Document ID: SEC-2009-0109-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2009-01-26T05:00Z

[Federal Register: January 26, 2009 (Volume 74, Number 15)]
[Notices]               
[Page 4493-4495]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ja09-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59260; File No. SR-NASDAQ-2009-001]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Rule 7050 Governing Pricing for Nasdaq Members Using the NASDAQ 
Options Market (``NOM'')

January 15, 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 January 9, 2009, 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. Nasdaq has filed the proposal 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 applicable only to members, 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 Substance 
of the Proposed Rule Change

    Nasdaq has filed a proposed rule change 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. Proposed new language is in italics; proposed 
deletions are in brackets.\5\
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    \5\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://
nasdaqomx.cchwallstreet.com.
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* * * * *
7050. NASDAQ Options Market
    The following charges shall apply to the use of the order execution 
and routing services of the NASDAQ Options Market by members for all 
securities that it trades.
(1) Fees for Execution of Contracts on the NASDAQ Options Market

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Except as specified below, the [C]c harge to  $0.45 per executed
 member entering order that executes in the    contract.
 NASDAQ Options Market.
For a pilot period ending July 31, 2009,      $0.45 per executed
 charge for members or non-members entering    contract.
 order via the Options Intermarket Linkage
 that executes in the Nasdaq Options Market.
Charge to members entering orders in options  No fee.
 on QQQQ, SPY, DIA and IWM with an account
 type ``Customer'' that executes and remove
 liquidity entered by another member.
Credit to member providing liquidity through  $0.30 per executed
 the NASDAQ Options Market.                    contract.
Credit to member providing liquidity using    $0.35 per executed
 price-improving orders through the NASDAQ     contract.
 Options Market.
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[[Page 4494]]

    (2)-(4) No change.
* * * * *

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. 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 lower the fee for the execution of options 
contracts for certain orders in certain options on the NASDAQ Options 
Market (``NOM''). Specifically, Nasdaq is proposing to permit orders 
with an account type of ``Customer'' to take liquidity \6\ for free in 
certain options. Nasdaq is proposing to apply the new fee provision to 
options on four exchange-traded funds: QQQQ, SPY, DIA, and IWM. This 
proposal is designed to attract liquidity to the Nasdaq Options Market 
and thereby to increase the quality and efficiency of executions.
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    \6\ An order that takes liquidity is one that is entered into 
NOM and that executes against an order resting on the NOM book.
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    To ensure that this reduction applies only to customers, the fee 
reduction will apply only when a customer order entered by one member 
takes liquidity provided by a different member. When a trade occurs in 
an included options class and the trade involves a customer removing 
liquidity that has been provided by the same broker dealer, the 
customer side of the transaction will be charged the standard rate for 
removing liquidity. For example, if participant A enters an order and 
then participant A accesses that liquidity with an order with an 
account type of ``Customer,'' the ``Customer'' order is still charged 
$0.45 per executed contract.
    This proposed rule change does not impact the liquidity provider 
rebates set forth in Nasdaq Rule 7050. Nor does it impact the fees 
assessed for orders executed in the Opening and Closing Crosses, or 
those orders routed to away markets.
    Nasdaq believes that the proposed fees are competitive, fair and 
reasonable, and non-discriminatory in that they apply equally to all 
members and customers. As with all fees, Nasdaq may adjust these 
proposed fees in response to competitive conditions by filing a new 
proposed rule change.
2. Statutory Basis
    Nasdaq 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 Nasdaq operates or controls. As the seventh options market in the 
national market system, Nasdaq's fees must be competitive and low in 
order for Nasdaq to attract order flow, execute orders, and grow as a 
market. Nasdaq believes that its fees are fair and reasonable and 
consistent with the Exchange Act.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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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. To the contrary, 
Nasdaq has designed its fees to compete effectively for the execution 
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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ and Rule 19b-
4(f)(2) thereunder,\10\ Nasdaq has designated this proposal as 
establishing or changing a due, fee, or other charge applicable only to 
members, which renders the proposed rule change effective upon filing. 
Nasdaq will make the proposed pricing schedule operational on January 
12th, 2009.
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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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    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-2009-001 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-2009-001. 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 the 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-2009-001 and should 
be submitted on or before February 17, 2009.

[[Page 4495]]

    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. E9-1465 Filed 1-23-09; 8:45 am]

BILLING CODE 8011-01-P