
[Federal Register Volume 77, Number 47 (Friday, March 9, 2012)]
[Notices]
[Pages 14450-14452]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5730]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66511; File No. SR-NSX-2012-04]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the NSX Fee and Rebate Schedule

March 5, 2012.
    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 1, 2012, National Stock Exchange, Inc. 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 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.
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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 amend its Fee and Rebate Schedule (the ``Fee Schedule'') 
issued pursuant to Exchange Rule 16.1(c) to adjust the rebates for 
certain orders executed in the Exchange's Automatic Execution Mode, 
amend the fee tiers for certain orders executed in the Exchange's Order 
Delivery Mode, adjust the routing fee, and establish a fee for receipt 
of the Exchange's Depth of Book feed.
    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 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 modify the Fee 
Schedule in four respects. First, the proposed rule change would amend 
the rebates applicable to liquidity adding orders in securities priced 
at least one dollar in the Exchange's Automatic Execution Mode of order 
interaction (``AutoEx''). Second, the proposed rule change would amend 
the rebate tiers applicable to orders in securities priced at least one 
dollar in the Exchange's Order Delivery Mode of order interaction 
(``Order Delivery''). Third, the proposed rule change would increase 
the order routing fee from $0.0029 to $0.0030 per share. Finally, the 
proposed rule change would establish a fee applicable to direct 
recipients of the Exchange's Depth of Book (``DOB'') feed. Each of the 
proposed changes is further addressed below.
Rebates for Securities Priced at Least One Dollar in AutoEx
    The proposed rule change proposes to modify the rebates applicable 
to liquidity adding orders in securities priced one dollar or more in 
AutoEx. These changes can be found in Section I of the Fee Schedule.
    Currently, for Tape A and C securities, the Exchange offers a 
rebate in AutoEx for displayed orders that add liquidity based upon an 
ETP Holder's Liquidity Adding ADV (as such term is defined in Endnote 3 
of the Fee Schedule). For Tape A and C securities, the Exchange offers 
per share rebates of $0.0026 or $0.0029 depending on whether the ETP 
Holder has achieved a Liquidity Adding ADV of at least 10 million. For 
Tape B securities, the Exchange currently offers a rebate of $0.0030 
per share. The proposed rule change would eliminate all rebate volume 
tiers in AutoEx and establish a flat $0.0026 rebate per share for 
liquidity adding orders of securities of at least one dollar, 
regardless of an ETP Holder's Liquidity Adding ADV or whether the 
security is Tape A, B or C. Corresponding edits are made to Endnote 3 
to reflect the elimination of the distinction between Tapes A, B and C 
with respect to this rebate.
    For Zero Display Orders (as defined in Endnote 4 of the Fee 
Schedule) that add liquidity in AutoEx, the Exchange currently offers a 
rebate of $0.0025 per share if an ETP Holder's Total ADV (as defined in 
Endnote 5 of the Fee Schedule) is at least 30 million and Liquidity 
Adding ADV is at least 5 million. The proposed fee change would 
eliminate this rebate altogether, such that there would be no rebate 
associated with such orders. The defined term ``Total ADV'' would also 
be deleted from Endnote 5 of the Fee Schedule as no longer utilized.
Rebates for Securities Priced at Least One Dollar in Order Delivery
    As reflected in Section II of the Fee Schedule, for all liquidity 
adding displayed orders of securities priced at least one dollar in 
Order Delivery, the Exchange currently offers a $0.0008 or $0.0024 per 
share rebate depending on whether an ETP Holder's Liquidity Adding ADV 
is between one and 5 million, or over 5 million, respectively. The 
proposed rule filing would adjust these tiers and rebates such that an 
$0.0008 per share rebate would apply to each Order Delivery displayed 
order that adds liquidity where an ETP Holder's Liquidity Adding ADV is 
less than 15 million, or a $0.0024 per share rebate would apply to each 
such order where an ETP Holder's Liquidity Adding ADV is at least 15 
million.
    In addition, for Zero Display Reserve Orders in Order Delivery of 
securities priced at least one dollar, the current rebate tiers, 
depending on Liquidity Adding ADV, of between $0.0008 and

[[Page 14451]]

$0.0012 is proposed to be eliminated. Thus, under the proposed rule 
change, for such orders no rebate will apply.
Order Routing Fee
    Under Section IIIA of the Fee Schedule, the Exchange currently 
charges a fee of $0.0029 per share for each order routed by the 
Exchange and executed in another market center. The instant rule change 
proposes to increase the routing fee to $0.0030 per share.
Depth of Book Feed Charge
    The Exchange is proposing to establish a monthly fee applicable to 
each direct recipient of its DOB feed, payable in advance. Prior to the 
effective date of the proposed rule change, NSX offered its DOB feed 
free of charge.\3\ After the effective date, a monthly fee of $400 per 
direct recipient will be charged.\4\ New text is proposed to be added 
as Section IIIC of the Fee Schedule under the header ``Depth of Book 
Feed'' to reflect this charge. This rule filing does not propose to 
change or modify the form, content or transmission of the NSX DOB feed, 
which except with respect to the proposed charge remains unchanged.
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    \3\ See Securities and Exchange Release No. 34-66007 (December 
20, 2011), 76 FR 81000 (December 27, 2011) (SR-NSX-2011-015).
    \4\ Direct recipients of the NSX DOB feed are firms that have 
entered into a Market Data Feed License Agreement with the Exchange, 
which agreement governs the terms of a firm's receipt, use and 
dissemination of the feed. This agreement can be found on the 
Exchange's Web site. See http://www.nsx.com/resources/content/2/4/documents/NSXDOBFeedSpecificationv111.pdf.
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Rationale
    The Exchange has determined that the fee changes proposed above are 
necessary to increase the revenues of the Exchange for the purposes of 
continuing to adequately fund its regulatory and general business 
functions and to enable the Exchange to continue to properly fulfill 
its regulatory responsibilities. In addition, the modification of the 
volume tiers for displayed orders in Order Delivery is intended to 
simplify the incentives available to ETP Holders to increase the 
available liquidity on the Exchange. The Exchange believes that the 
proposed Depth of Book change would allow the Exchange to recoup some 
of the expenses it incurs in developing and delivering the NSX DOB feed 
to the public market. Other market centers charge similar or higher 
rates for receipt of their proprietary data feeds.
    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 currently intends to make the proposed modifications, 
which are effective on filing of this proposed rule, operative as of 
commencement of trading on March 1, 2012. 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 (www.nsx.com).
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the provisions of Section 6(b) of the Securities Exchange Act of 
1934 \5\ (the ``Act''), in general, and Section 6(b)(4) of the Act,\6\ 
in particular in that each change 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    With respect to the proposed changes in Section I of the Fee 
Schedule that establish a flat rebate for displayed orders, and 
elimination of the rebate for Zero Display orders, of securities priced 
at least one dollar in Auto Ex, such proposed changes are reasonable 
because they are in the same range of rebates offered by other 
exchanges.\7\ The proposed changes are equitably allocated and not 
discriminatory as all qualified ETP Holders are eligible to submit (or 
not submit) orders of this kind on the Exchange, and all ETP Holders 
choosing to do so will be paid the same rebate.
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    \7\ See CBOE Stock Exchange, Inc, Fee Schedule (http://www.cboe.com/publish/cbsxfeeschedule/cbsxfeeschedule.pdf) and New 
York Stock Exchange (``NYSE'') Arca Fee Schedule (http://www.nyse.com/pdfs/NYSEArca_Equities_Fees.pdf).
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    With respect to the changes in Section II that modify the rebates 
received for displayed orders of securities priced at least one dollar 
in Order Delivery, such proposed rebates are reasonable because they do 
not adjust the dollar amount of the rebate but rather modify only the 
volume tiers necessary to achieve the applicable rebate. Such volume 
adjustments are reasonable methods to incentivize the use of such order 
type. For Zero Display orders, elimination of the rebate is a 
reasonable adjustment in relation to recent volumes of such order type 
on the Exchange. Additionally, all similarly situated members are 
subject to the same fee structure, and access to the Exchange is 
offered on fair and non-discriminatory terms. Volume-based rebates and 
discounts have been widely adopted in the equities markets, and are 
equitable because they are open to all members on an equal basis and 
provide rebates that are reasonably related to the value of an 
exchange's market quality associated with the requirements for the 
favorable pricing tier.
    The proposed adjustment of the Order Routing Fee in Section IIIA of 
the Fee Schedule is reasonable because it is only $0.0001 higher than 
the current routing fee and remains comparable to that charged by other 
Exchanges.\8\ This proposed change is equitably allocated and not 
discriminatory as it applies uniformly to all ETP Holder entering 
orders that are routed to other market centers.
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    \8\ See NASDAQ OMX (``Nasdaq'') Fee Schedule (http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2).
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    The proposed ``Depth of Book Feed Charge'' fee is reasonable as it 
is comparable to the fees imposed for receipt of proprietary data feeds 
charged by other market centers.\9\ This proposed fee applies uniformly 
to all parties that receive the DOB feed directly, and, thus, the 
charge is not discriminatory and equitably allocated. In addition, 
receipt of the NSX DOB feed is entirely voluntary, and only recipients 
choosing to receive the feed are subject to the charge.
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    \9\ See NYSE Arcabook fee schedule (http://www.nyxdata.com/arcabook) (charging $750/mo. for a data product that includes the 
NYSE Arca equivalent to the NSX DOB feed).
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    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues if they 
deem fee levels at a particular venue to be excessive. In such an 
environment, the Exchange must continually adjust its fees to remain 
competitive with other market centers.

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.

[[Page 14452]]

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 \10\ and subparagraph (f)(2) of Rule 
19b-4 \11\ 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 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-NSX-2012-04 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-2012-04. This file 
number should be included on the subject line if email 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 such filing will also 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 No. SR-NSX-2012-04 and should be 
submitted on or before March 30, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5730 Filed 3-8-12; 8:45 am]
BILLING CODE 8011-01-P


