Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee and Rebate Schedule Relating to Liquidity Adding Rebates, 17259-17262 [E9-8424]
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Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices
of the Act 85 in general, and furthers the
objectives of Section 6(b)(5) of the Act 86
in particular, in that it is 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. In
particular, the Exchange believes that
the proposals will improve the speed,
efficiency and quality of Exchange
options executions and to provide
greater flexibility for Exchange users in
how they quote and trade, while also
enhancing overall market quality by
expanded protection of better displayed
prices in the market.
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 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
No written comments were either
solicited or received.
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 Exchange consents,
the Commission shall: (a) By order
approve such proposed rule change, or
(b) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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:
Number SR–Phlx–2009–32 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–59723; File No. SR–NSX–
2009–02]
• 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–Phlx–2009–32. 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 (https://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 the 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–Phlx–2009–32 and should
be submitted on or before May 5,2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.87
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–8422 Filed 4–13–09; 8:45 am]
BILLING CODE 8010–01–P
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
86 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Nov<24>2008
16:39 Apr 13, 2009
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
the Fee and Rebate Schedule Relating
to Liquidity Adding Rebates
April 7, 2009.
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 March 31,
2009, National Stock Exchange, Inc.
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 comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
National Stock Exchange, Inc.
(‘‘NSX®’’ or ‘‘Exchange’’) is proposing to
(i) amend the Fee and Rebate Schedule
(the ‘‘Fee Schedule’’) issued pursuant to
Exchange Rule 16.1(c) in order to
increase the displayed order liquidity
adding rebate for Tape A and C
securities executed at one dollar or
above in the Automatic Execution Mode
of order interaction in the event that
certain volume thresholds are achieved,
(ii) provide a rebate for adding liquidity
in displayed orders at one dollar or
above in the Order Delivery Mode of
order interaction in the event that
certain volume thresholds are achieved
and (iii) establish a new Rule 16.3 to
provide that, for purposes of applying
the provisions of the Fee Schedule and
Exchange Rule 16, an ETP Holder may
request that the Exchange aggregate its
activity with the activity of its affiliates.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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
Electronic Comments
85 15
1 15
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U.S.C. 78s(b)(1).
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Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices
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 increase the liquidity
provider rebate for displayed orders
(i.e., those orders other than Zero
Display Reserve Orders) 3 (‘‘Displayed
Orders’’) executed in the Automatic
Execution Mode of order interaction
(‘‘AutoEx’’).4 The proposed increased
rebate applies only to Tape A and C
securities executed at a price of one
dollar and higher in AutoEx, and only
after certain volume thresholds are
achieved. In addition, the Exchange is
proposing to establish a liquidity
provider rebate for Displayed Orders
executed in the Order Delivery Mode of
order interaction (‘‘Order Delivery’’ or
‘‘O/D’’).5 This rebate applies only to
securities priced one dollar and higher
in Order Delivery, and only after certain
volume thresholds are achieved. The
proposed rebate for Displayed Orders in
Order Delivery mirrors the rebate for
liquidity adding Zero Display Orders
established pursuant to a rule change
submitted by the Exchange for
effectiveness on March 2, 2009.6
Finally, with this rule change the
Exchange is proposing to adopt a new
Rule 16.3 to allow for the aggregation
among affiliated ETP Holders of average
daily volumes and other activity.
Increase in AutoEx Displayed Order
Liquidity Adding Rebate for Tapes A
and C
Prior to effectiveness of the instant
rule filing, the AutoEx rebate for
liquidity adding Displayed Orders in
securities one dollar and above was
$0.0026 per share in Tapes A and C, and
$0.0030 per share in Tape B. The instant
rule filing proposes to increase the
rebate for Tape A and C securities in
cases where certain average daily
volume thresholds are achieved.
Specifically, ETP Holders who achieve
3 As
specified in Rule 11.11(c)(2)(A).
Exchange’s two modes of order interaction
are described in NSX Rule 11.13(b).
5 The Exchange’s two modes of order interaction
are described in NSX Rule 11.13(b).
6 See SR–NSX–2009–01.
4 The
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Liquidity Adding ADV 7 of less than 25
million will continue to receive the
previously established liquidity adding
rebate for executed Tape A and C
Displayed Orders in AutoEx of $0.0026
per share.8 However, under the instant
rule filing, ETP Holders who achieve a
Liquidity Adding ADV of 25 million
and 40 million shares will receive
higher rebates of $0.0027 and $0.0028,
respectively, with respect to their
executed liquidity adding displayed
AutoEx Tape A and C securities priced
at one dollar and higher.9
Like other calculations of ‘‘average
daily volume’’ in the Fee Schedule, the
measurement period for calculating the
proposed rebate is generally the
calendar month. However, in the event
a pricing or rebate program utilizing this
definition is implemented, modified or
discontinued on other than month’s
end, the period of measurement used to
determine ‘‘average daily volume’’ with
respect to the rebate (as used in the
definition of ‘‘Liquidity Adding ADV’’
and elsewhere in the Fee Schedule)
shall be that partial month during which
the program’s terms are in effect. This
is further explained in the Explanatory
Endnotes to the Fee Schedule.
O/D Liquidity Adding Displayed Order
Rebate
In addition, for securities trading at
one dollar or higher in Order Delivery,
this rule change proposes to provide a
progressively higher rebate applicable to
shares executed as liquidity providing
Displayed Orders in O/D. ETP Holders
who achieve an average daily volume of
shares executed as Displayed Orders in
O/D (‘‘Liquidity Adding ADV (O/D
7 As used elsewhere in the Fee Schedule,
‘‘Liquidity Adding ADV’’ means, with respect to an
ETP Holder, ‘‘the number of shares such ETP
Holder has executed as a liquidity provider on
average per trading day (excluding partial trading
days and securities under one dollar) across all
tapes on NSX for the calendar month (or partial
month, as applicable) in which the executions
occurred’’ (see the Explanatory Endnotes to the Fee
Schedule).
8 Similarly, no change is proposed with respect to
the liquidity adding rebate applicable to Tape B
securities in AutoEx.
9 The instant rule filing proposes to establish
tiered rebates for executed liquidity adding Tape A
and C Displayed Orders in AutoEx. The first rebate
tier is $0.0026 per share, applicable to Tape A and
C shares executed at one dollar or more in AutoEx
which added liquidity as Displayed Orders, where
the ETP Holder’s Liquidity Adding ADV is less than
25 million. The second tier is $0.0027 per share,
applicable to Tape A and C shares executed at one
dollar or more in AutoEx which added liquidity as
Displayed Orders, where the ETP Holder’s Liquidity
Adding ADV is at least 25 million and less than 40
million. The third tier is $0.0028 per share,
applicable to Tape A and C shares executed at one
dollar or more in AutoEx which added liquidity as
Displayed Orders, where the ETP Holder’s Liquidity
Adding ADV is at least 40 million.
PO 00000
Frm 00118
Fmt 4703
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Displayed)’’) of 1 million,10 10
million 11 and 20 million 12 shares will
receive rebates of $0.0008, $0.0010 and
$0.0012, respectively, with respect to
such shares (any such rebate hereinafter
referred to as an ‘‘O/D Liquidity Adding
Displayed Order Rebate’’). Liquidity
Adding ADV (O/D Displayed) means,
with respect to an ETP Holder, ‘‘the
number of Displayed Order shares such
ETP Holder has executed as a liquidity
provider on average per trading day
(excluding partial trading days and
securities under one dollar) across all
tapes in Order Delivery for the calendar
month (or partial month, as applicable)
in which the executions occurred’’ (see
the Explanatory Endnotes to the Fee
Schedule).
For purposes of clarity, if an ETP
Holder fails to achieve Liquidity Adding
ADV (O/D Displayed) of at least 1
million shares in a given month (or
partial month, as applicable), then no O/
D Liquidity Adding Displayed Order
Rebate applies. In addition, for purposes
of calculating an ETP Holder’s Liquidity
Adding ADV (O/D Displayed), only
such ETP Holder’s liquidity adding
Displayed Orders executed in O/D in
the given time frame are counted.
Finally, the O/D Liquidity Adding
Displayed Order Rebate applies only to
those shares of an ETP Holder executed
in O/D as liquidity adding Displayed
Orders (i.e., the rebate does not apply to
shares of Zero Display Orders that add
liquidity in O/D, nor to shares of
liquidity providing Displayed Orders in
AutoEx). These details are set forth in
an explanatory endnote to the Fee
Schedule.
Like other calculations of ‘‘average
daily volume’’ in the Fee Schedule, the
measurement period for calculating the
O/D Liquidity Adding Displayed Order
Rebate is generally the calendar month.
However, in the event a pricing or
rebate program utilizing this definition
is implemented, modified or
discontinued on other than month’s
end, the period of measurement used to
determine ‘‘average daily volume’’ with
respect to the rebate (as used in the
definition of Liquidity Adding ADV (O/
D Displayed) and elsewhere in the Fee
10 The first tier is $0.0008 per share, applicable
to shares executed in O/D which added liquidity as
Displayed Orders, where the number of such shares
is greater than or equal to 1 million and less than
10 million.
11 The second tier is $0.0010 per share, applicable
to shares executed in O/D which added liquidity as
Displayed Orders, where the number of such shares
is greater than or equal to 10 million and less than
20 million.
12 The third tier is $0.0012 per share, applicable
to shares executed in O/D which added liquidity as
Displayed Orders, where the number of such shares
is greater than or equal to 20 million.
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Schedule) shall be that partial month
during which the program’s terms are in
effect.
other applicable period), the following
ETP Holders achieve the following
average daily volumes of executed
shares (in each case, counting only
securities priced at one dollar or higher
and excluding partial trading days):
Examples of Order Delivery Liquidity
Adding Displayed Order Rebate 13
The following charts may be used to
illustrate application of the O/D
Liquidity Adding Displayed Order
Rebate. In a given calendar month (or
1
3
4
5
(Threshold)
6
AutoEx
Displayed Liquidity Adding
ETP Holder
2
AutoEx Zero
Display Liquidity Adding
AutoEx
Displayed Liquidity Taking
AutoEx Zero
Display Liquidity Taking
Liquidity Adding ADV (O/D
Displayed)
Liquidity Adding ADV
(O/D Dark)
30,000
920,000
30,000
30,000
30,000
920,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
A ...............................................................
B ...............................................................
C ...............................................................
ETP Holder A will not receive an O/
D Liquidity Adding Displayed Order
Rebate. ETP Holder A fails to satisfy the
eligibility requirement (ETP Holder A’s
Liquidity Adding ADV (O/D Displayed)
of 30,000 (column 5) falls short of the
first rebate tier of at least 1 million). ETP
Holder B and ETP Holder C similarly
fail to achieve the first tier of the O/D
Liquidity Adding Displayed Order
Rebate.
1
3
4
5
(Threshold)
6
AutoEx
Displayed Liquidity Adding
ETP Holder
2
AutoEx Zero
Display Liquidity Adding
AutoEx
Displayed Liquidity Taking
AutoEx Zero
Display Liquidity Taking
Liquidity Adding ADV (O/D
Displayed)
Liquidity Adding ADV
(O/D Dark)
1 million
1 million
30,000
30,000
10 million
10 million
D ...............................................................
ETP Holder D will receive an O/D
Liquidity Adding Displayed Order
Rebate. ETP Holder D’s Liquidity
Adding ADV (O/D Displayed) of 10
million meets the second tier of the
rebate. Accordingly, ETP Holder D’s O/
D Liquidity Adding Displayed Order
Rebate for the given period will equal
the number of full trading days in the
measurement period multiplied by 10
million multiplied by $0.0010 (the
second rebate tier for which ETP Holder
D is eligible based on Liquidity Adding
ADV (O/D Displayed) of at least 10
million and less than 20 million).
1
3
4
5
(Threshold)
6
AutoEx
Displayed Liquidity Adding
ETP Holder
2
AutoEx Zero
Display Liquidity Adding
AutoEx
Displayed Liquidity Taking
AutoEx Zero
Display Liquidity Taking
Liquidity Adding ADV (O/D
Displayed)
Liquidity Adding ADV
(O/D Dark)
0
10 million
0
0
20 million
10 million
E ...............................................................
Aggregation of Activity of Affiliated ETP
Holders
This rule change also proposes to
adopt a new Rule 16.3 (and delete the
obsolete text formerly contained
therein) which would allow an ETP
Holder to request that the Exchange
aggregate its activity with the activity of
certain of its affiliates for purposes of
applying Chapter 16 and the terms of
the Fee Schedule, including for
purposes of achieving the volume
rebates and discounts applicable in the
various formulations of ‘‘average daily
volume’’ used in the Fee Schedule. An
ETP Holder requesting aggregation of
affiliate activity shall be required to
certify to the Exchange the affiliate
status of entities whose activity it seeks
to aggregate prior to receiving approval
for aggregation, and shall be required to
inform the Exchange immediately of any
event that causes an entity to cease to
be an affiliate. Proposed Rule 16.3
further provides that the Exchange
reserves the right to request information
to verify the affiliate status of an entity.
Upon verification and approval by the
Exchange, an ETP Holder’s activity
would include, for purposes of
calculating, among other things, average
daily volumes, the activity of its
approved wholly owned subsidiary,
parent and sister entities that are also
ETP Holders.
13 These examples merely illustrate the
calculation of the rebates for Displayed Orders that
Add Liquidity in Order Delivery. They do not
calculate, nor show, the rebates and fees applicable
to displayed orders that add liquidity [sic], Zero
Display Orders that add liquidity in AutoEx or
Order Delivery, orders that take liquidity, or fees for
routing.
ETP Holder E will receive an O/D
Liquidity Adding Displayed Order
Rebate. ETP Holder E has achieved the
third tier of the Liquidity Adding ADV
(O/D Displayed) eligibility threshold
(with 20 million shares). Accordingly,
ETP Holder E’s O/D Liquidity Adding
Displayed Order Rebate for the given
period will equal the number of full
trading days in the measurement period
multiplied by 20 million multiplied by
$0.0012.
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Rationale
The Exchange has determined that
these changes are necessary to increase
the volume of Displayed Orders in both
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Federal Register / Vol. 74, No. 70 / Tuesday, April 14, 2009 / Notices
AutoEx and Order Delivery for the
purpose of increasing the revenue of the
Exchange and adequately funding its
regulatory and general business
functions. In addition, with respect to
the O/D Liquidity Adding Displayed
Order Rebate, this rule change will
provide ETP Holders with equal
incentive to submit Displayed Orders
(relative to Zero Display Orders) in
Order Delivery. With respect to
aggregation of affiliated ETP Holder
activity, the changes are necessary in
order to effectively compete with other
trading centers 14. The proposed
modifications are reasonable and
equitably allocated to those ETP Holders
that opt to provide and take liquidity in
Displayed Orders and Zero Display
Orders in either AutoEx or Order
Delivery, and is not discriminatory
because ETP Holders are free to elect
whether or not to send displayed orders
or Zero Display Orders via Order
Delivery or AutoEx, in Tape A, B and/
or C, and as a liquidity provider or
liquidity taker. In addition, the
proposed aggregation of affiliate activity
is reasonable and equitably allocated
among ETP Holders based on clearly
establish standards in Rule 16.3, and is
not discriminatory for the same reason.
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 credit and rebate structure
effective on filing of this proposed rule
for trading on April 1, 2009. 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 Web site (https://
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,15 in general, and Section 6(b)(4) of
the Act,16 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 fee
14 See, e.g., NASDAQ Rule 7027 (adopted by SEC
Release 34–53128 (Jan. 13, 2006)).
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(4).
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and rebate structure is not
discriminatory in that all ETP Holders
are eligible to submit (or not submit)
liquidity adding trades and quotes in
Order Delivery or AutoEx, in any tape,
and as either displayed or undisplayed,
and may do so at their discretion in the
daily volumes they choose during the
course of the measurement period. All
ETP Holders are further eligible to apply
for affiliate aggregation pursuant to the
objective criteria set forth in Rule 16.3.
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 foregoing rule change has taken
effect upon filing pursuant to Section
19(b)(3)(A)(ii) of the Act 17 and
subparagraph (f)(2) of Rule 19b–4 18
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.
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:
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NSX–2009–02. 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 (https://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 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 publicly available. All
submissions should refer to File
Number SR–NSX–2009–02 and should
be submitted on or before May 5, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–8424 Filed 4–13–09; 8:45 am]
BILLING CODE 8010–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NSX–2009–02 on the
subject line.
17 15
18 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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[Federal Register Volume 74, Number 70 (Tuesday, April 14, 2009)]
[Notices]
[Pages 17259-17262]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-8424]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59723; File No. SR-NSX-2009-02]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Fee and Rebate Schedule Relating to Liquidity Adding Rebates
April 7, 2009.
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 March 31, 2009, National Stock Exchange, Inc. 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 comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
National Stock Exchange, Inc. (``NSX[supreg]'' or ``Exchange'') is
proposing to (i) amend the Fee and Rebate Schedule (the ``Fee
Schedule'') issued pursuant to Exchange Rule 16.1(c) in order to
increase the displayed order liquidity adding rebate for Tape A and C
securities executed at one dollar or above in the Automatic Execution
Mode of order interaction in the event that certain volume thresholds
are achieved, (ii) provide a rebate for adding liquidity in displayed
orders at one dollar or above in the Order Delivery Mode of order
interaction in the event that certain volume thresholds are achieved
and (iii) establish a new Rule 16.3 to provide that, for purposes of
applying the provisions of the Fee Schedule and Exchange Rule 16, an
ETP Holder may request that the Exchange aggregate its activity with
the activity of its affiliates.
The text of the proposed rule change is available on the Exchange's
Web site at https://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
[[Page 17260]]
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 increase the
liquidity provider rebate for displayed orders (i.e., those orders
other than Zero Display Reserve Orders) \3\ (``Displayed Orders'')
executed in the Automatic Execution Mode of order interaction
(``AutoEx'').\4\ The proposed increased rebate applies only to Tape A
and C securities executed at a price of one dollar and higher in
AutoEx, and only after certain volume thresholds are achieved. In
addition, the Exchange is proposing to establish a liquidity provider
rebate for Displayed Orders executed in the Order Delivery Mode of
order interaction (``Order Delivery'' or ``O/D'').\5\ This rebate
applies only to securities priced one dollar and higher in Order
Delivery, and only after certain volume thresholds are achieved. The
proposed rebate for Displayed Orders in Order Delivery mirrors the
rebate for liquidity adding Zero Display Orders established pursuant to
a rule change submitted by the Exchange for effectiveness on March 2,
2009.\6\ Finally, with this rule change the Exchange is proposing to
adopt a new Rule 16.3 to allow for the aggregation among affiliated ETP
Holders of average daily volumes and other activity.
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\3\ As specified in Rule 11.11(c)(2)(A).
\4\ The Exchange's two modes of order interaction are described
in NSX Rule 11.13(b).
\5\ The Exchange's two modes of order interaction are described
in NSX Rule 11.13(b).
\6\ See SR-NSX-2009-01.
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Increase in AutoEx Displayed Order Liquidity Adding Rebate for Tapes A
and C
Prior to effectiveness of the instant rule filing, the AutoEx
rebate for liquidity adding Displayed Orders in securities one dollar
and above was $0.0026 per share in Tapes A and C, and $0.0030 per share
in Tape B. The instant rule filing proposes to increase the rebate for
Tape A and C securities in cases where certain average daily volume
thresholds are achieved. Specifically, ETP Holders who achieve
Liquidity Adding ADV \7\ of less than 25 million will continue to
receive the previously established liquidity adding rebate for executed
Tape A and C Displayed Orders in AutoEx of $0.0026 per share.\8\
However, under the instant rule filing, ETP Holders who achieve a
Liquidity Adding ADV of 25 million and 40 million shares will receive
higher rebates of $0.0027 and $0.0028, respectively, with respect to
their executed liquidity adding displayed AutoEx Tape A and C
securities priced at one dollar and higher.\9\
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\7\ As used elsewhere in the Fee Schedule, ``Liquidity Adding
ADV'' means, with respect to an ETP Holder, ``the number of shares
such ETP Holder has executed as a liquidity provider on average per
trading day (excluding partial trading days and securities under one
dollar) across all tapes on NSX for the calendar month (or partial
month, as applicable) in which the executions occurred'' (see the
Explanatory Endnotes to the Fee Schedule).
\8\ Similarly, no change is proposed with respect to the
liquidity adding rebate applicable to Tape B securities in AutoEx.
\9\ The instant rule filing proposes to establish tiered rebates
for executed liquidity adding Tape A and C Displayed Orders in
AutoEx. The first rebate tier is $0.0026 per share, applicable to
Tape A and C shares executed at one dollar or more in AutoEx which
added liquidity as Displayed Orders, where the ETP Holder's
Liquidity Adding ADV is less than 25 million. The second tier is
$0.0027 per share, applicable to Tape A and C shares executed at one
dollar or more in AutoEx which added liquidity as Displayed Orders,
where the ETP Holder's Liquidity Adding ADV is at least 25 million
and less than 40 million. The third tier is $0.0028 per share,
applicable to Tape A and C shares executed at one dollar or more in
AutoEx which added liquidity as Displayed Orders, where the ETP
Holder's Liquidity Adding ADV is at least 40 million.
---------------------------------------------------------------------------
Like other calculations of ``average daily volume'' in the Fee
Schedule, the measurement period for calculating the proposed rebate is
generally the calendar month. However, in the event a pricing or rebate
program utilizing this definition is implemented, modified or
discontinued on other than month's end, the period of measurement used
to determine ``average daily volume'' with respect to the rebate (as
used in the definition of ``Liquidity Adding ADV'' and elsewhere in the
Fee Schedule) shall be that partial month during which the program's
terms are in effect. This is further explained in the Explanatory
Endnotes to the Fee Schedule.
O/D Liquidity Adding Displayed Order Rebate
In addition, for securities trading at one dollar or higher in
Order Delivery, this rule change proposes to provide a progressively
higher rebate applicable to shares executed as liquidity providing
Displayed Orders in O/D. ETP Holders who achieve an average daily
volume of shares executed as Displayed Orders in O/D (``Liquidity
Adding ADV (O/D Displayed)'') of 1 million,\10\ 10 million \11\ and 20
million \12\ shares will receive rebates of $0.0008, $0.0010 and
$0.0012, respectively, with respect to such shares (any such rebate
hereinafter referred to as an ``O/D Liquidity Adding Displayed Order
Rebate''). Liquidity Adding ADV (O/D Displayed) means, with respect to
an ETP Holder, ``the number of Displayed Order shares such ETP Holder
has executed as a liquidity provider on average per trading day
(excluding partial trading days and securities under one dollar) across
all tapes in Order Delivery for the calendar month (or partial month,
as applicable) in which the executions occurred'' (see the Explanatory
Endnotes to the Fee Schedule).
---------------------------------------------------------------------------
\10\ The first tier is $0.0008 per share, applicable to shares
executed in O/D which added liquidity as Displayed Orders, where the
number of such shares is greater than or equal to 1 million and less
than 10 million.
\11\ The second tier is $0.0010 per share, applicable to shares
executed in O/D which added liquidity as Displayed Orders, where the
number of such shares is greater than or equal to 10 million and
less than 20 million.
\12\ The third tier is $0.0012 per share, applicable to shares
executed in O/D which added liquidity as Displayed Orders, where the
number of such shares is greater than or equal to 20 million.
---------------------------------------------------------------------------
For purposes of clarity, if an ETP Holder fails to achieve
Liquidity Adding ADV (O/D Displayed) of at least 1 million shares in a
given month (or partial month, as applicable), then no O/D Liquidity
Adding Displayed Order Rebate applies. In addition, for purposes of
calculating an ETP Holder's Liquidity Adding ADV (O/D Displayed), only
such ETP Holder's liquidity adding Displayed Orders executed in O/D in
the given time frame are counted. Finally, the O/D Liquidity Adding
Displayed Order Rebate applies only to those shares of an ETP Holder
executed in O/D as liquidity adding Displayed Orders (i.e., the rebate
does not apply to shares of Zero Display Orders that add liquidity in
O/D, nor to shares of liquidity providing Displayed Orders in AutoEx).
These details are set forth in an explanatory endnote to the Fee
Schedule.
Like other calculations of ``average daily volume'' in the Fee
Schedule, the measurement period for calculating the O/D Liquidity
Adding Displayed Order Rebate is generally the calendar month. However,
in the event a pricing or rebate program utilizing this definition is
implemented, modified or discontinued on other than month's end, the
period of measurement used to determine ``average daily volume'' with
respect to the rebate (as used in the definition of Liquidity Adding
ADV (O/D Displayed) and elsewhere in the Fee
[[Page 17261]]
Schedule) shall be that partial month during which the program's terms
are in effect.
Examples of Order Delivery Liquidity Adding Displayed Order Rebate \13\
---------------------------------------------------------------------------
\13\ These examples merely illustrate the calculation of the
rebates for Displayed Orders that Add Liquidity in Order Delivery.
They do not calculate, nor show, the rebates and fees applicable to
displayed orders that add liquidity [sic], Zero Display Orders that
add liquidity in AutoEx or Order Delivery, orders that take
liquidity, or fees for routing.
---------------------------------------------------------------------------
The following charts may be used to illustrate application of the
O/D Liquidity Adding Displayed Order Rebate. In a given calendar month
(or other applicable period), the following ETP Holders achieve the
following average daily volumes of executed shares (in each case,
counting only securities priced at one dollar or higher and excluding
partial trading days):
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 (Threshold) 6
-----------------------------------------------------------------------------------------------
AutoEx AutoEx Zero AutoEx AutoEx Zero
ETP Holder Displayed Display Displayed Display Liquidity Liquidity
Liquidity Liquidity Liquidity Liquidity Adding ADV (O/ Adding ADV (O/
Adding Adding Taking Taking D Displayed) D Dark)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A....................................................... 30,000 30,000 30,000 30,000 30,000 30,000
B....................................................... 920,000 30,000 30,000 30,000 30,000 30,000
C....................................................... 30,000 920,000 30,000 30,000 30,000 30,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
ETP Holder A will not receive an O/D Liquidity Adding Displayed
Order Rebate. ETP Holder A fails to satisfy the eligibility requirement
(ETP Holder A's Liquidity Adding ADV (O/D Displayed) of 30,000 (column
5) falls short of the first rebate tier of at least 1 million). ETP
Holder B and ETP Holder C similarly fail to achieve the first tier of
the O/D Liquidity Adding Displayed Order Rebate.
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 (Threshold) 6
-----------------------------------------------------------------------------------------------
AutoEx AutoEx Zero AutoEx AutoEx Zero
ETP Holder Displayed Display Displayed Display Liquidity Liquidity
Liquidity Liquidity Liquidity Liquidity Adding ADV (O/ Adding ADV (O/
Adding Adding Taking Taking D Displayed) D Dark)
--------------------------------------------------------------------------------------------------------------------------------------------------------
D....................................................... 1 million 1 million 30,000 30,000 10 million 10 million
--------------------------------------------------------------------------------------------------------------------------------------------------------
ETP Holder D will receive an O/D Liquidity Adding Displayed Order
Rebate. ETP Holder D's Liquidity Adding ADV (O/D Displayed) of 10
million meets the second tier of the rebate. Accordingly, ETP Holder
D's O/D Liquidity Adding Displayed Order Rebate for the given period
will equal the number of full trading days in the measurement period
multiplied by 10 million multiplied by $0.0010 (the second rebate tier
for which ETP Holder D is eligible based on Liquidity Adding ADV (O/D
Displayed) of at least 10 million and less than 20 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 (Threshold) 6
-----------------------------------------------------------------------------------------------
AutoEx AutoEx Zero AutoEx AutoEx Zero
ETP Holder Displayed Display Displayed Display Liquidity Liquidity
Liquidity Liquidity Liquidity Liquidity Adding ADV (O/ Adding ADV (O/
Adding Adding Taking Taking D Displayed) D Dark)
--------------------------------------------------------------------------------------------------------------------------------------------------------
E....................................................... 0 10 million 0 0 20 million 10 million
--------------------------------------------------------------------------------------------------------------------------------------------------------
ETP Holder E will receive an O/D Liquidity Adding Displayed Order
Rebate. ETP Holder E has achieved the third tier of the Liquidity
Adding ADV (O/D Displayed) eligibility threshold (with 20 million
shares). Accordingly, ETP Holder E's O/D Liquidity Adding Displayed
Order Rebate for the given period will equal the number of full trading
days in the measurement period multiplied by 20 million multiplied by
$0.0012.
Aggregation of Activity of Affiliated ETP Holders
This rule change also proposes to adopt a new Rule 16.3 (and delete
the obsolete text formerly contained therein) which would allow an ETP
Holder to request that the Exchange aggregate its activity with the
activity of certain of its affiliates for purposes of applying Chapter
16 and the terms of the Fee Schedule, including for purposes of
achieving the volume rebates and discounts applicable in the various
formulations of ``average daily volume'' used in the Fee Schedule. An
ETP Holder requesting aggregation of affiliate activity shall be
required to certify to the Exchange the affiliate status of entities
whose activity it seeks to aggregate prior to receiving approval for
aggregation, and shall be required to inform the Exchange immediately
of any event that causes an entity to cease to be an affiliate.
Proposed Rule 16.3 further provides that the Exchange reserves the
right to request information to verify the affiliate status of an
entity. Upon verification and approval by the Exchange, an ETP Holder's
activity would include, for purposes of calculating, among other
things, average daily volumes, the activity of its approved wholly
owned subsidiary, parent and sister entities that are also ETP Holders.
Rationale
The Exchange has determined that these changes are necessary to
increase the volume of Displayed Orders in both
[[Page 17262]]
AutoEx and Order Delivery for the purpose of increasing the revenue of
the Exchange and adequately funding its regulatory and general business
functions. In addition, with respect to the O/D Liquidity Adding
Displayed Order Rebate, this rule change will provide ETP Holders with
equal incentive to submit Displayed Orders (relative to Zero Display
Orders) in Order Delivery. With respect to aggregation of affiliated
ETP Holder activity, the changes are necessary in order to effectively
compete with other trading centers \14\. The proposed modifications are
reasonable and equitably allocated to those ETP Holders that opt to
provide and take liquidity in Displayed Orders and Zero Display Orders
in either AutoEx or Order Delivery, and is not discriminatory because
ETP Holders are free to elect whether or not to send displayed orders
or Zero Display Orders via Order Delivery or AutoEx, in Tape A, B and/
or C, and as a liquidity provider or liquidity taker. In addition, the
proposed aggregation of affiliate activity is reasonable and equitably
allocated among ETP Holders based on clearly establish standards in
Rule 16.3, and is not discriminatory for the same reason. Based upon
the information above, the Exchange believes that the proposed rule
change is consistent with the protection of investors and the public
interest.
---------------------------------------------------------------------------
\14\ See, e.g., NASDAQ Rule 7027 (adopted by SEC Release 34-
53128 (Jan. 13, 2006)).
---------------------------------------------------------------------------
Operative Date and Notice
The Exchange intends to make the proposed credit and rebate
structure effective on filing of this proposed rule for trading on
April 1, 2009. 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 Web site (https://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,\15\ in general, and
Section 6(b)(4) of the Act,\16\ 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 fee and rebate structure is not
discriminatory in that all ETP Holders are eligible to submit (or not
submit) liquidity adding trades and quotes in Order Delivery or AutoEx,
in any tape, and as either displayed or undisplayed, and may do so at
their discretion in the daily volumes they choose during the course of
the measurement period. All ETP Holders are further eligible to apply
for affiliate aggregation pursuant to the objective criteria set forth
in Rule 16.3.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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 foregoing rule change has taken effect upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act \17\ and subparagraph (f)(2) of Rule
19b-4 \18\ 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.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
\18\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NSX-2009-02 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSX-2009-02. 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 (https://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 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 publicly available. All
submissions should refer to File Number SR-NSX-2009-02 and should be
submitted on or before May 5, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8424 Filed 4-13-09; 8:45 am]
BILLING CODE 8010-01-P
