[Federal Register Volume 75, Number 85 (Tuesday, May 4, 2010)]
[Notices]
[Pages 23825-23827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10275]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61991; File No. SR-NASDAQ-2010-050]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the NASDAQ Stock Market LLC
Relating to the Opening of Trading in the NASDAQ Options Market
April 27, 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 April 15, 2010, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') 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 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 Substance
of the Proposed Rule Change
Nasdaq is filing a proposal for the NASDAQ Options Market (``NOM''
or ``Exchange'') to to [sic] modify Chapter VI, Section 8 of the
Exchange's rules, dealing with the Nasdaq Opening Cross.
The text of the proposed rule change is available from Nasdaq's Web
site at http://nasdaq.cchwallstreet.com, at Nasdaq's principal office,
and at the Commission's Public Reference Room.
[[Page 23826]]
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 modify Chapter VI, Section 8 of the rules
governing NOM, and in particular governing the opening of trading in
that market. Currently, pursuant to Chapter VI, Section 8(b) of NOM's
rules, the Nasdaq Opening Cross occurs once certain preconditions are
met. Section 8(b) of Chapter VI permits the Opening Cross to occur at
or after 9:30 if there is no Imbalance \3\, if the dissemination of a
quote or trade by the Market for the Underlying Security \4\ has
occurred (or, in the case of index options, the Exchange has received
the opening price of the underlying index) and if a certain number (as
the Exchange may determine from time to time) of other options
exchanges have disseminated a firm quote on the Options Price Reporting
Authority (``OPRA'').\5\
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\3\ ``Imbalance'' is defined in Section 8(a)(1) of Chapter VI as
the number of contracts of Eligible Interest that may not be matched
with other order contracts at a particular price at any given time.
\4\ Section 8(a)(5) of Chapter VI defines ``Market for the
Underlying Security'' as meaning either the primary listing market,
the primary volume market (defined as the market with the most
liquidity in that underlying security for the previous two calendar
months), or the first market to open the underlying security, as
determined by the Exchange on an issue-by-issue basis and announced
to the membership on the Exchange's Web site.
\5\ If all the conditions specified in Section 8(b) of Chapter
VI have been met except that there is an Imbalance, Section 8(b)(5)
requires one additional Order Imbalance Indicator message to be
disseminated, after which the Opening Cross occurs, executing the
maximum number of contracts. Any remaining Imbalance that is not
executable in the Opening Cross is canceled.
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Section 8(c) of Chapter VI governs situations in which the
requisite number of firm quotes have not been disseminated for an
option by other options exchanges. No Opening Cross will occur if firm
quotes are not disseminated for an option by the predetermined number
of options exchanges until such time during the day that the Exchange
determines. In that case, provided dissemination of a quote or trade by
the Market for the Underlying Security has occurred (or, in the case of
index options, the Exchange has received the opening price of the
underlying index) the option will open for trading.\6\
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\6\ If there is interest in the Opening Cross, the option will
not open for trading in that option until the orders that would be
executed in the Opening Cross are resolved through the cancellation
or modification of the orders by the entering party or parties.
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The Exchange is proposing to amend both Section 8(b) and 8(c) of
Chapter VI to clarify in each case that the dissemination of a quote or
trade by the Market for the Underlying Security must occur during
regular trading hours in order for the NOM opening cross to occur in
that option. These amendments would establish clearly that this
precondition for opening trading in an option on NOM would not be met
if, for example, the Market for the Underlying Security were to both
open and then halt trading prior to regular trading hours which
currently begin at 9:30 a.m.
The Exchange is also proposing to amend Section 8(c)(2) of Chapter
VI to clarify that if opening quotes or orders lock or cross each other
such that an Opening Cross can be initiated, the Exchange may open for
trading in that option even if the orders that would be executed in the
Opening Cross are not cancelled or modified so that they no longer lock
or cross each other, if and when the number of options exchanges
required under the introductory language of Section 8(b) of Chapter VI
for the opening of trading of System securities have disseminated a
firm quote on OPRA. This amendment will not make a change in the
operation of the trading system, but will merely clarify the intended
NOM opening process.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Section
6(b)(5) of the Act \8\ in particular, in that it is designed to promote
just and equitable principles of trade, 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.
Nasdaq believes that the proposal is consistent with this standard
because the proposed rule change is designed to clarify its rules for
the benefit of all market participants.
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\7\ 15 U.S.C. 78f(b).
\8\ 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
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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 Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder 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 after the date of the filing, or such shorter time as the
Commission may designate.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). 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 filing of the proposed
rule change, or such shorter time as designated by the Commission.
Nasdaq has satisfied this requirement.
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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 [email protected]. Please include
File Number SR-NASDAQ-2010-050 on the subject line.
[[Page 23827]]
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-2010-050. 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,\11\ 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 a.m.
and 3 p.m. Copies of the 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 available publicly. All
submissions should refer to File Number SR-NASDAQ-2010-050 and should
be submitted on or before May 25, 2010.
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\11\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov/rules/sro.shtml.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-10275 Filed 5-3-10; 8:45 am]
BILLING CODE 8010-01-P