Document ID: SEC-2012-1663-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2012-10-12T04:00Z

[Federal Register Volume 77, Number 198 (Friday, October 12, 2012)]
[Notices]
[Pages 62283-62285]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25106]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67977; File No. SR-NASDAQ-2012-110]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Offer the ACT Reject Scan and Assess a Related Fee

October 4, 2012.
    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 September 28, 2012, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
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 proposes to establish a new service, the ACT Reject Scan, 
and assess a related fee. Nasdaq is proposing to implement the proposed 
service on October 1, 2012 and implement the proposed fee on November 
1, 2012. The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com, at Nasdaq's principal office, and at the 
Commission's Public Reference Room.

[[Page 62284]]

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 those statements may be examined at the places specified in 
Item III [sic] below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts 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 add-on service to the Nasdaq 
Workstation and Weblink ACT 2.0, and establish related fees. Nasdaq's 
ACT Reject Scan service allows a member firm, at any point during the 
trading day, to scan the trades it has submitted to the Automated 
Confirmation Transaction Service (``ACT'') for all trades rejected by 
ACT. Currently, a member firm must investigate any trade that has been 
rejected by ACT and for which it has not received a control number.\3\ 
Some member firms have developed their own internal systems that record 
the data transmitted to ACT in a searchable database, which can aid 
them in assessing whether a trade was rejected by ACT. Member firms 
without such systems must contact Nasdaq Subscriber Services to 
determine the nature of the rejected trade. This manual process can be 
time-consuming, at a point when a member firm has limited time to 
report its trades. Nasdaq received feedback from member firms that a 
reject scan feature would aid in editing and resubmitting rejected 
trades, a process known as submitting a ``repaired'' trade. In 
response, Nasdaq developed the ACT Reject Scan service, which automates 
this process by providing to a subscribing member firm a list of all of 
its rejected trades together with the trade report forms populated with 
the original data entered. Subscribing member firms may then correct 
the rejected trade report forms and resubmit the repaired trade 
reports.
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    \3\ ACT provides a member firm a control number for all of its 
trades that are accepted by ACT.
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    The ACT Reject Scan service can only be accessed using a Nasdaq 
Workstation or Weblink ACT 2.0 user account. Member firms subscribing 
to the ACT Reject Scan service are charged a monthly fee per user, 
which provides access to the service for each Nasdaq Workstation and 
Weblink ACT 2.0 user account selected for subscription to the ACT 
Reject Scan service. Nasdaq proposes to offer the ACT Reject Scan 
service to each subscriber for a subscription fee of $75 per user, per 
month. Use of the ACT Reject Scan service is voluntary and the 
subscription fee will be imposed on all purchasers equally based on the 
number of users selected. The proposed fee will be applied to offset 
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. To 
the extent that costs are covered by the proposed fee, the proposed fee 
may also provide Nasdaq with a profit.
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 Section 
6(b)(4) of the Act,\5\ in particular, because 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 that 
Nasdaq operates or controls, and it does not unfairly discriminate 
between customers, issuers, brokers or dealers. As noted, use of the 
proposed ACT Reject Scan service is voluntary and the subscription fee 
will be imposed on all purchasers equally based on the number of users. 
The proposed fee will be allocated to 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, and may provide Nasdaq with a profit 
to the extent costs are covered.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange determined that the proposed fee is reasonable based 
on member firm interest in ACT Reject Scan service, costs associated 
with developing and supporting the service, and the value that ACT 
Reject Scan service provides to subscribing member firms. The 
information provided by ACT Reject Scan service relates to the 
subscribing member firm's trade submission activity through ACT and the 
member firm may aggregate and access this information by developing its 
own system or by contacting Nasdaq Subscriber Services for such 
information. As such, the Exchange believes that if a member firm 
determines that the fee is not cost-efficient for its needs, it may 
decline to subscribe to ACT Reject Scan service and access such 
information from other sources.
    The Exchange also believes the proposed rule change is consistent 
with Section 6(b)(5) of the Act,\6\ which requires that the rules of an 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protect investors and the public interest. The 
Exchange believes the proposed rule change is consistent with these 
requirements because the proposed service provides subscribing members 
with a useful surveillance tool with which they may access information 
concerning the acceptance of their trade reports entered into ACT, and 
quickly repair and resubmit their rejected reports. Accordingly, the 
Exchange believes that the proposed service will further goals of the 
Act by providing subscribing members with greater transparency with 
respect to their trade reports and increasing efficiency with respect 
to the re-submission of repaired reports.
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    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 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

[[Page 62285]]

become effective pursuant to Section 19(b)(3)(A) \7\ of the Act and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6)(iii). 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 the 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 under Rule 19b-4(f)(6) \9\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \10\ 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 asked 
the Commission to waive the 30-day operative delay so that Nasdaq may 
offer the ACT Reject Scan service beginning on October 1, 2012. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
it will provide members with the option to obtain greater transparency 
with respect to their trade reports, as well as an enhanced ability to 
repair rejected trades.\11\ In addition, the Commission notes that the 
service is being offered at no charge for the month of October. 
Therefore, the Commission hereby waives the 30-day operative delay and 
designates the proposed rule change to be operative upon filing with 
the Commission.
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For purposes only of waiving the operative delay for this 
proposal, 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 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.

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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2012-110 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-2012-110. This 
file number should be included on the subject line if email 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 on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2012-110, and should be submitted on or before 
November 2, 2012.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25106 Filed 10-11-12; 8:45 am]
BILLING CODE 8011-01-P