2742 Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 

8 15 U.S.C. 78s(b)(3)(A)(ii). 

9 17 CFR 240.19b–4(f)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

applicable to all users of the PULSe 

workstation. 

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 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 solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The proposed rule change is 

designated by the Exchange as 

establishing or changing a due, fee, or 

other charge, thereby qualifying for 

effectiveness on filing pursuant to 

Section 19(b)(3)(A)(ii) of the Act 8 and 

subparagraph (f)(2) of Rule 19b–4 9

thereunder. 

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. 

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 rule-comments

@sec.gov. Please include File Number 

SR–C2–2011–001 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–C2–2011–001. 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–C2– 

2011–001 and should be submitted on 

or before February 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–671 Filed 1–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63678; File No. SR– 

NASDAQ–2010–166] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify 

Pricing for NASDAQ Members Using 

the NASDAQ Market Center 

January 7, 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 December 

30, 2010, 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 proposes to modify pricing 

for NASDAQ members using the 

NASDAQ Market Center. NASDAQ will 

implement the proposed change on 

January 3, 2011. 

The text of the proposed rule change 

is available at http://nasdaq.cchwall

street.com/, at NASDAQ’s principal 

office, 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, 

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 amending Rule 7018 to 

encourage members to provide liquidity 

directly to NASDAQ that previously had 

been provided via a sponsored access 

relationship. Direct liquidity provision 

is beneficial to NASDAQ and to the 

marketplace generally. Direct liquidity 

provision improves NASDAQ’s market 

surveillance by providing a clear view 

of a member’s market activity, rather 

than a view of that activity under the 

aegis of the sponsored access provider. 

Direct liquidity provision also enables 

NASDAQ to offer rebates more 

equitably, based upon each member’s 

unique liquidity provision rather than 

compensating the effort required to 

aggregate order flow. 

To encourage the direct provision of 

liquidity, NASDAQ is adding subsection 

Rule 7018(k). This subsection applies in 

the first month in which a member 

begins providing liquidity to NASDAQ 

directly that previously had been 

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Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 2743 

3See NASDAQ Rule 7018(a). NASDAQ’s fees for 

accessing liquidity are fixed; they do not vary with 

volume and thus are not impacted by this proposal. 

4This is one example of how new Rule 7018(k) 

will operate. The actual rebates provided to 

members will vary depending upon the liquidity 

provided by their sponsored access provider and by 

the member itself. In all cases, the rebates for all 

members will be calculated using the rebates duly 

filed with the Commission and set forth in 

NASDAQ’s online manual. 

5 15 U.S.C. 78f. 

6 15 U.S.C. 78f(b)(4). 

provided to NASDAQ via a sponsored 

access relationship. In that month, the 

rebates for that member under Rule 

7018 shall be based upon the average 

daily volume of liquidity provided by 

the sponsored access provider. Under 

this calculation, the member will 

receive the same rebate for sending 

orders directly to NASDAQ that that 

member would have paid had it 

remained in a sponsored access 

relationship. Because NASDAQ’s 

liquidity provider rebates vary based 

upon volume of liquidity provided, 

absent this formulation, members might 

receive lower rebates by virtue of 

switching mid-month from sponsored 

access to direct provision of liquidity.3

For example, assume that Member 

ABCD provides liquidity to NASDAQ 

via a sponsored access relationship with 

Member 1234. Member 1234 provides 

average daily liquidity of 60 million 

shares of which 20 million shares is 

provided by Member ABCD. Member 

ABCD switches on the 20th trading day 

of January—a month with 25 trading 

days—from providing liquidity via 

Member 1234 to providing liquidity 

directly to NASDAQ. Member ABCD 

continues to provide 20 million shares 

of liquidity directly to NASDAQ for the 

final five trading days of January. 

Member 1234 continues to provide 40 

million shares of liquidity to NASDAQ 

for the final five trading days of January, 

having lost 20 million shares per day 

due to Member ABCD’s changed 

behavior. 

Under current Rule 7018, if Member 

ABCD continues to provide liquidity via 

Member 1234 for the entire month of 

January, it receives rebates of $0.0029 

per share of liquidity provided based on 

Member 1234 providing 60 million 

shares of liquidity per day. If Member 

ABCD switches on the 20th trading day 

of the month to providing liquidity 

directly to NASDAQ, it will receive 

rebates for the final five trading days at 

a rate of $0.0020 per share based on 4 

million shares per day (20 million × 5 

actual trading days ÷ 25 trading days in 

the month). Member 1234 has the ability 

to calculate the rebates for Member 

ABCD at less favorable rates as well 

because Member ABCD has lowered the 

average daily liquidity provided by 

Member 1234. This has the effect of devaluing the liquidity provided by 

Member ABCD for the periods of time 

both before and after it switches from 

sponsored access to direct liquidity 

provision. This discourages Member 

ABCD from providing liquidity directly 

to NASDAQ for any partial month 

period. 

Under new Rule 7018(k), NASDAQ 

will calculate the rebate for Member 

ABCD as follows. For the first 20 trading 

days, Member ABCD will be credited 

with all of the liquidity that Member 

1234 provides to NASDAQ—60 million 

shares. For the final five trading days of 

the month, Member ABCD will continue 

to be credited with the liquidity 

provided by member 1234—40 million 

shares—rather than the liquidity 

provided directly by member ABCD—20 

million shares. Thus, both Member 

ABCD and Member 1234 will receive 

rebates of $0.0029 based upon average 

daily liquidity provided of 56 million 

shares per day (60 million shares per 

day × 20 days + 40 million shares per 

day × five days ÷ 25 days).4

NASDAQ believes that this provides 

an appropriate incentive for members to 

switch from sponsored access 

relationships to direct liquidity 

provision, while also fairly valuing the 

liquidity provided by all members. It is 

appropriate for NASDAQ to share with 

members the substantial benefit that 

NASDAQ enjoys when it receives 

liquidity directly from members. As 

stated above, this benefit is both 

monetary and regulatory. At the same 

time, there is no cost to sponsored 

access providers that, under new 

subsection 7018(k), continue to enjoy 

the benefit of their successful efforts to 

aggregate liquidity. 

This option will be available to 

members only once and only for the 

final five trading days of a month. The 

five-day period is designed to allow 

members an operating transition from 

sponsored access to direct liquidity 

provision. To make that transition, 

members must re-program systems and 

test their interaction with NASDAQ 

systems. Members are reluctant to make 

this transition on the first day of a 

trading month because errors could 

reduce monthly liquidity provision and 

lead to lower rebates. NASDAQ 

considered offering this benefit for a 

longer period of time but concluded, 

after assessing multiple factors, that a 

five-day transition period is adequate 

for operational continuity. NASDAQ 

believes members should make this 

transition only once and that it is 

appropriate to compensate them for 

making this transition only once. 

It shall be the obligation of the 

member to notify NASDAQ prior to 

invoking Rule 7018(k) in a form 

specified by NASDAQ. This will enable 

NASDAQ to monitor and measure the 

liquidity provision that is transferred 

from a sponsored access relationship 

directly to NASDAQ. 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,5 in 

general, and with Section 6(b)(4) of the 

Act,6 in particular, 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. 

As stated above, the impact of the 

price changes upon the rebates received 

by a particular market participant will 

depend upon a number of variables, 

including the specifics of the market 

participant’s sponsored access 

relationship, its propensity to add or 

remove liquidity, the duration of the 

transition period, and other factors. 

Additionally, the proposed allocation 

of fees is fair and reasonable in that it 

furthers NASDAQ’s legitimate goal of 

encouraging members to provide 

liquidity directly to NASDAQ. There is 

a meaningful regulatory and economic 

benefit to NASDAQ when a firm 

provides liquidity directly as opposed to 

providing it via sponsored access. It is 

equitable and fair for NASDAQ to share 

that benefit with the member and to 

encourage that behavior. NASDAQ’s 

proposal is narrowly tailored to the goal 

of encouraging direct liquidity 

provision, and it imposes no penalty on 

any firm for not opting to invoke new 

Rule 7018(k). 

NASDAQ notes that it operates in a 

highly competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem rebate levels at a particular venue 

to be excessive. Additionally, members 

can choose to remain in sponsored 

access relationships rather than 

voluntarily choose to send order flow 

directly to NASDAQ. Accordingly, if 

particular market participants object to 

the proposed fee changes, they can 

avoid receiving the rebates implicated 

by this filing. NASDAQ believes that its 

fees continue to be reasonable and 

equitably allocated to members on the 

basis of whether they opt to direct 

orders to NASDAQ. 

mstockstill on DSKH9S0YB1PROD with NOTICES

2744 Federal Register / Vol. 76, No. 10 / Friday, January 14, 2011 / Notices 

7 15 U.S.C. 78s(b)(3)(a)(ii). 

8 17 CFR 240.19b–4(f)(2). 9 17 CFR 200.30–3(a)(12). 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 7 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder.8 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. 

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–NASDAQ–2010–166 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–2010–166. 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 website viewing and 

printing in the Commission’s Public 

Reference Room 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 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–NASDAQ–2010–166, and 

should be submitted on or before 

February 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–672 Filed 1–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

Disclosure of Code-Share Service by 

Air Carriers and Sellers of Air 

Transportation 

AGENCY: Office of the Secretary, 

Department of Transportation. 

ACTION: Notice. 

SUMMARY: The Department is publishing 

the following notice on the enforcement 

of its rules relating to disclosure of 

code-share service on Internet Web sites 

and elsewhere by air carriers, their 

agents, and third party sellers of air 

transportation in view of recent 

amendments to 49 U.S.C. 41712. 

FOR FURTHER INFORMATION CONTACT: 

Nicholas Lowry, Attorney, Office of 

Aviation Enforcement and Proceedings 

(C–70), 1200 New Jersey Ave., SE., 

Washington, DC 20590, (202) 366–9349. 

United States of America, Department 

of Transportation, Office of the 

Secretary, Washington, DC 

Guidance on Disclosure of Code-Share 

Service Under Recent Amendments to 

49 U.S.C. 41712 

Notice 

This notice is intended to provide 

guidance on the disclosure of codeshare service in light of recent 

amendments to 49 U.S.C. 41712. It is 

also intended to provide a reminder to 

ticket agents with respect to their codeshare disclosure responsibility, 

particularly as it concerns the 

development and provision of Internet 

Web sites (Web sites) that display codeshare flights and to air carriers regarding 

their responsibilities in connection with 

the Web sites of their agents. 

A recent amendment to section 41712, 

which has for some time contained a 

general prohibition against unfair and 

deceptive practices and unfair methods 

of competition on the part of air carriers, 

foreign air carriers and ticket agents, 

added a new section 41712(c) that 

specifically requires that these entities 

disclose in any oral, written or 

electronic communication to the public, 

prior to the purchase of a ticket, the 

name of the carrier providing the service 

for each segment of a passenger’s 

itinerary. The language is principally 

intended to address service rendered 

pursuant to code-share arrangements. In 

addition, the new language explicitly 

requires that on Web sites, disclosure 

must be made ‘‘on the first display of the 

Web site following a search of a 

requested itinerary in a format that is 

easily visible to a viewer.’’ Airline Safety 

and Federal Aviation Administration 

Extension Act of 2010, Public Law 111– 

216, Title II, § 210, 124 Stat. 2362, Aug. 

1, 2010. 

The Department’s current regulation 

on the disclosure of code-sharing 

arrangements, 14 CFR part 257, which 

was issued in 1999, is based on the 

general unfair and deceptive practice 

language of section 41712. Section 

257.5(a) requires, in all Web sites and 

other publicly available displays of 

schedule information, that code-share 

service be indicated with ‘‘an asterisk or 

other easily identifiable mark and that 

the corporate name of the transporting 

carrier and any other name under which 

that service is held out to the public is 

also disclosed.’’ As with the recently 

amended statutory language, the rule 

requires that in oral communications 

with the public, ticket agents must 

inform the consumer of the code-share 

service ‘‘before booking transportation’’ 

and state ‘‘the name of the transporting 

mstockstill on DSKH9S0YB1PROD with NOTICES