[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34448-34450]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14065]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67127; File No. SR-NSX-2012-08]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Temporarily Suspend the Requirements of NSX Rule 2.5 and Related NSX
ETP Holder Application Rules and Procedures in Order To Approve Apex
Clearing Corporation, f/k/a Ridge Clearing and Outsourcing Solutions,
Inc. (``Apex Clearing'') as an NSX ETP Holder
June 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 June 5, 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 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
National Stock Exchange, Inc. (``NSX[supreg]'' or ``Exchange'') is
proposing to amend its rules to temporarily suspend the requirements of
NSX Rule 2.5 and related NSX ETP Holder application rules and
procedures in order to approve Apex Clearing Corporation, f/k/a Ridge
Clearing and Outsourcing Solutions, Inc. (``Apex Clearing'') as an NSX
ETP Holder, subject to Apex Clearing complying with Exchange ETP Holder
application rules and procedures within 30 calendar days of the date
that Apex Clearing is provisionally approved as an ETP Holder. The
Exchange is also proposing to accept Apex Clearing's assumption of all
of the existing clearing agreements and arrangements currently in
effect between Penson Financial Services Inc. (``PFSI'') and various
other ETP Holders by execution of a global agreement thereto.
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
The Exchange proposes this rule filing to temporarily suspend the
requirements of NSX Rule 2.5 and related procedures regarding the
application process for ETP Holders in order to immediately approve
Apex Clearing as an NSX ETP Holder. The Exchange proposes this
temporary suspension on an emergency basis to ensure that Apex Clearing
can continue the clearing operations of PFSI without unnecessary
disruption, which could have a significant collateral impact to a
number of other ETP Holders. The proposed temporary suspension is
contingent upon Apex Clearing having complied with all Exchange ETP
Holder application rules and procedures within 30 calendar days of the
date Apex Clearing is provisionally approved as an NSX ETP Holder
pursuant to this filing.
On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''),
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc.
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together,
the ``Parties'') consummated a transaction resulting in a change in
ownership of Apex Clearing.\3\ Broadridge, Apex Holdings,
[[Page 34449]]
PWI and PFSI each made capital investments in Apex Holdings, the
holding company parent of Apex Clearing. PFSI also assigned all of its
U.S. clearing contracts and all customer and introducing broker
proprietary accounts along with key personnel to Apex Clearing (the
``Transferring Accounts'').\4\
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\3\ Prior to the Transaction, Apex Clearing's name was Ridge
Clearing & Outsourcing Solutions, Inc. Prior to the transaction,
Ridge Clearing & Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel and systems to
its affiliated entity, Broadridge Securities Processing Solutions,
LLC (``BSPS'') where it will continue to provide operations support
and outsourcing services to a number of broker-dealers, including
Apex Clearing.
\4\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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As a result of the transaction, Apex Clearing, which is not an NSX
ETP Holder, will provide the clearing and execution services currently
provided to the Transferring Accounts by PFSI. On May 31, 2012, Apex
Clearing submitted an executed application for approval as an NSX ETP
Holder and an NSX User Agreement. However because of the expedited
nature of the transaction, Apex Clearing was unable to fully comply
with NSX Rule 2.5(a)(5) and related new ETP Holder application
procedures. Because of the need for seamless continuity with respect to
the Transferring Accounts, Apex Clearing has requested that the
Exchange temporarily suspend its new ETP Holder application rules and
procedures to the extent necessary in order to enable Apex Clearing's
approval as an ETP Holder on an expedited basis. Pursuant to its
request, Apex Clearing will fully comply with the Exchange's new ETP
Holder application rules and procedures within 30 calendar days after
provisional approval.
NSX Rule 2.5 requires that applications for an Exchange Trading
Permit (``ETP'') shall be made to the Exchange and shall contain
certain specified documentation. Among other things, to be approved as
an NSX ETP Holder, the documentation must contain an agreement
regarding certain matters as specified in NSX Rule 2.5(a)(1) through
(4), which are generally contained in the Exchange's form User
Agreement required to be executed by an applicant, together with such
other reasonable information with respect to the applicant as the
Exchange may require. In addition, pursuant to NSX Rule 2.4, the
Exchange reviews whether the applicant meets federal and NSX capital
requirements and verifies that certain other application criteria are
satisfied.
Due to the amount of information an applicant is required to
provide and have completed prior to being approved as an ETP Holder,
the ETP Holder approval process generally takes several weeks to
complete. The length of time varies based on the timing of the
applicant's response to requests for information and documentation.
As proposed, Apex Clearing will continue the clearing and certain
other operations of PFSI as of June 6, 2012. In order to avoid
interruption of the services PFSI currently provides to other Exchange
ETP Holders, the Exchange believes that Apex Clearing should be
approved immediately as an NSX ETP Holder. The Exchange notes that Apex
Clearing is already a registered broker dealer and FINRA member, which
are prerequisites for becoming an NSX ETP Holder. See NSX Rule 2(a)(1).
The Exchange therefore proposes providing Apex Clearing with a
temporary suspension of NSX Rule 2.5 and related ETP Holder application
rules and procedures as they relate to approval to operate an NSX ETP
Holder and approval of a proposed ETP Holder's approved persons, and
immediately provisionally approve Apex Clearing as an ETP Holder. As
proposed this temporary suspension is contingent upon:
Apex Clearing providing the Exchange with sufficient
information to confirm that Apex Clearing will meet its capital
requirements as an NSX ETP Holder; and
Within 30 calendar days of Apex Clearing's approval as an
NSX ETP Holder under this proposed filing, Apex Clearing and its
approved persons will have complied with the Exchange's ETP Holder
application requirements as set forth in NSX rules and related
application documents.
As proposed, if Apex Clearing does not comply with all applicable
NSX ETP Holder application requirements within 30 calendar days of the
effective date of this filing, its status as an approved NSX ETP Holder
will no longer be effective.
In addition, the Exchange proposes to permit Apex Clearing to
assume all existing clearing agreements and arrangements currently in
effect with other NSX ETP Holders. Notice of such assumption, and a
solicitation of consent with respect thereto, will be provided to
impacted ETP Holders through applicable notices prior to the effective
date thereof.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \5\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5) \6\ in
particular in that it is designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
remove impediments to and to perfect the mechanism for a free and open
market and a national market system and, in general, to protect
investors and the public interest. The Exchange believes that
permitting the expeditious approval of Apex Clearing as an NSX ETP
Holder will avoid interruption of the services PFSI currently provides
to other Exchange ETP Holders. Based on information and representations
provided by Apex Clearing, a temporary suspension of certain NSX
membership rules and procedures is needed based on the expedited nature
of the transaction to enable seamless continuity with respect to the
transferring accounts. Consequently, the Exchange believes that
temporary suspension of its ETP Holder application requirements so that
Apex Clearing can be approved immediately as an NSX ETP Holder will
help to foster cooperation and coordination with persons engaged in
facilitating transactions in securities and is consistent with the Act.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
[[Page 34450]]
of the Act \9\ and Rule 19b-4(f)(6)(iii) thereunder.\10\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires a self-regulatory organization to give the
Commission written notice of its intent to file 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 Commission is waiving this five-day pre-filing
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission notes that the Exchange is proposing that certain of its
rules relating to membership requirements be temporarily suspended so
that Apex Clearing can be provisionally approved as an NSX ETP Holder.
The proposed relief does not exempt Apex Clearing from Exchange rule
requirements governing NSX ETP Holders. Apex Clearing would have a 30
calendar day grace period within which to apply for and be approved
under relevant Exchange rules. Moreover, the Commission believes that
waiver of the 30-day operative delay is appropriate to ensure a smooth
transition of PFSI operations to Apex Clearing. In particular, given
the rapidity with which events have developed, waiver of the 30-day
operative delay is necessary to avoid significant disruption to PFSI's
existing customers and the market generally. Therefore, the Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest and designates the
proposed rule change as operative upon filing.\13\
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\13\ For 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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 [email protected]. Please include
File Number SR-NSX-2012-08 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-2012-08. 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-2012-08 and should be
submitted on or before July 2, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14065 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P