Document ID: SEC-2010-0929-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-06-25T04:00Z

[Federal Register: June 25, 2010 (Volume 75, Number 122)]
[Notices]               
[Page 36460-36461]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn10-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62326; File No. SR-NASDAQ-2010-068]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Establish a Revenue Sharing 
Program With Correlix, Inc.

June 18, 2010.
    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 June 8, 2010, The NASDAQ Stock Market LLC (the ``Exchange'' or 
``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 the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    NASDAQ is filing with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposed rule change to establish a 
revenue sharing program with Correlix, Inc. (``Correlix''). The text of 
the proposed rule change is available at http://
nasdaq.cchwallstreet.com, at the Exchange'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, 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
    NASDAQ is filing a proposed rule change to establish a revenue 
sharing program with Correlix.\3\ NASDAQ has entered into an agreement 
with Correlix to provide to users of the NASDAQ Market Center real-time 
analytical tools to measure the latency of orders to and from that 
System. Under the agreement, NASDAQ will receive 30% of the total 
monthly subscription fees received by Correlix from parties who have 
contracted directly with Correlix to use their RaceTeam latency 
measurement service for the NASDAQ Market Center. NASDAQ will not bill 
or contract with any Correlix RaceTeam customer directly.
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    \3\ If approved, this program shall commence upon termination of 
the free 60-day trial period for Correlix servives [sic] proposed in 
SR-NASDAQ-2009-069 [sic].
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    Pricing for the Correlix RaceTeam product for the NASDAQ market 
varies depending on the number of unique MPIDs and ports selected by 
the customer for monitoring by Correlix. For NASDAQ (including the 
NASDAQ Options Market), the fee will be an initial $3,000 monthly base 
fee for the first unique MPID monitored. For each additional unique 
MIPD [sic] sought to be monitored, an additional monthly charge of 
$1,000 will be assessed. The monthly price for each unique MPID 
includes the monitoring of up to 25 NASDAQ port connections associated 
with that particular MPID. Customers that wish to exceed 25 ports per-
MPID for monitoring can purchase additional 25 port blocks for an 
additional fee of $1000 per month per MPID.
    Under the program, Correlix will see an individualized unique 
NASDAQ-generated identifier that will allow Correlix RaceTeam to 
determine round trip order time,\4\ from the time the order reaches the 
NASDAQ extranet, through the NASDAQ matching engine, and back out of 
the NASDAQ extranet. The RaceTeam product offering does not measure 
latency outside of the NASDAQ extranet. The unique identifier serves as 
a technological information barrier so that the RaceTeam data collector 
will only be able to view data for Correlix RaceTeam subscriber firms 
related to latency. Correlix will not see subscriber's individual order 
detail such as security, price or size. Individual RaceTeam 
subscribers' logins will restrict access to only their own latency 
data. Correlix will see no specific information regarding the trading 
activity of non-subscribers.
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    \4\ The product measures latency of orders whether the orders 
are rejected, executed, or partially executed.
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    NASDAQ believes that above arrangement will provide users of the 
NASDAQ Market Center greater transparency into the processing of their 
trading activity and allow them to make more efficient trading 
decisions.
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 
sections 6(b)(5) of the Act,\6\ 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. In 
particular, the proposal will provide greater transparency into trade 
and information processing and thus allow market participants to make 
better-informed and more efficient trading decisions.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
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    In addition, 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. In particular, 
NASDAQ notes that it operates in a highly competitive market in which 
market participants can readily direct orders to competing venues and 
that use of the Correlix RaceTeam product is completely voluntary. 
Further, NASDAQ makes the RaceTeam product uniformly available pursuant 
to a standard non-discriminatory pricing schedule offered by Correlix.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).

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[[Page 36461]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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:

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-2010-068 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-2010-068. 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 Web site 
viewing and printing 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 only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2010-068 and should be submitted on or before July 16, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15361 Filed 6-24-10; 8:45 am]
BILLING CODE 8010-01-P