49512 Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Notices 

5 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission considers the 60-day 

abrogation period to have commenced on August 

13, 2008, the date the Exchange filed Amendment 

No. 1. 

4Changes are marked to the rule text that appears 

in the electronic Nasdaq Manual found at http:// 

nasdaqomx.cchwallstreet.com. 

5See Securities Exchange Act Release No. 54248 

(July 31, 2006) (SR–NASDAQ–2006–019). Prior to 

the effective date of Nasdaq’s operation as an 

exchange for Nasdaq-listed securities, the rule 

governing the Nasdaq Crossing Network had been 

approved as an NASD rule (NASD Rule 4716). 

Securities Exchange Act Release No. 54101 (July 5, 

2006), 71 FR 39382 (July 12, 2006) (SR–NASD–

2005–140). 

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 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 publicly available. All 

submissions should refer to File 

Number SR–CHX–2008–13 and should 

be submitted on or before September 11, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.5

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19353 Filed 8–20–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58357; File No. SR–

NASDAQ–2008–068] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change as Modified 

by Amendment No. 1 To Modify Rule 

4770 To Enhance Trading in the 

NASDAQ Crossing Network 

August 13, 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 August 

11, 2008, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’) 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 Nasdaq. Nasdaq has designated this 

proposal as non-controversial and 

provided the Commission with the 

notice required by Exchange Act Rule 

19b–4(f)(6)(iii). This rule proposal, 

which is effective upon filing with the 

Commission, shall become operative on 

September 1, 2008. On August 13, 2008, 

the Exchange submitted Amendment 

No. 1 to the proposed rule change.3 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 Substance of 

the Proposed Rule Change 

Nasdaq is filing a rule proposal to 

modify Rule 4770 to enhance trading in 

the NASDAQ Crossing Network. Nasdaq 

proposes to implement the proposed 

rule change on September 1, 2008. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets.4

* * * * * 

4770. Nasdaq Crossing Network 

(a) Definitions. For the purposes of 

this rule the term: 

(1) ‘‘Nasdaq Reference Price Cross’’

shall mean the process for executing 

orders at a predetermined reference 

price at a randomly selected point in 

time during a five-second [one minute] 

trading window beginning at 10:45 a.m., 

12:45 p.m. and 2:45 p.m. Eastern Time 

during the regular hours session and at 

4:30 p.m. during the after hours session. 

(2) No Change. 

(3) No Change. 

(b) No Change. 

* * * * * 

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 filing a rule proposal to 

modify Rule 4770 to enhance trading in 

the NASDAQ Crossing Network. The 

Commission approved the Nasdaq 

Crossing Network on July 5, 2006.5 The 

Nasdaq Crossing Network provides an 

execution option to market participants 

trading in Nasdaq and other exchangelisted securities that facilitates the 

execution of trades quickly and 

anonymously. 

In order to minimize the opportunity 

for manipulation, Nasdaq executes the 

cross through an automated and random 

matching mechanism at a randomly 

selected time during the predetermined 

one-minute cross-trading window. 

Nasdaq introduced the randomization 

period in order to prevent market 

participants from entering or cancelling 

orders in the Nasdaq Crossing Network 

in an attempt to improperly influence 

the execution price of a cross. The 

randomization period was thought to 

protect both market participants and 

public investors from potential 

manipulation. 

In response to input from our 

members and other market participants, 

Nasdaq proposes to modify the 60- 

second ‘‘randomization period’’ of [sic] 

that precedes the execution of all 

crosses within the Nasdaq Crossing 

Network. Based upon changing market 

conditions, Nasdaq has now determined 

that the full benefits of the 

randomization period can be realized 

through a shorter randomization period 

of five seconds rather than 60 seconds. 

The speed of order routing and 

execution in the marketplace has 

increased substantially since the launch 

of the Nasdaq Crossing Network. As a 

result, a random period of five seconds 

is sufficient to create significant risk of 

a delayed execution outside the control 

of a market participant. In other words, 

there is little incremental benefit of a 

random period longer than five seconds. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 163 / Thursday, August 21, 2008 / Notices 49513 

6 15 U.S.C. 78f. 

7 15 U.S.C. 78f(b)(5). 

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

9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–

4(f)(6)(iii) requires a self-regulatory organization to 

provide the Commission with 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, or such 

shorter time as designated by the Commission. The 

Exchange has fulfilled this requirement. 

10For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

11The Commission notes that any proposed 

change in fees must be filed with the Commission 

pursuant to Rule 19b–4. See 17 CFR 240.19b–4. 12 17 CFR 200.30–3(a)(12). 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Securities 

Exchange Act of 1934,6 in general and 

with Section 6(b)(5) of the Act,7 in 

particular, in that it is designed 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; and is not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers, 

or to regulate by virtue of any authority 

conferred by this title matters not 

related to the purposes of this title or 

the administration of the exchange. The 

proposal satisfies this requirement in 

that it is designed to increase order 

interaction and the likelihood of 

execution in the Nasdaq Crossing 

Network while maintaining investor 

protection associated with a random 

delay to decrease the potential for 

manipulation. 

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. To the 

contrary, the proposal is designed to 

enhance competition by making 

Nasdaq’s trading mechanism more 

effective and competitive. 

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 does not: (i) Significantly affect 

the 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 8 and Rule 19b–

4(f)(6) thereunder.9

Nasdaq has asked the Commission to 

waive the operative delay to permit the 

proposed rule change to become 

operative on September 1, 2008. The 

Commission has determined that 

allowing the filing to become operative 

on September 1, 2008, is consistent with 

the protection of investors and the 

public interest.10 Nasdaq has 

represented that it intends to re-launch 

the Nasdaq Crossing Network on 

September 1, 2008. As part of the relaunch, Nasdaq has stated that it will 

educate members regarding the 

liquidity, transparency and execution 

quality available through the Nasdaq 

Crossing Network. Nasdaq intends to 

also reduce prices to encourage 

participants to participate in the 

Crossing Network and thereby create a 

deeper source of liquidity.11 The 

Commission believes that allowing 

Nasdaq to introduce the reduced 

randomization period as part of its 

September 1, 2008 re-launch will assist 

market participants that utilize the 

Nasdaq Crossing Network in 

understanding how the system operates 

with the reduced randomization period 

in place. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–2008–068 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–2008–068. 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 

Section, 100 F Street, NE., Washington, 

DC 20549–1090 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–2008–068 and 

should be submitted on or before 

September 11, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19351 Filed 8–20–08; 8:45 am] 

BILLING CODE 8010–01–P 

mstockstill on PROD1PC66 with NOTICES