4796 Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices 

proposed rule’s impact on efficiency, competition, 

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

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.SC. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

5Securities Exchange Act Release No. 59154 

(December 23, 2008) (SR–BSE–2008–48). 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because it makes only technical changes 

to FINRA’s rules which should help to 

avoid confusion among FINRA members 

and other market participants. 

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–FINRA–2009–003 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–FINRA–2009–003. 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of FINRA. 

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 the File 

Number SR–FINRA–2009–003 and 

should be submitted on or before 

February 17, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–1675 Filed 1–26–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59261; File No. SR–BX– 

2009–001] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Deferring 

Operation of Its Listing Standards for 

Primary Listings and Consolidating 

Into a Single Rule Certain 

Requirements for Products Traded on 

the Exchange Pursuant to Unlisted 

Trading Privileges 

January 15, 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 January 8, 

2009, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) 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 the Exchange. The Exchange has 

designated the proposed rule change as 

constituting a non-controversial rule 

change under Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

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 

The Exchange proposes (i) to suspend 

the operation of the Exchange’s newly 

adopted listing standards with respect 

to primary listings on the Exchange 

until such time as the Exchange adopts 

listing fees, and (ii) to adopt rules 

reflecting the requirements for trading 

products on the Exchange pursuant to 

unlisted trading privileges (‘‘UTP’’) that 

have been established in various new 

product proposals previously approved 

by the Commission. The Exchange 

proposes to make the change operative 

on January 12, 2009. 

The text of the proposed rule change 

is available from the principal office of 

the Exchange, at the Commission’s 

Public Reference Room and also on the 

Exchange’s Web site at http://nasdaq

trader.com/Trader.aspx?id=Boston

_Stock_Exchange. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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. The 

Exchange 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 

On August 29, 2008, the Exchange 

was acquired by The NASDAQ OMX 

Group, Inc. At the time of this 

acquisition, the Exchange was not 

operating a venue for listing or trading 

cash equities. Pursuant to SR–BSE– 

2008–48, the Exchange has adopted a 

new rulebook with rules governing 

membership, the regulatory obligations 

of members, listing, and equity trading.5

The new rules, which are designated as 

the ‘‘Equity Rules,’’ include rules that 

permit issuers of various types of 

securities to establish primary listings 

on the Exchange. However, the 

Exchange has determined that market 

conditions do not currently warrant 

offering the Exchange as a listing venue. 

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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices 4797 

6 17 CFR 240.19b–4(e). 

7A Member is any registered broker-dealer that 

has been admitted to membership in the Exchange. 

Accordingly, although the listing 

standards will remain in the Exchange’s 

rulebook, the Exchange is proposing 

new Equity Rule 4401, which provides 

that the provisions of the Equity Rule 

4000 Series that permit the listing of 

securities will not be operative until the 

Exchange files a proposed rule change 

under Section 19(b)(2) under the Act to 

adopt listing fees for the Exchange and 

such proposed rule change is approved 

by the Commission. The rule is similar 

in effect to Rule 14.1(a) of the BATS 

Exchange. 

In addition, the Exchange also 

proposes to amend its rules to reflect 

certain requirements for trading 

products on the Exchange pursuant to 

UTP that have been established in 

various new product proposals 

previously approved by the 

Commission. The Exchange is amending 

Equity Rule 4420 to provide that it may 

extend UTP to any security that is an 

NMS Stock (as defined in Rule 600 of 

Regulation NMS) that is listed on 

another national securities exchange. 

Any such security will be subject to all 

of the Exchange’s trading rules 

applicable to NMS Stocks, unless 

otherwise noted, including the 

provisions of Equity Rules 4120, 4420, 

4630, and new Rule 4421 described 

below. The Exchange will file with the 

Commission a Form 19b–4(e) with 

respect to any such security that is a 

‘‘new derivative securities product’’ as 

defined in Rule 19b–4(e) under the Act 6

(defined as a ‘‘UTP Derivative 

Security’’). In addition, any new 

derivative securities product traded on 

the Exchange will be subject to the 

criteria described below. 

Proposed Equity Rule 4421(a)(2) 

provides that the Exchange will 

distribute an information circular prior 

to the commencement of trading in a 

UTP Derivative Security, which 

generally will include the same 

information as the information circular 

provided by the listing exchange, 

including: (1) The special risks of 

trading the UTP Derivative Security; (2) 

the Rules of the Exchange that will 

apply to the UTP Derivative Security, 

including Equity Rule 2310, the 

Exchange’s suitability rule; (3) 

information about the dissemination of 

the value of the underlying assets or 

indexes; and (4) the applicable trading 

hours for the UTP Derivative Security 

and risks of trading during the 

Exchange’s pre-market session (8 a.m. to 

9:30 a.m.) and post-market session (4 

p.m. to 7 p.m.) due to the lack of 

calculation or dissemination of the 

underlying index value, the intraday 

indicative value, or a similar value. 

Proposed Equity Rule 4421(a)(3)(A) 

reminds Members 7 that they are subject 

to the prospectus delivery requirements 

under the Securities Act of 1933, as 

amended (the ‘‘Securities Act’’), unless 

a UTP Derivative Security is the subject 

of an order by the Commission 

exempting the product from certain 

prospectus delivery requirements under 

Section 24(d) of the Investment 

Company Act of 1940 (the ‘‘1940 Act’’) 

and the product is not otherwise subject 

to prospectus delivery requirements 

under the Securities Act. The Exchange 

will inform its Members of the 

application of these provisions to a 

particular UTP Derivative Security 

governed by the 1940 Act by means of 

an information circular. 

The Exchange is amending Equity 

Rule 4120(b) to more fully address 

trading halts in UTP Derivative 

Securities traded on the Exchange 

pursuant to UTP. As currently in effect, 

Rule 4120(b) provides for trading halts 

of ‘‘Derivative Securities Products,’’ 

which are defined as a series of Portfolio 

Depository Receipts, Index Fund Shares, 

Managed Fund Shares, Trust Issued 

Receipts, Commodity-Related 

Securities, or securities representing 

interests in unit investment trusts or 

investment companies. Although this 

definition covers a wide range of 

products that would be considered UTP 

Derivative Securities, for the avoidance 

of doubt, the Exchange is explicitly 

amending the definition to include all 

UTP Derivative Securities. The current 

rule also contains a definition of 

‘‘Required Value’’ and provides for 

trading halts in certain circumstances 

where a Required Value is not being 

disseminated. Currently, ‘‘Required 

Value’’ is defined to mean ‘‘(i) the value 

of any index or any commodity-related 

value underlying a Derivative Security 

Product and (ii) the indicative 

optimized portfolio value, intraday 

indicative value, or other comparable 

estimate of the value of a share of a 

Derivative Securities Product updated 

regularly during the trading day.’’ The 

Exchange proposes to amend the 

definition to also include ‘‘(iii) a net 

asset value in the case of a Derivative 

Securities Product for which a net asset 

value is disseminated, and (iv) a 

‘disclosed portfolio’ in the case of a 

Derivative Securities Product that is a 

series of managed fund shares or 

actively managed exchange-traded 

funds for which a disclosed portfolio is 

disseminated.’’ 

Thus, as amended, the rule provides 

that the Exchange, upon notification by 

the listing market of a halt due to a 

temporary interruption in the 

calculation or wide dissemination of a 

Required Value for a Derivative 

Securities Product, will immediately 

halt trading in that product on the 

Exchange. If the Required Value 

continues not to be calculated or widely 

disseminated at the commencement of 

trading on the Exchange on the next 

business day, the Exchange shall not 

commence trading of the product on 

that day. If an interruption in the 

calculation or wide dissemination of the 

Required Value continues, the Exchange 

may resume trading in the Derivative 

Securities Product only if calculation 

and wide dissemination of the Required 

Value resumes or trading in such 

product resumes on the listing market. 

The Exchange is also amending 

Equity Rule 4630, which governs the 

activities of registered market makers in 

Commodity-Related Securities. A 

‘‘Commodity-Related Security’’ is 

defined to mean a security that is issued 

by a trust, partnership, commodity pool 

or similar entity that invests, directly or 

through another entity, in any 

combination of commodities, futures 

contracts, options on futures contracts, 

forward contracts, commodity swaps, or 

other related derivatives, or the value of 

which is determined by the value of 

commodities, futures contracts, options 

on futures contracts, forward contracts, 

commodity swaps, or other related 

derivatives. A ‘‘commodity’’ is defined 

in Section 1(a)(4) of the Commodity 

Exchange Act, a definition that includes 

currencies. As amended, the rule 

provides that a registered market maker 

in a Commodity-Related Security is 

prohibited from acting or registering as 

a market maker in any commodities, 

futures contracts, options on futures 

contracts, forward contracts, commodity 

swaps, or other related derivatives 

underlying such Commodity-Related 

Security. The rule further provides that 

a member acting as a registered market 

maker in a Commodity-Related Security 

must file with the Exchange’s 

Regulation Department in a manner 

prescribed by such Department and 

keep current a list identifying all 

accounts for trading in commodities, 

futures contracts, options on futures 

contracts, forward contracts, commodity 

swaps, or other related derivatives 

underlying such Commodity-Related 

Security, in which the market maker 

holds an interest, over which it may 

exercise investment discretion, or in 

which it shares in the profits and losses. 

No market maker shall trade in, or 

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4798 Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices 

8 15 U.S.C. 78f. 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). In addition, as required 

under Rule 19b–4(f)(6)(iii), the Exchange provided 

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 days prior to the filing of the proposed 

rule change. 

12See, e.g., NSX Rule 15.9 and Securities 

Exchange Act Release No. 57448 (March 6, 2008), 

73 FR 13597 (March 13, 2008) (SR–NSX–2008–05); 

ISE Rule 2101 and Securities Exchange Act Release 

No. 57387 (February 27, 2008), 73 FR 11965 (March 

5, 2008) (SR–ISE–2007–99); BATS Rule 14.1 and 

Securities Exchange Act Release No. 58623 

(September 23, 2008), 73 FR 57169 (October 1, 

2008) (SR–BATS–2008–004). 

13For purposes only of waiving the operative date 

of this proposal, the Commission has considered 

the rule’s impact on efficiency, competition, and 

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

exercise investment discretion with 

respect to, such underlying 

commodities, futures contracts, options 

on futures contracts, forward contracts, 

commodity swaps, or other related 

derivatives, in an account in which a 

market maker, directly or indirectly, 

controls trading activities, or has an 

interest in the profits or losses thereof, 

that has not been reported as required 

by the Rule. 

In addition, a member acting as a 

registered market maker in a 

Commodity-Related Security is 

obligated to establish adequate 

information barriers when such market 

maker engages in communications to 

other departments within the same firm 

or the firm’s affiliates that involve 

trading in commodities, futures 

contracts, options on futures contracts, 

forward contracts, commodity swaps, or 

other related derivatives underlying 

such Commodity-Related Security. The 

member acting as a registered market 

maker in a Commodity-Related Security 

shall make available to the Exchange’s 

Regulation Department such books, 

records or other information pertaining 

to transactions by such entity or 

registered or non-registered employee 

affiliated with such entity for its or their 

own accounts for trading commodities, 

futures contracts, options on futures 

contracts, forward contracts, commodity 

swaps, or other related derivatives 

underlying such Commodity-Related 

Security, as may be requested by the 

Regulation Department. Finally, in 

connection with trading a CommodityRelated Security or commodities, 

futures contracts, options on futures 

contracts, forward contracts, commodity 

swaps, or other related derivatives 

underlying a Commodity-Related 

Security, the member acting as a market 

maker in a Commodity-Related Security 

shall not use any material nonpublic 

information received from any person 

associated with the member or 

employee of such person regarding 

trading by such person or employee in 

the commodities, futures contracts, 

options on futures contracts, forward 

contracts, commodity swaps, or other 

related derivatives underlying such 

Commodity-Related Security. 

The Exchange represents that its 

surveillance procedures for UTP 

Derivative Securities traded on the 

Exchange will be similar to the 

procedures used for equity securities 

traded on the Exchange and will 

incorporate and rely upon existing 

Exchange surveillance procedures. The 

Exchange will closely monitor activity 

in UTP Derivative Securities traded on 

the Exchange pursuant to UTP to deter 

any potential improper trading activity. 

The proposed rule change also provides 

that the Exchange will enter into a 

comprehensive surveillance sharing 

agreement (‘‘CSSA’’) with a market 

trading components of the index or 

portfolio on which the UTP Derivative 

Security is based to the same extent as 

the listing exchange’s rules require the 

listing market to enter into a CSSA with 

such market. 

Finally, the Exchange is amending 

provisions of Equity Rule 4120 and 4630 

that stipulate that the Exchange will file 

separate proposals under Section 

19(b)(2) of the Act for each issue of 

Managed Fund Shares or CommodityBased Securities that it trades on a UTP 

basis. Because the new rules being 

adopted by the Exchange consolidate 

the requirements for trading such 

securities that have been established in 

new product proposals previously 

approved by the Commission, separate 

proposals under Section 19(b)(2) of the 

Act are no longer required for trading 

these securities. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,8

in general and with Section 6(b)(5) of 

the Act,9 in particular, in that it would 

promote just and equitable principles of 

trade, remove impediments to, and 

perfect the mechanism of, a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest by 

providing for the trading of securities, 

including UTP Derivative Securities, on 

the Exchange pursuant to UTP, subject 

to consistent and reasonable standards. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange 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 on the proposed 

rule change 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 19b– 

4(f)(6) thereunder.11

The Exchange has asked the 

Commission to waive the 30-day 

operative delay. The Commission 

believes that such waiver is consistent 

with the protection of investors and the 

public interest because such waiver 

should benefit investors by creating, 

without undue delay, additional 

competition in the trading of UTP 

Derivative Securities, subject to 

consistent and reasonable standards. 

Waiver of the waiting period will also 

allow prompt clarification of the status 

of the Exchange as a listing venue by 

specifying that the Exchange’s listing 

standards shall not be operative for 

primary listings until the Exchange 

adopts listing fees. The proposed rule 

change is modeled closely after similar 

rules of other national securities 

exchanges 12 and does not raise any 

novel or significant regulatory issues. 

Therefore, the Commission designates 

the proposed rule change as operative 

upon filing.13

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: 

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Federal Register / Vol. 74, No. 16 / Tuesday, January 27, 2009 / Notices 4799 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 58145 

(July 11, 2008), 73 FR 41143. 

4See August 7, 2008 letter from Ira D. 

Hammerman, Senior Managing Director and 

General Counsel, Securities Industry and Financial 

Markets Association (‘‘SIFMA’’), to Florence 

Harmon, Acting Secretary, Commission (‘‘SIFMA 

Letter’’). 

5See September 18, 2008 letter from Jeffrey S. 

Davis, Deputy General Counsel and Vice President, 

Nasdaq, to Florence Harmon, Acting Secretary, 

Commission (‘‘Nasdaq Letter’’). 

6SIFMA Letter at 2, quoting the Commission’s 

order approving Nasdaq’s exchange application. See 

Securities Exchange Act Release No. 53128 (January 

13, 2006), 71 FR 3550 (January 23, 2006) (File No. 

10–131), in text following footnote 136. 

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–BX–2009–001 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–BX–2009–001. 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 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–BX–2009–001 and should 

be submitted on or before February 17, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–1671 Filed 1–26–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59266; File No. SR– 

NASDAQ–2008–016] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change To 

Create the Nasdaq Market Pathfinders 

Service and Establish Fees for the 

Service 

January 16, 2009. 

I. Introduction and Description of the 

Proposal 

On June 27, 2008, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change that would establish the Nasdaq 

Market Pathfinders Service (‘‘Service’’) 

and establish fees for the Service. The 

Service will allow subscribers to view a 

real time data product that tracks the 

aggregated market activity of certain 

market participants who are 

aggressively buying and/or selling. 

Nasdaq proposes to offer new 

subscribers a 30-day waiver of the user 

fees for the Service. After the conclusion 

of the waiver period, subscribers may 

avail themselves of three different 

subscription options at varying prices. 

The proposed rule change was 

published in the Federal Register on 

July 17, 2008.3 The Commission 

received one comment on the proposal.4

Nasdaq responded to the comment letter 

on September 18, 2008.5 The 

Commission is approving the proposed 

rule change. 

II. Summary of Comment Letter 

The commenter suggests that the 

Commission cannot approve the 

proposed rule change for the following 

reasons: 

—Nasdaq is proposing to make 

commercial use of data supplied to it 

in Nasdaq’s capacity as a regulatory 

body, despite the Commission’s 

previous statement that, with regard 

to OATS information, it does not 

believe such data should be used for 

non-regulatory purposes unless the 

data is made available to other market 

participants on the same terms under 

which it is provided to Nasdaq.6

—Nasdaq has failed to provide a 

detailed discussion of the data or 

analytics to be included in the 

Service. SIFMA stated that several 

firms have expressed concern with 

the proposal’s potential to 

compromise the confidentiality of the 

transacting party’s trading strategies 

or provide misinformation as to a 

transacting party. 

—SIFMA questions whether the Service 

will provide a means to reverse 

engineer the algorithms and strategies 

Nasdaq members have created, or 

whether the impact on such 

algorithms and strategies will be such 

as to render them useless. 

—SIFMA also raised a procedural 

concern, stating that Nasdaq is 

proposing to create a proprietary 

product that uses data its members are 

required to submit without 

compensation; no other exchange or 

market data vendor can replicate this 

product because necessary elements 

are not available to anyone but 

Nasdaq; and no cost data is provided 

to allow an opportunity to determine 

if the fees are fair and reasonable. 

III. Nasdaq’s Response to the Comment 

Letter 

In response to the SIFMA Letter, 

Nasdaq made the following points: 

—SIFMA inaccurately claims that 

Nasdaq is collecting data in its 

capacity as a regulatory body and 

using it for commercial purposes, 

stating that the Service does not use 

OATS information, but instead relies 

on trade information sent directly and 

only from the Nasdaq Matching 

Engine. 

—The Service will not operate in a 

manner that permits users to 

distinguish between short and long 

sales; the Service will not 

compromise the confidentiality of the 

transacting party’s trading strategies, 

nor provide misinformation as to a 

transacting party because there are 

filters in place to prevent this from 

occurring. 

—The Service will not provide a means 

to reverse engineer the algorithms and 

strategies Nasdaq members have 

created, nor will it affect those 

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