Document ID: SEC-2011-1636-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2011-10-24T04:00Z

[Federal Register Volume 76, Number 205 (Monday, October 24, 2011)]
[Notices]
[Pages 65765-65767]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27379]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65587; File No. SR-NASDAQ-2011-144]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Establishment of a Direct Market Data Product, NASDAQ 
Options Trade Outline (``NOTO'')

October 18, 2011.
    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 October 12, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') 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 the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to establish a direct market data product, 
NASDAQ Options Trade Outline (``NOTO'').
    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 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. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to establish the NOTO 
market data product. NOTO is a market data product offered by the 
Exchange that is designed to provide proprietary electronic trade data 
to subscribers. NOTO is available as either an ``End-of-Day'' data 
product or an ``Intra-Day'' data product, as described more fully 
below. NOTO is available to any person who wishes to subscribe to it, 
regardless of whether or not they are a member of the Exchange. NOTO is 
available only for internal use and distribution by subscribers.
Data Included in NOTO
    NOTO provides information about the activity of a particular option 
series during a particular trading session. NOTO subscribers will 
receive the following data:
     Aggregate number of buy and sell transactions in the 
affected series;
     Aggregate volume traded electronically on the Exchange in 
the affected series;
     Aggregate number of trades effected on the Exchange to 
open a position; \3\
---------------------------------------------------------------------------

    \3\ NOTO will provide subscribers with the aggregate number of 
``opening purchase transactions'' in the affected series. An opening 
purchase transaction is an Exchange options transaction in which the 
purchaser's intention is to create or increase a long position in 
the series of options involved in such transaction. NOTO will also 
provide subscribers with the aggregate number of ``opening writing 
transactions.'' An opening writing transaction is an Exchange 
options transaction in which the seller's (writer's) intention is to 
create or increase a short position in the series of options 
involved in such transaction.
---------------------------------------------------------------------------

     Aggregate number of trades effected on the Exchange to 
close a position; \4\
---------------------------------------------------------------------------

    \4\ NOTO will provide subscribers with the aggregate number of 
``closing purchase transactions'' in the affected series. A closing 
purchase transaction is an Exchange options transaction in which the 
purchaser's intention is to reduce or eliminate a short position in 
the series of options involved in such transaction. NOTO will also 
provide subscribers with the aggregate number of ``closing sale 
transactions.'' A closing sale transaction is an Exchange options 
transaction an Exchange options transaction in which the seller's 
intention is to reduce or eliminate a long position in the series of 
options involved in such transaction.

---------------------------------------------------------------------------

[[Page 65766]]

     Origin of the orders involved in trades on the Exchange in 
the affected series during a particular trading session, specifically 
aggregated in the following categories of participants: customers, 
broker-dealers, and market makers.
End of Day Product
    The End of Day product includes the aggregate data described above 
representing the entire trading session. It is calculated during an 
overnight process after each trading session and is available to 
subscribers for download the following morning at approximately 7 a.m., 
E.T.
    The Exchange will establish a monthly subscriber fee for the End of 
Day product by way of a separate proposed rule change, which the 
Exchange will submit after the NOTO market data product is established.
Intra-Day Product
    The Intra-Day product includes periodic, cumulative data for a 
particular trading session. The Intra-Day product is produced and 
updated every ten minutes during the trading day. Data is captured in 
``snapshots'' taken every 10 minutes throughout the trading day and is 
available to subscribers within 5 minutes of the conclusion of each 10 
minute period. For example, subscribers to the Intra-Day product will 
receive the first calculation of intra-day data by 9:44 a.m. E.T., 
which represents data captured from 9:30 a.m. to 9:39 a.m. Subscribers 
will receive the next update at 9:54 a.m., representing the data 
previously provided together with data captured from 9:40 a.m. through 
9:49 a.m., and so forth. Each update will represent the aggregate data 
captured from the current ``snapshot'' and all previous ``snapshots.''
    The Exchange will establish a monthly subscriber fee for the Intra-
Day product by way of a separate proposed rule change, which the 
Exchange will submit after the NOTO market data product is established.
    NOTO provides subscribers data that should enhance their ability to 
analyze option trade and volume data, and to create and test trading 
models and analytical strategies. The Exchange believes that NOTO is a 
valuable tool that subscribers can use to gain comprehensive insight 
into the trading activity in a particular option series.
    NOTO is virtually identical to a market data product currently 
available on NASDAQ OMX PHLX LLC (``PHLX'') known as the PHLX Options 
Trade Outline (``PHOTO'') market data product.\5\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 62887 (September 10, 
2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121).
---------------------------------------------------------------------------

2. Statutory Basis
    NASDAQ believes that its proposal is consistent with Section 6(b) 
of the Act \6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \7\ 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 establishing a market data product that enhances subscribers' 
ability to make decisions on trading strategy, and by providing option 
trade and volume data that should help bring about such decisions in a 
timely manner.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    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 Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ 
thereunder.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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-2011-144 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-2011-144. 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 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 such 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

[[Page 65767]]

identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File No. SR-NASDAQ-2011-144 and should be submitted on 
or before November 14, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-27379 Filed 10-21-11; 8:45 am]
BILLING CODE 8011-01-P