Document ID: SEC-2007-1528-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-11-09T05:00Z

[Federal Register: November 9, 2007 (Volume 72, Number 217)]
[Notices]               
[Page 63635-63636]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no07-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56739; File No. SR-NASDAQ-2007-082]

 
 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 Thereto To Modify Fees for Members Using the Nasdaq 
Market Center

November 2, 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 October 1, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange''), filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II , 
and III below, which Items have been substantially prepared by the 
Exchange. On October 31, 2007, Nasdaq filed Amendment No. 1 to the 
proposed rule change. The Exchange filed the proposed rule change 
pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, 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 modify pricing for Nasdaq members using the 
Nasdaq Market Center. Nasdaq will implement this rule change on October 
1, 2007.
    The text of the proposed rule change is available at Nasdaq, the 
Commission's Public Reference Room, and http://www.nasdaq.complinet.com
.

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
    Effective October 1, 2007, Nasdaq is implementing a set of pricing 
changes to its fees for routing to the New York Stock Exchange 
(``NYSE'') that reflect recently announced changes to order execution 
fees at that venue.\5\ The changes are designed to ensure that Nasdaq's 
routing fees generally reflect the charges that Nasdaq Execution 
Services, Nasdaq's routing broker, will incur when routing to NYSE, 
with minimal markups or markdowns to reflect the value of Nasdaq's 
services as a high-speed router and to provide incentives for firms to 
enter orders that attempt to execute in Nasdaq for the full size of the 
order prior to routing. Accordingly, Nasdaq's routing fees are being 
decreased in instances where NYSE has lowered fees, and increased in 
instances where NYSE has increased its fees. Specifically:
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    \5\ See Securities Exchange Act Release No. 56590 (October 1, 
2007), 72 FR 57369 (October 9, 2007) (SR-NYSE-2007-88).
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     Nasdaq is eliminating the charge to route orders in 
securities other than exchange-traded funds to the NYSE in instances 
where the orders add liquidity on the NYSE, since NYSE is eliminating 
charges for such orders.
     Nasdaq is increasing its fees to route other orders to 
NYSE, to approximate NYSE's increased charge of $0.0008 per share for 
orders that remove liquidity. As is currently true, Nasdaq's exact 
charge varies depending on the overall volume of the member and the 
exact characteristics of the routed order, but is generally within 
$0.0001 of NYSE's charge. In addition, NYSE caps its execution fee at 
$120 per trade, which translates to a cap on executions greater than 
150,000 shares. Nasdaq does not apply a cap to its routing charges when 
sending orders to the NYSE, because Nasdaq receives extremely few 
executions for greater than 150,000 shares from the NYSE. Under the 
revised pricing schedule, Nasdaq will charge:
    [cir] $0.00075 or $0.0008 per share executed for orders that 
attempt to execute in Nasdaq for the full size of the order before 
being routed, depending on whether the order is eligible to post 
liquidity in Nasdaq or is designated only to remove liquidity before 
routing;
    [cir] $0.0009 per share executed for Directed Intermarket Sweep 
Orders and orders that attempt to execute solely against displayed 
interest in Nasdaq before routing; and
    [cir] A variable charge of $0.0008 to $0.0009 for orders that do 
not attempt to execute in Nasdaq before routing. For members with an 
average daily volume in all securities during the month of more than 35 
million shares of liquidity provided, the charge will be $0.0008; for 
members with an average daily volume of more than 60 million shares of 
liquidity routed to NYSE without attempting to execute in Nasdaq (other 
than Directed Intermarket Sweep Orders), the charge will be $0.000825; 
for members with an average daily volume in all securities of more than 
20 million shares of liquidity provided, the charge will be $0.00085; 
and for other members, the charge will be $0.0009.
    [cir] A fee of $0.0004 per share executed for an order that 
executes in the NYSE opening or closing process as an ``at the 
opening'', ``at the opening only'', ``market-at-the-close'', or 
``limit-at-the-close'' order. Such orders receive a ``blended 
execution'' rate at NYSE, reflecting the average between the $0.0008 
charge to take liquidity and the $0 charge to add liquidity. Nasdaq 
will pass this charge through directly.
    In addition to the foregoing changes, Nasdaq is also modifying fees 
for routing orders to venues other than NYSE and the American Stock 
Exchange (``Amex'') in circumstances where the orders do not attempt to 
execute in Nasdaq for the full size of the order prior to routing. 
Currently, Nasdaq charges $0.0035 per share for value-added orders that 
attempt to execute only against displayed size or that are designated 
as Directed Intermarket Sweep Order, and a slightly discounted fee of 
$0.003 per share for other orders that do not check Nasdaq. Although 
Nasdaq is retaining the discounted fee for orders routed to Amex and 
for orders in exchange-traded funds (``ETFs'') routed to NYSE, Nasdaq 
adopted the higher fee for orders routed to other venues. Nasdaq 
believes that retaining

[[Page 63636]]

the discount for Amex and ETF orders routed to NYSE is warranted in 
light of their historic status as primary listing markets and the 
volume of ETF orders routed to them, but that a higher fee for other 
orders that do not check the Nasdaq book is warranted in order to 
encourage greater use of orders that do check the book. Finally, Nasdaq 
is deleting several out-of-date references to fees in effect only 
during the month of July 2007.\6\
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    \6\ All of the changes apply only to securities trading at $1 
per share or more. All of Nasdaq's other fees, including its fees 
for securities priced at less than $1, remain unchanged.
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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. The change responds to fee changes 
by NYSE effective on October 1, 2007, to ensure that Nasdaq's fees for 
routing to NYSE are generally consistent with charges that NYSE imposes 
on Nasdaq when it routes orders to it, and further clarifies incentives 
of market participants to designate orders as eligible for execution on 
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

    The Exchange does not believe that the proposed rule change will 
impose 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 on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change is subject to section 
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \10\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by a self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on October 31, 2007, the date on which Nasdaq filed 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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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-2007-082 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-2007-082. 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-2007-082 and should 
be submitted on or before November 30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-21982 Filed 11-8-07; 8:45 am]

BILLING CODE 8011-01-P