Document ID: SEC-2007-0582-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-04-20T04:00Z

[Federal Register: April 20, 2007 (Volume 72, Number 76)]
[Notices]               
[Page 20004-20006]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap07-132]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55633; File No. SR-NASDAQ-2007-041]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Fees of Other Market Centers Related to Clearly Erroneous 
Rulings

April 16, 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 April 10, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') 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 Nasdaq. Nasdaq submitted the proposed rule change 
under Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which

[[Page 20005]]

renders the proposal effective 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).
    \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 pass through fees related to clearly erroneous 
rulings that are charged to Nasdaq by other markets. Nasdaq will 
implement the proposed rule change immediately.
    The text of the proposed rule change is below. Proposed new 
language is in italics.\5\
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    \5\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaq.complinet.com.

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* * * * *
11890. Clearly Erroneous Transactions
    (a)-(b) No change.
    (c) Review by the Market Operations Review Committee (``MORC'')
    (1)-(3) No change.
    (4) The party initiating the appeal shall be assessed a $500.00 fee 
if the MORC upholds the decision of the Nasdaq officer. In addition, in 
instances where Nasdaq, on behalf of a member, requests a determination 
by another market center that a transaction is clearly erroneous, 
Nasdaq will pass any resulting charges through to the relevant member.
    (d) 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq recently amended Rule 11890, which covers the breaking of 
trades determined to be clearly erroneous, to add a new Rule 
11890(c)(4) that assesses a fee of $500 for unsuccessful appeals of 
clearly erroneous adjudications by Nasdaq. Nasdaq is now adding a 
sentence to the rule to provide that in instances where Nasdaq, on 
behalf of a member, requests a determination by another market center 
that a transaction is clearly erroneous, Nasdaq will pass any resulting 
charges through to the relevant member. The proposed change reflects 
the fact that NYSE Arca recently adopted a similar $500 appellate fee, 
and other market centers may follow suit.\6\
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    \6\ Securities Exchange Act Release No. 54655 (October 26, 
2006), 71 FR 64596 (November 2, 2006) (SR-NYSEArca-2006-48).
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    If a Nasdaq member enters an order into Nasdaq that is routed to 
NYSE Arca and executed there, the Nasdaq member may not have standing 
to file under NYSE Arca rules to seek a determination that the 
execution was clearly erroneous if it is not an NYSE Arca member. 
Accordingly, Nasdaq Execution Services, Nasdaq's routing broker-dealer, 
which is a member of NYSE Arca, will file a petition under NYSE Arca 
rules if the Nasdaq member requests. If an appeal is unsuccessful, 
Nasdaq will be charged under NYSE Arca rules. Accordingly, Nasdaq 
proposes to pass the charge through, on a dollar-for-dollar basis, to 
the member that requested the appeal.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ in particular, in that the 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 the change will 
allocate charges for adjudications under the clearly erroneous rules of 
other market centers to the Nasdaq members that initiate such 
adjudications.
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    \7\ 15 U.S.C. 78f.
    \8\ 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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-2007-041 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-2007-041. 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

[[Page 20006]]

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-
041 and should be submitted on or before May 11, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-7487 Filed 4-19-07; 8:45 am]

BILLING CODE 8010-01-P