Document ID: SEC-2008-0233-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-02-12T05:00Z

[Federal Register: February 12, 2008 (Volume 73, Number 29)]
[Notices]               
[Page 8096-8098]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12fe08-74]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57274; File No. SR-NASDAQ-2008-009]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Modify Fees for Members Using the Nasdaq Market Center

February 5, 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 February 1, 2008, The NASDAQ Stock Market LLC (``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 substantially by Nasdaq. Nasdaq has designated 
this proposal as one establishing or changing a member due, fee, or 
other charge imposed by Nasdaq under section 19(b)(3)(A)(ii) of the Act 
\3\ and Rule 19b-4(f)(2) 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 implemented this proposed rule change on 
February 1, 2008. The text of the proposed rule change is available at 
http://www.nasdaq.complinet.com, the principal offices of the Exchange, 

and 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
    Nasdaq is introducing changes to its order execution pricing 
schedule to lower fees for certain members that execute high volumes of 
transactions through the Nasdaq Market Center but that do not qualify 
for current favorable pricing because they provide lower volumes of 
liquidity. Specifically, any member that accesses an average of 55 
million or more shares of liquidity through the Nasdaq Market Center in 
a month would pay a reduced fee for accessing that liquidity unless the 
member already qualifies for a more favorable pricing level. For shares 
of New York Stock Exchange (``NYSE'') listed companies, the fee will be 
$0.00285 per share executed in the Nasdaq Market Center,\5\ and for 
securities listed on Nasdaq and other exchanges, the reduced fee will 
be $0.00265 per share executed in the Nasdaq Market Center.\6\ Members 
qualifying for the reduced execution charge would continue to pay fees 
for routing to other exchanges at their current levels, which are 
identical to the current fees for accessing liquidity.
---------------------------------------------------------------------------

    \5\ The fee represents a reduction from the current execution 
fees of $0.0029 per share paid by members with an average daily 
volume of (i) more than 20 million shares of liquidity provided and 
(ii) more than 35 million shares of liquidity accessed and/or 
routed; and $0.003 per share executed for members with lower 
volumes. Members with an average daily volume of (i) more than 35 
million shares of liquidity provided and (ii) more than 55 million 
shares of liquidity accessed and/or routed; or with an average daily 
volume of (i) more than 25 million shares of liquidity provided, and 
(ii) more than 65 million shares of liquidity accessed and/or 
routed, will continue to pay a lower rate of $0.0028 per share 
executed.
    \6\ The fee represents a reduction from the current execution 
fees of $0.0028 per share paid by members with an average daily 
volume of (i) more than 20 million shares of liquidity provided and 
(ii) more than 35 million shares of liquidity accessed and/or 
routed; and $0.003 per share executed for members with lower 
volumes. Members with an average daily volume of (i) more than 35 
million shares of liquidity provided and (ii) more than 55 million 
shares of liquidity accessed and/or routed; or with an average daily 
volume of (i) more than 25 million shares of liquidity provided, and 
(ii) more than 65 million shares of liquidity accessed and/or 
routed, will continue to pay a lower rate of $0.0026 per share 
executed.
---------------------------------------------------------------------------

    Second, Nasdaq is simplifying its pricing schedule by eliminating a 
reduced fee for orders that are designated for routing directly to the 
American Stock Exchange (``Amex'') without attempting to execute in the 
Nasdaq Market Center prior to routing. As a result, for securities 
listed on exchanges other than NYSE, the fee is now $0.0035 per share 
for all orders

[[Page 8097]]

designated for specialized routing, including Directed Intermarket 
Sweep Orders, orders that attempt to execute solely against displayed 
interest in Nasdaq, and orders that do not attempt to execute in Nasdaq 
at all.
    Third, Nasdaq is reducing one of the volume levels required to 
qualify for a reduced fee for routing orders to NYSE. Members with an 
average daily volume of more than 50 million shares of liquidity 
(currently 60 million shares) routed to NYSE without attempting to 
execute in Nasdaq (other than Directed Intermarket Sweep Orders) will 
qualify for a fee of $0.0009 for orders that do not attempt to execute 
in Nasdaq (compared with the fee of $0.001 for members with lower 
volumes).\7\
---------------------------------------------------------------------------

    \7\ Members also qualify for the reduced fee if they have an 
average daily volume of more than 35 million shares of liquidity 
provided.
---------------------------------------------------------------------------

    Finally, Nasdaq is modifying its fees for routing odd lot 
transactions to NYSE Arca. Currently, these fees apply only to orders 
that are entered in Nasdaq as odd lots and then executed at NYSE Arca. 
The modified fees will apply to any order executed at NYSE Arca as an 
odd lot, regardless of how it is entered in Nasdaq. For orders that 
attempt to execute in Nasdaq prior to routing, the fee will be $0.004 
per share executed for Nasdaq-listed securities and $0.03 for other 
securities; for orders that do not attempt to execute in Nasdaq, the 
fee will be $0.005 per share executed for Nasdaq-listed securities and 
$0.04 for other securities. The change is designed to allow Nasdaq to 
recoup charges that NYSE Arca imposes on odd lots; the higher fee for 
orders that do not check Nasdaq before routing is designed to further 
discourage the entry of odd lot orders that have no opportunity for 
executing prior to routing.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\8\ in general, and with section 
6(b)(4) of the Act,\9\ 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. The changes will result in a 
reduction in execution fees for members that execute high volumes of 
securities in Nasdaq but without also providing high volumes of 
liquidity, and will expand the availability of reduced routing rates 
for members using Nasdaq to route to the NYSE. The changes will also 
rationalize fees for routing orders in securities listed on exchanges 
other than NYSE by eliminating a discount for certain orders routed to 
Amex. Finally, the proposed rule change will ensure that Nasdaq fully 
recovers costs incurred when routing odd lots to NYSE Arca and will 
provide financial disincentives for members to enter orders that are 
likely to result in the routing of odd lots. The impact of the changes 
upon the net fees paid by a particular market participant will depend 
upon a number of variables, including the types of securities that it 
trades through Nasdaq, its monthly volume, the order types it uses, and 
the prices of its quotes and orders, but on balance the change should 
result in a fee decrease or unchanged fees for most members. Nasdaq 
notes that it operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues if they 
deem fee levels at a particular venue to be excessive. Accordingly, to 
the extent that certain routing fees are increasing, Nasdaq believes 
that these fees remain competitive with those charged by other venues 
and therefore continue to be reasonable and equitably allocated to 
those members that opt to direct orders to Nasdaq rather than competing 
venues.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \10\ and Rule 
19b-4(f)(2) \11\ thereunder, because it establishes or changes a due, 
fee, or other charge imposed on members by Nasdaq. Accordingly, the 
proposal is effective upon filing with the Commission. 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2008-009 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-009. 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-2008-009 and should 
be submitted on or before March 4, 2008.

[[Page 8098]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-2523 Filed 2-11-08; 8:45 am]

BILLING CODE 8011-01-P