Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18769 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4The Commission notes that Nasdaq is also 

establishing the InterACT service with this 

proposed rule change. 

5Changes are marked to the rule text that appears 

in the electronic manual of Nasdaq found at 

http://nasdaqomx.cchwallstreet.com. The 

Commission notes that there are no deletions. 

6FINRA Rule 7230A(c) details the reporting 

responsibilities of the parties to the transaction. 

7 Detailed information regarding each trade that 

exceeded the applicable deadline is available for fee 

through Nasdaq’s Regulation Reconnaissance 

service. 

8 17 CFR 242.611. 

9 Id. 

10 17 CFR 242.600(b)(78). 

11 17 CFR 242.611(a). 

12 Id. 

13Certain transactions are eligible for an 

exception to the trade through rule. 17 CFR 

242.611(b). 

14 Detailed information regarding each trade 

through is available for an additional fee through 

Nasdaq’s Regulation Reconnaissance service. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59786; File No. SR– 

NASDAQ–2009–033] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Establish 

InterACT, a New Service, and Related 

Fees. 

April 17, 2009. 

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 April 9, 

2009, 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. Nasdaq 

has designated the proposed rule change 

as effecting a change described under 

Rule 19b–4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 adopt new Rule 

7049 to establish fees for InterACT,4 a 

tool to help member firms avoid 

reporting violations on the FINRA/ 

NASDAQ Trade Reporting Facility 

(‘‘TRF’’) and Regulation NMS trade 

throughs. 

The text of the proposed rule change 

is below. Proposed new language is 

underlined; proposed deletions are in 

brackets.5

* * * * * 

7049. Nasdaq InterACT 

Nasdaq InterACT is a surveillance tool that 

provides summaries of a subscribing 

member’s trade activity for the FINRA/ 

NASDAQ Trade Reporting Facility. Such 

summaries include the total number of trades 

that have been reported to the Facility, 

various statistics associated with those trades 

reported (including: declines, cancels, stepouts, as-ofs, etc), the total number of trades 

that must be reviewed for acceptance, and 

the total number of Regulation NMS trade 

throughs. 

InterACT is available to each member firm 

at no cost for a 60 day trial period. 

Thereafter, InterACT is available for a 

subscription fee of $300 per month, per user, 

for the first three users, and $100 per month, 

per user, for each additional user, with a 

maximum fee of $1,500 per month, per 

member firm. 

* * * * * 

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 proposes to establish a new 

add-on service to the Nasdaq 

Workstation and Weblink ACT 2.0, and 

establish related fees. InterACT is a new 

compliance tool that allows member 

firms to supervise in real-time trade 

activity required to be reported to the 

TRF. The TRF is a transaction reporting 

facility managed by the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’). FINRA Rule 7230A(b) 

details how and when trade reports are 

to be submitted to the TRF. Specifically, 

FINRA Rule 7230A(b) requires that 

transactions in reportable securities be 

reported to the TRF within ninety 

seconds after execution by a party to the 

transaction.6 FINRA Rule 7230A(b) 

further requires that member firms 

accept or decline transactions entered 

into the TRF by the reporting 

counterparty to a transaction within 

twenty minutes. InterACT provides 

subscribers with real-time totals of the 

number of trades that have exceeded the 

ninety second or twenty minute 

thresholds. This proactive alerting tool 

will allow subscribers to quickly 

identify violations of FINRA Rule 

7230A(b) and take action to remediate 

the source of the violation. In this 

regard, InterACT provides a link to 

query the trades, which will allow users 

to gain full access to the details of the 

trades identified.7 InterACT also 

provides subscribers with the number of 

trade reports that are nearing the twenty 

minute threshold to accept or decline 

the reported transaction, which will 

assist firms in identifying any backlogs 

and allocating resources necessary to 

avoid a violation of FINRA Rule 

7230A(b). 

In addition to aiding member firms 

with their TRF reporting compliance, 

InterACT provides subscribers with 

tools to assist in complying with Rule 

611 of Regulation NMS 8. Rule 611 

under the Act 9 requires trading centers, 

which include certain broker-dealers 

and market makers,10 to, among other 

things, avoid trading through protected 

orders and regularly surveil to ascertain 

the effectiveness of the policies and 

procedures designed to prevent trade 

throughs.11 Such firms must take 

prompt action to remedy deficiencies in 

their policies and procedures.12 To 

assist member firms with compliance 

with these requirements, InterACT 

provides real time totals of the number 

of a subscribing member firm’s trade 

throughs during the day. The totals 

differentiate between the number of 

trade throughs marked as exempt and 

the number of trade throughs that are 

not.13 As such, these reports provide a 

useful tool with which subscribers are 

able to quickly identify occurrences of 

trade throughs, determine whether such 

trade throughs are marked exempt, and, 

when appropriate, to take action to 

remediate the cause of any non-exempt 

trade throughs.14

InterACT can only be accessed using 

an existing Nasdaq Workstation or 

Weblink ACT 2.0 user account. 

Members subscribing to InterACT are 

charged a monthly fee per user, which 

provides InterACT access for each 

Nasdaq Workstation and Weblink ACT 

2.0 user account selected for 

subscription to InterACT. Nasdaq 

proposes to offer InterACT to each 

subscribing member firm initially at no 

cost for a sixty-day trial period, after 

which Nasdaq proposes to charge a 

subscription fee of $300 per month, per 

user for the first three users, and $100 

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18770 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

15 15 U.S.C. 78f. 

16 15 U.S.C. 78f(b)(4). 

17The Commission notes that in setting these 

fees, Nasdaq has also allowed for a profit margin 

of some amount, although that amount has not been 

disclosed to the Commission. Telephone 

conversation on April 15, 2009 among Sean 

Bennett, Nasdaq, Katherine England, SEC, and 

Joseph Morra, SEC. 

18 15 U.S.C. 78f(b)(5). 

19 17 CFR 242.611. 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6). 22 17 CFR 200.30–3(a)(12). 

per month, per user for each additional 

user. Nasdaq proposes to limit the 

maximum fee charged to a subscriber to 

$1,500 per month, per member firm. 

Nasdaq believes the subscription fee 

fairly reflects the value of this product. 

Use of InterACT is voluntary and the 

subscription fee will be imposed on all 

purchasers equally based on the number 

of users selected. The proposed fee will 

cover the costs associated with 

establishing the service, responding to 

customer requests, configuring Nasdaq’s 

systems, programming to user 

specifications, and administering the 

service, among other things. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,15 in 

general, and Section 6(b)(4) of the Act,16

in particular, because 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 that the Nasdaq 

operates or controls, and it does not 

unfairly discriminate between 

customers, issuers, brokers or dealers. 

As noted, use of InterACT is voluntary 

and the subscription fees will be 

imposed on all purchasers equally based 

on the number of users, with a 

maximum fee of $1,500 per month, per 

member firm. The proposed fees will 

cover the costs associated with 

establishing the service, responding to 

customer requests, configuring Nasdaq’s 

systems, programming to user 

specifications, and administering the 

service, among other things.17

Nasdaq also believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b)(5) of the 

Act18 because it is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. InterACT will assist subscribing 

member firms to quickly identify 

violations of FINRA Rule 7230A(b) and 

Rule 611 under the Act,19 in turn 

allowing member firms to quickly 

remediate the cause of the violation and 

stem subsequent violations. InterACT 

will also provide subscribers with real 

time totals of open trades awaiting 

review and acceptance within the 

twenty minute period required by 

FINRA Rule 7230A(b). As a 

consequence, the subscriber will be 

aware of any review backlog and may 

take action to avoid a violation. 

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. 

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 

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

Act20 and Rule 19b–4(f)(6) thereunder,21

Nasdaq has designated this proposal as 

one that effects a change that: (i) Does 

not significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for thirty days 

after the date of the filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest. Nasdaq has provided 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. Nasdaq 

believes that the filing may 

appropriately be designated for filing 

under Rule 19b–4(f)(6) because the 

filing provides a useful enhancement to 

an existing facility of Nasdaq that is 

designed to assist members in detecting 

and avoiding rule violations, and 

establishes a reasonable fee for such 

enhancement. 

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–2009–033 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2009–033. 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 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 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–2009–033 and should be 

submitted on or before May 15, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9373 Filed 4–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

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