Document ID: SEC-2009-0617-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2009-05-06T04:00Z

[Federal Register: May 6, 2009 (Volume 74, Number 86)]
[Notices]               
[Page 21046-21048]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my09-152]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59843; File No. SR-NASDAQ-2009-035]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Fees for Members Using the NASDAQ Market Center

April 29, 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 April 14, 2009, The NASDAQ Stock Market LLC (``NASDAQ'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared by NASDAQ. Pursuant to Section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ NASDAQ has designated 
this proposal as establishing or changing a due, fee, or other charge, 
which renders the proposed rule change effective upon filing.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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    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

    NASDAQ proposes to modify pricing for NASDAQ members using the 
Nasdaq Market Center. This proposed rule change, which is effective 
upon filing, will become operative on April 15, 2009. The text of the 
proposed rule change is available at 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
    NASDAQ is modifying its pricing for order execution and routing of 
equities. As detailed below, NASDAQ is establishing two fee schedules 
for the month of April, the first is applicable from April 1 through 
April 14 and the second from April 15 to April 30. The effect of the 
fee changes will vary with respect to the listing venue of the 
securities being traded and whether a member is accessing or providing 
liquidity or routing an order.
    Fee Schedule Applicable From April 1 through April 14. For the 
first half of April, NASDAQ will charge the same ``per transaction'' 
fees and offer the same ``per transaction'' credits that were approved 
[sic] \5\ and put into effect prior to April 1 through the filing of 
SR-NASDAQ-2009-029. NASDAQ will modify the fee schedule by reducing the 
levels of market activity at which members qualify for reduced ``per 
transaction'' pricing. For firms that meet the reduced market activity 
requirements, this will result in an effective reduction of 
transaction-based prices. For firms that do not meet the reduced market 
activity requirements, there will be no change in fees.
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    \5\ The Commission does not approve proposed rule changes filed 
pursuant to Section 19(b)(3)(A) of the Act.
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    As always, NASDAQ calculates market activity levels on a monthly 
basis at the end of each month. Therefore, although NASDAQ is not 
changing the transaction-based fees and rebates for the first half of 
April and the firms' market activity for this period have already been 
fixed, firms can still affect their average market activity

[[Page 21047]]

levels for the entire month of April by increasing their market 
activity on NASDAQ during the second half of April. Firms that increase 
their activity level to exceed the newly-reduced activity requirements 
will receive reduced fees per transaction.
    The specific changes to market activity requirements are as 
follows. For securities listed on NASDAQ and the New York Stock 
Exchange (``NYSE''), NASDAQ is reducing the activity requirements for 
the tier for members with an average daily volume through the Nasdaq 
Market Center in all securities of (i) more than 50 million shares of 
liquidity provided, and (ii) more than 60 million shares of liquidity 
accessed and/or routed.\6\ The new fee schedule will require average 
daily volume through the Nasdaq Market Center in all securities of (i) 
more than 35 million shares of liquidity provided, and (ii) more than 
55 million shares of liquidity accessed and/or routed. Members 
qualifying for this tier will continue to pay $0.0026 per share 
executed when accessing liquidity (or 0.1% of the total transaction 
cost in the case of executions of securities priced at less than $1 per 
share). There will be no change to the second pricing tier applicable 
to members with an average daily volume through the Nasdaq Market 
Center in all securities of (i) more than 25 million shares of 
liquidity provided, and (ii) more than 40 million shares of liquidity 
accessed and/or routed. Members qualifying for this tier will continue 
to pay $0.0028 per share executed when accessing liquidity (or 0.1% of 
the total transaction cost in the case of executions at less than $1 
per share). As is currently the case, members not qualifying for a 
reduced pricing tier will pay $0.0030 per share executed to access 
liquidity (or 0.1% of the total transaction cost in the case of 
executions at less than $1 per share).
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    \6\ As is currently the case with respect to reduced pricing 
tiers, orders that do not attempt to execute in the Nasdaq Market 
Center for the full size of the order prior to routing are not 
counted in determining shares of liquidity routed.
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    With respect to securities listed on exchanges other than NASDAQ or 
NYSE, NASDAQ is also modifying the levels of activity required to 
qualify for favorable pricing tiers while leaving the level of charges 
and credits associated with tiers unchanged. Thus, in order to qualify 
for the most favorable fee to access and route liquidity, a member must 
(i) provide more than 35 million shares of liquidity (currently 50 
million) and (ii) access or route more than 55 million shares of 
liquidity (currently 60 million). Members qualifying for this tier 
currently pay $0.0029 per share executed to access liquidity or to 
route after attempting to execute for the full size of the order, and 
this fee will remain unchanged.\7\ Members not qualifying for a reduced 
pricing tier will continue to pay $0.0030 per share executed to access 
liquidity and to route after checking the Nasdaq Market Center book for 
the full size of the order.
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    \7\ For securities priced under $1, the fee to access liquidity 
remains 0.1% of the total transaction cost, and the fee to route 
remains 0.3% of the total transaction cost.
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    NASDAQ is also decreasing the market activity levels required to 
qualify for the most favorable credits it pays to liquidity providers. 
With respect to NASDAQ and NYSE-listed securities, currently a member 
must provide more than 50 million shares of liquidity to qualify for 
the most favorable pricing tier, where the credit for displayed 
liquidity is $0.0025 per share, with the credit for non-displayed 
liquidity remaining at $0.0015 per share. The next most favorable tier 
currently requires a member to provide a daily average of more than 25 
million shares of liquidity, and the credit for displayed liquidity is 
$0.0022 per share, with the credit for non-displayed liquidity 
remaining $0.001 per share.\8\ Under the revised pricing schedule, 
members qualify for the most favorable pricing tier by providing 35 
million shares of liquidity, and for the second tier by providing 20 
million shares of liquidity. Members not qualifying for these pricing 
tiers will continue to receive $0.001 per share for non-displayed 
liquidity and $0.002 per share for displayed liquidity.
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    \8\ All credits described relate to executions of securities 
priced at $1 or more per share. Both before and after implementation 
of the proposed rule change, the credit with respect to executions 
of securities priced at less than $1 per share is $0.
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    With respect to securities listed on exchanges other than NASDAQ or 
NYSE, NASDAQ is also reducing the volume levels required to qualify for 
favorable credits while the transaction-based pricing will remain 
unchanged. Thus, in order to qualify for the most favorable credit, a 
member must provide an average daily volume of more than 35 million 
shares of liquidity (currently 50 million): The most favorable credit 
will remain $0.0015 for non-displayed liquidity and $0.0028 for 
displayed liquidity. To qualify for the next most favorable credit, a 
member must provide a daily average volume of more than 20 million 
shares of liquidity (currently 25 million): Members is [sic] this tier 
receive $0.001 per share for non-displayed liquidity and $0.0025 per 
share for displayed liquidity. Other members will continue to receive 
$0.001 per share for non-displayed liquidity and $0.002 per share for 
displayed liquidity.\9\
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    \9\ In all cases, no credit is paid with respect to securities 
priced at less than $1 per share.
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    Fee Schedule Applicable From April 15 through April 30. For the 
second half of April, NASDAQ will modify the fee schedule by (1) 
adopting a uniform transaction fee of $0.0030 per share for accessing 
liquidity in all securities priced over $1.00, (2) adding a new tier of 
market activity at which favorable pricing is available, and (3) 
reducing the transaction-based fees and increasing the transaction-
based credits offered for each tier of market activity. For firms that 
meet reduced market activity requirements, this will result in a 
reduction of transaction-based prices. For firms that do not meet any 
reduced market activity requirements, there will be no change in fees. 
Unless specifically mentioned, all other fees set forth in Rule 7018 
regarding the first half of April will remain the same for the second 
half of April.
    Specifically, with respect to credits provided for tiers of 
liquidity-providing activity, NASDAQ will retain its current tiers of 
average daily volume of liquidity provided of 20 million and 35 million 
shares, and add a third tier of credits that will be available to 
members that provide average daily volume of liquidity of 125 million 
shares.\10\ NASDAQ is also modifying the transaction-based credits paid 
to liquidity providers in each market activity tier. Members that 
qualify for the highest tier of market activity by providing an average 
daily volume of 125 million shares or more will receive a credit of 
$0.00295 per share, as opposed to $0.0025 that they currently receive 
with respect to NASDAQ and NYSE stocks and $0.0028 for stocks listed on 
other exchanges. Members that provide 35 million shares of more will 
receive a credit of $0.0029 per share as opposed to $0.0025 that they 
currently receive with respect to NASDAQ and NYSE stocks and $0.0028 
for stocks listed on other exchanges. Members that provide 20 million 
shares or more will receive a credit of $0.0025 per share, as opposed 
to $0.0022 that they currently receive with respect to NASDAQ and NYSE 
stocks and the same as currently offered for stocks listed on other 
exchanges. Finally, members that provide less than 20 million shares 
will

[[Page 21048]]

receive a credit of $0.0020 per share in all securities as they do 
today.
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    \10\ Again, average daily volume of liquidity provided is 
calculated on a monthly basis. Therefore, the daily volume that a 
member provided during the first half of April will impact the 
volume tier into which the member falls at the end of April.
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2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\11\ in general, and with 
Section 6(b)(4) of the Act,\12\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility or 
system which NASDAQ operates or controls. The proposed fee change 
applies uniformly to all NASDAQ members. The impact of the changes upon 
the net fees paid by a particular market participant will depend upon a 
number of variables, including its monthly volume, the prices of its 
quotes and orders (i.e., its propensity to add or remove liquidity), 
and the listing venue for the securities that it trades. NASDAQ notes 
that it operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues if they 
deem fee levels at a particular venue to be excessive. The proposed 
rule change reflects a reduction in the overall cost of trading on 
NASDAQ. Nasdaq believes that the applicable fees and credits remain 
competitive with those charged by other venues and therefore continue 
to be reasonable and equitably allocated to those members that opt to 
direct orders to NASDAQ rather than competing venues.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \13\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\14\ 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.
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    \13\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
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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 rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2009-035 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-2009-035. 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 offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2009-035, and should be submitted on or before 
May 27, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-10428 Filed 5-5-09; 8:45 am]

BILLING CODE 8010-01-P