Self-Regulatory Organizations; National Stock Exchange; Order Granting Approval to Proposed Rule Change To Prohibit Tape Shredding, 31249-31250 [06-4998]

Download as PDF Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Notices Electronic Comments submission that supports its system capacity representations. 2. Statutory Basis The Exchange believes that the introduction of Quarterly Options Series will attract order flow to the Exchange, increase the variety of listing options available to investors, and provide investors with a valuable hedging tool. Accordingly, the Exchange believes the proposed rule change is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(5) of the Act 7 in particular, in that it is designed to promote just and equitable principles of trade and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. wwhite on PROD1PC61 with NOTICES IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: 6 15 7 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Aug<31>2005 19:10 May 31, 2006 • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–ISE–2006–24 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53861; File No. SR–NSX– 2006–05] Self-Regulatory Organizations; National Stock Exchange; Order Granting Approval to Proposed Rule Change To Prohibit Tape Shredding Paper Comments May 24, 2006. • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2006–24. 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. Copies of such 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–ISE–2006–24 and should be submitted on or before June 22, 2006. I. Introduction For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–8435 Filed 5–31–06; 8:45 am] On April 4, 2006, National Stock ExchangeSM (‘‘NSX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to prohibit tape shredding. The proposed rule change was published for comment in the Federal Register on April 24, 2006.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposed to add an interpretation to Rule 3.1, which identifies the splitting of any order into multiple smaller orders (‘‘tape shredding’’) for any purpose other than best execution as contrary to the high standards of commercial honor and just and equitable principles of trade. III. Discussion and Commission Findings The Commission has reviewed carefully the proposed rule change and finds that it is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange,4 particularly section 6(b)(5) of the Act which, among other things, requires that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating securities transactions, to remove impediments to and to 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 The Commission believes that the proposed rule change 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 53663 (April 17, 2006), 71 FR 21063. 4 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). BILLING CODE 8010–01–P 2 17 8 17 Jkt 208001 31249 PO 00000 CFR 200.30–3(a)(12). Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\01JNN1.SGM 01JNN1 31250 Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Notices comments on the proposed rule change, as amended, from interested persons. should help eliminate the distortive practice of trade shredding, and, therefore, promote just and equitable principles of trade. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change IV. Conclusion NSX proposes to amend NSX Rules 11.10(A)(k) and (l) to amend its Tape B market data revenue sharing program, and to establish a Tape C market data revenue sharing program. The text of the proposed rule change is available at the Commission, at NSX, and on the NSX Web site at http://www.nsx.com/ RulesFilings2.asp. It is therefore ordered, pursuant to section 19(b)(2) of the Act,6 that the proposed rule change (File No. SR– NSX–2006–05), be and hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 J. Lynn Taylor, Assistant Secretary. [FR Doc. 06–4998 Filed 5–31–06; 8:45 am] II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8010–01–M SECURITIES AND EXCHANGE COMMISSION [Release No. 34–53860; File No. SR–NSX– 2006–07] Self-Regulatory Organizations; National Stock Exchange; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Amend the Exchange’s Tape B Market Data Revenue Sharing Program and To Establish a Tape C Market Data Revenue Sharing Program In its filing with the Commission, NSX 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. 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 May 24, 2006. 1. Purpose 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 April 26, 2006, National Stock Exchange (‘‘NSX’’ 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 NSX. On May 23, 2006, NSX filed Amendment No. 1. NSX filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6) thereunder,4 which renders it effective upon filing with the Commission.5 The Commission is publishing this notice to solicit NSX Rule 11.10(A)(k) currently provides for a Tape B rebate program, consisting of a 50% transaction credit on revenues generated by transactions in Tape B securities. The credit is allocable to members on a pro rata basis based upon Tape B revenue generated by a member’s transactions on the Exchange. Under the current Tape B rebate program, the transaction credit is based on net revenue in those fiscal quarters where the overall revenue retained by the Exchange does not offset actual expenses and working capital needs. The Exchange is proposing to amend the Tape B program to remove this aspect, so that the Tape B rebate program will be based only on gross Tape B revenue. The Exchange believes this change will not impair its ability to carry out its regulatory responsibilities under the Act, as the change is likely to lead to greater transactional volume in Tape B securities on the Exchange and therefore greater revenues that may be applied to the Exchange’s regulatory programs. The Exchange is cognizant of its surveillance and compliance responsibilities as a self-regulatory organization. As such, the Exchange represents that its 6 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 4 17 CFR 240.19b–(4)(f)(6). 5 NSX provided the Commission with written notice of its intent to file the proposed rule change on April 20, 2006. For purposes of calculating the 60-day abrogation period, the Commission considers the period to have commenced on May 23, 2006, the date NSX filed Amendment No. 1. See section 19(b)(3)(A) of the Act, and Rule 19b– 4(f)(6)(iii) thereunder. 15 U.S.C. 78s(b)(1), 17 CFR 240.19b–(f)(6)(iii). wwhite on PROD1PC61 with NOTICES 7 17 VerDate Aug<31>2005 19:10 May 31, 2006 Jkt 208001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 responsibilities as a self-regulatory organization will be in no way compromised by the implementation of the changes proposed herein. The Exchange notes that the calculation of rebates based on gross revenues is consistent with market data revenue rebate programs of other national securities exchanges.6 The Exchange also proposes to establish an equivalent market data revenue sharing program for Tape C securities. The proposed Tape C program will also provide a 50% transaction credit on revenues generated by transactions in Tape C securities, and will be allocable to members on a pro rata basis based upon the Tape C revenue generated by such member. The Exchange believes that there is no regulatory reason to distinguish Tape C transactions from Tape B transactions, and is therefore proposing an equivalent market data revenue sharing program. As with the current Tape B program, to the extent that market data revenue from Tape C transactions is subject to any adjustment, credits provided under the Tape C program may be adjusted accordingly. In connection with these changes, the Exchange is proposing to move its current Tape B rebate program from NSX Rule 11.10(A)(k) to NSX Rule 11.10(A)(l), so that both the Tape B and Tape C programs will be contained in the same paragraph of NSX Rule 11.10(A). The Exchange believes the proposed rule change is consistent with the protection of investors and the public interest because it will lower the cost of trading and market data to brokerdealers and the investing public, and because it may enhance competition in the trading of Tape B and Tape C securities. 6 The Exchange’s definition of ‘‘gross revenue’’ is the revenue received by the Exchange from the tape associations after the tape associations take into account the ‘‘allocated support cost’’ and ‘‘unincorporated business costs.’’ Some markets, such as the Chicago Stock Exchange (‘‘CHX’’), provide for rebates based upon monthly tape revenue from the Consolidated Tape Association (less all direct CTA costs) generated by a particular Tape A or Tape B security. See CHX Fee Schedule, Section M. Other markets, like the Nasdaq Stock Market, allow members to earn credits from one or two pools, with each pool representing 50% of the tape revenue paid by the Consolidated Tape Association for each of the Tape A or Tape B transactions after deducting the amount that the market pays to the Consolidated Tape Association for capacity usage. See NASD Rule 7010(c)(2). While NYSE Arca LLC has some limitations on who is eligible to receive rebates, the amount of the pool for calculation purposes is based on 50% of the gross revenues derived from market data fees. See NYSE Arca ‘‘Market Data Revenue Sharing Credits’’ under Exchange Fees. E:\FR\FM\01JNN1.SGM 01JNN1

Agencies

[Federal Register Volume 71, Number 105 (Thursday, June 1, 2006)]
[Notices]
[Pages 31249-31250]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4998]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53861; File No. SR-NSX-2006-05]


Self-Regulatory Organizations; National Stock Exchange; Order 
Granting Approval to Proposed Rule Change To Prohibit Tape Shredding

May 24, 2006.

I. Introduction

    On April 4, 2006, National Stock ExchangeSM (``NSX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to prohibit tape shredding. The proposed rule 
change was published for comment in the Federal Register on April 24, 
2006.\3\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53663 (April 17, 
2006), 71 FR 21063.
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II. Description of the Proposal

    The Exchange proposed to add an interpretation to Rule 3.1, which 
identifies the splitting of any order into multiple smaller orders 
(``tape shredding'') for any purpose other than best execution as 
contrary to the high standards of commercial honor and just and 
equitable principles of trade.

III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule change and 
finds that it is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange,\4\ particularly section 6(b)(5) of the Act which, among other 
things, requires that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating 
securities transactions, to remove impediments to and to 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\ The 
Commission believes that the proposed rule change

[[Page 31250]]

should help eliminate the distortive practice of trade shredding, and, 
therefore, promote just and equitable principles of trade.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-NSX-2006-05), be and 
hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-4998 Filed 5-31-06; 8:45 am]
BILLING CODE 8010-01-M