Document ID: SEC-2010-0538-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-04-09T04:00Z

[Federal Register: April 9, 2010 (Volume 75, Number 68)]
[Notices]               
[Page 18250-18251]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ap10-138]                         

[[Page 18250]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61830; File No. SR-NASDAQ-2010-040]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Pricing for Option Orders Routed to Away Markets

April 1, 2010.
    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 March 25, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by NASDAQ. 
Pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ NASDAQ has designated this proposal as establishing or 
changing a due, fee, or other charge, which renders the proposed rule 
change effective upon filing. 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    NASDAQ proposes to modify Rule 7050 governing pricing for NASDAQ 
members using the NASDAQ Options Market (``NOM''), NASDAQ's facility 
for executing and routing standardized equity and index options. 
Specifically, NOM proposes to expand the list of options that will be 
assessed routing fees of $0.30 per contract for customer orders and 
$0.55 per contract for Firm and Market Maker orders that are routed 
from NOM to NASDAQ OMX PHLX, Inc. (``Phlx''). The proposal also 
includes a technical change to properly alphabetize the symbol ``BAC'' 
in the rule text. NASDAQ will make the proposed rule change effective 
for transactions settling on or after April 1, 2010.
    The text of the proposed rule change is available at http://
nasdaqomx.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
    NASDAQ is proposing to modify Rule 7050 governing the fees assessed 
for options orders entered into NOM but routed to and executed on 
NASDAQ OMX PHLX, Inc. (``Phlx''). Specifically, NASDAQ is proposing to 
expand the number of options to which certain routing fees apply to 
reflect the expansion of the fee schedule for adding and removing 
liquidity on the Phlx.\5\
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    \5\ See SR-Phlx-2010-47 (March 22, 2010). For a description of 
the Phlx's current fee schedule for adding and removing liquidity, 
See Securities Exchange Act Release No. 61684 (March 10, 2010), 75 
FR 13189 (March 18, 2010) (SR-Phlx-2010-33).
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    NASDAQ currently assesses a $0.30 per contract routing fee for 
customer orders, and a $0.55 per contract routing fee for Firm and 
Market Maker orders routed from NOM to Phlx for options that are 
subject to fees and rebates for adding and removing liquidity as 
described in the Phlx fee schedule. To reflect the additions Phlx is 
making to its fee schedule, NASDAQ proposes to add the following 
options to the table set forth in Rule 7050(4): Alcoa, Inc. (``AA''); 
American International Group, Inc. (``AIG''); Advanced Micro Devices, 
Inc. (``AMD''); AMR Corporation (``AMR''); Caterpillar, Inc. (``CAT''); 
Cisco Systems, Inc. (``CSCO''); Ford Motor Company (``F''); Direxion 
Daily Financial Bull 3X Shares (``FAS''); Direxion Daily Financial Bear 
3X Shares (``FAZ''); SPDR Gold Trust (``GLD''); Intel Corporation 
(``INTC''); JPMorgan Chase & Co. (``JPM''), Las Vegas Sands Corp. 
(``LVS''); MGM Mirage (``MGM''); Micron Technology, Inc. (``MU''); 
Newmont Mining Corporation (``NEM''); Palm, Inc. (``PALM''); Pfizer, 
Inc. (``PFE''); Potash Corp./Saskatchewan, Inc. (``POT''); SanDisk 
Corporation (``SNDK''); AT&T, Inc. (``T''); UAL Corporation (``UAUA''); 
Verizon Communications, Inc. (``VZ''), and United States Steel 
Corporation (``X'').
    The Exchange is proposing these fees to recoup the majority of 
transaction and clearing costs associated with routing orders to Phlx. 
As with all fees, the Exchange may adjust these routing fees by filing 
a new proposed rule change.
    The Exchange has designated this proposal to be operative for 
trades settling on or after April 1, 2010.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\6\ in general, and with Section 
6(b)(4) of the Act,\7\ 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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    NASDAQ further believes that the proposed rule change is consistent 
with Section 6(b)(5) of the Act \8\ in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments 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; and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers, or to regulate by virtue of any authority conferred by the Act 
matters not related to the purposes of the Act or the administration of 
the Exchange.
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    \8\ 15 U.S.C. 78f(b)(5).
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    NASDAQ is one of eight options markets in the national market 
system for standardized options. Joining NASDAQ and electing to trade 
options is entirely voluntary. Under these circumstances, NASDAQ's fees 
must be competitive and low in order for NASDAQ to attract order flow, 
execute orders, and grow as a market. NASDAQ thus believes that its 
fees are fair and reasonable and consistent with the Exchange Act.

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 that is not necessary or appropriate in 
furtherance

[[Page 18251]]

of the purposes of the Act, as amended. To the contrary, NASDAQ has 
designed its fees to compete effectively for the execution and routing 
of options contracts and to reduce the overall cost to investors of 
options trading.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were either solicited or 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 \9\ and paragraph (f)(2) of Rule 19b-4 \10\ 
thereunder. 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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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-2010-040 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-2010-040. 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 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-2010-040 and should be submitted on or before April 30, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8153 Filed 4-8-10; 8:45 am]
BILLING CODE 8011-01-P