Skip to Content

Notice

Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NSX Rule 11 Governing Round Lots, Odd Lots and Mixed Lots.

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble December 22, 2009.

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 December 17, 2009, National Stock Exchange, Inc. (“NSX” or “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 prepared by the Exchange. The Commission is publishing this notice to solicit comment on the proposed rule change from interested persons.

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

The Exchange is proposing to amend NSX Rules 11.2 and 11.11 governing round, odd and mixed lots.

The text of the proposed rule change is available on the Exchange's Web site at http://www.nsx.com, on the Commission's Web site at http://www.sec.gov, 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 to amend NSX Rules 11.2 and 11.11(c)(4) in order to clarify the Exchange's rules regarding round lots, odd lots and fixed lots. The proposed changes are part of an effort to provide clarity with respect to such definitions in the context of an overriding interest in maintaining a fair and orderly market, protecting investors and protecting the public interest. The proposed changes are more fully discussed below.

The definitions of “round lot”, “odd lot” and “mixed lot” in Rule 11.2 are proposed to be modified in order to clarify their meanings and to conform with common usage and treatment within the financial industry.[3] The definition of “round lot” is being modified to mean a normal unit of trading, which is most frequently (but not always) 100 shares. Similarly, the definitions of “odd lot” and “mixed lot” are rephrased for purposes of clarity and transparency.

In addition, in proposed Rule 11.11(c)(4), the definition of “Mixed Lot Order” is modified in order to clarify the Exchange's treatment of the odd lot portion of Mixed Lot Orders. The newly added language in proposed Rule 11.11(c)(4) confirms that Mixed Lot Orders may be entered, and clarifies that the Exchange will treat the odd lot component of a Mixed Lot Order for purposes of order interaction as an Odd Lot Order. This language is intended to clarify for purposes of certainty and transparency how the Exchange treats the odd lot portions of Mixed Lot Orders. Consistent with the new language, the revised rule retains the existing statement that the odd lot components of Mixed Lot Orders are only eligible to be protected quotations if aggregated to form a round lot.[4] Providing this clarity with respect to the treatment of the odd lot component of a mixed lot order is consistent with the rules of other markets which specifically provide for the treatment of the odd lot components of mixed lot orders.[5] Further, such treatment is consistent with Reg NMS, including Rules 610 and 611, which permit market centers to establish rules for the Start Printed Page 69159handling of odd-lot orders and the odd-lot portions of mixed-lot orders.[6]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b) of the Act,[7] in general, and furthers the objectives of Section 6(b)(5) [8] in particular in that it is designed, among other things, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change advances these objectives by providing transparency and certainty with respect to the definitions of terms frequently used in the Exchange's rules and by clarifying the Exchange's treatment of the odd lot component of Mixed Lot Orders.

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 Exchange 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 will take effect 30 days from the date of filing (or such shorter time as the Commission may designate) pursuant to Section 19(b)(3)(A)(ii) of the Act [9] and subparagraph (f)(6) of Rule 19b-4 [10] thereunder, because the proposal: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided that the self-regulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the filing date of the proposed rule change.[11]

Pursuant to Rule 19b-4(f)(6)(iii) under the Act,[12] the Commission may designate a shorter time period if such action is consistent with the protection of investors and the public interest. The Exchange requests that the effective date for the instant rule change be thirty days after the date of filing of this rule change, or such earlier date as the Commission determines.

At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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.[13]

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 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-2009-08. This file number should be included on 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such 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 publicly available. All submissions should refer to File Number SR-NSX-2009-08 and should be submitted on or before January 20, 2010.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See FINRA Rule 6320A (“ ‘Normal unit of trading' means 100 shares of a security unless, with respect to a particular security, FINRA determines that a normal unit of trading shall constitute other than 100 shares”).

Back to Citation

4.  The round lot component of a Mixed Lot Order is treated as a round lot order.

Back to Citation

5.  See NYSE Rule 124 on Odd Lot Orders and Supplementary Material .40 thereto; see also ISE Rule 2105(c)(3) (providing that the odd lot component of a mixed lot order will be treated the same as an odd lot order, i.e., rejected unless it meets certain requirements).

Back to Citation

6.  See Responses to Frequently Asked Questions Concerning Rule 611 and Rule 610 of Regulation NMS, Question 7.03: Odd-Lot Orders and Odd-Lot Portions of Mixed-Lot Orders (“trading centers are permitted to establish their own rules for handling odd-lot orders and the odd-lot portions of mixed-lot orders”).

Back to Citation

8.  15 U.S.C. 78f(b)(4) [sic].

Back to Citation

9.  15 U.S.C. 78s(b)(3)(A)(ii).

Back to Citation

11.  As required under Rule 19b-4(f)(6)(iii), NSX provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to the filing date.

Back to Citation

12.  17 CFR 19b-4(f)(6)(iii).

Back to Citation

[FR Doc. E9-30911 Filed 12-29-09; 8:45 am]

BILLING CODE 8011-01-P