Document ID: SEC-2008-1476-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-10-28T04:00Z

[Federal Register: October 28, 2008 (Volume 73, Number 209)]
[Notices]               
[Page 64002-64003]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc08-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58827; File No. SR-NASDAQ-2008-083]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding the Nasdaq Options Maintenance Tool and Related Fees

October 21, 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 October 16, 2008, The NASDAQ Stock Market LLC (``Nasdaq''), filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by Nasdaq. The Exchange filed the proposal as a 
``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to establish a new service and related fees for use 
on the Nasdaq Options Market. The new Nasdaq Options Maintenance Tool 
will enable subscribers to query trades, correct trades and/or allocate 
trades to appropriate accounts and sub-accounts.
    The text of the proposed rule change is below. Proposed new 
language is italicized.\5\
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    \5\ Changes are marked to the rules of The NASDAQ Stock Market 
LLC found at http://nasdaqomx.cchwallstreet.com.
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* * * * *

7039. Nasdaq Options Maintenance Tool

    The Nasdaq Options Maintenance Tool will be available to each user 
at no cost until October 31, 2008, and for a subscription fee of $200 
per month, per user thereafter.
* * * * *

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 proposes to establish a new service, the Nasdaq Options 
Maintenance Tool (``OMT''), and establish related fees. The OMT is a 
new web-based options back-office tool that gives users the ability to 
query trades, correct trades and/or allocate trades to the appropriate 
accounts and sub-accounts for clearing. The Options Clearing 
Corporation (``OCC'') requires firms to provide certain information 
when submitting a trade for clearing. Currently, other options 
exchanges make available to firms a tool with which they can correct 
trade clearing information that is submitted to the OCC.\6\ Certain 
firms have requested that Nasdaq provide a similar tool so that they 
may correct their trade-related clearing information. In response, 
Nasdaq has developed the OMT, which will allow users to correct certain 
OCC-required trade information. Specifically, the OMT will allow a firm 
to correct a trade's account number or designate a sub-account number, 
correct a trade's designation as opening or closing, and change the 
Clearing Member Trade Assignment clearing firm. The OMT will also allow 
firms to correct a trade's OCC designation as Customer, Firm, or Market 
Maker.
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    \6\ See e.g., the International Securities Exchange PrecISE, and 
the Boston Options Exchange Back Office Trade Management 
Software.Certain firms have requested that Nasdaq provide a similar 
tool so that they may correct their trade-related clearing 
information. In response, Nasdaq has developed the OMT, which will 
allow users to correct certain OCC-required trade information. 
Specifically, the OMT will allow a firm to correct a trade's account 
number or designate a sub-account number, correct a trade's 
designation as opening or closing, and change the Clearing Member 
Trade Assignment clearing firm. The OMT will also allow firms to 
correct a trade's OCC designation as Customer, Firm, or Market 
Maker.
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    Nasdaq proposes to offer the OMT at no cost through October 31, 
2008, after which Nasdaq proposes to charge a subscription fee of $200 
per month, per user. Nasdaq believes the subscription fee fairly 
reflects the value of this product. Use of the OMT is voluntary and the 
subscription fee will be imposed on all purchasers equally based on the 
number of users selected.
    The proposed fee will cover the costs associated with establishing 
the service, responding to customer requests, configuring Nasdaq's 
systems, programming to user specifications, and administering the 
service, among other things. The OMT is responsive to the requests of 
market participants, some of whom have determined that they could not 
participate on the Nasdaq Options Platform until they had this 
functionality was [sic] available.
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)(5) of the Act,\8\ in particular, because it is designed to prevent 
fraudulent and

[[Page 64003]]

manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Use of the Options Maintenance 
Tool is voluntary and the subscription fees will be imposed on all 
purchasers equally based on the number of users.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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    Nasdaq also believes that the proposed rule change is consistent 
with Section 6(b)(4) of the Act \9\ 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 the Nasdaq operates or controls, and it does not unfairly 
discriminate between customers, issuers, brokers or dealers. As noted, 
use of the Options Maintenance Tool is voluntary and the subscription 
fees will be imposed on all purchasers equally based on the number of 
users. The proposed fees will cover the costs associated with 
establishing the service, responding to customer requests, configuring 
Nasdaq's systems, programming to user specifications, and administering 
the service, among other things. Nasdaq notes that the revenue 
associated with this product may be negligible as this tool was built 
to primarily support new volume into Nasdaq's Options Platform.
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    \9\ 15 U.S.C. 78f(b)(4).
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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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and 
Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \12\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Immediate implementation of the OMT functionality should assist Nasdaq 
members in providing accurate clearing information to OCC by allowing 
firms to correct inaccurate trade information before it is submitted to 
OCC. Further, the OMT should assist firms in efficiently managing their 
back office clearing operations, such as handling Clearing Member 
Transfer Agreements. Finally, the Commission recognizes that Nasdaq 
would like to provide the OMT in the most expedited timeframe possible 
to attract firms to the Nasdaq Options Market, enhancing Nasdaq's 
competitive position. For these reasons, the Commission designates that 
the proposed rule change become operative immediately upon filing.\14\
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    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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.

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-2008-083 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-083. 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-2008-083 and should 
be submitted on or before November 18, 2008.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-25651 Filed 10-27-08; 8:45 am]

BILLING CODE 8011-01-P