Document ID: SEC-2013-0822-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2013-04-30T04:00Z

[Federal Register Volume 78, Number 83 (Tuesday, April 30, 2013)]
[Notices]
[Pages 25329-25331]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10102]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69444; File No. SR-NASDAQ-2013-066]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Establish the Limit Up/Limit Down Band Lookup Add-On Service to 
TradeInfo and Assess a Related Subscription Fee

April 24, 2013.
    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 15, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ proposes to establish the Limit Up/Limit Down Band Lookup 
add-on service to TradeInfo and assess a related subscription fee. The 
Exchange is proposing to offer the proposed service at no cost to 
members beginning April 15, 2013 \3\ and for a monthly fee of $200 per 
user beginning May 1, 2013.
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    \3\ But see Securities Exchange Act Release No. 69445 (Aril 24, 
2013) (proposed rule change eliminating the free period for the 
Limit Up/Limit Down Band Lookup add-on service; NASDAQ will offer 
the service for $200 on May 1, 2013).
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    The text of the proposed rule change is below. Proposed new 
language is italicized.
* * * * *

7015. Access Services

    The following charges are assessed by Nasdaq for connectivity to 
systems operated by NASDAQ, including the Nasdaq Market Center, the 
FINRA/NASDAQ Trade Reporting Facility, and FINRA's OTCBB Service. The 
following fees are not applicable to the NASDAQ Options Market LLC. For 
related options fees for Access Services refer to Chapter XV, Section 3 
of the Options Rules.
    (a)-(e) No change.
    (f) TradeInfo
    Members not subscribing to the Nasdaq Workstation using TradeInfo 
will be charged a fee of $95 per user per month.
    A member firm that has a TradeInfo user subscription may subscribe 
to the Limit Up/Limit Down Band Lookup add-on service at no cost 
beginning April 15, 2013 and for a fee of $200 per user per month 
beginning May 1, 2013. The Limit Up/Limit Down Band Lookup add-on 
service provides a subscribing member firm with intraday and historical 
limit up/limit down price band information for individual securities 
that are subject to limit up/limit down price bands.
    (g)-(h) No change.
    * Eligible for 25% discount under the Qualified Market Maker 
Program during a pilot period expiring on April 30, 2013.
* * * * *

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 those 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 parts 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 offer member firms a means to review the 
Limit Up/Limit Down (``LULD'') price bands for individual securities. 
The National Market System Plan to Address Extraordinary Market 
Volatility \4\ (the

[[Page 25330]]

``Plan'') provides a limit up/limit down mechanism designed to prevent 
trades in NMS securities from occurring outside of specified price 
bands. The bands will be set a percentage level above and below the 
average reference price of the security over the immediately preceding 
five-minute period, and are calculated on a continuous basis during 
regular trading hours. If the National Best Offer (``NBO'') equals the 
lower price band without crossing the NBO, or National Best Bid 
(``NBB'') equals the upper price band without crossing the NBB, then 
the stock will enter a limit state quotation period of 15 seconds 
during which no new reference prices or price bands will be calculated. 
A stock will exit the limit state when the entire size of all 
quotations are [sic] either executed or cancelled. If the limit state 
exists and trading continues to occur at the price band, or no trading 
occurs within the price band, for more than 15 seconds, then a five 
minute trading pause will be enacted. The Plan requires that member 
firms establish, maintain, and enforce written policies and procedures 
that are reasonably designed to ensure that the firm complies with the 
limit up-limit down and trading pause requirements specified in the 
Plan.
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    \4\ On April 5, 2011, the Exchange, together with other self-
regulatory organizations, filed with the Commission a national 
market system plan to adopt a market-wide limit up/limit down system 
to reduce the negative impacts of sudden, unanticipated price 
movements in NMS Stocks, like that which was experienced on May 6, 
2010. Securities Exchange Act Release No. 64547 (May 25, 2011), 76 
FR 31647 (June 1, 2011) (File No. 4-631). The Plan was approved by 
the Commission on a pilot basis on May 31, 2012. Securities Exchange 
Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012). On 
April 8, 2013, Phase I of the Plan went into effect. Phase I of the 
Plan applies only to Tier 1 NMS Stocks. The Limit Up/Limit Down Band 
Lookup service will support all securities subject to the Plan as 
they are phased in.
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    LULD price band information is disseminated via the Securities 
Information Processor feeds (``SIPs''). If a member firm wishes to know 
what a particular security's price band parameters were during a 
particular day, including the current day, it must develop a system 
that will capture and store the data disseminated by the SIPs. Member 
firms have requested that NASDAQ provide a service that displays LULD 
price band information for individual securities for both the current 
day and historically. To meet this need, NASDAQ OMX included a Band 
Lookup feature in the Limit Locator \5\ compliance tool available for 
NASDAQ Workstation and Weblink ACT users. NASDAQ proposes to offer 
virtually the same Band Lookup functionality as an add-on service to 
TradeInfo to allow a broader audience access to intraday and historical 
LULD price band information for individual securities.\6\ A subscribing 
member firm may retrieve a list of all of the historical price bands 
for a selected security on a selected day, up to 30-days prior. The 
service displays both the upper and lower price bands, and the time at 
which the price bands became effective. The service also provides 
subscribing member firms with the option to export the data provided by 
the service in CSV format.
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    \5\ NASDAQ Rule 7061.
    \6\ The Band Lookup feature of Limit Locator provides 
subscribers with the same information as the proposed Band Lookup 
feature of TradeInfo, presented in [sic] slightly different manner.
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    To subscribe to the Limit Up/Limit Down Band Lookup service a 
member firm must also subscribe to TradeInfo. TradeInfo allows a 
subscribing member firm to query for their [sic] orders submitted to 
the NASDAQ System and perform certain actions concerning the queried 
orders, such as canceling open orders. TradeInfo is the means by which 
a member firm accesses the proposed service.\7\ Each TradeInfo user 
account provides an access point to Limit Up/Limit Down Band Lookup 
service, therefore a member firm that subscribes to multiple TradeInfo 
accounts may access Limit Up/Limit Down Band Lookup service through 
each of its TradeInfo user accounts concurrently. The Exchange is 
proposing to offer the proposed service at no cost to members beginning 
April 15, 2013 and for a monthly fee of $200 per user beginning May 1, 
2013.
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    \7\ TradeInfo is offered complimentary as part of the NASDAQ 
Workstation or separately for a fee of $95 per user, per month. See 
Rule 7015(f).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general, and with Section 6(b)(4) \9\ of the 
Act, in particular. The Exchange believes it is consistent with Section 
6(b)(4) of the Act because 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 the Exchange operates 
or controls. The Exchange determined that the proposed fee is 
reasonable based on member firm interest in the service, costs 
associated with developing and supporting the service, and the value 
that the Limit Up/Limit Down Band Lookup service provides to 
subscribing member firms.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\10\ which requires that the rules of an 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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; and 
are not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Exchange believes the proposed rule 
change is consistent with these requirements because the proposed 
service provides a subscribing member firm with a useful analytical 
tool with which it may determine where the limit up/limit down price 
bands of individual securities are both currently and historically on a 
rolling 30-day basis. With this information, a subscribing member firm 
is able to analyze historical trade executions and reports, and conduct 
back-testing scenarios.
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    \10\ 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. The proposed 
service provides useful information to member firms with which they may 
analyze historical trade executions and reports, and conduct back-
testing scenarios. The proposed fee allows NASDAQ to recapture the 
costs associated with developing and supporting the service, and may 
provide NASDAQ with a profit to the extent its costs are covered.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii), 
the Exchange is required to provide the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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 
Commission has determined to waive the requirement that NASDAQ 
provide the Commission with written notice of its intent to file the 
proposed rule change at least five business days prior to the filing 
date.

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[[Page 25331]]

    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative upon filing. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because Phase I of the Plan has 
become effective and the Band Lookup feature will benefit the 
Exchange's member firms if made available by the Exchange as soon as 
possible. For this reason, the Commission designates the proposed rule 
change to be operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ Rule 19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2013-066 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-2013-066. This 
file number should be included on the subject line if email 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 Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE., Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal offices of 
NASDAQ. 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-2013-066, and should be submitted on or before May 21, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10102 Filed 4-29-13; 8:45 am]
BILLING CODE 8011-01-P