Document ID: SEC-2009-0311-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2009-03-10T04:00Z

[Federal Register: March 10, 2009 (Volume 74, Number 45)]
[Notices]               
[Page 10324-10325]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10mr09-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59485; File No. SR-Nasdaq-2009-016]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by The NASDAQ Stock Market LLC To 
Eliminate the $3 Price Requirement for Continued Approval for an 
Underlying Security and Listing Additional Series of Options

March 2, 2009.
    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 February 27, 2009, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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 the Exchange. Nasdaq has 
designated the proposed rule change as constituting a non-controversial 
rule change under Rule 19b-4(f)(6) under the Act,\3\ 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes for NOM to modify Chapter IV, Section 4 (Securities 
Traded on NOM) of its options rules to eliminate the $3 market price 
per share requirement for continued approval for an underlying 
security. Nasdaq also proposes to modify Section 4 by eliminating the 
prohibition against listing additional series of options on an 
underlying security at any time when the price per share of such 
underlying security is less than $3.
    The text of the proposed rule change is available from Nasdaq's 
website at http://nasdaq.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
    The purpose of this proposed rule change is to eliminate the $3 
market price per share requirement for continued approval for an 
underlying security from Chapter IV, Section 4 of NOM options rules. 
This proposed rule change also eliminates the prohibition against 
listing additional series or options on an underlying security at any 
time when the price per share of such underlying security is less than 
$3.
    NOM's rules require that the market price for a security be at 
least $3 on the previous trading day for the continued listing of 
options on that underlying security. If the price of an underlying 
security falls below $3, Nasdaq can continue to trade then-listed 
series on that underlying security, but is unable to list new series of 
options. Nasdaq believes that the current $3 market price per share 
requirement could have a negative effect on investors. For example, in 
the current volatile market environment in which the market price for a 
large number of securities has fallen below $3, Nasdaq is currently 
unable to list new series on underlying securities trading below $3. If 
there is market demand for series below $3, Nasdaq would be unable to 
accommodate such requests and investors would be unable to hedge their 
positions with options series with strikes below $3.
    Nasdaq believes that the $3 market price per share requirement is 
no longer necessary or appropriate, and therefore proposes that 
underlying securities meeting the remaining continued listing criteria 
set forth in Chapter IV, Section 4 will be eligible for continued 
listing and the listing of additional options series.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\4\ in general and with Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, remove impediments

[[Page 10325]]

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 proposed rule change will permit Nasdaq to 
make options on underlying securities available even if the price of 
the underlying security is less than $3 thus providing investors 
additional opportunities to hedge their positions.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
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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 not necessary or appropriate in furtherance 
of the purposes of the Act.

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 foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 Commission has determined to waive the five-day pre-filing 
period in this case.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \8\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \9\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. Nasdaq requests that 
the Commission waive the 30-day operative delay. The Commission notes 
that this proposed rule change is substantially identical to a proposed 
rule change that was approved by the Commission after an opportunity 
for public comment,\10\ and does not raise any new substantive issues. 
The Exchange believes that waiving the 30-day operative delay would 
advance similar rules for listing similar products on options exchanges 
and is essential for competitive purposes. For these reasons, the 
Commission believes that waiving the 30-day operative delay \11\ is 
consistent with the protection of investors and the public interest and 
designates the proposal operative upon filing.
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Nasdaq's proposed rule change is substantially identical to 
a proposed rule change by the Chicago Board Options Exchange 
(``CBOE'') recently approved by the Commission. See Securities 
Exchange Act Release No. 59336 (February 2, 2009) (SR-CBOE-2008-
127).
    \11\ 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. See 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 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.

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-2009-016 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-2009-016. 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 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 publicly available. All 
submissions should refer to File Number SR-Nasdaq-2009-016 and should 
be submitted on or before March 31, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-4958 Filed 3-9-09; 8:45 am]

BILLING CODE 8011-01-P