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Notice

Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change To Modify Chapter VII of the Exchange's Rules Regarding Suspensions of an ETP Holder by Certain Exchange Officers

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Start Preamble June 11, 2007.

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 May 9, 2007, National Stock Exchange, Inc. (“NSX” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange is proposing to modify Chapter VII of the Exchange's rules to provide that the Chairman of the Exchange's Board of Directors (“Chairman”) or the Exchange's Chief Start Printed Page 33552Regulatory Officer, or their respective designees, would have the authority to summarily suspend or place limitations or conditions on an ETP Holder, or summarily suspend a person from access to Exchange services in certain circumstances. That authority currently rests with the Chairman or the Exchange's President. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are enclosed in brackets.

RULES OF NATIONAL STOCK EXCHANGE, INC.

* * * * *

CHAPTER VII

Suspension by Chairman [or President] or Chief Regulatory Officer

Rule 7.1. Imposition of Suspension

(a) An ETP Holder which fails or is unable to perform any of its contracts, or is insolvent or is unable to meet the financial responsibility requirements of the Exchange, shall immediately inform the Secretary in writing of such fact. Upon receipt of said notice, or whenever it shall appear to the Chairman of the Board or [President] Chief Regulatory Officer, or their respective designees, (after such verification and with such opportunity for comment by the ETP Holder as the circumstances reasonably permit) that an ETP Holder has failed to perform its contracts or is insolvent or is in such financial or operational condition or is otherwise conducting its business in such financial or operational condition or is otherwise conducting its business in such a manner that it cannot be permitted to continue in business with safety to its customers, creditors and other ETP Holders of the Exchange, the Chairman or [President] Chief Regulatory Officer, or their respective designees, may summarily suspend the ETP Holder or may impose such conditions and restrictions upon the ETP Holder as are reasonably necessary for the protection of investors, the Exchange, the creditors and the customers of such ETP Holder.

(b) No Change.

(c) In the event of suspension of an ETP Holder, the Exchange shall give prompt notice of such suspension to the ETP Holders of the Exchange. Unless the Chairman or the Chief Regulatory Officer, or their respective designees, [President] shall determine that lifting the suspension without further proceedings is appropriate, such suspension shall continue until the ETP Holder is reinstated as provided in Rule 7.3. of this Chapter.

Rules 7.2.-7.5. No Change.

Rule 7.6. Summary Suspension of Exchange Services

The Chairman [or President] of the Board or Chief Regulatory Officer, or their respective designees, (after such verification with such opportunity for comment as the circumstances reasonably permit) may summarily limit or prohibit: (i) Any person from access to services offered by the Exchange, if such person has been and is expelled or suspended from any self-regulatory organization or barred or suspended from being associated with an ETP Holder of any self-regulatory organization or is in such financial or operating difficulty that the Exchange determines that such person cannot be permitted to do business with safety to investors, creditors, Exchange ETP Holders or the Exchange; or (ii) a person who is not an ETP Holder from access to services offered by the Exchange, if such person does not meet the qualification requirements or other pre-requisites for such access and if such person cannot be permitted to continue to have access with safety to investors, creditors, ETP Holders and the Exchange. Any person aggrieved by any such summary action may seek review under the provisions of the Exchange Rules relating to adverse action.

Rule 7.7. No Change.

* * * * *

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

The Exchange is proposing to modify Chapter VII of the Exchange's rules regarding suspensions of an ETP Holder by certain Exchange officers. Specifically, the proposal provides that the Chairman or the Chief Regulatory Officer, or their respective designees, would now have the authority to summarily suspend or place limitations or conditions on an ETP Holder under Rule 7.1, and lift suspensions pursuant to Rule 7.1(c) without further proceedings. The proposal also provides that the Chairman or the Chief Regulatory Officer, or their respective designees, shall also have the authority to summarily limit or suspend Exchange services to certain persons under Rule 7.6. In both cases, that authority currently rests with the Chairman or the President.

The proposal also provides that in the event either the Chairman or the Chief Regulatory Officer is not available, a person may be designated to act in their place for purposes of Chapter VII. The designee for the Chairman would be the Chairman of the Exchange's Regulatory Oversight Committee (“ROC”), a member of the ROC, or another comparable member of the Exchange's Board of Directors who is an Independent Director,[3] in that order of priority. The designee for the Chief Regulatory Officer would be an officer in the Regulatory Services Division of the Exchange. This provision would provide continuity in the event the Chairman or the Chief Regulatory Officer is unavailable.

This rule change proposal would impact who has authority to act under Chapter VII but in no way changes the substantive provisions of this Chapter VII.

2. Statutory Basis

The proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) [4] of the Act. Specifically, the Exchange believes the proposed rule change is consistent with the requirements of Section 6(b)(5) [5] of the Act that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and practices, and, in general, to protect investors and the public interest.

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 Start Printed Page 33553competition 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

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will:

(A) By order approve such proposed rule change or

(B) Institute proceedings to determine whether the proposed rule change should be 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

Paper Comments

  • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSX-2007-05. This file number should be included in the subject line if e-mail 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 inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NSX. 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 the File Number SR-NSX-2007-05 and should be submitted on or before July 9, 2007.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[6]

Nancy M. Morris,

Secretary.

End Signature End Preamble

Footnotes

3.  Section 1.1. I of the NSX By-Laws defines Independent Director as a member of the Board that the Board has determined to have no material relationship with the Exchange or any affiliate of the Exchange, or any ETP Holder or any affiliate of any such ETP Holder, other than as a member of the Board.

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4.  15 U.S.C. § 78f(b).

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5.  15 U.S.C. § 78f(b)(5).

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[FR Doc. E7-11627 Filed 6-15-07; 8:45 am]

BILLING CODE 8010-01-P