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 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 36791 

4For example, with regard to posting on the NOM 

book, if the order was a non-routable order and 

CBOE’s offer (see Example 1) updated to 3.10, the 

exposure period would terminate, and the nonroutable order would then be posted on the NOM 

book at a price of 3.10 and displayed at 3.05. 

Direct Order, or an Additional Exposure 

Order. 

* * * * * 

Sec. 11 Order Routing 

(a) For System securities, the order 

routing process shall be available to 

Participants from 9:30 a.m. Eastern 

Time until market close, and shall route 

orders as follows. Participants can 

designate orders as either available for 

routing or not available for routing. 

Orders designated as not available for 

routing shall follow the book processing 

rules set forth in Section 10 above. 

Orders designated as available for 

routing, will first check the System for 

available contracts for execution. After 

checking the System for available 

contracts, orders are sent to other 

available market centers for potential 

execution, per entering firm’s 

instructions. When checking the book, 

the System will seek to execute at the 

price at which it would send the order 

to a destination market center. Orders 

designated as Additional Exposure 

Orders, as defined in Chapter VI, 

Section 1, will be exposed on the System 

Book Feed prior to routing to other 

markets. If contracts remain unexecuted after routing, they are posted 

on the book. Once on the book, should 

the order subsequently be locked or 

crossed by another market center, the 

System will not route the order to the 

locking or crossing market center. With 

the exception of the Minimum Quantity 

order type, all time-in-force parameters 

and order types may be used in 

conjunction with this routing option. 

* * * * * 

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 change the 

NOM rules in order to provide 

marketable orders an additional 

opportunity for execution on the NOM 

when NOM is not part of the NBBO. 

Currently, if an order that is marketable 

against the NBBO is received, it is 

matched against any possible contra 

side orders available in the Trading 

System. If the order is still unexecuted, 

or if only partially unexecuted, the 

order is then routed away to the market 

or markets at the NBBO, cancelled back 

to the entering party or posted on the 

NOM Book and displayed at a nonlocking price according to the 

instructions on the order. 

The proposed rule change will 

provide for the NOM System to expose 

the order, at the NBBO price, to 

subscribers of a data feed for System 

securities (‘‘System Book Feed’’), for a 

brief period of time (the ‘‘exposure 

period’’) not to exceed one second. All 

Members have the opportunity to 

respond to any order exposed or 

displayed on the System Book Feed. 

Participants may designate orders to 

be Additional Exposure Orders using a 

notation on the order message submitted 

to the Exchange. Additional Exposure 

Orders will be exposed at a price equal 

to the National Best Offer, if a buy, or 

the National Best Bid, if a sell. During 

the exposure period, the Additional 

Exposure Order will be treated as a 

Limit Order (as defined in Chapter VI, 

Section 1(e)(2)) for book processing 

purposes. Specifically, during the 

exposure period, orders and quotes that 

are equal to the NBBO and on the 

opposite side of the market will be 

matched against the exposed order and 

immediately executed as they are 

received. Orders and quotes that are 

better than the NBBO and on the 

opposite side of the market will also be 

matched against the exposed order, and 

immediately executed as they are 

received at the price of the exposed 

order as per Chapter VI, Section 10(1) 

and (3) of the NOM rules. If the order 

is still unexecuted, or if only partially 

unexecuted, it will be routed to the 

market(s) at the NBBO, cancelled back 

to the entering party or posted on the 

NOM Book and displayed at a nonlocking price as per the instructions of 

the order. 

Any update to the NBBO during the 

exposure period that unlocks the 

exposed order will cause the exposure 

period to terminate, and any unexecuted 

portion of the order will either be (i) 

executed against contra interest on the 

NOM book; (ii) immediately routed to 

the new NBBO market(s); (iii) cancelled 

if the order is marked as a Do Not Route 

order and there is no contra interest 

available; or (iv) the order will be posted 

on the NOM book for possible display 

and/or execution pursuant to Section 7 

of Chapter VI if the order is marked as 

a Do Not Route order and has a Time In 

Force other than IOC. 

Conversely, an update to the NBBO 

that crosses the exposed price will also 

bring the exposure period to an 

immediate end, and any unexecuted 

portion of the order will either be routed 

away, cancelled or posted on the NOM 

book pursuant to Section 7 of Chapter 

VI.4

Example 1 

NOM market 3.00–3.30. 

CBOE market (NBBO) 3.00–3.20. 

NOM receives an order to Buy paying 

3.30. The order is exposed for one 

second at a price of 3.20 prior to routing 

to CBOE. 

200 milliseconds after the start of the 

exposure, CBOE offer moves to 3.30. 

The exposure period terminates, and the 

order is executed against the NOM 3.30 

offer, and if not fully executed, routed 

to the CBOE offer at 3.30, cancelled or 

posted on the NOM book depending on 

the instructions on the order. 

Example 2 

NOM 3.00–3.30. 

CBOE market (NBBO) 3.00–3.20. 

NOM receives an order to Buy paying 

3.30. The order is exposed for one 

second prior to routing to CBOE. 

200 milliseconds after the start of the 

exposure period, ISE posts an offer at 

3.10. Again, the exposure period 

terminates, and if the order is 

designated for routing, the order is 

immediately routed to the ISE to trade 

against the 3.10 offer, otherwise the 

order is cancelled or posted in 

accordance with Chapter VI, Section 

7(b)(3)(C) (‘‘Trade-Through Compliance 

and Locked or Crossed Markets’’). 

NOM Users who do not wish to have 

an order exposed have the ability to 

designate their order accordingly, in 

which case the order will be executed 

against contra interest on the NOM 

book, immediately routed to other 

markets at the NBBO, posted on the 

NOM book at a non-locking price in 

accordance with Chapter VI, Section 

7(b)(3)(C) or cancelled depending on the 

instructions on the order. Users who 

wish to avoid both exposure and routing 

may do so by using an order designation 

that indicates to the Exchange that the 

order should not be exposed and 

marking the order as Do Not Route. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 


srobinson on DSKHWCL6B1PROD with NOTICES
36792 Federal Register / Vol. 74, No. 141 / Friday, July 24, 2009 / Notices 

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

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

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). Pursuant to Rule 19b– 

4(f)(6)(iii) under the Act, the Exchange is required 

to give the Commission 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 met this requirement. 

9 17 CFR 240.19b–4(f)(6). 

10 17 CFR 240.19b–4(f)(6)(iii). 

11See Item 7 of SR–NASDAQ–2009–066. See e.g., 

Boston Options Exchange Rules Chapter V, Sec. 

16(b)(iii), Chicago Board Options Exchange Rule 

6.14, and NYSE Arca Rule 6.76A. 

12For the 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). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

of the Act 5 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 6

in particular, in that it is designed 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. The 

Exchange believes that it will provide 

greater opportunities for investors to 

receive executions on the NOM System 

so as to enhance the efficiency of order 

handling, and also provides Users the 

opportunity to match prices at other 

markets. 

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. 

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 proposed rule change: (i) 

Does not significantly affect the 

protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) does not become operative for 30 

days after the date of the filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest, the proposed rule change has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 7 and Rule 19b– 

4(f)(6) thereunder.8

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 9 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 10

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has 

requested that the Commission waive 

the 30-day operative delay. The 

Exchange asserts that waiver of the 

operative delay is appropriate in order 

to allow the Exchange to remain 

competitive with other options 

exchanges, which have a substantially 

similar functionality to that being 

proposed.11 On this basis, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest and designates that the 

proposed rule change become operative 

immediately.12

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

the 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–2009–066 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–NASDAQ–2009–066. 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 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–2009–066 and should be 

submitted on or before August 14, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–17636 Filed 7–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60333; File No. SR–ISE– 

2009–52] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to the Extension of 

the Price Improvement Mechanism 

Pilot Program 

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 13, 

2009, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or 

‘‘ISE’’) 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 ISE. The ISE 

has designated the proposed rule change 

as a ‘‘non-controversial’’ rule change 

pursuant to Section 19(b)(3)(A) of the 


srobinson on DSKHWCL6B1PROD with NOTICES