Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 59009 

3See Securities Exchange Act Release No. 58401 

(August 21, 2008), 73 FR 50663. 

4See Securities Exchange Act Release No. 50819 

(December 8, 2004), 69 FR 75093 (December 15, 

2004) (approving rules implementing the PIM). See 

also Securities Exchange Act Release No. 57847 

(May 21, 2008), 73 FR 30987 (May 29, 2008) 

(approving a proposed rule change to permit a 

member to enter an agency order into the PIM at 

a price that is equal to the national best bid or offer 

(‘‘NBBO’’) when the ISE’s best bid or offer is 

inferior to the NBBO). 

5See ISE Rule 723(b)(1). 

6 15 U.S.C. 78f(b)(5). 

7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

8See Securities Exchange Act Release No. 50819 

(December 8, 2004), 69 FR 75093, 75096 (December 

15, 2004). 

9See ISE Rule 723(c)(2). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4Securities Exchange Act Release No. 34–58392 

(August 20, 2008), 73 FR 50382 (August 26, 2008) 

(approving SR–NASDAQ–2008–019). 

5 Id. 

proposed rule change to modify its Price 

Improvement Mechanism (‘‘PIM’’) 

auction eligibility requirements to 

eliminate the requirement that there be 

at least three market makers quoting in 

the relevant series. The proposed rule 

change was published for comment in 

the Federal Register on August 27, 

2008.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The Exchange’s PIM auction process 

currently allows Electronic Access 

Members (‘‘EAMs’’) to enter two-sided 

orders (‘‘Crossing Transaction’’) to 

provide better prices than the ISE best 

bid or offer to agency orders.4 The 

customer side of these orders is then 

exposed to other members to give them 

an opportunity to participate in the 

trade at the proposed cross price or 

better. ISE’s current rules require, 

among other things, that an EAM enter 

an order into the PIM only when there 

are at least three market makers quoting 

in the options series.5 The Exchange is 

now proposing to eliminate this 

requirement. 

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange and, in particular, 

with Section 6(b)(5) of the Act,6 which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, 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.7

ISE’s current requirement that there 

must be at least three market makers 

quoting in the option series at the time 

an EAM enters an order into the PIM 

was designed, in part, to increase the 

likelihood of competition in the auction. 

In approving ISE’s proposal to establish 

the PIM, the Commission stated that it 

believed that the three market maker 

requirement would ‘‘improve the 

opportunity for an [a]gency [o]rder to be 

exposed to a competitive auction.’’ 8

ISE rules permit all members to enter 

improvement orders into the PIM for 

their own account or for the account of 

a public customer.9 Because of this 

opportunity for broad participation in 

PIM auctions, the Commission believes 

that orders submitted to the PIM will 

continue to be exposed to a meaningful, 

competitive auction, even without the 

three market maker requirement. For 

this reason, the Commission finds that 

ISE’s proposal to eliminate the three 

market maker requirement is consistent 

with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–ISE–2008–63) 

be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23842 Filed 10–7–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58646; File No. SR– 

NASDAQ–2008–074] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by The 

NASDAQ Stock Market LLC To 

Remove Rule 6800 From the Nasdaq 

Rules 

September 25, 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 

September 17, 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, which Items have been 

prepared by Nasdaq. Nasdaq has 

designated the proposed rule change as 

constituting a non-controversial rule 

change 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 Substance of 

the Proposed Rule Change 

Nasdaq proposes to remove from the 

Nasdaq rule book Rule 6800 pertaining 

to Nasdaq’s Mutual Fund Quotation 

Service (‘‘MFQS’’). The Commission 

recently approved Nasdaq’s proposal to 

remove MFQS-related rules from the 

Nasdaq rule book, but reference to Rule 

6800 was inadvertently omitted from 

Nasdaq’s proposal.4 Nasdaq proposes to 

implement the proposed rule change 

immediately. 

Nasdaq proposes to delete in its 

entirety Rule 6800 (titled Mutual Fund 

Quotation Service), showing this Rule in 

the rule book as ‘‘Reserved.’’ The text of 

the proposed rule change is available on 

NASDAQ’s Web site (http:// 

nasdaqomx.cchwallstreet.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 

The Commission recently approved 

Nasdaq’s proposal to remove MFQSrelated rules from the Nasdaq rule 

book.5 In its proposal, Nasdaq stated its 

view that its rule book should not 

contain rules that do not pertain to 

‘‘facilities’’ of the exchange and that 


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59010 Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 

6As stated in the Commission’s order approving 

removal of the other MFQS provisions from the rule 

book, if Nasdaq were to propose to modify the 

operation of MFQS such that it would fall within 

the definition of a facility of an exchange in the Act 

(or to tie MFQS pricing to an exchange activity), 

Nasdaq would file a proposed rule change with the 

Commission. Id. 

7 15 U.S.C. 78s(b)(1). 

8 17 CFR 240.19b–4. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 Id. 

13For purposes only of waiving the operative date 

of this proposal, the Commission has considered 

the proposed rule’s impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 16 17 CFR 200.30–3(a)(12). 

MFQS is not a ‘‘facility’’ within the 

meaning of the Act. In approving 

Nasdaq’s proposal, the Commission 

found, based on representations made 

by Nasdaq, that MFQS does not appear 

to be a facility of a national securities 

exchange. 

While Nasdaq’s intent was to remove 

from its rule book all MFQS-related 

rules, provisions of Rule 6800, which 

describe MFQS, were inadvertently 

omitted from the list of provisions 

marked for deletion. As a result, the feerelated provisions were removed, but 

the service description in Rule 6800 

remained. Given Nasdaq’s view that its 

rule book should not contain rules that 

do not pertain to ‘‘facilities’’ and given 

that all MFQS fee provisions have 

already been removed, Nasdaq proposes 

to delete Rule 6800. This proposal will 

have the effect of conforming Nasdaq’s 

rule book to Nasdaq’s stated policy 

regarding MFQS.6

2. Statutory Basis 

Nasdaq believes that MFQS is not a 

facility of a national securities exchange 

within the meaning of the Act and the 

terms of MFQS use are not rules that 

must be filed with the Commission 

under Section 19(b)(1) of the Act 7 and 

Rule 19b–4 thereunder.8 Therefore, 

removing the applicable provisions from 

the Nasdaq rule book would be 

consistent with the provisions of 

Section 6(b) of the Act.9

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 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 10 and Rule 19b4(f)(6) thereunder.11 Nasdaq has 

requested that the Commission waive 

the 30-day pre-operative period for 

‘‘non-controversial’’ proposals because 

removing Rule 6800 from the Nasdaq 

rule book is consistent with the recently 

approved removal of other MFQSrelated provisions from the rule book. 

Waiving the 30-day pre-operative period 

contained in Exchange Act Rule 19b– 

4(f)(6)(iii)12 will allow Nasdaq to 

implement this change without 

unnecessary delay. In light of the 

foregoing, the Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.13

Accordingly, the Commission has 

determined to waive the operative 

delay, and the proposed rule change has 

become effective pursuant to Section 

19(b)(3)(A) of the Act,14 and Rule 19b– 

4(f)(6) thereunder,15 with no operative 

delay. 

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–2008–074 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–2008–074. 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 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–2008–074 and should be 

submitted on or before October 29, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23836 Filed 10–7–08; 8:45 am] 

BILLING CODE 8011–01–P 


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