Document ID: SEC-2010-1970-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-12-21T05:00Z

[Federal Register Volume 75, Number 244 (Tuesday, December 21, 2010)]
[Notices]
[Pages 80102-80104]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31925]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63536; File No. SR-NASDAQ-2010-163]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Collection of Exchange Fees

December 14, 2010.
    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 December 8, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items

[[Page 80103]]

have been prepared by the 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

    The NASDAQ Stock Market LLC proposes to create a new Rule 7007 
titled ``Collection of Exchange Fees and Other Claims--NASDAQ Options 
Market'' to require members to provide a clearing account number at the 
National Securities Clearing Corporation (``NSCC'') for purposes of 
permitting the Exchange to debit any undisputed or final fees, fines, 
charges and/or other monetary sanctions or monies due and owing to the 
Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaq.cchwallstreet.com, at the principal 
office of the Exchange, 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, the Exchange 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. The Exchange 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
    The purpose of the proposed rule change is to create an efficient 
method of collecting undisputed or final fees, fines, charges and/or 
other monetary sanctions or monies due and owing to the Exchange from 
NASDAQ Options Market (``NOM'') members.\3\ This proposal would provide 
a cost savings to the Exchange by alleviating administrative processes 
related to the collection of monies owed to the Exchange. Collection 
matters divert staff resources away from the Exchange's regulatory and 
business purposes. In addition, the debiting process would prevent 
member accounts from becoming overdue.
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    \3\ The Exchange will not debit accounts for fees that are 
unusually large or for special circumstances, unless such debiting 
is requested by the member.
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    Currently, the Exchange issues monthly invoices to NOM members, 
which invoices are paid by NOM members directly to the Exchange's 
accounting department. The Exchange proposes to require NOM members and 
applicants to provide a clearing account number for an account at NSCC 
in order to permit the Exchange to debit any undisputed or final fees, 
fines, charges and/or monetary sanctions or other monies due and owing 
to the Exchange or other charges related to Rule 1002(c)(2).\4\
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    \4\ Exchange Rule 1002(c)(1) titled Payment of Fees, Dues, 
Assessments, and Other Charges by Members and Associated Persons, 
states that fees, dues, assessments, and other charges shall be 
called and payable by members and associated persons as determined 
by Nasdaq from time to time.
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    The Exchange would continue to send a monthly invoice \5\ to each 
NOM member on approximately the 4th-6th business day of the following 
month. The Exchange would also send a file to NSCC each month on 
approximately the 23rd of the following month to initiate the debit of 
the appropriate amount stated on the member's invoice for the prior 
month. Because the members would receive an invoice well before any 
monies are debited (normally within two weeks), the members would have 
adequate time to contact the staff with any questions concerning their 
invoice.
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    \5\ The monthly invoice will indicate that the amount on the 
invoice will be debited from the designated NSCC account. Each 
month, the Exchange will send a file to the member's clearing firm 
which will indicate the amounts to be debited from each member. If a 
member is ``self-clearing,'' no such file would be sent as the 
member would receive the invoice, as noted above, which would 
indicate the amount to be debited.
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    If a NOM member disagrees with the invoice, the Exchange would not 
commence the debit until the dispute is resolved. Specifically, if a 
member disputes an invoice, the Exchange will not include the disputed 
amount in the debit if the member has disputed the amount in writing to 
the Exchange's designated staff by the 15th of the month, or the 
following business day if the 15th is not a business day, and the 
amount in dispute is at least $10,000 or greater.
    Once NSCC receives the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the clearing members' account. In 
the instance where the member clears through an Exchange clearing 
member, the estimated transactions fees owed to the Exchange are 
typically debited by the clearing member on a daily basis in order to 
ensure adequate funds have been escrowed. The Exchange would debit any 
monies owed including undisputed or final fees,\6\ fines, charges and/
or monetary sanctions or monies due and owed to the Exchange.\7\ The 
Exchange believes that the debit process would eliminate the risk of 
unpaid invoices because of the large amounts of capital held at NSCC by 
members.
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    \6\ See applicable Exchange fees at Rule 7050 and Rule 7053.
    \7\ This includes, among other things, fines which result from: 
violations of the Minor Rule Plan pursuant to Chapter X, Section 7 
and monetary sanctions pursuant to Rule 8310, 8320 or 8330. With 
respect to disciplinary sanctions, the Exchange would not debit any 
monies until such action is final. The Exchange would not consider 
an action final until all appeal periods have run and/or all appeal 
timeframes are exhausted. With respect to non-disciplinary actions, 
the Exchange would similarly not take action to debit a member 
account until all appeal periods have run and/or all appeal 
timeframes are exhausted. Any uncontested disciplinary or non-
disciplinary actions will be debited, and the amount due will appear 
on the members invoice prior to the actual NSCC debit.
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    The Exchange is also proposing to amend Exchange Rules 1002, 
Qualifications of Nasdaq Members and Associated Persons, and Exchange 
Rule 8320, Payment of Fines, Other Monetary Sanctions, or Costs; 
Summary Action for Failure to Pay, to reference new Exchange Rule 7007.
    The Exchange would provide NOM members with a thirty (30) day 
period, upon publication of this rule change, to provide the Membership 
Department with an NSCC number.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \9\ 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, 
by providing its NOM members with an efficient process to pay 
undisputed or final fees, fines, charges and/or monetary sanctions or 
monies due and owing to the Exchange. The Exchange believes that this 
process of debiting NSCC accounts would ease the NOM member's 
administrative burden in paying monthly invoices, avoid overdue 
balances and provide same day collection from all NOM members, who owe 
monies to the Exchange, which results in equitable treatment.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).

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[[Page 80104]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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

    No written comments were either solicited or 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 after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ 
thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
NASDAQ has satisfied this requirement.
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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.

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-2010-163 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-2010-163. 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,\12\ 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 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-2010-163 and should be submitted on or before 
January 11, 2011.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31925 Filed 12-20-10; 8:45 am]
BILLING CODE 8011-01-P