
[Federal Register Volume 78, Number 191 (Wednesday, October 2, 2013)]
[Notices]
[Pages 60954-60956]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24016]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70525; File No. SR-NSX-2013-18]


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

September 26, 2013.
    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 September 23, 2013, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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) in order to 
change two of the stocks on the list of five select securities (the 
``Select Securities'') for which the Exchange pays a rebate of $0.0045 
per executed share to Equity Trading Permit (``ETP'') \3\ Holders that 
direct Double Play Orders \4\ in those securities to the CBOE Stock 
Exchange, Inc. (``CBSX''). The Exchange is proposing no other changes 
to the Fee Schedule except to amend the list of Select Securities. 
Specifically, the Exchange proposes to remove Advanced Micro Devices, 
Inc., (``AMD'') and Micron Technology, Inc. (``MU'') from the list of 
Select Securities, and replace them with Apple Inc. (``AAPL'') and 
Google Inc. (``GOOG'') \5\ AMD and MU will revert to the fee and rebate 
programs applicable for all other securities that trade on the 
Exchange, which provide for a rebate of $0.0015 for Double Play Orders, 
other than those in the Select Securities, routed to and executed on 
CBSX.
---------------------------------------------------------------------------

    \3\ NSX Rule 1.5 defines the term ``ETP'' as an Equity Trading 
Permit issued by the Exchange for effecting approved securities 
transactions on the Exchange's Trading Facilities.
    \4\ NSX Rule 11.11(c)(10) defines a ``Double Play Order'' as 
market or limit orders for which an ETP Holder instructs the System 
to route to designated away Trading Centers which are approved by 
the Exchange from time to time without first exposing the order to 
the NSX Book. A Double Play Order that is not executed in full after 
routing away receives a new time stamp upon return to the Exchange 
and is ranked and maintained in the NSX Book in accordance with Rule 
11.14(a).
    \5\ The Exchange previously filed for immediate effectiveness 
amendments to its Fee Schedule, effective July 1, 2013, that: (i) 
Established the $0.0045 per share rebate for executions of Double 
Play Orders in the Select Securities on CBSX; (ii) clarified that 
the unexecuted portion of a Double Play Order that is returned to 
NSX after its initial route to CBSX and subsequently executed on the 
NSX or routed away in accordance with NSX Rule 11.15(a)(ii) is 
subject to the standard Fee Schedule; and (iii) clarified that the 
$0.0030 per share routing fee applies only to orders routed by the 
Exchange in accordance with NSX Rule 11.15(a)(ii). In addition to 
AMD and MU, the Select Securities identified were Bank of America 
Corp. (``BAC''), Nokia Corporation (``NOK''), and Sirius XM Radio 
Inc. (``SIRI''). See Exchange Act Release No. 34-69941; 78 FR 41966; 
SR-NSX-2013-14 [sic].
---------------------------------------------------------------------------

    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section IIIA of its Fee Schedule to 
change two of the five stocks on the list of Select Securities that 
will receive a rebate of $0.0045 per executed share to ETP Holders that 
direct Double Play Orders to CBSX. A Double Play Order is a market or 
limit order for which the ETP Holder instructs the NSX System \6\ to 
bypass the NSX Book \7\ and route the order to a designated away 
Trading Center(s) \8\ that has been approved by

[[Page 60955]]

the Exchange.\9\ The NSX System will provide any unexecuted portion of 
a Double Play Order with a new timestamp upon return to the Exchange, 
and the order will be processed in the manner described in NSX Rule 
11.14 (Priority of Orders).
---------------------------------------------------------------------------

    \6\ Under NSX Rule 1.5, the term ``System'' is defined as ``the 
electronic securities communications and trading facility. , . 
through which orders of Users are consolidated for ranking and 
execution.''
    \7\ Under NSX Rule 1.5, the term ``NSX Book'' is defined as 
``the System's electronic file of orders.''
    \8\ NSX Rule 2.11(a) defines a Trading Center as other 
securities exchanges, facilities of securities exchanges, automated 
trading systems, electronic communications networks or other brokers 
or dealers.
    \9\ See NSX Rule 11.11(c)(10).
---------------------------------------------------------------------------

    Under the revised Fee Schedule, symbols AAPL and GOOG will replace 
symbols AMD and MU. CBSX has determined to change these two Select 
Securities in its fee schedule.\10\ The Exchange intends to pass 
through the rebates to ETP Holders that direct Double Play Orders in 
the Select Symbols to the CBSX and, accordingly, is making this 
conforming change to the Fee Schedule in order to pass through the 
rebates received from CBSX to ETP Holders that direct Double Play 
Orders in the Select Securities to CBSX. The Exchange notes that its 
proposed amendment to the Fee Schedule to substitute two symbols on the 
list of Select Securities does not affect the amount of the rebate 
applicable to Double Play orders in such securities routed to CBSX, for 
the select securities and for all other securities.
---------------------------------------------------------------------------

    \10\ Exchange Act Release No. 34-70382; 78 FR 57247; SR-CBOE-
2013-86 [sic].
---------------------------------------------------------------------------

    The removal of AMD and MU from the list of Select Securities and 
the addition of AAPL and GOOG is proposed as a means to increase the 
liquidity in AAPL and GOOG. AMD and MU had been included in the Select 
Symbols in an attempt to attract greater liquidity in both symbols, but 
increased liquidity has not occurred. By returning those symbols to the 
fee and rebate structure applicable to all other securities, and 
substituting AAPL and GOOG, the Exchange hopes to attract greater 
liquidity provision in AAPL and GOOG. AAPL and GOOG are higher-priced 
stocks that typically have larger spreads than other products, and it 
is anticipated that the enhanced rebate structure may result in more 
liquidity in these symbols.
2. Statutory Basis
    The Exchange believes that the proposed change to the list of 
Select Symbols to which the increased rebate for Double Play Orders 
routed away and executed on the CBSX will apply is consistent with the 
provisions of Section 6(b) of the Act in general, and Sections 6(b)(4) 
\11\ and 6(b)(5) \12\ of the Act in particular. The Exchange submits 
that increased rebate is consistent with Section 6(b)(4) of the Act in 
that it provides for the equitable allocation of reasonable dues and 
fees among ETP Holders, issuers and persons using the Exchange's 
facilities. All ETP Holders are eligible to submit (or not submit) 
Double Play Orders in the Select Securities at their discretion. 
Providing ETP Holders with the enhanced rebate for directing Double 
Play Orders in the Select Securities to the CBSX is a reasonable method 
to increase order flow handled by the Exchange, and the periodic 
substitution of securities on the list of Select Securities is 
responsive to whether the enhanced rebate structure is attaining the 
anticipated results in these symbols, and whether changes to the list 
of Select Securities should be made to provide new opportunities for 
ETP Holders and their customers to benefit from increased liquidity in 
these symbols that the enhanced rebates were designed to encourage.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange notes that its proposed amendment to the Fee Schedule 
to substitute two symbols on the list of Select Securities does not 
affect the amount of the rebate applicable to Double Play orders in 
such securities routed to CBSX. The Exchange's proposal mirrors that of 
the CBSX, which is proposing to amend its fee schedule to effect the 
same change to the list of Select Securities, to be effective as of 
September 3, 2013. The Exchange intends to merely pass through rebates 
to ETP Holders that direct Double Play Orders in the Select Symbols to 
the CBSX and, accordingly, is making this conforming change to the Fee 
Schedule in order to pass through the rebates received from CBSX to ETP 
Holders that direct Double Play Orders in the Select Securities to 
CBSX.
    As noted by the Exchange in its initial filing to implement the 
enhanced rebate schedule in the Select Securities, \13\ the liquidity 
profiles of the Select Securities are different from those for other 
symbols and the rebate structure for the Select Securities is intended 
to incentivize the trading in the Select Securities and thus provide a 
greater pool of liquidity. The substitution of two symbols meeting this 
profile for two other symbols that did not attain the increased 
liquidity levels is a reasonable means of attracting greater liquidity 
in these symbols to the Exchange. The rebates for the Select Securities 
apply equally to all market participants. The Exchange submits that the 
rebate structure for the Select Securities constitutes an equitable 
allocation of reasonable fees and other charges among ETP Holders, 
issuers and other persons using the facilities of the Exchange, and the 
substitution of two symbols on the current list of five is consistent 
with the [sic] of Section 6(b)(4) of the Act.
---------------------------------------------------------------------------

    \13\ Id. at footnote 5.
---------------------------------------------------------------------------

    The Exchange believes that the fee and rebate structure for the 
Select Securities is consistent with Section 6(b)(5) of the Act in that 
it does not permit unfair discrimination between ETP Holders, issuers 
and customers, and substituting two symbols on the list of Select 
Securities does not affect the non-discriminatory nature of the 
enhanced rebate program. ETP Holders and their customers will continue 
to choose to send Double Play Orders in the Select Securities to NSX to 
be eligible for the enhanced rebate schedule and they will also 
continue to have a choice of other execution venues with different 
pricing mechanisms as well. By offering the enhanced rebate structure 
in the Select Securities, the Exchange is providing alternatives to ETP 
Holders and their customers, while also striving to increase the 
liquidity in the Select Securities on the Exchange.

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. The Exchange submits that 
the enhanced rebate in the Select Securities promotes competition by 
potentially attracting additional liquidity to the Exchange and 
providing access to liquidity on the CBSX. The increased rebate is 
designed to encourage ETP Holders to use Double Play Orders and 
increase the number of shares handled by the Exchange and CBSX. To this 
extent, the Exchange submits that the proposed substitution of AAPL and 
GOOG for AMD and MU on the list of Select Securities is responsive to 
the competitive forces that impact liquidity and order flow and are 
intended to enhance competition for order flow in these securities.
    Moreover, as the Exchange has previously noted, it does not believe 
that passing through the rebate received from the CBSX to ETP Holders 
imposes a burden on competition for any other Exchange-approved Trading 
Center to which ETP Holders may direct orders since other Trading 
Centers may offer other competitive functions or features such as low 
cost executions, increased levels of liquidity or faster executions. 
The ETP Holder may choose which offering is most attractive and the 
increased rebate is one factor which an ETP Holder may consider.

[[Page 60956]]

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 \14\ and subparagraph 
(f)(2) of Rule 19b-4.\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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-2013-18 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-2013-18. 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-2013-18 and should be 
submitted on or before October 23, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24016 Filed 10-1-13; 8:45 am]
BILLING CODE 8011-01-P


