Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 46129 

3 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Changes are marked to the rules of The 

NASDAQ Stock Market LLC found at http:// 

nasdaq.complinet.com. 

No. SR–DTC–2008–05 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 No. 

SR–DTC–2008–05. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. to 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

DTC’s principal office and on DTC’s 

Web site at http://www.dtcc.com/legal/ 

rule_filings/dtc/2008.php. 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 No. 

DTC–2008–05 and should be submitted 

on or before August 28, 2008. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.3

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18070 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58275; File No. SR–

NASDAQ–2008–025] 

Self-Regulatory Organizations; the 

NASDAQ Stock Market LLC; Notice of 

Filing of a Proposed Rule Change, and 

Amendment No. 2 Thereto, Relating to 

the Establishment of the Equity Value 

Indicator Cross 

July 31, 2008. 

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 March 20, 

2008, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) 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 

substantially prepared by the Exchange. 

On July 23, 2008, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change. On July 30, 2008, Nasdaq 

withdrew Amendment No. 1 and filed 

Amendment No. 2 to the proposed rule 

change. Amendment No. 2 replaces the 

original filing in its entirety. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq is proposing to establish a 

crossing mechanism for EVI securities, 

which is designed to allow issuers of 

employee stock options a market-based 

way of measuring the cost of such 

options. The text of the proposed rule 

change is below. Proposed new 

language is italicized; deletions are 

bracketed.3

* * * * * 

6300. [RESERVED] Nasdaq Equity 

Value Indicator Cross 

(a) Definitions. For the purposes of 

this rule the term: 

(1) ‘‘Imbalance’’ shall mean the 

amount of Eligible Interest that may not 

be matched with other orders at a 

particular price at any given time. 

(2) ‘‘Order Imbalance Indicator’’ shall 

mean a message disseminated by 

electronic means containing 

information about Eligible Interest and 

the price at which such interest would 

execute at the time of dissemination. 

The Order Imbalance Indicator shall 

disseminate the following information: 

(A) ‘‘Current Reference Price’’ shall 

mean the highest price at which the 

maximum amount of Eligible Interest 

can be paired. 

(B) the amount of Eligible Interest that 

is paired at the Current Reference Price; 

(C) the size of any Imbalance at the 

Current Reference Price; and 

(D) the buy/sell direction of any 

Imbalance. 

(3) ‘‘Nasdaq EVI Cross’’ shall mean 

the process for determining the price at 

which Eligible Interest shall be 

executed. All prices referred to in this 

rule shall be in minimum increments of 

one penny. 

(4) ‘‘Eligible Interest’’ shall mean any 

priced order that may be entered into 

the system for the EVI Cross. 

(5) ‘‘EVI’’ shall mean any Equity 

Value Indicator Tracking Security which 

is issued for the purpose of generating 

a market-based value of employee stock 

options for purposes of FASB Statement 

of Financial Accounting Standards No. 

123(R), Share-Based Payment. The 

number of EVIs made available via the 

EVI Cross, the limit price, if any, of the 

EVIs, and the terms of the EVIs shall be 

determined by the EVI issuer which 

shall make that information available to 

the public at the earliest time 

practicable. 

(b) Processing of Nasdaq EVI Cross. 

(1) (A) No later than 4:00 p.m. EST on 

the day of the scheduled EVI Cross, a 

Nasdaq member authorized to act for 

the EVI Issuer shall direct in writing that 

Nasdaq enter into the System a single 

sell order with the quantity and limit 

price if any of EVI Eligible Interest. The 

sell order may not be modified after 4 

p.m. and may be cancelled after 4:00 

p.m. only in connection with a 

cancellation of the EVI Cross as set forth 

in subsection (c) below. 

(B) Beginning at 8 a.m. and 

continuing until 4:59:59 p.m. Nasdaq 

members may enter buy orders into the 

System. Except as provided below, once 

entered, buy orders may be cancelled 

but may not be modified. 

(C) The EVI Cross shall occur at 5 

p.m. EST. in the manner set forth below 

unless the time of execution is 

extended. The time of execution of the 

EVI Cross shall be extended only if the 

Current Reference Price of the EVI 

security changes by 1 percent or more 

between 4:59 p.m. and 5 p.m, in which 

case the time of the EVI Cross will be 

extended by 2 minutes. The time of 

execution of the EVI Cross shall be 

extended for an additional 2 minutes if 

the Current Reference Price of the EVI 

Security changes by 1 percent or more 

in the final minute of a two-minute 


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46130 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 

4Nasdaq anticipates that each EVI tracking 

security will entitle the holder to specified 

payments upon the exercise of stock options 

comprising a reference pool of stock options that 

have been previously granted to employees by the 

issuer. The securities will represent a payment 

obligation of the issuer, but will not represent any 

direct ownership interest in the issuing company or 

in any of the reference pool stock options. The 

specific features of the securities, including how 

payments are calculated, maturity dates and form 

of payment, will be determined by each issuer. The 

price and allocation of the securities for each 

issuance will be determined by the results of the 

auction. The issuer will make available to the 

public the terms and features of its EVI tracking 

security. 

5Nasdaq does not currently expect that EVI 

securities will be listed on Nasdaq or any other 

national securities exchange. In the event an EVI 

issuer desires to list its EVIs on Nasdaq or another 

exchange, the issuer will be required to meet 

applicable listing requirements. In the event no 

such requirements exist, the exchange would be 

required to file a proposed rule change under 

Section 19(b) seeking approval of appropriate 

listing requirements. 

extension. The time of execution of the 

EVI Cross shall be extended no more 

than 30 times. If the time of execution 

of the EVI Cross has been extended 10 

times, order cancellation will be 

prohibited. 

(2) At 4 p.m. and continuing through 

the execution of the EVI Cross, Nasdaq 

shall disseminate by electronic means 

an Order Imbalance Indicator every 

minute for the first 45 minutes and 

every 15 seconds thereafter. 

(3) The Nasdaq EVI Cross shall occur 

at the highest price that maximizes the 

amount of Eligible Interest to be 

executed. 

(4) If the Nasdaq EVI Cross price is 

selected and less than all Eligible 

Interest that is available would be 

executed, all Eligible Interest shall be 

executed at the Nasdaq EVI Cross price 

in price/time priority. 

(5) All Eligible Interest executed in the 

Nasdaq EVI Cross shall be executed at 

the Nasdaq EVI Cross price, trade 

reported to the National Securities 

Clearing Corporation and disseminated 

via a data feed. 

(c) The EVI Cross shall be cancelled 

if: 

(i) The issuer determines prior to 4:45 

p.m. on the date scheduled for the EVI 

Cross to cancel its participation; or 

(ii) The common stock of the issuer is 

in a halted state at 4:45 p.m. on the date 

scheduled for the EVI Cross. 

(d) The issuer of an EVI Security shall 

become eligible to participate in the 

NASDAQ EVI Cross by paying a fee as 

follows: 

(i) Two percent of the total value of 

the EVI offering up to a maximum of 

$10,000,000 of total value, plus 

(ii) One and one half percent of the 

total value of the EVI offering above 

$10,000,000 of total value, and 

(iii) The maximum fee shall be 

$1,500,000. 

This fee shall be refunded if no EVI 

Cross is executed. This fee shall include 

all processing of the EVI Cross, 

including order entry, order execution, 

imbalance information dissemination, 

and transmission to the appropriate 

clearing agency. Nasdaq members not 

issuing securities shall pay no fees to 

participate in the NASDAQ EVI Cross. 

* * * * * 

The text of the proposed rule change is 

also available at Nasdaq, the 

Commission’s Public Reference Room, 

and 

www.nasdaqomx.cchwallstreet.com. 

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 to establish a 

crossing mechanism for EVI securities, 

which is designed to allow issuers of 

employee stock options a market-based 

way of measuring the cost of such 

options. In this filing, Nasdaq is seeking 

Commission approval under Section 

19(b) of the Act only for its proposed 

rules relating to the EVI cross. The 

registration of any particular EVI 

securities with the Commission is the 

responsibility of the issuer and would 

be subject to separate review by the 

Commission and its Division of 

Corporation Finance.4 Similarly, the 

extent to which an issuer may use a 

price derived from a particular EVI 

crossing auction to measure the cost of 

employee stock options may be subject 

to separate review by the Commission 

and its staff. 

The EVI Cross is a market pricing 

mechanism modeled on Nasdaq’s 

industry leading crossing technology 

currently used for the Nasdaq Opening 

and Closing Crosses, the Nasdaq 

Crossing Network, and the Nasdaq IPO 

and Halt Crosses, set forth in Nasdaq 

Rules 4752, 4753, 4754, and 4770. As a 

facility of Nasdaq,5 the EVI Cross will 

utilize the existing technology network 

that links more than 100,000 market 

participants with NASDAQ and provide 

broad access for investors to participate 

in price discovery for EVI instruments. 

The EVI Cross will provide price 

discovery, equal access, and fair 

executions at a single price that is fully 

reflective of market demand for EVI 

instruments. The EVI Cross will be the 

appropriate mechanism to determine a 

fair market price for EVI instruments 

which issuers may utilize to determine 

their options expense. 

Like Nasdaq’s current crosses, the EVI 

Cross will have three elements: (1) A 

defined order entry period, (2) 

information dissemination, and (3) a 

single price execution according to a 

fixed algorithm. For the EVI Cross, order 

entry will begin at 8 a.m. and end at 5 

p.m. EST on date of issuance, typically 

the first trading day following an 

options grant date. Nasdaq members 

will access the EVI Cross system 

through existing interfaces for order 

entry, although the EVI Cross system 

will be entirely separate from the 

Nasdaq Market Center execution system 

(the Single Book). The EVIs available for 

sale in the EVI Cross will be entered 

into the System in a single sell order. A 

Nasdaq member authorized to act on 

behalf of the EVI Issuer shall direct 

Nasdaq to enter the single sell order into 

the System, including the quantity of 

EVIs and the limit price, if any. Once 

entered, the sell order cannot be 

modified after 4 p.m. and my [sic] be 

cancelled after 4 p.m. only in 

connection with a cancellation of the 

EVI Cross as set forth in subsection (c) 

of Rule 6300. All buy orders must be for 

a fixed price and size; all EVIs will be 

offered by the issuer for sale on 

identical terms to individual bidders. 

Entered buy orders can be cancelled 

until 5 p.m, and no executions will 

occur prior to the auction close. 

As with Nasdaq’s current crosses, 

Nasdaq will facilitate price discovery for 

the EVI Cross. First, Nasdaq will 

facilitate price discovery prior to the 

start of the EVI Cross. As set forth in the 

proposed rule, Nasdaq will require 

issuers to make available to the public 

at the earliest possible time information 

regarding the number of EVIs made 

available via the EVI Cross, the reserve 

price, if any, of the EVIs, and the terms 

and conditions of the EVIs. This 


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Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 46131 

6See Nasdaq Rule 7023. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(5). 

requirement will reinforce the issuers’

inherent interest in attracting the 

maximum number of bidders to the EVI 

Cross by providing potential bidders 

with the information they need to 

determine their willingness to 

participate and the price and size of 

their orders. 

In addition, Nasdaq will facilitate 

price discovery by disseminating 

indicative auction price information via 

the Order Imbalance Indicator which is 

available on NASDAQTrader.com and 

as a data feed. Indicative price 

information includes: (1) The Current 

Reference Price, an indicative auction 

price at which all EVI instruments 

would be sold based on current bids; (2) 

paired units, the number of units 

matched for execution at the Current 

Reference Price; and (3) the Imbalance, 

the total imbalance and the size of 

executable units at the Current 

Reference Price. Indicative information 

will be disseminated starting at 4 p.m. 

once per minute for the first 45 minutes, 

and every 15 seconds thereafter. 

Disseminating indicative information 

will help both issuers and purchasers. It 

will assist issuers by informing them 

whether the EVI Cross is likely to 

culminate in a successful auction. 

Indicative information will enable the 

issuer to determine that the EVI Cross is 

unlikely to succeed due to, for example, 

insufficient buying interest, market 

volatility, or buying interest below the 

issuer’s reserve price. Thus, issuers can 

use the indicative information to 

exercise their option under the 

proposed rule to cancel the EVI Cross 

any time prior to 4:45 p.m. Indicative 

information assists buyers by enabling 

them to gauge the level of buying 

interest and the likely outcome of the 

EVI Cross. Thus, buyers can use 

indicative information to exercise their 

options under the rule to enter or cancel 

orders in the EVI Cross. Nasdaq 

understands that the transparency 

created by the dissemination of 

indicative information has been a major 

factor in the success of Nasdaq’s 

Opening, Closing, and Intra-Day 

Crosses. 

To protect against volatility, Nasdaq 

will extend the quote-only period if a 

price change greater than one percent 

occurs between 4:59 p.m. and 5 p.m. In 

that case, Nasdaq will extend the quoteonly period by two minutes. If during 

the final minute of a two-minute 

extension, a price change greater than 

one percent occurs, the quote-only 

period will be extended for an 

additional two minutes. If the quoteonly period is extended more than 10 

times, members will be prohibited from 

canceling orders. There will be no more 

than 30 extensions of the quote-only 

period. 

The EVI Cross will occur at 5 p.m. 

Eastern Time or at such time that the 

quote-only period ends, as described 

above. The EVI Cross will occur at the 

highest price that maximizes the 

amount of Eligible Interest to be 

executed. Final auction information 

disseminated to all participants and all 

executions will clear through National 

Securities Clearing Corporation. 

Nasdaq has unique technology and 

expertise in creating liquid markets and 

efficient price discovery. The EVI Cross 

will utilize the existing technology 

network that links more than 100,000 

market participants with NASDAQ and 

provides broad access for investors to 

participate in price discovery of an 

options valuation security. Market data 

vendors and participants will have 

access to imbalance information for the 

EVI Cross by purchasing the Net Order 

Imbalance Indicator data feed which is 

available on the Nasdaq TotalView data 

feed and also through the Nasdaq 

Workstation and Nasdaq Data Store at 

the current filed fee.6 As with other 

NASDAQ trading platforms, the EVI 

Cross will provide an open process in 

which all investors have the ability to 

enter orders and participate in price 

discovery. The EVI Cross mechanism 

will be regulated by FINRA and 

NASDAQ. 

Fees Applicable to the EVI Cross 

Nasdaq will assess a single fee for the 

EVI Cross equal to a percentage of the 

total value of the issuance of the EVI 

Security up to a maximum of 

$1,500,000. This cost will be borne by 

the issuer of the EVI instrument and 

will cover the entire cost of the 

processing of the EVI Cross, including 

the entry and execution of orders, the 

dissemination of indicative information, 

and the transmission of execution 

information to cross participants and to 

NSCC. The fee will be based upon the 

total value of the EVI offering, regardless 

of whether all EVIs in the offering are 

executed in the EVI Cross, except that 

the fee shall be refunded if no EVI Cross 

occurs. 

Nasdaq members will pay no fees to 

participate in the EVI Cross by entering 

orders and having them executed. 

Although members will be required to 

establish a new port for connectivity to 

access the EVI Cross, there will be no 

fee assessed for that port. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,7 in 

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

Act,8 in particular, in that the proposal 

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 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. Nasdaq believes this 

proposal supports the goals of the 

Exchange Act by creating a new, 

efficient, liquid, and transparent market 

for interested investors. The proposed 

functionality is completely voluntary 

with respect to all potential 

participants, including issuers, 

members, and customers. Nasdaq 

believes that the proposed fee is fair, 

reasonable and non-discriminatory, in 

that it must remain responsive to 

competitive market forces. 

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. 

To the contrary, by offering an 

innovative new product, Nasdaq is 

demonstrating the proper functioning of 

the competitive framework established 

under the Exchange Act and 

administered by the Commission. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 


sroberts on PROD1PC70 with NOTICES
46132 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5See SR–NASDAQ–2008–058 (filed June 30, 

2008), and SR–NASDAQ–2008–059 (filed July 1, 

2008). 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be 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–NASDAQ–2008–025 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–NASDAQ–2008–025. 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, 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 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–NASDAQ–2008–025 and 

should be submitted on or before 

August 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18155 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58279; File No. SR–

NASDAQ–2008–066] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing of a Proposed Rule Change To 

Modify Rule 7050 Governing Pricing 

for Nasdaq Members Using the 

NASDAQ Options Market (‘‘NOM’’) 

July 31, 2008. 

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 July 24, 

2008, 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 filed this proposal pursuant to 

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

Rule 19b–4(f)(2) thereunder,4 Nasdaq 

has designated this proposal as 

establishing or changing a due, fee, or 

other charge applicable only to 

members, which renders the proposed 

rule change effective upon filing. The 

Commission is publishing this notice 

and order to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq has filed a proposed rule 

change to modify Rule 7050 governing 

pricing for Nasdaq members using the 

NASDAQ Options Market (‘‘NOM’’), 

Nasdaq’s facility for executing and 

routing standardized equity and index 

options. The text of the proposed rule 

change is available at http:// 

nasdaqomx.cchwallstreet.com, the 

principal offices of Nasdaq, and 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. The text of these 

statements may be examined at the 

places specified in Item III below, and 

is set forth in Sections A, B, and C 

below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Nasdaq is proposing to modify Rule 

7050 governing the fees assessed for 

execution of options orders entered into 

NOM but routed to away markets. When 

Nasdaq began trading standardized 

option on March 31, 2008, it assessed a 

routing fee based upon an 

approximation of the cost to Nasdaq of 

executing such orders at those markets. 

Nasdaq later determined that the 

superior approach for executions on 

away markets is to pass-through to 

exchange members the actual fees 

assessed by away markets plus the 

clearing fees for the execution of orders 

routed from Nasdaq. To support that 

approach, Nasdaq collected and 

organized in chart format the fees to be 

assessed for executions at each 

destination exchange. 

Nasdaq has determined that it is 

impractical to reflect and maintain in its 

rule manual the chart of fees assessed by 

each of the six away markets. Nasdaq 

filed two proposed rule changes to make 

changes to the chart of fees for 

executions on away markets during the 

month of July.5 Nasdaq expects that the 

current rule convention would require 

Nasdaq to file up to six changes each 

month in order to accurately reflect the 

changing fees for all six markets. 

Accordingly, under Nasdaq’s current 

proposed rule change, Nasdaq will 

preserve the pass-through approach to 

fees for executions on away markets but 

modify the way those fees appear in 

Nasdaq’s rule manual. Rather than 

reflect the actual fees in its rule manual, 

Nasdaq will cross-reference a location 

on its primary website for members, 

NasdaqTrader.com, where it will 

maintain a fee schedule applicable to 

options executions at away markets. 

Nasdaq will maintain a current fee 

schedule as well as an historical record 


sroberts on PROD1PC70 with NOTICES