
[Federal Register Volume 77, Number 224 (Tuesday, November 20, 2012)]
[Notices]
[Pages 69709-69711]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28145]



[[Page 69709]]

Vol. 77

Tuesday,

No. 224

November 20, 2012

Part II





Securities and Exchange Commission





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

  Federal Register / Vol. 77 , No. 224 / Tuesday, November 20, 2012 / 
Notices  

[[Page 69710]]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68226; File No. SR-NSX-2012-19]


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

November 14, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on November 2, 2012, National Stock Exchange, Inc. 
(``NSX[supreg]'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``SEC'' or ``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

    The Exchange is proposing to amend its Fee and Rebate Schedule (the 
``Fee Schedule'') issued pursuant to Exchange Rule 16.1(a) to modify 
the rebates for certain orders executed in the Exchange's Order 
Delivery and Automated Response (``Order Delivery'') mode. The text of 
the proposed rule change is available on the Exchange's Web site at 
www.nsx.com, at the Exchange's principal office, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend Section II of its Fee Schedule 
to modify the rebates for orders executed in the Exchange's Order 
Delivery mode in securities with quoted prices of at least one dollar. 
Under Section II of the Fee Schedule, the Exchange offers ETP Holders 
both a Primary and Alternate Fee Schedule with six (6) tiers of 
progressively greater rebates.\3\ An ETP Holder's monthly average daily 
trading volume (``ADV'') determines which rebate tier the ETP Holder 
meets. The Exchange proposes to consolidate tiers and increase the 
rebates under Section II of the Fee Schedule for Order Delivery 
participants as follows:
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    \3\ ETP Holders that are Order Delivery participants 
automatically receive the Alternate Fee Schedule upon meeting the 
minimum ADV threshold of 1,500,000 in Order Delivery Mode and 
10,000,000 shares in Automatic Execution Mode. Under the Alternate 
Fee Schedule, ETP Holders will receive up to an additional $0.0003 
liquidity adding rebate over the tiered rebates contained in the 
Primary Fee Schedule when the tier requirements are met.
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     Tier 1--ADV range would change from 0 and <10.0 million to 
0 & <12.0 million. Rebate amount is unchanged.
     Tier 2--ADV range would change from 10.0 and <12.0 million 
to 12.0 & <14.0 million. Rebates would change from $0.0011 to $0.0014 
in the Primary Fee Schedule and from $0.0014 to $0.0017 in the 
Alternate Fee Schedule.
     Tier 3--ADV range would change from 12.0 and <15.0 million 
to 14.0 & <16.0 million. Rebates would change from $0.0015 to $0.0018 
in the Primary Fee Schedule and from $0.0018 to $0.0021 in the 
Alternate Fee Schedule.
     Tier 4--ADV range would change from 15.0 and <20.0 million 
to 16.0 million and above. Rebates would change from $0.0021 to $0.0024 
in the Primary Fee Schedule and from $0.0024 to $0.0027 in the 
Alternate Fee Schedule.
     Tiers 5 and 6 would be deleted.\4\
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    \4\ Order Delivery participants that met the ADV thresholds 
required by tiers 5 and 6 were eligible to receive a 25% market data 
rebate. NSX clarified that this rebate would apply to the Exchange's 
highest tier under the proposal, tier 4. See Email from Chris 
Solgan, Senior Regulatory Counsel, NSX to Ronesha A. Butler, Special 
Counsel and David A. Garcia, Attorney-Advisor, Division of Trading 
and Markets, dated November 8, 2012.
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    The Exchange believes improving rebates is a reasonable method to 
incentivize ETP Holders that use Order Delivery to submit greater order 
volumes to the Exchange, which would result in increased revenues to 
the Exchange. Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues. In such an environment, the Exchange must continually 
review, and consider adjusting, its fees and rebates to remain 
competitive with other exchanges. The Exchange believes that the 
proposed rule change reflects this competitive environment.
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 November 2, 2012.\5\ 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).
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    \5\ Because the proposed changes are effective November 2, 2012, 
trading activity occurring on November 1, 2012 will be billed under 
the then existing Fee Schedule when ETP Holders are invoiced at 
month end.
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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 Securities Exchange Act of 
1934 \6\ (the ``Act''), in general, and Section 6(b)(4) of the Act,\7\ 
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 rebate structure under Section II of the Fee Schedule is not 
discriminatory in that all ETP Holders are eligible to submit (or not 
submit) liquidity adding trades and quotes, and may do so at their 
discretion in the daily volumes they choose during the course of the 
measurement period. The volume adjustments are reasonable methods to 
incentivize the submission of such orders. All similarly situated ETP 
Holders are subject to the same fee structure, and access to the 
Exchange is offered on terms that are not unfairly-discriminatory. 
Volume-based rebates and discounts have been widely adopted in the 
equities markets, and are equitable because they are open to all ETP 
Holders on an equal basis and provide rebates that are reasonably 
related to the value of an exchange's market quality associated with 
the

[[Page 69711]]

requirements for the favorable pricing tier.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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 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

    The proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Exchange Act \8\ and subparagraph (f)(2) 
of Rule 19b-4 \9\ 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 such 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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-2012-19 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-2012-19. 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 
10:00 a.m. and 3:00 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-2012-19 and should be 
submitted on or before December 11, 2012.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28145 Filed 11-19-12; 8:45 am]
BILLING CODE 8011-01-P


