
[Federal Register: July 30, 2008 (Volume 73, Number 147)]
[Notices]               
[Page 44305-44307]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy08-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58217; File No. SR-NSX-2008-12]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Provide for a Post Intermarket Sweep Order

July 24, 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 July 18, 2008, National Stock Exchange, Inc. (``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 substantially prepared by the Exchange. 
NSX filed the proposal pursuant to Section 19(b)(3)(A) 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend NSX Rule 11.11(c)(8) to allow 
ETP Holders the option of designating an intermarket sweep order 
(``ISO'') as a ``Post Intermarket Sweep Order'' (``Post ISO''). The 
text of the proposed rule change is below. Proposed new language is in 
italics, and the proposed deletions are enclosed in brackets:

Rules of National Stock Exchange, Inc.

Chapter XI. Trading Rules
* * * * *
Rule 11.11. Orders and Modifiers
    Users may enter into the System the types of orders listed in this 
Rule 11.11, subject to the limitations set forth in this Rule or 
elsewhere in these Rules.
    (a)-(b) No change.
    (c) Other Types of Orders and Order Modifiers.
    (1)-(7) No change.
    (8) [Incoming] Intermarket Sweep Order (``ISO'').
    (i) Incoming ISO. The System will accept incoming intermarket sweep 
orders (as such term is defined in Regulation NMS) from other trading 
centers. In order to be eligible for treatment as an intermarket sweep 
order, the order must be marked ``ISO,'' and the User entering the 
order must simultaneously route one or more additional limit orders 
marked ``ISO,'' as necessary, to away markets to execute against the 
full displayed size of any protected quotation for the security with a 
price that is superior to the limit price of the intermarket sweep 
order entered in the System. Such orders, if they meet the requirements 
of the foregoing sentence, will be considered immediate-or-cancel (IOC) 
and will be executed without regard to protected quotations at away 
markets consistent with Regulation NMS.
    (ii) Post ISO. A User may designate an ISO as a ``Post ISO.'' In 
order to be eligible for treatment as a Post ISO, the order must be 
marked ``Post ISO,'' and in submitting such an order the User entering 
the order represents that such User has simultaneously routed one or 
more additional limit orders marked ``ISO,'' as necessary, to away 
markets to execute against the full displayed size of any protected 
quotation for the security with a price that is superior or equal to 
the limit price of the Post ISO entered in the System. Such order, if 
it meets the requirements of the foregoing sentence and is not a Post 
Only Order pursuant to Rule 11.11(c)(5), will be executed without 
regard to protected quotations at away markets consistent with 
Regulation NMS by sweeping the NSX Book up to and including its limit 
price. A Post ISO which is designated by the User as a Post Only Order 
pursuant to Rule 11.11(c)(5) will be rejected without execution if, 
when entered, it is immediately marketable against displayed orders in 
the NSX Book. Any unfilled portion of a Post ISO that meets the 
requirements of Rule 11.22(d)(3) will be posted at the entered limit 
price.
    (9) No change.
    (d) No change.
* * * * *

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 44306]]

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
    The Exchange is proposing to amend Exchange Rules 11.11(c)(8) to 
allow ETP Holders the option of posting an order designated as an ISO.
    Under current Rule 11.11(c)(8), the System will accept incoming 
intermarket sweep orders (as such term is defined in Regulation NMS) 
from other trading centers. In order to be eligible for treatment as an 
intermarket sweep order, the order must be marked ``ISO,'' and the User 
entering the order must simultaneously route one or more additional 
limit orders marked ``ISO,'' as necessary, to away markets to execute 
against the full displayed size of any protected quotation for the 
security with a price that is superior to the limit price of the 
intermarket sweep order entered in the System. Such orders, if they 
meet the requirements of the foregoing sentence, will be considered 
immediate-or-cancel (IOC) and will be executed without regard to 
protected quotations at away markets consistent with Regulation NMS.
    Under the proposed rule change, by designating an ISO as a ``Post 
ISO,'' the ETP Holder represents to the Exchange that the ETP Holder 
has simultaneously routed one or more additional limit orders marked 
``ISO,'' as necessary, to away markets to execute against the full 
displayed size of any protected quotation for the security with a price 
that is superior or equal to the limit price of the intermarket sweep 
order entered in the System. The incoming Post ISO (unless marked 
``post only'') will sweep the NSX Book up to its limit price. Unlike a 
standard ISO (which is considered IOC), if residual shares of the Post 
ISO are available, they will be posted at the entered limit price 
(similar to existing ``Sweep and Post'' orders under Rule 
11.11(c)(7)(ii)(A)). Any unfilled portion of a Post ISO order following 
the sweep of the NSX Book will be posted in the NSX Book and will be 
ineligible for routing.
    If an incoming Post ISO is marked as ``Post Only'' pursuant to Rule 
11.11(c)(5) and is marketable (within NSX), it will be rejected. 
Otherwise, Post Only Post ISOs will be accepted and posted in the NSX 
Book at its limit price providing liquidity.
    Similar to ISOs under the current Rules, Users sending a Post ISO 
must simultaneously route one or more additional limit orders marked 
``ISO,'' as necessary, to away markets to execute against the full 
displayed size of any protected quotation for the security with a price 
that is superior or equal to the limit price of the intermarket sweep 
order entered in the System in accordance with Regulation NMS' Order 
Protection Rule Rules 610 and 611. Post ISOs may therefore lock or 
cross protected quotes at away market centers that were sent ISOs equal 
to the limit price, consistent with Rule 11.22(d)(3), but may not lock 
or cross the NSX Top of Book, and are not routable, subject to their 
compliance with this rule and Rule 11.22(d)(3).
    Post ISOs may be entered as odd, round or mixed lots. Only 
displayed orders (and displayed orders with reserves) may be designated 
as Post ISOs. Post ISO for Order Delivery will be processed in the same 
way as other order types supported today.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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 states that written comments on the proposed rule 
change were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this 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 Rule 19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide 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, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest.\9\ 
Previously, the Commission approved an order type similar to the one 
proposed,\10\ and this proposal does not raise any novel issues. For 
these reasons, the Commission designates the proposed rule change as 
operative upon filing.
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    \9\ For purposes only of waiving the 30-day operative delay, the 
Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \10\ See Securities Exchange Act Release No. 54549 (September 
29, 2006), 71 FR 59179 (October 6, 2006) (SR-NYSEArca-2006-59) 
(approving NYSE Arca Equities Rule 7.31(w)).
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    At any time within 60 days of the filing of the 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,

[[Page 44307]]

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-2008-12 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-2008-12. 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, 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-NSX-2008-12 and should be 
submitted on or before August 20, 2008.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17412 Filed 7-29-08; 8:45 am]

BILLING CODE 8010-01-P
