this proposal, ETP Holders would be able to enter an optional limit cap price on any pegged Zero Display Reserve Order. The cap price will prevent the pegged order from following the PBBO past the ETP Holder's specified price. A limit price may be entered, providing a ceiling price (for Buy orders) and floor price (for Sell orders). All pegged Zero Display Reserve Orders-- including those that track the inside quote on the same side of the market (``Primary Peg''), the opposite side of the market (``Market Peg'') or the Midpoint--are eligible to have a limit cap price. The methodology used to price the pegged orders will remain unchanged. However, if the pegged order upon price re-evaluation would be assigned a value that violates its limit price due to the cap, the pegged order will not be assigned that new price and will therefore not be eligible for matching. This pegged order will be re-evaluated again when a new marketable order arrives. In addition, the limit price may be modified by entering a cancel/ replace of the pegged order. In this case, a new timestamp will be applied. Rule 11.14 will be amended to reflect this priority. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act,\5\ in general, and 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. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f. \6\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of 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 subparagraph (f)(6) of Rule 19b-4 thereunder.\8\ As required under Rule 19b-4(f)(6)(iii),\9\ the NSX provided 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, prior to the filing of the proposed rule change. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78s(b)(3)(A). \8\ 17 CFR 240.19b-4(f)(6). \9\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally may not become operative prior to the 30th day after the date of filing.\10\ However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The NSX requested that the Commission waive the 30-day operative delay and make the proposed rule change effective and operative upon filing because the proposal is similar to a feature available on other markets and raises no new issues. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. In particular, the Commission does not believe that the rule change presents any novel issues since the inclusion of a limit cap on the Zero Display Reserve Order has been included on similar order types currently available on other markets.\12\ --------------------------------------------------------------------------- \10\ See id. \11\ Id. \12\ See, e.g., Securities Exchange Act Release Nos. 54613 (October 17, 2006), 71 FR 62325 (October 24, 2006) (SR-NASDAQ-2006- 043); 51326 (March 7, 2005), 70 FR 12521 (March 14, 2005) (SR-NASD- 2004-173). --------------------------------------------------------------------------- Accordingly, the Commission designates the proposed rule change operative upon filing with the Commission.\13\ --------------------------------------------------------------------------- \13\ For 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). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the 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, 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 rule-comments@sec.gov. Please include File Number SR-NSX-2008-10 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-2008-10. This file [[Page 38003]] 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 such filing also will be available for inspection and copying at the principal office of the NSX. 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-2008-10 and should be submitted on or before July 23, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Florence E. Harmon, Acting Secretary. [FR Doc. E8-14928 Filed 7-1-08; 8:45 am] BILLING CODE 8010-01-P
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