Document ID: SEC-2008-0168-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-02-01T05:00Z

[Federal Register: February 1, 2008 (Volume 73, Number 22)]
[Notices]               
[Page 6229-6230]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01fe08-126]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57212; File No. SR-NASDAQ-2008-004]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change Related to Supplemental Market 
Participant Identifiers

January 28, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on January 9, 2008, 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 substantially prepared by Nasdaq. 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 make permanent the pilot program that allows 
market makers and Electronic Communications Networks (``ECNs'') to 
obtain supplemental market participant identifiers (``MPIDs''). Nasdaq 
also proposes to remove any restrictions on the number of MPIDs market 
participants can request. The text of the proposed rule change is 
available at Nasdaq, the Commission's Public Reference Room and 
nasdaq.complinet.com.

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. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq proposes to make permanent the pilot program incorporated in 
Nasdaq Rule 4613(a)(2) (``Rule'') that allows market makers and ECNs to 
obtain supplemental MPIDs. The pilot inadvertently was permitted to 
lapse on November 30, 2006. The Rule has operated as a temporary pilot 
since it was first adopted in June 2003 and although the pilot lapsed, 
Nasdaq continued to apply the procedures set forth in the Rule and the 
related interpretive material.\3\ The purpose of providing supplemental 
MPIDs is to provide quoting market participants a better ability to 
organize and manage diverse order flows from their customers and to 
route orders and quotes to Nasdaq's listed trading facilities from 
different units/desks. To the extent that this flexibility provides 
increased incentives to provide liquidity to Nasdaq systems, Nasdaq 
believes that all market participants benefit. Because the Rule has 
benefited market makers and ECNs and has not had any negative impact on 
the Nasdaq market in the more than four years that it has been in 
place, Nasdaq believes the Rule should become permanent.
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    \3\ See Securities Exchange Act Release No. 47954 (May 30, 
2003), 68 FR 34017 (June 6, 2003). See also IM-4613--Procedures for 
Allocation of Second Displayable MPIDs.
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    Nasdaq also proposes to remove the current restriction in the Rule 
that limits the number of supplemental MPIDs that market makers and 
ECNs can request for displaying attributable quotes or orders. In 
accordance with the pilot program, market makers and ECNs may be issued 
a maximum of nine supplemental MPIDs. The reason for this restriction 
was a technological limitation that existed at the time the Rule was 
adopted, but this limitation no longer exists. Therefore, Nasdaq 
proposes to remove the restriction.
    In addition, Nasdaq proposes to remove IM-4613, which sets forth 
the procedures for allocating supplemental MPIDs. The removal of 
Nasdaq's technological limitation on the number of MPIDs for a given 
security makes the procedures unnecessary.
    The decision to remove any restriction on the number of 
supplemental MPIDs must be balanced against the need to protect the 
integrity of the Nasdaq market. Accordingly, market makers and ECNs 
would be prohibited from using a supplemental MPID to accomplish 
indirectly what they are prohibited from doing directly through a 
single MPID. For example, members would not be permitted to use a 
supplemental MPID to avoid their Manning obligations under IM-2110-2, 
best execution obligations under Nasdaq Rule 2320, or their obligations 
under the

[[Page 6230]]

Commission's Order Handling Rules. Members would be required to 
continue to comply with the firm quote rule, the OATS rules, and the 
Commission's order routing and execution quality disclosure rules.
    If it were determined that a supplemental MPID was being used 
improperly, Nasdaq would withdraw its grant of the supplemental MPID 
for all purposes for all securities. In addition, if a market maker or 
ECN were no longer to fulfill the conditions appurtenant to its primary 
MPID (e.g., by being placed into an unexcused withdrawal), it would not 
be permitted to use any supplemental MPID for any purpose in that 
security.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6(b) of the Act,\4\ in general and with 
Section 6(b)(5) of the Act,\5\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, 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. There no 
longer remains any market or technological need to restrict the number 
of MPIDs market participants can request.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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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.

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 (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 rule-comments@sec.gov. Please include File Number SR-NASDAQ-2008-004 on the 

subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2008-004. 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 at (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 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-2008-004 and 
should be submitted on or before February 22, 2008.
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    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-1835 Filed 1-31-08; 8:45 am]

BILLING CODE 8011-01-P