Document ID: SEC-2011-1939-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2011-12-14T05:00Z

[Federal Register Volume 76, Number 240 (Wednesday, December 14, 2011)]
[Notices]
[Pages 77863-77865]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32000]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65915; File No. SR-NASDAQ-2011-166]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 4613(a)(2)(D) To Clarify That the Designated Percentage for 
Rights and Warrants Is Thirty Percent

 December 8, 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 November 29, 2011, The NASDAQ Stock Market LLC (``NASDAQ''), filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been 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 amend Rule 4613(a)(2)(D) to clarify that the 
Designated Percentage for rights and warrants, which are no longer 
subject to Rule 4120(a)(11), is 30 percent.

[[Page 77864]]

    The text of the proposed rule change is below. Proposed new 
language is italicized.

4613. Market Maker Obligations

    A member registered as a Market Maker shall engage in a course 
of dealings for its own account to assist in the maintenance, 
insofar as reasonably practicable, of fair and orderly markets in 
accordance with this Rule.
    (a) Quotation Requirements and Obligations
    (1) No change.
    (2) Pricing Obligations. For NMS stocks (as defined in Rule 600 
under Regulation NMS) a Market Maker shall adhere to the pricing 
obligations established by this Rule during Regular Trading Hours; 
provided, however, that such pricing obligations (i) shall not 
commence during any trading day until after the first regular way 
transaction on the primary listing market in the security, as 
reported by the responsible single plan processor, and (ii) shall be 
suspended during a trading halt, suspension, or pause, and shall not 
re-commence until after the first regular way transaction on the 
primary listing market in the security following such halt, 
suspension, or pause, as reported by the responsible single plan 
processor.
    (A)-(C) No change.
    (D) For purposes of this Rule, the ``Designated Percentage'' 
shall be 8% for securities subject to Rule 4120(a)(11)(A), 28% for 
securities subject to Rule 4120(a)(11)(B), and 30% for securities 
subject to Rule 4120(a)(11)(C), except that between 9:30 a.m. and 
9:45 a.m. and between 3:35 p.m. and the close of trading, when Rule 
4120(a)(11) is not in effect, the Designated Percentage shall be 20% 
for securities subject to Rule 4120(a)(11)(A), 28% for securities 
subject to Rule 4120(a)(11)(B), and 30% for securities subject to 
Rule 4120(a)(11)(C).
     The Designated Percentage for rights and warrants shall be 30%.
    (E)-(K) No change.
    (b)-(e) No change.
* * * * *

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ proposes to amend Rule 4613(a)(2)(D) to clarify that the 
Designated Percentage for rights and warrants, which are not subject to 
Rule 4120(a)(11), is 30 percent.
    On June 23, 2011, the Commission approved a proposed rule change of 
NASDAQ, together with the analogous rule changes of other equity 
exchanges and FINRA to amend their respective rules, to expand Rule 
4120(a)(11) to include all remaining NMS stocks, which included rights 
and warrants.\3\ In expanding the coverage of Rule 4120(a)(11), NASDAQ 
also amended Rule 4613(a)(2)(D) to state specific Designated 
Percentages for the securities covered under new Rules 4120(a)(11)(A)-
(C). Prior to the expansion, all NMS stocks not covered by Rule 
4120(a)(11), including rights and warrants, had a Designated Percentage 
of 30 percent. Given that rights and warrants are once again excluded 
from the Rule 4120(a)(11) trading pause,\4\ NASDAQ is making a 
clarifying change to Rule 4613(a)(2)(D) to state that rights and 
warrants shall have a Designated Percentage of 30 percent.
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    \3\ See Securities Exchange Act Release No. 64735 (June 23, 
2011), 76 FR 38243 (June 29, 2011) (SR-NASDAQ-2011-067, et al.).
    \4\ See Securities Exchange Act Release No. 65814 (November 23, 
2011) (SR-NASDAQ-2011-154).
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\5\ in general, and furthers the objectives of Section 6(b)(5),\6\ 
in particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \7\ of the Act 
in that it seeks to ensure fair competition among brokers and dealers 
and among exchange markets. NASDAQ believes that the proposed rule 
meets these requirements because it makes a clarifying change to a rule 
that is currently silent on how it is applied to certain securities. 
NASDAQ is applying the same Designated Percentage to rights and 
warrants, which are no longer covered by the trading pause under Rule 
4120(a)(11), as it had prior to recent changes to the rule.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78k-1(a)(1).
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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.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6)(iii) thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and 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 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \13\ 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 immediately upon filing.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).

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[[Page 77865]]

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Specifying 30% as the Designated Percentage for rights and warrants in 
Rule 4613(a)(2)(D) would restore the Market Maker quoting obligations 
that existed prior to the recent inclusion and subsequent exclusion of 
rights and warrants from the single-stock circuit breaker pilot 
program. Allowing the change to be operative upon filing should 
minimize investor confusion on how Rule 4613(a)(2)(D) will operate for 
rights and warrants in light of the recent exclusion of rights and 
warrants from Rule 4120(a)(11). For this reason, the Commission 
designates the proposed rule change as operative upon filing with the 
Commission.\14\
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    \14\ 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.

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 No. SR-NASDAQ-2011-166 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 No. SR-NASDAQ-2011-166. 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 
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 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-2011-166 and should be 
submitted on or before January 4, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32000 Filed 12-13-11; 8:45 am]
BILLING CODE 8011-01-P