Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 12171 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(2). 18 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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 Exchange believes that the 

proposed rule change is consistent with 

these requirements because the 

proposed amended rule text provides 

members with more detail regarding the 

circumstances under which the 

Exchange assesses a Covered Sale Fee. 

As such, the proposed changes will help 

avoid member confusion and foster 

better understanding of the application 

of the rule. Accordingly, the Exchange 

believes the proposed rule change will 

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 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 burden on competition 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 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change establishes or changes a due, fee 

or other charge applicable only to a 

member, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 16 and Rule 19b–4(f)(2) 

thereunder.17

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–23 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–Phlx–2011–23. 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 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 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2011–23 and should be submitted on or 

before March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4903 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63984; File No. SR– 

NASDAQ–2011–027] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Make 

Clarifying Changes to Rule 7002 

Concerning the Application and 

Collection of the Sales Fee 

February 28, 2011. 

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 February 

16, 2011, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’) 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 NASDAQ. 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 the Substance 

of the Proposed Rule Change 

NASDAQ is proposing to make 

clarifying changes to Rule 7002 

concerning the application and 

collection of the Sales Fee. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets. 

7002. Sales Fee 

A Sales Fee is assessed by Nasdaq to 

each member for sales of securities 

through Nasdaq transaction execution 

systems in the following circumstances: 

(a) When a sale in equity securities 

occurs with respect to which Nasdaq is 

obligated to pay a fee to the SEC under 

Section 31 of the Act; 

(b) When a sale in option securities 

occurs with respect to which Nasdaq is 

obligated to pay a fee to the SEC under 

Section 31 of the Act; 

(c) When a sell order in equity 

securities is routed for execution at a 

market other than Nasdaq, resulting in 

a covered sale on that market and an 

obligation of the routing facility of 

Nasdaq to pay the related sales fee of 

that market; 

(d) When a sell order in option 

securities is routed for execution at a 

market other than the Nasdaq Options 

Market, resulting in a covered sale on 

that market and an obligation of the 


jlentini on DSKJ8SOYB1PROD with NOTICES
12172 Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 

3 15 U.S.C. 78ee. 

4 17 CFR 240.31. 

5 17 CFR 240.31(a)(6). 

6NASDAQ OMX issues Regulatory Alerts to 

provide its equities and options markets’ members 

with notice of Sales Fee changes. See e.g., http:// 

www.nasdaqtrader.com/ 

TraderNews.aspx?id=ERA2011–01. 

7See e.g., CBOE Fees Schedule (January 3, 2011), 

Item 6 ‘‘Sales Value Fee,’’ ISE Rule 212, NYSE Rule 

440H, and NYSE Amex Rule 393. 

8NASDAQ Execution Services and NASDAQ 

Options Services are NASDAQ’s routing brokers for 

equity and option securities, respectively. See Rule 

4758(b) and NOM Rules Chapter VI, Section 11(e). 

9 17 CFR 240.31(a)(9). 

10 In addition to clearing transactions in options, 

the Options Clearing Corporation also clears 

security futures. See http:// 

www.optionsclearing.com. 

11Supra note 9. 

routing facility of Nasdaq to pay the 

related sales fee of that market; [with 

respect to which Nasdaq is obligated to 

pay a fee to the SEC under Section 31 

of the Act.] The Sales Fee is collected 

indirectly from members through their 

clearing firms by a designated clearing 

agency, as defined by the Act, [NSCC] 

on behalf of Nasdaq. The amount of the 

Sales Fee is equal to (i) the Section 31 

fee rate multiplied by (ii) the member’s 

aggregate dollar amount of covered sales 

resulting from transactions through 

Nasdaq transaction execution systems 

during any computational period. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASDAQ 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. 

NASDAQ 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 

NASDAQ is proposing amendments 

to Rule 7002 to make clear the 

circumstances that trigger application of 

the Sales Fee, and to make other 

clarifying changes. Rule 7002 permits 

NASDAQ to collect a fee from its 

members for sales of securities through 

NASDAQ transaction execution systems 

with respect to which NASDAQ is 

obligated to pay a fee to the SEC 

pursuant to Section 31 of the Act 3 and 

Rule 31, thereunder.4 Each national 

securities exchange and association is 

required to calculate the aggregate dollar 

amount of ‘‘covered sales’’ occurring on 

the exchange or through a member of 

the national securities association and 

to pay fees based on those covered sales 

to the Commission (‘‘Section 31 fees’’). A 

covered sale is a ‘‘sale of a security, 

other than an exempt sale or a sale of 

a security future, occurring on a 

national securities exchange or by or 

through any member of a national 

securities association otherwise than on 

a national securities exchange.’’ 5

Pursuant to Rule 7002, NASDAQ 

assesses a member the Sales Fee for an 

executed sell order entered into 

NASDAQ transaction execution systems 

that results in a covered sale. The Sales 

Fee defrays the cost of the Section 31 fee 

triggered by the covered sale. In this 

regard, the Sales Fee assessed a member 

is equal to the Section 31 fee assessed 

by the Commission for the covered sale. 

Further, NASDAQ adjusts the Sales Fee 

in lock step with changes to the Section 

31 fee made by the Commission.6

Assessing a sales fee is common practice 

among the national securities exchanges 

and associations.7

As noted above, the Sales Fee defrays 

the cost of the Section 31 fee. The Sales 

Fee is triggered by the fulfillment of a 

members [sic] sell order in equity or 

options securities entered into NASDAQ 

transaction execution systems that 

results in a covered sale. If the member’s 

sell order is fulfilled on NASDAQ’s 

equity or options trading markets, 

NASDAQ incurs a Section 31 fee 

obligation. Sell orders in equity or 

options securities entered into NASDAQ 

transaction execution systems that are 

routed to another market for execution, 

however, do not result in a covered sale 

on NASDAQ. Execution of such routed 

orders is facilitated by NASDAQ’s 

routing brokers,8 which act as the 

selling member for a routed order on the 

away market on behalf of the NASDAQ 

member. Such routed sell orders result 

in a covered sale on the away market, 

which incurs a Section 31 fee 

obligation. Like NASDAQ, the away 

market assesses a sales fee on the 

member that entered the sell order, in 

this case NASDAQ Execution Services 

or NASDAQ Options Services, to defray 

the cost of the Section 31 fee obligation. 

In turn, NASDAQ assesses its member, 

the original selling party, a Sales Fee 

pursuant to Rule 7002 to defray the cost 

of the Section 31 fee passed on by the 

away exchange pursuant to its sales fee. 

As such, NASDAQ’s Sales Fee offsets 

the sales fee it is assessed by the away 

market, the result of which is to place 

the parties involved in the transaction 

in the same position as if the covered 

sale had occurred on NASDAQ. 

In light of the varying means by 

which a Sales Fee is incurred by 

members, as described above, NASDAQ 

believes that a more detailed description 

of the circumstances that trigger the 

Sales Fee is warranted. Accordingly, the 

new rule language proposed by 

NASDAQ expressly discusses covered 

sales in both equity and option 

securities. In addition, the proposed 

new rule language includes a 

description of sell orders entered into 

NASDAQ transaction execution systems 

that result in a covered sale on another 

exchange, expressly discussing the fee 

incurred by NASDAQ and the 

application of the Sales Fee in such 

circumstances. 

NASDAQ also proposes deleting 

reference to the NSCC as the party that 

collects the Sales Fee and replacing it 

with the term ‘‘designated clearing 

agency,’’ which is defined by rules 

promulgated under the Act as a 

‘‘clearing agency registered under 

section 17A of the Act * * * that clears 

and settles covered sales or covered 

round turn transactions.’’) 9 NASDAQ is 

adopting the term ‘‘designated clearing 

agency’’ because it encompasses a 

broader range of clearing agencies than 

is currently noted under the rule. In this 

regard, Rule 7002 discusses the process 

by which the Sales Fee is collected from 

members for equity covered sales, 

noting that the fee is collected indirectly 

from members through their clearing 

firms by NSCC. NSCC is a designated 

clearing agency that clears transactions 

in equity securities. NASDAQ employs 

NSCC to collect the Sale Fee from 

members arising from their covered 

sales in equity securities. Sales Fees 

arising from options covered sales, 

however, are collected from members by 

the Options Clearing Corporation, 

another designated clearing agency that 

clears option securities.10 Consistent 

with the other changes proposed herein, 

NASDAQ believes the rule should be 

updated to more fully describe the 

parties and processes involved in 

collection of the Sales Fee. Accordingly, 

NASDAQ proposes to use a term 

defined by the rules promulgated under 

the Act,11 which most accurately 

reflects all parties NASDAQ employs to 

collect the Sales Fee from its members. 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 43 / Friday, March 4, 2011 / Notices 12173 

12 15 U.S.C. 78f(b)(4). 

13 15 U.S.C. 78f. 

14 15 U.S.C. 78f(b)(5). 

15 15 U.S.C. 78s(b)(3)(A). 

16 17 CFR 240.19b–4(f)(2). 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule change is consistent with Section 

6(b)(4) of the Act 12 in that it provides 

for the equitable allocation of reasonable 

dues, fees and other charges among 

members and issuers and other persons 

using any facility or system which 

NASDAQ operates or controls, and it 

does not unfairly discriminate between 

customers, issuers, brokers or dealers. 

The proposed clarifying language does 

not change the application and 

assessment of the Sales Fee under the 

rule, but rather provides greater detail 

on the transactions that trigger the fee 

and the process by which the fee is 

collected. NASDAQ applies Rule 7002 

uniformly to all members’ sell orders 

entered into NASDAQ’s transaction 

execution systems resulting in covered 

sales. 

NASDAQ also believes the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,13 in 

general and with Section 6(b)(5) of the 

Act,14 in particular, which requires that 

the rules of an exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, 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. 

NASDAQ believes that the proposed 

rule change is consistent with these 

requirements because the proposed 

amended rule text provides members 

with more detail regarding the 

circumstances under which NASDAQ 

assesses a Sales Fee, and the process by 

which the fee is collected. As such, the 

proposed changes will help avoid 

member confusion and foster better 

understanding of the application of the 

rule. Accordingly, NASDAQ believes 

the proposed rule change will 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 

protect investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change establishes or changes a due, fee 

or other charge applicable only to a 

member, it has become effective 

pursuant to Section 19(b)(3)(A) of the 

Act 15 and Rule 19b–4(f)(2) 

thereunder.16

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, as amended, 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2011–027 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–NASDAQ–2011–027. 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 such filing 

also will be available for inspection and 

copying at the principal offices of 

NASDAQ. 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– 

NASDAQ–2011–027, and should be 

submitted on or before March 25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–4901 Filed 3–3–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63989; File No. SR–EDGX– 

2011–04] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend EDGX Rules 

11.5, 11.9, and 11.15 To Make Certain 

Changes Consistent With the 

Upcoming Implementation of 

Amendments to Regulation SHO 

February 28, 2011. 

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 February 

25, 2011 the EDGX Exchange, Inc. (the 

‘‘Exchange’’ or the ‘‘EDGX’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which items have 


jlentini on DSKJ8SOYB1PROD with NOTICES