[Federal Register Volume 77, Number 160 (Friday, August 17, 2012)]
[Notices]
[Pages 49848-49849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20262]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67647; File No. SR-NSX-2012-12]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the Text of NSX Rule 11.15 To Clarify the Manner in Which
Certain Orders are Routed by the Exchange to Other Market Centers
August 14, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 9, 2012, National Stock Exchange, Inc. (``NSX'' 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
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 modify the text of NSX Rule 11.15 to clarify the manner in
which certain orders are routed by the Exchange to other market
centers.
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 currently uses routing logic to direct certain
incoming orders to other trading centers for execution in accordance
with Rule 11.15(a)(ii) (``Routing to Away Trading Centers'' for
``Orders Other Than Sweep Orders''). The Exchange is proposing to amend
Rule 11.15(a)(ii) in order to provide that (i) the Exchange may route
incoming orders to alternative trading systems, (ii) routed orders may
not receive an execution and (iii) limit orders routed pursuant to Rule
11.15(a)(ii) will be routed with a time in force of immediate or cancel
(``IOC'').
NSX Rule 11.15(a)(ii) currently provides in clause (B) that, unless
the terms of an order direct otherwise, the Exchange will route
incoming orders (other than Sweep Orders \3\) to ``the applicable
trading center for execution against the applicable protected quotation
at the Protected NBBO.'' A Protected NBBO is defined under NSX Rule
1.5(P)(2) as ``the national best bid or offer that is a protected
quotation.'' The Exchange proposes to amend the language in Rule
11.15(a)(ii)(A) and (B) to explicitly provide that incoming orders may
be routed to any ``Trading Center'' which is defined by the Exchange
under NSX Rule 2.11(a) to include alternative trading systems.\4\
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\3\ A Sweep Order is defined in NSX Rule 11.11(c)(7).
\4\ See NSX Rule 2.11(a) which defines a ``Trading Center'' as
``other securities exchanges, facilities of securities exchanges,
automated trading systems, electronic communications networks or
other brokers or dealers.''
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The Exchange further proposes to clarify that the Exchange's
Routing Logic determines the venue or venues to which an order may be
routed. ``Routing Logic'' will be defined under Rule 1.5(R)(2) as ``the
methodology used to determine the Trading Center to which an incoming
order will be directed for potential execution.'' The Exchange is also
proposing to add subsection (C) to NSX Rule 11.15(a)(ii) which will
clarify that the Exchange may alter the Routing Logic without
notice.\5\
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\5\ The Exchange currently offers a single routing option
through its subsidiary broker-dealer, NSX Securities LLC (``NSXS''),
which entity may engage one or more third-party routing broker-
dealers to route orders, at the direction of the Exchange, to away
Trading Centers.
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The Exchange also proposes to amend 11.15(a)(ii)(A) and (B) by
modifying the phrase ``for execution'' to ``for potential execution''
in order to clarify the fact that a routed order may not necessarily
receive an execution at the away Trading Center.
Finally, the references to converted and routed ``limit orders'' in
Rule 11.15(a)(ii)(A) and (B) are proposed to be modified as ``limit IOC
Orders'' in order to clarify that such orders are routed with a time in
force of immediate-or-cancel.
The proposed amendments benefit Equity Trading Permit (``ETP'')
Holders by providing them with additional information regarding the
Exchange's order routing process.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6 of the Act,\6\ and the rules and regulations thereunder and,
in particular, the requirements of Section 6(b) of the Act.\7\
Specifically, the Exchange believes the modification of Rule 11.15
furthers the objective of Section 6(b)(5) of the Act because it clearly
explains the potential venues to which the Exchange may route orders.
The proposed amendments clarify how the Exchange routes incoming orders
other than Sweep Orders. Accordingly, the Exchange believes that the
proposed rule change promotes just and equitable
[[Page 49849]]
principles of trade, will remove impediments to, and perfect the
mechanism of a free and open market and a national market system and,
in general, protects investors and the public interest.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b).
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The proposed rule change provides transparency and certainty with
respect to how orders are routed by the Exchange. In so doing, the
proposed rule change promotes the maintenance of a fair and orderly
market, the protection of investors and the protection of the public
interest, consistent with the Act and the rules promulgated thereunder.
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 \8\ and Rule 19b-4(f)(6) thereunder.\9\
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) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\10\
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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.
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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 19b4(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 requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because such waiver will allow the Exchange to route certain
orders to additional Trading Centers that may execute such orders
faster and at the best price available. In addition, the proposed rule
change will provide clarity regarding the manner in which the Exchange
routes certain orders and should eliminate potential confusion in NSX
Rules. Therefore, the Commission designates the proposal as operative
upon filing with the Commission.\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 sixty (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.
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-2012-12 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-2012-12. 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 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-2012-12 and should be submitted on
or before September 7, 2012.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2012-20262 Filed 8-16-12; 8:45 am]
BILLING CODE 8011-01-P