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Notice

Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.13 Regarding Maximum Permissible Response Time for Users of Order Delivery

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Start Preamble September 1, 2010.

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 August 31, 2010, 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 Exchange filed the proposal as a “non-controversial” proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act [3] and Rule 19b-4(f)(6) thereunder.[4] 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 Substance of the Proposed Rule Change

NSX is proposing to amend NSX Rule 11.13(b)(2) concerning the time within which ETP Holders submitting displayed orders utilizing the Order Delivery mode of order interaction must respond to an inbound order before the ETP Holder's displayed is cancelled.

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 is proposing to amend its Rule 11.13(b)(2) concerning the time within which an ETP Holders submitting displayed orders utilizing the Order Delivery mode of order interaction (“Order Delivery”) [5] must respond to an inbound order before NSX BLADE ® cancels the ETP Holder's order. Under the proposed rule change, if no response to an inbound order is received within 300 milliseconds, the ETP Holder's order will be cancelled.[6]

Currently, Rule 11.13(b)(2) provides that an ETP Holder's displayed order in Order Delivery will be cancelled “if no response to an inbound order is received within ½ of a second.” Under the instant rule change, the Exchange proposes to replace reference to “1/2 of a second” with “300 milliseconds,” which timeframe the Exchange considers appropriate at the present time and in conformity with industry standards. Utilization of the proposed 300 millisecond response time requirement represents no change to current Exchange practice.[7]

Effective Date

The Exchange requests that the instant rule change be approved by the Securities and Exchange Commission (the “Commission”) immediately upon filing, and in any case not more than thirty days after the date of filing of this rule change, or such earlier date as the Commission determines, because the Start Printed Page 55390instant rule change is non-controversial and presents no novel issues.

2. Statutory Basis

Approval of the rule change proposed in this submission is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.[8] In particular, the proposed change is consistent with Section 6(b)(5) of the Act,[9] because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest. The proposed rule change advances these objectives by establishing a clear and objective timeframe within which users of Order Delivery submitting displayed orders must respond to incoming orders before their orders are cancelled.

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

Because the foregoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act [10] and Rule 19b-4(f)(6) thereunder.[11]

A proposed rule change filed under Rule 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing.[12] However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay. The Commission notes that the Exchange has indicated that its proposal will provide a clear and objective timeframe, within which users of Order Delivery submitting displayed orders must respond to incoming orders before their orders are cancelled. The Commission believes that the Exchange's proposal to reduce from 1/2 of a second to 300 milliseconds the timeframe for a user's response to inbound orders on the Exchange's Order Delivery system will update NSX's rule to reflect its current practice and represents the first step in NSX's efforts to propose a more appropriate standard that is more in line with current industry standards. Based on the foregoing, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest and hereby designates the proposal operative upon filing.[13]

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.[14]

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-2010-11. 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 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 will also be available for inspection and copying at the principal office of the self-regulatory organization. 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-2010-11 and should be submitted on or before October 1, 2010.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[15]

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  15 U.S.C. 78s(b)(3)(A)(iii).

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5.  The Exchange's two modes of order interaction are described in NSX Rule 11.13(b).

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6.  In addition, Rule 11.13(b)(2) provides that, to be eligible for Order Delivery service, an ETP Holder “must demonstrate to Exchange examiners that the User's system can automatically process the inbound order and respond immediately.” Interpretation and Policy .01 provides that the Exchange “currently considers 100 milliseconds” to be the maximum permissible response time to an inbound order. The current rule filing does not propose to change this standard.

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7.  The Exchange is currently conducting a study regarding the time standards referenced in Rule 11.13, and will submit a rule change proposing modifications to those standards as necessary and appropriate.

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12.  17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)(iii) requires that a self-regulatory organization submit to the Commission written notice of its 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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13.  For the 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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[FR Doc. 2010-22551 Filed 9-9-10; 8:45 am]

BILLING CODE 8010-01-P