Document ID: SEC-2013-2157-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2013-12-18T05:00Z

[Federal Register Volume 78, Number 243 (Wednesday, December 18, 2013)]
[Notices]
[Pages 76662-76664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30044]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71060; File No. SR-NASDAQ-2013-151]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Delay Implementation of Recent Changes to Rule 4120(c)(7)(C)

December 12, 2013.
    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 December 4, 2013, 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 and 
II 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.
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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 Exchange proposes a proposed rule change to delay 
implementation of recent changes to Rule 4120(c)(7)(C) to allow market 
participants the opportunity to participate in testing of the new 
process

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 Exchange proposes to delay the implementation date of recently-
approved changes to the halt release process under Rule 4120(c)(7)(C). 
On November 14, 2013, the Exchange filed an immediately effective rule 
change to amend Rule 4120(c)(7)(C) to modify the parameters for 
releasing securities for trading upon the termination of a trading 
halt.\3\ The Exchange filed the proposal pursuant to subparagraph 
(f)(6) of Rule 19-4 under the Act,\4\ which requires, among other 
things, that changes filed pursuant to this subparagraph not become 
operative for thirty days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange requested that the 
Commission waive the thirty-day operative delay under subparagraph 
(f)(6) of Rule 19b-4,\5\ noting that the proposed change is designed to 
protect market participants from seemingly erroneous pricing of halted 
securities upon resumption of trading, and that, it is possible, 
particularly with regard to the IPO release process, for a disruptive 
order to skew the release price far from what was anticipated by market 
participants based on the indicative prices published by the Exchange 
prior to the calculation.\6\ On November 21, 2013, the Commission 
issued public

[[Page 76663]]

notice of the filing, granting waiver of the pre-operative delay.\7\
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    \3\ Securities Exchange Act Release No. 70911 (November 21, 
2013), 78 FR 71011 (November 27, 2013) (SR-NASDAQ-2013-143).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ Id.
    \6\ Supra note 3.
    \7\ Id.
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    The Exchange is proposing to delay implementation of the change for 
a brief period to allow for adequate user testing of the new process. 
NASDAQ has scheduled a User Acceptance Test (``UAT'') for December 14, 
2013, during which NASDAQ will provide market participants with the 
opportunity to participate in simulated halts of test securities using 
the new process. NASDAQ plans to implement the new process effective 
with the beginning of regular trading hours on December 16, 2013. 
Although NASDAQ does not anticipate any issues with the test, should 
the UAT uncover issues with the new halt release process, NASDAQ will 
further delay implementation of the process and provide public notice 
thereof prior to the anticipated implementation date of December 16, 
2013.
2. Statutory Basis
    The Exchange 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)(5) of the Act,\9\ 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 
transaction 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, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The brief delay in implementing the new process as 
discussed herein promotes these goals by ensuring market participants 
have adequate opportunity to test their systems against the new process 
in a simulated trading environment. NASDAQ believes that providing 
adequate testing will allow NASDAQ to identify any potential issues 
with its revised process, while also allowing market participants to 
identify potential problems with their systems. As a consequence, the 
proposal will protect investors by avoiding potential market 
disruptions, which may occur should the new process not be adequately 
tested in a simulated trading environment. The Exchange also believes 
that the proposal is consistent with Section 6(b)(5) of the Act because 
it will avoid market participant confusion that may be caused by having 
a change to a rule that is immediately operative, but not yet 
implemented. NASDAQ notes that it continues to believe in the 
importance of implementing the amended process as soon as reasonably 
practical and will do so upon successful completion of testing as 
described above.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. The 
Exchange believes that the proposal is irrelevant to competition 
because it is not driven by, and will have no impact on, competition.

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) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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 for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder.\12\
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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)(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 
Commission is waiving this five-day pre-filing requirement.
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay so that the proposal 
may become effective and operative immediately. According to the 
Exchange, the proposal is designed to clarify when the changes to Rule 
4120(c)(7)(C) that are currently both effective and operative will be 
implemented, thus avoiding any market participant confusion regarding 
the implementation, and ensuring that NASDAQ's rules are consistent 
with its operations. Thus, the Exchange believes that it is in the 
interest of protecting investors to briefly delay implementation of the 
recent changes to Rule 4120(c)(7)(C). Based on the Exchange's 
statements, the Commission believes that waiving the five-day pre-
filing requirement and 30-day operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission designates the proposal as operative upon filing.\15\
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    \15\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings under Section 19(b)(2)(B)\16\ of 
the Act to determine whether the proposed rule should be approved or 
disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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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 proposal 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 Number SR-NASDAQ-2013-151 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 76664]]

Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NASDAQ-2013-151. 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 
10:00 a.m. and 3:00 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-2013-151 and should 
be submitted on or before January 8, 2014.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30044 Filed 12-17-13; 8:45 am]
BILLING CODE 8011-01-P