[Federal Register Volume 75, Number 192 (Tuesday, October 5, 2010)]
[Notices]
[Pages 61539-61541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24897]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63007; File No. SR-NASDAQ-2010-121]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Fees for Members Using the NASDAQ Market Center
September 29, 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 September 28, 2010, 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 modify pricing for NASDAQ members using the
NASDAQ Market Center. NASDAQ will implement the proposed change on
October 1, 2010. The text of the proposed rule change is available at
http://nasdaq.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 amending Rule 7018 to make modifications to its pricing
schedule for execution and routing of orders in securities priced at $1
or more through the NASDAQ Market Center.\3\ First, NASDAQ is
introducing a new rebate tier for members providing liquidity through
the NASDAQ Market Center. The new tier is available to members
providing a daily average of more than 20 million shares of liquidity
during the month, including a daily average of more than 8 million
shares provided with respect to securities that are listed on exchanges
other than NASDAQ or the New York Stock Exchange (``Tape B
Securities''). Members qualifying for this tier will receive a rebate
of $0.0015 per share executed for quotes/orders that are not displayed,
and $0.0029 per share
[[Page 61540]]
executed for other quotes/orders. NASDAQ is making this change in order
to encourage greater levels of liquidity provision in Tape B
Securities.
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\3\ Fees and credits for execution and routing of orders in
securities priced below $1 remain unchanged.
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Second, NASDAQ is modifying the rebate tier for members (i)
providing a daily average of more than 25 million shares of liquidity
through the NASDAQ Market Center and (ii) accessing more than 200,000
options contracts through the NASDAQ Options Market. Currently, a
member that qualified for this tier would receive $0.0029 per share
executed for providing liquidity through the NASDAQ Market Center. The
tier is being modified so that the rebate will be $0.0015 per share
executed for quotes/orders that are not displayed, but will remain
$0.0029 per share executed for other quotes/orders. This change will
make the tier more consistent with other tiers that provide a lower
rebate with respect to non-displayed quotes/orders.
Third, NASDAQ is modifying the conditions under which a member may
qualify for the most favorable liquidity provider rebate tier, under
which members earn $0.00295 per share executed for displayed quotes/
orders and $0.0015 per share executed for non-displayed quotes/orders.
Currently, a member qualifies for this tier if it provides a daily
average of more than 95 million shares of liquidity during the month.
Under the proposed change, the required level of liquidity provision
will vary depending on overall market volumes during the month. Thus, a
member will qualify for the rebate if it has a daily average volume
during the month of (i) more than 95 million shares of liquidity
provided, if average total consolidated volume reported to all
consolidated transaction reporting plans by all exchanges and trade
reporting facilities is more than 10 billion shares per day during the
month, (ii) more than 85 million shares of liquidity provided, if
average total consolidated volume is between 9,000,000,001 and 10
billion shares per day during the month, (iii) more than 75 million
shares of liquidity provided, if average total consolidated volume is
between 8,000,000,001 and 9 billion shares per day during the month, or
(iv) more than 65 million shares of liquidity provided, if average
total consolidated volume is 8 billion or fewer shares per day during
the month. The change is expected to increase the number of firms
qualifying for the most favorable rebate tier during months when
overall trading volumes are lower, by allowing the required level of
liquidity provision to vary with overall trading volumes.
Finally, NASDAQ is making minor modifications to its routing fees
to reflect the imminent launch of cash equities trading on NASDAQ OMX
PSX (``PSX''), a new facility of NASDAQ OMX PHLX LLC, NASDAQ's sister
exchange. The changes will result in routing fees to PSX that are
similar to fees already in place for routing to NASDAQ OMX BX.
Specifically, the fee for routing directed orders to PSX will be
$0.0015 per share executed.\4\ In addition, the fee for routing to PSX
using NASDAQ's SAVE and TFTY routing strategies will consist of a pass
through of the fee charged by PSX to access liquidity there (currently
$0.0013 per share executed).
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\4\ PSX will charge a fee of $0.0013 per share executed to
access liquidity, so the routing fee of $0.0015 reflects a small
markup on the fee that PSX charges NASDAQ's routing broker. By
contrast, BX pays a rebate to firms accessing liquidity, so NASDAQ's
routing fee of $0.0002 per share executed similarly allows it to
receive revenue for routing directed orders. By contrast, when
routing using certain specific routing strategies, NASDAQ foregoes
revenue and passes through the applicable access fees or rebates.
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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)(4) of the Act,\6\ 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 impact of the price changes upon
the net fees paid by a particular market participant will depend upon a
number of variables, including the prices of the market participant's
quotes and orders relative to the national best bid and offer (i.e.,
its propensity to add or remove liquidity), the types of securities
that it trades, its usage of non-displayed quotes/orders, its trading
volumes, and overall market volumes.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
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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, if particular market participants object to the proposed
fee changes, they can avoid paying the fees by directing orders to
other venues. NASDAQ believes that its fees continue to be reasonable
and equitably allocated to members on the basis of whether they opt to
direct orders to NASDAQ.
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. Because the market
for order execution and routing is extremely competitive, members may
readily direct orders to NASDAQ's competitors if they object to the
proposed rule change.
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 rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\7\ At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend 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. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
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\7\ 15 U.S.C. 78s(b)(3)(a)(ii).
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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 [email protected]. Please include
File Number SR-NASDAQ-2010-121 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-2010-121. This
[[Page 61541]]
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 website
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 such filing also will be available for inspection and copying at the
principal offices 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-2010-121, and
should be submitted on or before October 26, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24897 Filed 10-4-10; 8:45 am]
BILLING CODE 8010-01-P