[Federal Register Volume 79, Number 102 (Wednesday, May 28, 2014)]
[Notices]
[Pages 30678-30680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-12229]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72215; File No. SR-NSX-2014-13]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Exchange Rule 11.1 to Shorten the Operating Hours for the
Post-Regular Trading Hours Trading Session
May 21, 2014.
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 May 16, 2014, 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 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
The Exchange is proposing an amendment to Rule 11.1 (Hours of
Trading) to shorten the length of the Exchange's post-Regular Trading
Hours Trading session from 8:00 p.m. to 5:00 p.m. Eastern Time \3\ on
days that the Exchange is open for business. The text of the proposed
rule change is also available on the Exchange's Web site at
www.nsx.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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\3\ All time references in this filing are to Eastern Time
unless otherwise noted.
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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 those 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.
[[Page 30679]]
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 paragraph (a) of Rule 11.1 to
shorten the length of time during which the Exchange's post-Regular
Trading Hours \4\ trading session operates from 8:00 p.m. to 5:00 p.m.
The Exchange submits that shortening the post-Regular Trading Hours
trading session will allow the Exchange to utilize its staff and
resources in a more efficient manner while continuing to provide
Exchange Equity Trading Permit (``ETP'') Holders \5\ and their
customers with a post-Regular Trading Hours session for one hour after
the close of the Regular Trading Session.
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\4\ Exchange Rule 1.5R.(1) defines ``Regular Trading Hours'' as
the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
\5\ Exchange Rule 1.5E.(1) defines an ``ETP'' as an Equity
Trading Permit issued by the Exchange for effecting approved
securities transactions on the Exchange's trading facilities. An ETP
may be issued to a sole proprietor, partnership, corporation,
limited liability company or other organization which is a
registered broker or dealer pursuant to Section 15 of the Act, and
which has been approved by the Exchange.
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The Exchange believes that reducing the operating time of the
after-hours trading session to 5:00 p.m. is justified in view of the
trading volume in the one hour immediately after the close of Regular
Trading Hours as compared with the trading volume through the end of
the after-hours trading session at 8:00 p.m. For calendar year 2013,
NSX executed a total of 10,445,976 shares between 4:00 p.m. and 5:00
p.m., resulting in an average daily volume of 41,452 shares. By
comparison, during the same period, between the hours of 5:00 p.m. and
8:00 p.m., NSX executed a total of 1,562,650 shares, or an average
daily volume of 6,200 shares. These volume levels support the
Exchange's conclusion that most ETP Holder trading activity in the
post-Regular Trading Hours trading session occurs in the first hour, by
5:00 p.m. and that the volume level in the following three hours of the
post-Regular Trading Hours trading session does not sufficiently
balance against the resources and personnel that the Exchange dedicates
to support the operation of the after-hours trading session beyond 5:00
p.m.
The Exchange notes that other national securities exchanges offer a
longer trading session after the close of Regular Trading Hours and ETP
Holders can choose to direct their orders to those exchanges if they
wish to participate in an after-hours trading session extending beyond
5:00 p.m.\6\ Thus, the Exchange believes that its proposal will
adequately address the needs of ETP Holders by providing for a one-hour
post-Regular Trading Hours trading session, which trade data show is
the period in which most of the trading activity is occurring, and will
allow the Exchange to conserve resources and staff time that would
otherwise be dedicated to supporting the after-hours trading session
for a four hour period on every trading day. The Exchange believes
that, given these considerations, the proposal to shorten the time
period during which the post-Regular Trading Hours trading session
operates is reasonable and appropriate.
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\6\ See, e.g., NYSE Arca Equities, Inc. Rule 7.34(a)(3), which
provides for a ``Late Trading Session'' from 1:15 p.m. Pacific Time
(4:15 p.m. Eastern Time) to 5:00 p.m. Pacific Time (8:00 p.m.
Eastern Time); EDGA Exchange, Inc. Rule 1.5(c), which provides for a
Post-Closing Session between 4:00 p.m. and 8 p.m.
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2. Statutory Basis
The Exchange submits that the proposed amendment to Rule 11.1(a)
furthers the purposes of Section 6(b) of the Act and, in particular,
Section 6(b)(5) thereunder in that it is intended to promote just and
equitable principles of trade and, in general, protect investors and
the public interest; furthermore, the proposed amendment is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
Specifically, the Exchange's proposal to amend Rule 11.1(a) to
shorten the length of its post-Regular Trading Hours trading session
from 8:00 p.m. to 5:00 p.m. on every day on which the Exchange is open
for business will allow the Exchange to focus its staff and resources
on the Exchange's core business, which is providing an efficient and
cost-effective marketplace for trading in equity securities during
Regular Trading Hours, while maintaining a facility for ETP Holders to
execute trades after 4:00 p.m. Reducing the time during which the post-
Regular Trading Hours trading session operates will allow the Exchange
to maximize efficiencies and eliminate costs that are attendant to the
longer after-hours session, but do not yield a sufficient economic
return. The Exchange submits that the proposed amendment is therefore
consistent with Section 6(b)(5) of the Act in that, by seeking to
operate in a more efficient manner that focuses on trading during
Regular Trading Hours, it will operate to promote just and equitable
principles of trade and in general protect investors and the public
interest.
The Exchange further submits that the proposed rule amendment will
not permit unfair discrimination between customers, issuers, brokers,
or dealers because the proposed change will affect all ETP Holders and
market participants in the same way and to the same extent, and is
therefore consistent with Section 6(b)(5) of the Act.
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
for the furtherance of the Act. By shortening the time period during
which its post-Regular Trading Hours trading session operates, the
Exchange is reducing the number of equity securities exchanges offering
a late trading session extending from after the close of Regular
Trading Hours until 8:00 p.m. However, the Exchange does not believe
that this will inappropriately burden competition in that, as proposed,
it will continue to offer a post-Regular Trading Hours trading session
until 5:00 p.m. and other exchanges offer an after-hours session
extending until 8:00 p.m. The Exchange therefore believes that the
availability of an after-hours trading facility at other exchanges will
provide ETP Holders with venues to which they can direct their post-
Regular Trading Hours activity after the Exchange's proposed 5:00 p.m.
end time and the reduction in the time frame during which the
Exchange's after-hours facility operates will not impair competition.
Additionally, the Exchange believes that, by reducing the operating
time of its post-4:00 p.m. trading session and focusing its staff and
resources on the Exchange's operations during core trading hours and a
shortened after-hours trading session, it will achieve efficiencies
that will operate to enhance its competitive position and therefore its
proposal imposes no inappropriate or unnecessary 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 not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from ETP Holders or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not: (i) Significantly affect
the
[[Page 30680]]
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 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 \7\ and Rule 19b-
4(f)(6)(iii) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.\9\
However, pursuant to Rule 19b-4(f)(6)(iii),\10\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because doing so will
allow the Exchange to immediately implement the proposed change to the
post-Regular Trading Hours trading session, which will better align the
expenses of operating the post-Regular Trading Hours trading session
with the volume and revenue associated with that trading session.
According to the Exchange, the proposal will streamline the operation
of the Exchange and allow for more effective utilization of Exchange
resources. Accordingly, the Commission designates the proposed rule
change as operative upon filing with the Commission.\11\
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\9\ 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 the 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 pre-filing requirement.
\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of waiving the operative delay for this
proposal, 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-2014-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSX-2014-13. 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 such filing also will be available
for inspection and copying at the principal offices 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-2014-13,
and should be submitted on or before June 18, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-12229 Filed 5-27-14; 8:45 am]
BILLING CODE 8011-01-P