
[Federal Register: August 4, 2010 (Volume 75, Number 149)]
[Notices]               
[Page 47049-47051]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au10-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62601; File No. SR-NSX-2010-09]

 
Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt Enhanced Customer Disclosure Rules Concerning Transactions 
Outside of Regular Trading Hours

July 29, 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 July 29, 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 and 
II below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \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

    NSX is proposing to adopt certain enhanced customer disclosure 
requirements applicable to transactions outside of the Exchange's 
regular trading hours trading session.
    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 amend Rule 11.1 
to adopt enhanced customer disclosure requirements applicable to 
transactions on the Exchange during trading sessions outside of Regular 
Trading Hours (as such term is defined below). In addition, the instant 
rule change proposes to make certain clean-up conforming changes to 
other Exchange Rules as further described below.
    The instant rule filing proposes to adopt as Rule 11.1(c) certain 
enhanced disclosure requirements applicable to transactions effected on 
the Exchange outside of the Regular Trading Hours trading session.\5\ 
Specifically, Rule 11.1(c) provides that no ETP Holder may accept an 
order from a non-ETP Holder for execution outside of Regular Trading 
Hours without disclosing to such non-ETP Holder that extended hours 
trading involves material trading risks, including the possibility of 
lower liquidity, high volatility, changing prices, unlinked markets, an 
exaggerated effect from news announcements, wider spreads and any other 
relevant risk. The absence of an updated underlying index value or 
intraday indicative value is an additional trading risk in extended 
hours for UTP Derivative Security products under NSX Rule 15.9. 
Proposed Rule 11.1(c) provides for the benefit of ETP Holders 
disclosure language regarding the foregoing risks that would be 
generally acceptable to

[[Page 47050]]

the Exchange. In addition, proposed Rule 11.1(d) provides that trades 
on the Exchange executed and reported outside of Regular Trading Hours 
shall be designated as ``.T'' trades. Proposed Rule 11.1(c) and (d) are 
based on Arca Rule 7.34(e) and (f), respectively.\6\
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    \5\ Currently, the Exchange's Regular Trading Hours, as such 
term is defined in NSX Rule 1(R)(1), are from 8:30 a.m. until 3 p.m. 
Central Time (9:30 a.m. until 4 p.m. Eastern Time (``ET'')). The 
pre-Regular Trading Hours trading session is from 8 a.m. until 9:30 
a.m. ET, and the post-Regular Trading Hours trading session is from 
4 p.m. until 6:30 p.m. ET.
    \6\ See also NASDAQ Rule 4631, ISE Rule 2102, Interpretation and 
Policy .04 and .05, and BATS Rule 3.21.
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    In addition, the proposed rule change makes clean up changes to NSX 
Rule 1.5R(1) by modifying the definition of ``Regular Trading Hours'' 
to reflect Eastern Time instead of Central Time, consistent with the 
time references in the remainder of NSX Rules. Further, for purposes of 
internal consistency and clarity, the references to hours of trading in 
Interpretation and Policy .01(f) of Rule 15.12 is eliminated as 
obsolete, and in Rule 15.9B(2) such reference is modified consistent 
with the usage of the term ``Regular Trading Hours''. Finally, the 
definition of ``Day Order'' in Rule 11.11(b)(2) is modified to clarify 
that Day Orders will expire at the close of the Exchange's Regular 
Trading Hours trading session instead of at the close of the regular 
trading session on the given security's listing exchange.\7\
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    \7\ This modification constitutes no change to the Exchange's 
current practices because the close of the regular trading sessions 
on listing exchanges has historically also been 4 p.m. ET.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(5) \9\ in particular in that it 
is designed, among other things, to promote clarity, transparency and 
full disclosure, in so doing, to prevent fraudulent and manipulative 
acts and practices, 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. Moreover, the proposed rule change 
is not discriminatory in that all ETP Holders are eligible to 
participate (or elect to not participate) in effectuating transactions 
on the Exchange outside of Regular Trading Hours on the same terms and 
conditions.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

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

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\12\ 
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 has requested that the 
Commission waive the 30-day operative delay. The Commission notes that 
the Exchange's proposal is substantially similar to the rules of other 
national securities exchanges and does not raise any new substantive 
issues.\13\ Based on the foregoing, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest and hereby designates the proposal 
operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission 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 has satisfied this requirement.
    \13\ See supra note 6. The Commission previously has waived the 
operative delay for similar rule change proposals of other exchanges 
under Rule 19b-4(f)(6) on the same basis. See, e.g., Securities 
Exchange Act Release No. 59963 (May 21, 2009), 74 FR 25787 (May 29, 
2009) (SR-BATS-2009-012); and Securities Exchange Act Release No. 
58685 (September 30, 2008), 73 FR 58277 (October 6, 2008) (SR-ISE-
2008-73).
    \14\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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.\15\
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    \15\ 15 U.S.C. 78s(b)(3)(C).
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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-2010-09 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-2010-09. 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 should submit only information that

[[Page 47051]]

you wish to make available publicly. All submissions should refer to 
File Number SR-NSX-2010-09 and should be submitted on or before August 
25, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Florence E. Harmon,
Deputy Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-19225 Filed 8-3-10; 8:45 am]
BILLING CODE 8010-01-P

