Document ID: SEC-2007-1009-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-07-26T04:00Z

[Federal Register: July 26, 2007 (Volume 72, Number 143)]
[Notices]               
[Page 41093-41094]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jy07-74]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56112; File No. SR-NASDAQ-2007-064]

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

July 20, 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 July 2, 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 filed the proposal pursuant to Section 19(b)(3)(A)(ii) of the 
Act \3\ and Rule 19b-4(f)(2) \4\ thereunder, as establishing or 
changing a due, fee, or other charge applicable to a member, which 
renders the proposed rule change 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)(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 pricing for Nasdaq members using the 
Nasdaq Market Center. Nasdaq will implement this rule change on July 2, 
2007. The text of the proposed rule change is available at Nasdaq, 
http://www.nasdaq.com, and 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
    On June 1, 2007,\5\ Nasdaq increased its fees for routing orders in 
securities other than exchange-traded funds to the New York Stock 
Exchange (``NYSE'') in instances where the order does not check the 
Nasdaq book prior to routing. Nasdaq also changed its fee schedule to 
provide that orders that do not attempt to execute in Nasdaq prior to 
routing to other venues do not count in determining a member's average 
daily volume of shares of liquidity accessed and/or routed for purposes 
of determining the pricing tier applicable to a particular member. 
Nasdaq is now further amending the fee schedule to increase the fees 
for orders that check the Nasdaq book but only to the extent of 
displayed liquidity, rather than for the full size of the order.
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    \5\ See Securities Exchange Act Release No. 55979 (June 28, 
2007), 72 FR 37065 (July 6, 2007) ((SR-NASDAQ-2007-055) (May 29, 
2007)).
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    Market participants using Nasdaq for routing orders have the 
ability to instruct as to the conditions under which routing should 
occur. One possibility is to route without checking the Nasdaq book; 
another is to route after checking the Nasdaq book only to extent of 
displayed liquidity; and another is to send the full order for 
execution against the book prior to routing, thereby allowing 
undisplayed reserved size to be accessed. For example, if displayed 
size at the inside was 1000 shares and 10,000 shares were in reserve at 
that price, an order for 10,000 shares could be fully executed in 
Nasdaq if the full order was sent, but would be routed if the order 
accessed only the displayed size.
    Both the changes made in the instant proposed rule change and the 
changes made in SR-NASDAQ-2007-055 are designed to enhance the quality 
of Nasdaq's market by providing an incentive for members to enter 
orders that check the full size of the Nasdaq book prior to routing. An 
increase in the extent to which members check the book will in turn 
encourage liquidity providers to post executable quotes in Nasdaq. 
Moreover, since there is generally far more undisplayed liquidity than 
displayed liquidity at the inside price, the proposed change will 
encourage members to execute their orders in Nasdaq to the fullest 
extent possible.
    For orders that check the book only to the extent of displayed 
interest, the fee will be $0.00035 per share executed when routed to 
the NYSE for execution and $0.0035 per share executed when routed 
elsewhere. At the same time, however, Nasdaq is lowering the fee for 
Directed Intermarket Sweep Orders sent to the NYSE, from $0.0035 to 
$0.00035 per share executed, in keeping with the overall prevailing 
level of fees for routing to NYSE.
    Finally, for the month of July 2007, Nasdaq is lowering: (i) The 
volume level required for receiving a liquidity provider credit of 
$0.0025 per share executed from 35 million average daily shares of 
liquidity provided to 30

[[Page 41094]]

million average daily shares of liquidity provided; (ii) the volume 
level required for paying a fee of $0.000275 per share executed when 
routing to the NYSE from 35 million average daily shares of liquidity 
provided to 30 million average daily shares of liquidity provided; and 
(iii) one of the criteria for paying an execution/routing fee of 
$0.0026 per share executed from 35 million average daily shares of 
liquidity provided to 30 million average daily shares of liquidity 
provided.\6\ The change reflects Nasdaq's expectation that overall 
trading volumes will be low during the month of July due to the Fourth 
of July holiday and the vacation schedules of member employees.
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    \6\ Specifically, in July 2007, the $0.0026 fee will be 
available to members with an average daily volume through the Nasdaq 
Market Center in all securities during the month of: (i) More than 
30 million shares of liquidity provided, and (ii) more than 55 
million shares of liquidity accessed and/or routed; or: (i) More 
than 25 million shares of liquidity provided, and (ii) more than 65 
million shares of liquidity accessed and/or routed.
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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 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 the fee change 
reflects an allocation of fees that recognizes the benefits to Nasdaq 
market quality of liquidity provision and orders that access all 
available liquidity in Nasdaq prior to routing.
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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 proposed rule change has become effective upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ 
and Rule 19b-4(f)(2) thereunder,\10\ in that the proposed rule change 
establishes or changes a member due, fee, or other charge imposed by 
the self-regulatory organization. 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-2007-064 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-2007-064. 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, 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 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-2007-064 and should 
be submitted on or before August 16, 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. E7-14386 Filed 7-25-07; 8:45 am]

BILLING CODE 8010-01-P