Document ID: SEC-2011-1135-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2011-08-08T04:00Z

[Federal Register Volume 76, Number 152 (Monday, August 8, 2011)]
[Notices]
[Pages 48186-48187]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19981]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65013; File No. SR-NASDAQ-2011-103]

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 2, 2011.
    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 July 27, 2011, The NASDAQ Stock Market LLC (the ``Exchange'' 
or ``NASDAQ'') 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 prepared by NASDAQ. 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 Substance 
of the Proposed Rule Change

    NASDAQ proposes to modify pricing for NASDAQ members using the 
NASDAQ Market Center. NASDAQ will implement the proposed change on 
August 1, 2011. The text of the proposed rule change is available from 
NASDAQ's Web site at http://nasdaq.cchwallstreet.com, at NASDAQ's 
principal office, at the Commission's Public Reference Room, and at the 
Commission's Web site at http://www.sec.gov.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is amending Rule 7018 to make modifications to its pricing 
schedule for execution of quotes/orders through the NASDAQ Market 
Center of securities priced at $1 or more. Specifically, NASDAQ has 
several liquidity provider rebate tiers focused on members that are 
active in both the NASDAQ Stock Market and the NASDAQ Options Market. 
Currently, a member that provides shares of liquidity in the NASDAQ 
Market Center representing 0.9% or more of the total consolidated 
volume reported to all consolidated transaction reporting plans by all 
exchanges and trade reporting facilities during the month, and trades a 
daily average of more than 300,000 contracts in the NASDAQ Options 
Market during the month, is eligible to receive a rebate of $0.0015 per 
share executed for its non-displayed quotes/orders and $0.00295 per 
share executed for its displayed quotes/orders. NASDAQ is modifying the 
tier requirements slightly to require liquidity in the NASDAQ Market 
Center representing more than 1.0% of total consolidated volume, and an 
average daily volume of more than 200,000 contracts in the NASDAQ 
Options Market. Although NASDAQ is raising the requirement for 
liquidity provision in the NASDAQ Market Center and lowering the 
requirement for NASDAQ Options Market activity, it is NASDAQ's 
expectation, based on observed trading patterns in the market, that the 
change will make it easier for members to achieve the criteria for the 
tier, and therefore will result in a price reduction.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\3\ in general, and with Section 
6(b)(4) of the Act,\4\ 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. All similarly situated members are 
subject to the same fee structure, and access to NASDAQ is offered on 
fair and non-discriminatory terms.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
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    NASDAQ notes that its pricing tiers focused on members active in 
both the NASDAQ Market Center and the NASDAQ Options Market are 
responsive to the convergence of trading in which members 
simultaneously trade different asset classes within a single strategy. 
NASDAQ also notes that cash equities and options markets are linked, 
with liquidity and trading patterns on one market affecting those on 
the other. Accordingly, pricing incentives that encourage market 
participant activity in both markets recognize that activity in the 
options markets also supports price discovery and liquidity provision 
in the NASDAQ Market Center. Moreover, NASDAQ believes that these 
changes are reasonable because they will make it easier for members 
active in both markets to qualify for an enhanced rebate, and are also 
non-discriminatory and equitable. They are open to all members, but are 
not the exclusive means by which members may qualify for the associated 
rebate levels. Accordingly, members are not required to trade in the 
NASDAQ Options Market in order to receive the applicable rebates.
    Finally, NASDAQ notes that it operates in a highly competitive 
market in which market participants can readily favor competing venues 
if they deem fee levels at a particular venue to be excessive. In such 
an environment, NASDAQ must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. NASDAQ believes that the proposed rule change 
reflects this competitive environment because it will broaden the 
conditions under which members may qualify for higher liquidity 
provider rebates.

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

[[Page 48187]]

of the purposes of the Act, as amended. Because the market for order 
execution and routing is extremely competitive, members may readily opt 
to disfavor NASDAQ's execution services if they believe that 
alternatives offer them better value. For this reason and the reasons 
discussed in connection with the statutory basis for the proposed rule 
change, NASDAQ does not believe that the proposed changes will impair 
the ability of members or competing order execution venues to maintain 
their competitive standing in the financial markets.

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.\5\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend 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. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
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    \5\ 15 U.S.C. 78s(b)(3)(a)(ii).
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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-2011-103 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-2011-103. 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 the 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-2011-103 and should be submitted on or before August 29, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19981 Filed 8-5-11; 8:45 am]
BILLING CODE 8011-01-P