Document ID: SEC-2009-1176-0001
Agency: sec
Document Type: Notice
Title: 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
Posted Date: 2009-08-19T04:00Z

[Federal Register: August 19, 2009 (Volume 74, Number 159)]
[Notices]               
[Page 41955-41957]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au09-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60492; File No. SR-NASDAQ-2009-074]

 
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

August 12, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 41956]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 31, 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 prepared by NASDAQ. Pursuant to Section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ NASDAQ has designated 
this proposal as establishing or changing a due, fee, or other charge, 
which renders the proposed rule change effective upon filing.
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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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    The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of the 
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 August 
3, 2009. The text of the proposed rule change is available at http://
nasdaqomx.cchwallstreet.com/, at NASDAQ's principal office, and at 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, 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 is proposing several changes to the fees associated with the 
use of the NASDAQ Market Center. First, NASDAQ is modifying the fees 
applicable to routing orders to NASDAQ OMX BX. Currently, NASDAQ passes 
through all fees charged and rebates provided by NASDAQ OMX BX with 
respect to orders routed to it. Pursuant to the change, NASDAQ will 
provide this pass-through only with respect to orders that either (i) 
check the NASDAQ book prior to routing and are then directed to route 
first to NASDAQ OMX BX and then to NYSE or NYSE Amex; or (ii) route to 
destinations other than NASDAQ prior to checking the NASDAQ book but 
that are designated to return to NASDAQ after being routed. For 
directed orders that route to NASDAQ OMX BX, NASDAQ will charge $0.0002 
per share executed in the case of orders for securities listed on 
NASDAQ or NYSE, and $0.0022 per share executed in the case of orders 
for securities listed on other exchanges. For other orders routed to 
NASDAQ OMX BX, NASDAQ will charge $0.0026 per share executed.
    Second, for securities listed on NASDAQ or NYSE, NASDAQ is reducing 
the volume level required for a member to qualify for NASDAQ's most 
favorable ``take rate'' for the months of August and September 2009. 
Currently, a member pays a fee of $0.0027 per share executed if it has 
an average daily volume in all securities during the month of (i) more 
than 150 million shares of liquidity routed, removed, and/or provided, 
and (ii) more than 35 million shares of liquidity provided. During 
August and September 2009, the required volume of shares of liquidity 
routed, removed, and/or provided will be reduced to 140 million shares, 
with the required volume of liquidity provided remaining unchanged. The 
change reflects expectations of overall lower trading volumes during 
these months.
    Third, NASDAQ is eliminating special fees for orders that execute 
at NYSE Arca as odd-lot transactions. The change reflects an 
announcement by NYSE Arca that it will itself eliminate special fees 
applicable to odd-lot transactions.\5\ Similarly, NASDAQ is modifying 
special fees applicable to routed orders that execute at NYSE as odd-
lot transactions. Specifically, a special fee of $0.0005 per share 
executed for orders that execute at NYSE as odd-lots after checking the 
NASDAQ book will be eliminated; thus, such orders would pay the normal 
routing fees applicable to orders that are not odd lots. Fees 
applicable to orders that execute at NYSE as odd-lots without checking 
the NASDAQ book remain unchanged.
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    \5\ See http://www.nyse.com/pdfs/Arca_Fee_Schedule_
Update.pdf.
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    Fourth, NASDAQ is modifying its fees for orders routed to NYSE that 
execute in its opening or closing process to reflect announced changes 
to NYSE's pricing for such orders.\6\ The fee for ``market at the 
close'' and ``limit at the close'' orders will be $0.0007 per share 
executed, and the fee for ``at the opening'' or ``at the opening only'' 
orders will be $0.0005, subject to a monthly cap of $10,000 per member.
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    \6\ See http://www.nyse.com/pdfs/NYSE_Pricing_Change_
20090801.pdf.
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    Fifth, NASDAQ is adding language to paragraph (a) of Rule 7018 to 
clarify that for purposes of determining a member's shares of liquidity 
routed, orders that do not attempt to execute in the NASDAQ Market 
Center for the full size of the order prior to routing are not counted. 
NASDAQ is also deleting obsolete language pertaining to calculating a 
member's volume during the month of July 2009. Finally, NASDAQ is 
making several changes to the text of Rule 7018 to make the punctuation 
and phraseology of the rule consistent throughout.
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 is reducing the level of 
liquidity required to receive a favorable take rate for orders in 
stocks listed on NASDAQ or NYSE, resulting in potential price 
reductions for members with large volumes of liquidity routed, 
accessed, and/or provided. NASDAQ is also reducing the circumstances 
under which it will pass through charges and rebates for orders routed 
to NASDAQ OMX BX, and increasing fees for routing certain orders that 
execute at NYSE as odd-lots. Finally, NASDAQ is making modifications in 
its routing charges to reflect announced changes in the fees that it 
will pay to route orders to NYSE and NYSE Arca.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The impact of the changes upon the net fees paid by a particular 
market participant will depend upon a number of variables, including 
its monthly volume, the order types it uses, and the prices of its 
quotes and orders (i.e., its propensity to add or remove liquidity and 
to set the best bid and offer). NASDAQ notes that it operates in a 
highly competitive market in which market participants can readily 
direct order flow to competing venues if they

[[Page 41957]]

deem fee levels at a particular venue to be excessive. NASDAQ believes 
that its fees remain competitive with other venues and are reasonable 
and equitably allocated to those members on the basis of whether they 
opt to direct orders to NASDAQ.

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

    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-2009-074 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-2009-074. 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-2009-074 and should 
be submitted on or before September 9, 2009.

    For the Commission, by the Division of Trading and Markets, 
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. E9-19894 Filed 8-18-09; 8:45 am]

BILLING CODE 8010-01-P