Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 36787 

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

2 17 CFR 240.19b–4. 

be included in such report by the fund’s 

registration form. 

The purpose of this requirement is to 

apprise current shareholders of the 

operational and financial condition of 

the UIT. Absent the requirement to 

disclose all material information in 

reports, investors would be unable to 

obtain accurate information upon which 

to base investment decisions and 

consumer confidence in the securities 

industry might be adversely affected. 

Requiring the submission of these 

reports to the Commission permits us to 

verify compliance with securities law 

requirements. In addition, Rule 30e–2 

permits, under certain conditions, 

delivery of a single shareholder report to 

investors who share an address 

(‘‘householding’’). Specifically, Rule 

30e–2 permits householding of annual 

and semi-annual reports by UITs to 

satisfy the delivery requirements of Rule 

30e–2 if, in addition to the other 

conditions set forth in the rule, the UIT 

has obtained from each applicable 

investor written or implied consent to 

the householding of shareholder reports 

at such address. The rule requires UITs 

that wish to household shareholder 

reports with implied consent to send a 

notice to each applicable investor 

stating that the investors in the 

household will receive one report in the 

future unless the investors provide 

contrary instructions. In addition, at 

least once a year, UITs relying on the 

rule for householding must explain to 

investors who have provided written or 

implied consent how they can revoke 

their consent. Preparing and sending the 

initial notice and the annual 

explanation of the right to revoke 

consent are collections of information 

under the Paperwork Reduction Act. 

The purpose of the notice and annual 

explanation requirements associated 

with the householding provisions of the 

rule is to ensure that investors who wish 

to receive individual copies of 

shareholder reports are able to do so. 

The Commission estimates that as of 

2009, approximately 820 UITs were 

subject to the provisions of Rule 30e–2. 

The Commission further estimates that 

the annual burden associated with Rule 

30e–2 is 121 hours for each UIT, 

including an estimated 20 hours 

associated with the notice requirement 

for householding and an estimated 1 

hour associated with the explanation of 

the right to revoke consent to 

householding, for a total of 99,220 

burden hours. 

In addition to the burden hours, the 

Commission estimates that the cost of 

contracting for outside services 

associated with complying with Rule 

30e–2 is $20,000 per respondent (80 

hours times $250 per hour for 

independent auditor services), for a total 

of $16,400,000 ($20,000 per respondent 

times 820 respondents). 

These estimates are made solely for 

the purposes of the Paperwork 

Reduction Act, and are not derived from 

a comprehensive or even a 

representative survey or study of the 

costs of Commission rules and forms. 

The collection of information under 

Rule 30e–2 is mandatory. The 

information provided under Rule 30e–2 

is not kept confidential. The 

Commission may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. 

Written comments are invited on: (a) 

Whether the proposed collections of 

information are necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collections of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collections 

of information on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology. Consideration 

will be given to comments and 

suggestions submitted in writing within 

60 days of this publication. 

Please direct your written comments 

to Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: July 21, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–17769 Filed 7–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60330; File No. SR–FINRA– 

2009–044] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

FINRA Rules 2262 (Disclosure of 

Control Relationship With Issuer), 2269 

(Disclosure of Participation or Interest 

in Primary or Secondary Distribution) 

and 5260 (Prohibition on Transactions, 

Publication of Quotations, or 

Publication of Indications of Interest 

During Trading Halts) in the 

Consolidated FINRA Rulebook 

July 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 June 29, 

2009, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. 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 

FINRA is proposing to adopt without 

material change NASD Rules 2240 

(Disclosure of Control Relationship with 

Issuer), 2250 (Disclosure of Participation 

or Interest in Primary or Secondary 

Distribution) and 3340 (Prohibition on 

Transactions, Publication of Quotations, 

or Publication of Indications of Interest 

During Trading Halts) as FINRA rules in 

the Consolidated FINRA Rulebook and 

to delete NYSE Rules 312(f)(1) through 

312(f)(3) and 321.24. The proposed rule 

change would renumber NASD Rules 

2240, 2250 and 3340 as FINRA Rules 

2262, 2269 and 5260, respectively, in 

the Consolidated FINRA Rulebook. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 


srobinson on DSKHWCL6B1PROD with NOTICES
36788 Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 

3The current FINRA rulebook consists of: (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA member firms, 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see FINRA 

Information Notice, March 12, 2008 (Rulebook 

Consolidation Process). 

4For convenience, the Incorporated NYSE Rules 

are referred to as the ‘‘NYSE Rules.’’ 

5NASD Rules 2240 and 2250 (formerly 

designated, respectively, as Sections 13 and 14 of 

the Rules of Fair Practice) were adopted in 1939 as 

part of FINRA’s original rulebook. See Certificate of 

Incorporation and By-Laws, Rules of Fair Practice 

and Code of Procedure for Handling Trade Practice 

Complaints of National Association of Securities 

Dealers, Inc. (August 8, 1939). The requirements of 

NASD Rules 2240 and 2250 duplicate almost wordfor-word SEA Rules 15c1–5 (Disclosure of Control) 

and 15c1–6 (Disclosure of Interest in Distributions), 

respectively. See Securities Exchange Act Release 

No. 1330 (August 4, 1937) (‘‘Release No. 1330’’). 

6SEA Rule 15c1–5 defines ‘‘manipulative, 

deceptive, or other fraudulent device or 

contrivance,’’ as used in Section 15(c)(1) of the 

Exchange Act, to include failure to provide the 

required disclosure. Section 15(c)(1) provides, in 

part, that no broker or dealer ‘‘shall make use of the 

mails or any means or instrumentality of interstate 

commerce to effect any transaction in, or to induce 

or attempt to induce the purchase or sale of, any 

security * * * otherwise than on a national 

securities exchange of which it is a member * * * 

by means of any manipulative, deceptive, or other 

fraudulent device or contrivance.’’ See also Release 

No. 1330. 

7Under SEA Rule 15c1–6, like Rule 15c1–5, 

failure to provide the required notification is a 

fraudulent act. Rule 15c1–6, like Rule 15c1–5, is 

limited by the scope of Section 15(c)(1) of the 

Exchange Act. See supra note 6. 

8The indicia for determining status as a Material 

Associated Person are set forth in SEA Rule 17h– 

1T(a)(2). See NYSE Rule 312(f)(1). 9Note that NYSE Rules 312(f)(1), (f)(2) and (f)(3) 

were, prior to revisions adopted in 2006, combined 

together as former Rule 312(f). NYSE Rule 312(f)(1) 

prohibits member organizations, after completion of 

a distribution, from effecting any transaction 

(except on an unsolicited basis) for the account of 

any customer in the equity or non-investment grade 

debt of the member organization itself, any parent 

entity, or any Material Associated Person. Rule 

312(f)(3), among other things, requires a member 

corporation with publicly held securities 

outstanding to obtain the NYSE’s approval to 

acquire such securities for its own account or the 

account of any corporation controlling, controlled 

by or under common control with the member 

corporation. The rule provides that the NYSE will 

approve such acquisition unless it determines that 

such action will impair the financial responsibility 

or operational capability of the member 

corporation. For further discussion of NYSE Rule 

312(f), see NYSE Information Memo 06–65 

(September 11, 2006). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA 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. FINRA 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 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),3

FINRA is proposing to adopt without 

material change NASD Rules 2240 

(Disclosure of Control Relationship with 

Issuer), 2250 (Disclosure of Participation 

or Interest in Primary or Secondary 

Distribution) and 3340 (Prohibition on 

Transactions, Publication of Quotations, 

or Publication of Indications of Interest 

During Trading Halts) as FINRA rules in 

the Consolidated FINRA Rulebook and 

to delete NYSE Rules 312(f)(1) through 

312(f)(3) and 321.24. The proposed rule 

change would renumber NASD Rules 

2240, 2250 and 3340 as FINRA Rules 

2262, 2269 and 5260, respectively, in 

the Consolidated FINRA Rulebook. 

(A) Proposed FINRA Rules 2262 and 

2269 

(1) Background 

Both NASD and NYSE Rules 4 address 

disclosures or notifications that member 

firms must provide to customers in 

connection with certain securities 

transactions. 

NASD Rules 2240 and 2250 set forth 

requirements that apply to transactions 

with or for a customer in any market.5

In short: 

• Disclosure of control relationship: 

NASD Rule 2240 provides that a 

member controlled by, controlling, or 

under common control with the issuer 

of any security must, before entering 

into any contract with or for a customer 

for the purchase or sale of such security, 

disclose to the customer the existence of 

such control; if such disclosure is not 

made in writing, it must be 

supplemented by written disclosure at 

or before the completion of the 

transaction; 6

• Disclosure of participation or 

interest in distribution: Rule 2250 

provides that if a member is acting as a 

broker for a customer, or is acting for 

both the customer and some other 

person, or is acting as a dealer and 

receives or has promise of receiving a 

fee from a customer for advising the 

customer with respect to securities, then 

the member must, at or before the 

completion of any transaction for or 

with the customer in any security in the 

primary or secondary distribution of 

which the member is participating or is 

otherwise financially interested, give 

the customer written notification of the 

existence of such participation or 

interest.7

NYSE Rules 312(f)(2) and 321.24 

address disclosures or notifications to 

customers in somewhat different 

fashion than NASD Rules 2240 and 

2250: 

• NYSE Rule 312(f)(2) is similar to 

NASD Rule 2240, except that Rule 

312(f)(2)’s requirement to disclose the 

control relationship between the issuer 

and the member is triggered in the 

context of making a recommendation to 

a customer. Specifically, Rule 312(f)(2) 

requires that any member organization 

that makes any recommendation of any 

equity or non-investment grade debt 

security issued by any person controlled 

by or under common control with such 

member organization (other than a 

Material Associated Person 8) must 

promptly disclose to the customer the 

existence and nature of such control at 

the time of recommendation and, if the 

disclosure is not made in writing, must 

provide it in writing prior to the 

completion of the transaction; 9

• NYSE Rule 321.24, like NASD Rule 

2250, requires disclosure of interest in 

securities, except that the provisions of 

Rule 321.24 apply in contexts involving 

securities underwritten, distributed or 

sold by a subsidiary of the member. 

Specifically, Rule 321.24 requires that, 

in connection with any transactions 

which the member or member 

organization may have had with its 

customers, or any recommendation 

which the member or member 

organization may make to its customers, 

involving securities underwritten, 

distributed or sold by the subsidiary, 

full disclosure must be made by the 

member or member organization to its 

customers of the interest of the 

subsidiary in the securities at that time. 

(2) Proposal 

FINRA proposes to transfer NASD 

Rules 2240 and 2250 unchanged into 

the Consolidated FINRA Rulebook. 

Though the substantive requirements of 

both rules are duplicated, almost wordfor-word, in SEA Rules 15c1–5 and 

15c1–6, the two NASD rules provide 

broad protection to customers because 

their scope extends to transactions with 

or for a customer in any market, not just 

over-the-counter transactions. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 36789 

10See, e.g., Securities Exchange Act Release No. 

59273 (January 22, 2009), 74 FR 4992 (January 28, 

2009) (Notice of Filing File No. SR–FINRA–2008– 

067). 

11NASD Rule 3340 was originally adopted as 

Section 42 of Article III of the Rules of Fair Practice. 

12See Securities Exchange Act Release No. 44390 

(June 5, 2001), 66 FR 31262 (June 11, 2001) (Order 

Approving File No. SR–NASD–2000–33). 

13See Securities Exchange Act Release No.46249 

(July 24, 2002), 67 FR 49822 (July 31, 2002) (Order 

Approving File No. SR–NASD–2002–97) (approving 

the 2002 amendments to NASD Rule 3340); 

Securities Exchange Act Release No. 54084 (June 

30, 2006), 71 FR 38935 (July 10, 2006) (Order 

Approving File No. SR–NASD–2005–087) 

(approving the 2006 amendments to NASD Rule 

3340). 

14See Securities Exchange Act Release No. 47259 

(January 27, 2003), 68 FR 5319 (February 3, 2003) 

(Order Approving File No. SR–NASD–2001–047). 

15See NASD Notice to Members 02–82 (December 

2002) (Frequently Asked Questions Relating to 

Trading Halts). 

16On December 30, 2008, FINRA filed with the 

SEC a proposed rule change to amend NASD Rule 

3340 to create a limited exception to permit 

members to route unsolicited customer orders for 

execution outside the United States while a trading 

halt is in effect in the United States. See SR– 

FINRA–2008–069. Assuming Commission approval 

of this proposed rule change prior to Commission 

approval of SR–FINRA–2008–069, FINRA will 

amend SR–FINRA–2008–069, as necessary, to 

reflect such approval. Similarly, in the event the 

Commission approves SR–FINRA–2008–069 prior 

to approval of this proposed rule change, FINRA 

will amend this proposed rule change, as necessary, 

to reflect such approval. 

17 15 U.S.C. 78o–3(b)(6). 

FINRA proposes to repeal NYSE Rules 

312(f)(1) through (f)(3) and 321.24 

because the purposes they serve are 

addressed by proposed FINRA Rules 

2262 and 2269, other existing or 

proposed FINRA rules, and SEC rules. 

With respect to NYSE Rule 312(f)(1), 

FINRA notes that making a 

recommendation or effecting a 

transaction such as set forth in the rule 

raises concerns that are within the 

purview of current anti-manipulation 

rules (e.g., FINRA Rule 2020 and SEA 

Rule 10b–5). Further, FINRA notes that 

customers would be protected by the 

disclosure that the proposed rules 

require with respect to the conflicts of 

interest that the NYSE rule addresses. 

Moreover, members must comply with 

FINRA’s suitability rule when 

recommending securities transactions to 

their customers. With respect to NYSE 

Rule 312(f)(2), FINRA notes that the 

proposed FINRA rules would operate to 

protect customers without regard to 

whether a member recommends a 

security to a customer. With respect to 

NYSE Rule 312(f)(3), FINRA believes 

that the customer protections provided 

by the proposed rules and the antimanipulation rules, in combination, 

would render the NYSE rule redundant. 

Further, FINRA maintains a set of rules 

specifically addressing financial 

responsibility requirements for members 

and is separately proposing to adopt 

consolidated financial responsibility 

rules.10 Lastly, with respect to NYSE 

Rule 321.24, FINRA notes that the 

disclosure required by the proposed 

FINRA rules is not limited to situations 

involving securities underwritten, 

distributed or sold by a member’s 

subsidiary. 

(B) Proposed FINRA Rule 5260 

(1) Background 

NASD Rule 3340 prohibits members 

from, directly or indirectly, effecting 

transactions or publishing quotations or 

indications of interest (‘‘IOIs’’) in (1) any 

security with respect to which a trading 

halt is in effect; or (2) any security 

future when there is a regulatory trading 

halt in effect with respect to the 

underlying security. 

The trading and quoting conduct 

prohibited by Rule 3340 is triggered 

only when a trading halt is in effect. The 

rule also provides that, in the event that 

FINRA halts over-the-counter trading 

and quoting in NMS stocks because the 

Alternative Display Facility (‘‘ADF’’) or 

a Trade Reporting Facility (‘‘TRF’’) is 

unable to transmit real-time information 

to the applicable Securities Information 

Processor, members are not prohibited 

from trading through other markets for 

which trading is not halted. 

NASD Rule 3340 was originally 

approved by the SEC in 1988.11 The rule 

was subsequently amended in 2001, 

2002, 2003 and 2006. The 2001 

amendments expressly prohibited 

members from publishing quotations 

and IOIs during a trading halt (the rule 

in its form prior to the 2001 

amendments prohibited members from 

effecting a transaction but did not 

expressly address quotations and 

IOIs).12 The 2002 and 2006 amendments 

to Rule 3340 provided that, if the ADF 

or a TRF were unable to transmit realtime information to the applicable 

Securities Information Processor, 

members would not be prohibited from 

trading through other markets for which 

trading is not halted.13 The 2003 

amendments to the rule added a 

provision to prohibit member firms, 

including Alternate Trading Systems 

(‘‘ATSs’’), from trading or publishing 

quotes or IOIs in any security future 

when a regulatory trading halt is in 

effect with respect to the underlying 

security. Specifically, Rule 3340 was 

amended to apply to a future for a single 

security when a regulatory trading halt 

is in effect for the underlying security or 

a future on a narrow-based securities 

index when a regulatory trading halt is 

in effect for one or more underlying 

securities that constitute 50% or more of 

the market capitalization of the index.14

In 2002, FINRA published a set of 

frequently asked questions in response 

to members’ requests for guidance on 

the application of NASD Rule 3340 to 

particular scenarios.15

(2) Proposal 

FINRA believes that Rule 3340 is well 

understood by its members and has 

proven effective. Accordingly, FINRA 

proposes that the rule be transferred 

without material change into the 

Consolidated FINRA Rulebook as 

FINRA Rule 5260.16

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,17 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes that the 

proposed rule change would further the 

purposes of the Act because, as part of 

the Consolidated FINRA Rulebook, the 

proposed rule change will protect 

investors and the public interest by 

addressing disclosures or notifications 

in connection with certain securities 

transactions and by addressing certain 

trading and quoting conduct when a 

trading halt is in effect. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA 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 

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 


srobinson on DSKHWCL6B1PROD with NOTICES
36790 Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 

18 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:// 

nasdaqomx.cchwallstreet.com. 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(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–FINRA–2009–044 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–2009–044. 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 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 File 

Number SR–FINRA–2009–044 and 

should be submitted on or before 

August 14, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–17633 Filed 7–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60335; File No. SR– 

NASDAQ–2009–066] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Modify the 

Processing of Orders on the NASDAQ 

Options Market 

July 17, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on July 7, 

2009, The NASDAQ Stock Market LLC 

(‘‘Exchange’’ or ‘‘Nasdaq’’) filed with the 

Securities and Exchange Commission 

the proposed rule change as described 

in Items I and II below, which items 

have been prepared by Nasdaq. 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 

The Exchange proposes to amend 

Chapter VI, Section 10 of the NASDAQ 

Options Market (‘‘NOM’’ or 

‘‘Exchange’’) to allow marketable orders 

to be exposed to market participants for 

a brief period of time before routing to 

an away market center for execution at 

the National Best Bid/Offer (‘‘NBBO’’) or 

cancelling the order. The text of the 

proposed rule change is available from 

Nasdaq’s Web site at http:// 

nasdaq.cchwallstreet.com, at Nasdaq’s 

principal office, and at the 

Commission’s Public Reference Room. 

The text of the proposed rule change 

is below. Proposed new language is 

underlined; proposed deletions are in 

brackets.3

* * * * * 

Chapter VI Trading Systems 

Sec. 1 Definitions 

The following definitions apply to 

Chapter VI for the trading of options 

listed on NOM. 

(a)–(d) No change. 

(e) The term ‘‘Order Type’’ shall mean 

the unique processing prescribed for 

designated orders that are eligible for 

entry into the System, and shall include: 

(1)–(7) No Change. 

(8) ‘‘Additional Exposure Orders’’ are 

orders that are priced at the National 

Best Offer, for buys, and the National 

Best Bid, for sells. The order is exposed 

on the System Book Feed for a time 

determined by the Exchange, not to 

exceed one second. At the end of the 

exposure period, if still unexecuted, the 

order will be routed to the market(s) at 

the NBBO, cancelled back to the 

entering party, or posted on the book 

pursuant to Section 7 of Chapter VI. 

Any update to the NBBO that 

improves the exposed order price will 

cause an immediate end to the exposure 

period. Any unexecuted portion of the 

order will be routed to the market(s) at 

the NBBO, cancelled back to the 

entering party or posted on the book 

pursuant to Section 7 of Chapter VI. 

Any update to the NBBO that unlocks 

the exposed order price will cause an 

immediate end to the exposure period. 

Any unexecuted portion of the order 

will be executed against contra interest 

on the book, routed to the market(s) at 

the NBBO, cancelled back to the 

entering party or posted on the book 

pursuant to Section 7 of Chapter VI. 

* * * * * 

Sec. 6 Acceptance of Quotes and 

Orders 

All bids or offers made and accepted 

on NOM in accordance with the NOM 

Rules shall constitute binding contracts, 

subject to applicable requirements of the 

Rules of the Exchange and the Rules of 

the Clearing Corporation. 

(a) General—A System order is an 

order that is entered into the System for 

display and/or execution as appropriate. 

Such orders are executable against 

marketable contra-side orders in the 

System. 

(1) All System Orders shall indicate 

limit price and whether they are a call 

or put and buy or sell. Systems Orders 

can be designated as Immediate or 

Cancel (‘‘IOC’’), Good-till-Cancelled 

(‘‘GTC’’), Day (‘‘DAY’’), WAIT or Expire 

Time (‘‘EXPR’’). 

(2) A System order may also be 

designated as a Reserve Order, a Limit 

Order, a Minimum Quantity Order, a 

Discretionary Order, a Market Order, a 

Price Improving Order, [or] an Exchange 


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