Document ID: SEC-2009-1219-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Processing of Orders on the NASDAQ Options Market
Posted Date: 2009-08-26T04:00Z

[Federal Register: August 26, 2009 (Volume 74, Number 164)]
[Notices]               
[Page 43210-43212]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au09-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60521; File No. SR-NASDAQ-2009-076]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify Processing of Orders on the NASDAQ Options Market

August 18, 2009.
    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 August 13, 2009, 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 substantially prepared by Nasdaq. Nasdaq has designated the 
proposed rule change as effecting a change described under Rule 19b-
4(f)(6) under the Act,\3\ which 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].\4\
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    \4\ Changes are marked to the rules of The NASDAQ Stock Market 
LLC found at http://nasdaqomx.cchwallstreet.com.
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* * * * *
Chapter VI Trading Systems
Sec. 1 Definitions

The following definitions apply to Chapter VI for the trading of 
options listed on NOM.
    (a)-(d) No change.
    (e) The term ``Order Type'' shall mean the unique processing 
prescribed for designated orders that are eligible for entry into the 
System, and shall include:
    (1)-(7) No Change.
    [(8) ``Additional Exposure Orders'' are orders that are priced at 
the National Best Offer, for buys, and the National Best Bid, for 
sells. The order is exposed on the System Book Feed for a time 
determined by the Exchange, not to exceed one second. At the end of the 
exposure period, if still unexecuted, the

[[Page 43211]]

order will be routed to the market(s) at the NBBO, cancelled back to 
the entering party, or posted on the book pursuant to Section 7 of 
Chapter VI.
    Any update to the NBBO that improves the exposed order price will 
cause an immediate end to the exposure period. Any unexecuted portion 
of the order will be routed to the market(s) at the NBBO, cancelled 
back to the entering party or posted on the book pursuant to Section 7 
of Chapter VI.
    Any update to the NBBO that unlocks the exposed order price will 
cause an immediate end to the exposure period. Any unexecuted portion 
of the order will be executed against contra interest on the book, 
routed to the market(s) at the NBBO, cancelled back to the entering 
party or posted on the book pursuant to Section 7 of Chapter VI.]
* * * * *
Sec. 6 Acceptance of Quotes and Orders

    All bids or offers made and accepted on NOM in accordance with the 
NOM Rules shall constitute binding contracts, subject to applicable 
requirements of the Rules of the Exchange and the Rules of the Clearing 
Corporation.
    (a) General--A System order is an order that is entered into the 
System for display and/or execution as appropriate. Such orders are 
executable against marketable contra-side orders in the System.
    (1) All System Orders shall indicate limit price and whether they 
are a call or put and buy or sell. Systems Orders can be designated as 
Immediate or Cancel (``IOC''), Good-till-Cancelled (``GTC''), Day 
(``DAY''), WAIT or Expire Time (``EXPR'').
    (2) A System order may also be designated as a Reserve Order, a 
Limit Order, a Minimum Quantity Order, a Discretionary Order, a Market 
Order, a Price Improving Order, or an Exchange Direct Order[, or an 
Additional Exposure Order].
* * * * *
Sec. 11 Order Routing

    (a) For System securities, the order routing process shall be 
available to Participants from 9:30 a.m. Eastern Time until market 
close, and shall route orders as follows. Participants can designate 
orders as either available for routing or not available for routing. 
Orders designated as not available for routing shall follow the book 
processing rules set forth in Section 10 above. Orders designated as 
available for routing, will first check the System for available 
contracts for execution. After checking the System for available 
contracts, orders are sent to other available market centers for 
potential execution, per entering firm's instructions. When checking 
the book, the System will seek to execute at the price at which it 
would send the order to a destination market center. [Orders designated 
as Additional Exposure Orders, as defined in Chapter VI, Section 1, 
will be exposed on the System Book Feed prior to routing to other 
markets.] If contracts remain un-executed after routing, they are 
posted on the book. Once on the book, should the order subsequently be 
locked or crossed by another market center, the System will not route 
the order to the locking or crossing market center. With the exception 
of the Minimum Quantity order type, all time-in-force parameters and 
order types may be used in conjunction with this routing option.
* * * * *

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 has not yet implemented a recently approved rule change to 
the NOM rules, which would provide marketable orders an additional 
opportunity for execution on the NOM when NOM is not part of the 
NBBO.\5\ Upon further review, Nasdaq proposes to eliminate this 
additional opportunity for execution on the NOM.
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    \5\ See Securities Exchange Act Release No. 60335 (July 17, 
2009), 74 FR 36790 (July 24, 2009) (SR-NASDAQ-2009-066).
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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,\6\ in general, and with 
Sections 6(b)(5) of the Act,\7\ in particular, in that the proposal 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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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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

    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, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its 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 deems this requirement to have been met.
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    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

[[Page 43212]]

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-2009-076 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 Number SR-NASDAQ-2009-076. 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 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 Number SR-NASDAQ-2009-076 and 
should be submitted on or before September 16, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20530 Filed 8-25-09; 8:45 am]

BILLING CODE 8010-01-P