Document ID: SEC-2007-0524-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-04-10T04:00Z

[Federal Register: April 10, 2007 (Volume 72, Number 68)]
[Notices]               
[Page 17969-17970]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap07-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55576; File No. SR-NASDAQ-2007-026]

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

 April 3, 2007.
    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 March 22, 2007, 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 substantially prepared by Nasdaq. 
Nasdaq has designated this proposal as one establishing or changing a 
due, fee, or other charge under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule 
change effective immediately upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for Nasdaq members using the 
Nasdaq Market Center. The text of the proposed rule change is available 
at Nasdaq, on the Exchange's Web site at http://www.nasdaq.com, and in 

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 proposes to conform its execution fees and liquidity-
provider rebates for transactions in non-Nasdaq-listed securities 
priced under $1 to the current fees and rebates for Nasdaq-listed 
securities priced under $1. The execution fees for such transactions 
will be 0.1% of the total transaction cost, and the liquidity-provider 
rebate will be zero.\5\ Thus, for example, the execution fee for a 
trade of 100 shares in a stock priced at $0.70 would be $0.07, with no 
rebate to the liquidity provider.
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    \5\ For an order in a non-Nasdaq security through which a member 
accesses liquidity, this change will result in a fee reduction; for 
a quote or order through which a member acts as a liquidity 
provider, this change will eliminate the rebate previously paid to 
the member. See e-mail from John Yetter, Vice President and Deputy 
General Counsel, Nasdaq, to Sara Gillis, Attorney, Division of 
Market Regulation, Commission, on April 2, 2007 (``April 2, 2007 E-
mail'').
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    Nasdaq is also proposing to modify the routing fee for Nasdaq-
listed and non-Nasdaq-listed securities priced under $1 to 0.3% of the 
total transaction cost.\6\ The change reflects the fact that under Rule 
610 of Regulation NMS,\7\ market centers to which Nasdaq routes may 
charge Nasdaq only up to 0.3% of the transaction cost for executing 
routed orders in securities priced under $1.
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    \6\ Depending on the price of the transaction and a member's 
average daily share volume during the month, this change may either 
constitute a fee increase or a fee reduction for a particular routed 
order. See April 2, 2007 E-mail, supra note 5.
    \7\ 17 CFR 242.610.
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    Nasdaq recently began trading non-Nasdaq-listed securities priced 
under $1 in sub-penny increments. As a result, Nasdaq has seen an 
increase in its share volume in these securities. Nasdaq believes that, 
as is true for Nasdaq-listed securities, the pricing structure for 
these securities ensures that market participants do not pay execution 
or routing fees, or receive rebates, that are disproportionately large 
when compared with the dollar value of a particular transaction. Nasdaq 
believes that the changes also ensure that execution fees are in 
compliance with Rule 610 of Regulation NMS. Separately, Nasdaq has 
filed a proposal for a retroactive reduction in the fees charged for 
executions of non-Nasdaq-listed securities priced under $1 for the 
period from March 5 through March 21, 2007, to ensure that these fees 
are also in compliance with the requirements of Rule 610.

[[Page 17970]]

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ 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. Nasdaq believes that this change 
will ensure that the level of fees and rebates associated with trading 
securities at prices under $1 is consistent with the value of these 
securities, the costs of routing orders to other market centers for 
execution, and the requirements of Rule 610 of Regulation NMS.
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    \8\ 15 U.S.C. 78f.
    \9\ 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.

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 rule change establishes or changes a due, 
fee, or other charge applicable only to a member imposed by Nasdaq, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \10\ 
and subparagraph (f)(2) of Rule 19b-4 thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-2007-026 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-2007-026. 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. 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-2007-026 and should be submitted on or before May 
1, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-6674 Filed 4-9-07; 8:45 am]

BILLING CODE 8010-01-P