Document ID: SEC-2008-0107-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-01-22T05:00Z

[Federal Register: January 22, 2008 (Volume 73, Number 14)]
[Notices]               
[Page 3786-3788]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22ja08-108]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57146; File No. SR-NASDAQ-2008-003]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto To Establish Fees for Members Using the 
NASDAQ Pre-Trade Risk Management Functionality

January 14, 2008.
    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 January 7, 2008, 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 substantially by Nasdaq. On January 10, 2008, Nasdaq 
filed Amendment No. 1 to the proposed rule change to make certain 
clarifying changes in its description. Nasdaq has designated this 
proposal as one establishing or changing a member due, fee, or other 
charge imposed by the Exchange under section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit

[[Page 3787]]

comments on the proposed rule change, as amended, from interested 
persons.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq is proposing to establish member charges for the use of 
NASDAQ new pre-trade risk management (``PRM'') functionality. The text 
of the proposed rule change is available at http://www.nasdaq.complinet.com
, the principal offices of the Exchange, 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, 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 to establish the following charges for the use 
of Nasdaq's new PRM functionality:
    There will be a charge of $100 per month for each port enabled for 
PRM functionality. This charge will be in addition to other applicable 
port charges. Each PRM-enabled port will provide (at no additional 
charge) ``fat finger'' checks for orders being placed through the port. 
A fat finger check will compare price instructions on the order against 
the current composite displayed size and price at the relevant levels, 
and will automatically reject the order if it is priced outside the 
acceptable range previously specified by the user.
    Users of PRM Modules will be assessed a further charge of $500 per 
month per Module. Since a PRM Module can function only through PRM-
enabled ports, all Module users will also be responsible for the 
charges described above to enable at least one port for PRM.
    A PRM Module helps users control risk by checking each order, 
before it is accepted into the system, against certain parameters pre-
specified by the user, such as maximum order size or value, order type 
restrictions, market session restrictions (pre/post market), security 
restrictions, including per-security limits, restricted stock list, and 
certain other criteria. These checks are in addition to the fat finger 
checks that are available for all orders submitted through a PRM-
enabled port. A Module can be configured to pre-trade-manage a user's 
order flow for a specified market participant ID (``MPID''), for a 
specified MPID and PRM-enabled port, or for an account within an MPID.
    There will be an additional charge for PRM Module users who wish 
also to use the Aggregate Total Checks functionality: $0.025 per each 
side that is being checked, capped at $2,000 per month per PRM Module. 
Whereas PRM Modules validate individual orders against pre-specified 
parameters, Aggregate Totals Checks allow users to establish additional 
checks by limiting in certain pre-specified ways their overall daily 
trading activity.
    Users of the NASDAQ Workstation or WeblinkACT 2.0 who subscribe to 
PRM Modules will receive one Workstation add-on per Module. Additional 
add-ons will be available, if needed, for $100 per month.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\5\ in general, and with section 
6(b)(4) of the Act,\6\ 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 PRM functionality provides 
members with a new optional tool at a reasonable cost. Members are not 
required to use either the NASDAQ PRM or any similar functionality. 
Furthermore, some users are already performing various pre-trade checks 
either with their own tools or with third-party software. The optional 
nature of the service and competition from both existing and possible 
future sources and providers assures that the proposed charges will 
remain market-competitive.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq 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, 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 proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-
4(f)(2) \8\ thereunder, because it establishes or changes a due, fee, 
or other charge imposed on members by Nasdaq. Accordingly, the proposal 
is effective upon filing with the Commission. 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.\9\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
    \9\ 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 January 10, 2008, the date on which Nasdaq filed 
Amendment No. 1.
---------------------------------------------------------------------------

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-2008-003 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2008-003. 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/

[[Page 3788]]

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 the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit onlyinformation that you wish to make publicly available. All 
submissions should refer to File Number SR-NASDAQ-2008-003 and should 
be submitted on or before February 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-993 Filed 1-18-08; 8:45 am]

BILLING CODE 8011-01-P