Document ID: SEC-2008-1644-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-12-08T05:00Z

[Federal Register: December 8, 2008 (Volume 73, Number 236)]
[Notices]               
[Page 74549-74551]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de08-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59023; File No. SR-NASDAQ-2008-090]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Enhancements to the Nasdaq Regulation Reconnaissance Service

November 26, 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 November 24, 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 by Nasdaq. 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 fees for an enhancement to the 
Regulation Reconnaissance Service, which would provide firms with the 
ability to recreate the Nasdaq/CQS order books and trade data by way of 
a visual display. The text of the proposed rule change is available on 
Nasdaq's Web site, 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 proposes to establish a fee for a new enhancement to the 
Nasdaq Regulation Reconnaissance Service (``Reg Recon''). Reg Recon is 
currently available as an add-on to the Nasdaq Workstation and Weblink 
ACT 2.0. Nasdaq is proposing to provide access to the Market Replay 
function to Reg Recon subscribers for an additional fee. Market Replay 
is a software program developed by Nasdaq, which uses publicly-
available information to recreate and display the Nasdaq/CQS order 
books and trade data for any point in time.\3\
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    \3\ Market Replay data is delayed 15 minutes.
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    Nasdaq currently provides Market Replay for free on a publicly-
accessible Web site as a demonstration of the product. Nasdaq hopes 
that vendors will ultimately purchase Market Replay to provide access 
to the functionality to their customers, either using the software ``as 
is'' or integrating the software into their proprietary displays. 
Nasdaq is proposing to provide Reg Recon subscribers an option to 
enhance their service with an integrated version of Market Replay.
    Market Replay allows users to reconstruct the market for any 
Nasdaq/CQS security, and view trades and quotes at the millisecond 
level. In particular, Market Replay allows users to access the 
historical market for a particular security by entering a symbol, date, 
and timeframe. Subscribers may

[[Page 74550]]

view quotes and/or trades in a security for the day and timeframe 
requested.
    By way of a scrolling chart, Market Replay displays the National 
Best Bid and Offer together with the consolidated trades for the chosen 
security in simulated real time. Users are able to zoom in on the chart 
and manipulate the chart speed and direction. Users may also filter the 
data presented on the chart by market center.\4\ Market Replay can also 
provide users with a list of trades that occurred during a user-defined 
timeframe, and can calculate price and volume statistics for that 
timeframe (i.e., minimum/maximum price, total shares, and Volume 
Weighted Average Price).
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    \4\ Currently, Market Replay supports the following market 
centers: American Stock Exchange; CBOE Stock Exchange; Chicago Stock 
Exchange; Financial Industry Regulatory Authority; International 
Securities Exchange; National Stock Exchange; New York Stock 
Exchange; NYSE Arca; Philadelphia Stock Exchange; and The NASDAQ 
Stock Market. Nasdaq plans to add data for the BATS Exchange and 
Boston Stock Exchange in the future.
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    Similarly, Market Replay can provide a minimum and maximum National 
Best Bid and Offer for a selected timeframe, as well as the minimum and 
maximum bid and offer for each exchange trading stock during the 
timeframe.
    In addition to providing a useful analytical tool, Nasdaq believes 
that firms would find Market Replay helpful in responding to customer 
inquiries regarding the price received in a particular trade. In 
particular, firms can send to customers a Nasdaq-validated screen shot 
of the moment their particular trade occurred, confirming the quality 
of the execution.
    Nasdaq proposes to offer Reg Recon subscribers access to the Market 
Replay function to [sic] for a fee of $500 per MPID, per month, plus a 
fee of $50 per user, per month. The proposed fees will cover the 
expense of purchasing the publicly-available data, as well as cover the 
costs associated with purchasing the Market Replay software from Nasdaq 
Data Products as any vendor must do. The proposed fees will also 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 Reg Recon service generally, and the Market 
Replay upgrade are entirely optional services. Firms may choose to 
purchase Reg Recon or not, and those that choose to purchase it may 
then choose to purchase the Market Replay upgrade or not. If a firm 
does not perceive that the Reg Recon and Market Replay services are 
sufficiently valuable, it will choose not to purchase those services.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\5\ in general, and with Section 
6(b)(5) of the Act,\6\ in particular, in that the proposal 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. The amendments proposed 
herein will provide Reg Recon subscribers with a useful analytical tool 
with which to analyze and understand the historical market for Nasdaq/
CQS securities and assist with researching RegNMS trade-throughs.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
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    Nasdaq also 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)(4) of the Act,\8\ 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 the Nasdaq operates or controls, and it does not unfairly 
discriminate between customers, issuers, brokers or dealers. Use of the 
Market Replay enhancement to Reg Recon is voluntary and the 
subscription fees will be imposed on all purchasers equally based on 
the level of service selected.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    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.

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 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-2008-090 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-2008-090. 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

[[Page 74551]]

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 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-
090 and should be submitted on or before December 29, 2008.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading & Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-28957 Filed 12-5-08; 8:45 am]

BILLING CODE 8011-01-P