
[Federal Register: June 30, 2010 (Volume 75, Number 125)]
[Notices]               
[Page 37861-37863]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn10-113]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62358; File No. SR-NSX-2010-06]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Implement an Equity Rights Program

June 22, 2010.
    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 June 15, 2010, National Stock Exchange, Inc. (``NSX[supreg]'' 
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 the Exchange. The 
Commission is publishing this notice to solicit comment on the proposed 
rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NSX is proposing to implement an equity rights program pursuant to 
which warrants may be purchased that would allow equity in the 
Exchange's parent holding company to be acquired based on, among other 
things, a participating ETP Holder's payment of an initial purchase 
price for the warrants and achievement of certain liquidity adding 
volume thresholds on the Exchange over a six month measuring period.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nsx.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts 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 implement an 
equity rights program pursuant to which warrants for common stock of 
the Exchange's parent holding company, NSX Holdings, Inc. 
(``Holdings''), will be issued to each ETP Holder who participates in 
the program in exchange for such ETP Holder participant's initial cash 
capital contribution of $250,000, and with such warrants being 
exercisable upon the achievement by the participating ETP Holder of the 
following liquidity adding volume thresholds (measured as a percentage 
of total consolidated average daily volume) on the Exchange during a 
six month measurement period commencing June 15, 2010:


----------------------------------------------------------------------------------------------------------------
                                             Participating ETP holder's
                                         liquidity adding ADV as % of total    Participating ETP holder's total
                                                  consolidated ADV                   exercisable warrants
----------------------------------------------------------------------------------------------------------------
Tier 1:...............................  > 15 basis points..................  4,575
Tier 2:...............................  > 25 and < 30 basis points.........  19,575
Tier 3:...............................  > 30 and < 35 basis points.........  22,075
Tier 4:...............................  > 35 and < 40 basis points.........  24,575
Tier 5:...............................  > 40 basis points..................  24,575 plus participation in bonus
                                                                              pool.
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    For purposes of the program, the term ``Liquidity Adding ADV'' 
means, with respect to a participating ETP Holder, the number of shares 
such ETP Holder has executed as a liquidity provider on average per 
trading day (excluding partial trading days) across all tapes on NSX 
for the measuring period in which the executions occurred. The term 
``Total Consolidated ADV'' means average daily volume reported by all 
exchanges and trade reporting facilities to the consolidated 
transaction reporting plans for Tape A, B and C securities. For 
purposes of calculating an ETP Holder's Liquidity Adding ADV as a 
percentage of Total Consolidated ADV over the measuring period, the 10 
days during the measuring period constituting that ETP Holder's lowest 
ratio of liquidity adding volume to total consolidated volume will be 
excluded. In addition, the number of shares executed by ETP Holders 
under common ownership and control may be aggregated for purposes of 
calculating average daily volumes.
    Total Bonus Pool shares shall equal the number of warrant holders 
achieving Tier 5 multiplied by 10,000. Each warrant holder eligible for 
participation in the Bonus Pool shall be

[[Page 37862]]

entitled to exercise its Bonus Pool warrants for a number of Bonus Pool 
shares determined by the following formula: number of shares in Bonus 
Pool multiplied by a fraction, the numerator of which is the eligible 
holder's Liquidity Adding ADV in excess of 40 basis points of Total 
Consolidated ADV and the denominator of which is the total of all 
eligible holders' Liquidity Adding ADV in excess of 40 basis points of 
Total Consolidated ADV.
    The maximum number of shares issued under the program will be 
103,724. The number of shares that would otherwise be issued to warrant 
holders if in excess of this limit will, at the time of warrant 
exercise, be reduced for each warrant on a pro rata basis. Warrant 
exercise will not be permitted to the extent that exercise would result 
in a warrant holder's pro forma ownership in Holdings exceeding 19.9% 
or any lower percentage cap that is applicable to such warrant holder 
due to legal or regulatory limitations. The warrants are not 
transferrable, and all shares issued pursuant to the terms of the 
warrants are subject to ownership and voting limits and transfer 
restrictions as stated in Holding's Certificate of Incorporation and 
By-laws.
    Each participating ETP Holder will also receive the option to 
participate in any second rights program made by the Exchange and 
Holdings covering a six month measuring period shortly following the 
current measuring period, on the same terms and conditions as all other 
participants in such program, but with the new cash contribution 
required for participation in such program fixed at $250,000. All other 
participants in any such second program will pay a cash contribution 
that is the same for each such participant, in an amount that is based 
on a determination made by Holdings at the time of announcement of any 
such program.
    Participants must have executed the definitive documentation 
(including a Warrant Purchase Agreement) and tendered the minimum cash 
investment by June 30, 2010. All program terms, rights and obligations 
are subject to final documentation to be executed by participating ETP 
Holders, which final documentation may contain terms that supplement 
those summarized herein.
    In addition to the payment of the purchase price and the execution 
of the purchase agreement, participating ETP Holders must qualify as 
``accredited investors'' (as such term is defined in Regulation D of 
the Securities Act of 1933). All participating ETP Holders will 
participate on the same terms, conditions and restrictions. This filing 
shall not constitute an offer to sell or a solicitation of an offer to 
buy securities.

Measurement Period and Notice

    The Exchange intends to commence the six month measurement period 
for the equity award program on June 15, 2010. The Exchange will 
provide ETP Holders with notice of the implementation of this program 
through the issuance of a Regulatory Circular and will post a copy of 
this rule filing on the Exchange's Web site (http://www.nsx.com). Any 
ETP Holder that is interested in participating in this program may 
contact John J. McCoy, Chief Legal Officer of the Exchange, at (201) 
499-1854, for more information and legal documentation. Execution among 
the parties of a non-disclosure agreement regarding such additional 
program information will be required.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\3\ in general, and 
Section 6(b)(4) of the Act,\4\ in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges among its members and other persons using the facilities of the 
Exchange. Moreover, the proposed rule change is not discriminatory in 
that all ETP Holders are eligible to participate (or elect to not 
participate) in the program on the same terms and conditions.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    The proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \5\ and subparagraph (f)(2) of Rule 
19b-4 \6\ 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NSX-2010-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2010-06. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You

[[Page 37863]]

should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NSX-2010-06 
and should be submitted on or before July 21, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15822 Filed 6-29-10; 8:45 am]
BILLING CODE 8010-01-P

