[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Notices]
[Pages 9395-9397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3584]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63893; File No. SR-NASDAQ-2011-023]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add Routing Option SOLV and Corresponding Fees
February 11, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 9396]]
notice is hereby given that on February 4, 2011, The NASDAQ Stock
Market LLC (the ``Exchange'' or ``Nasdaq'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been substantially
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 Substance
of the Proposed Rule Change
NASDAQ proposes to amend NASDAQ Rule 4758 to add a new routing
option, SOLV, and add corresponding fees to the fee schedule.
The text of the proposed rule change is available on Nasdaq's Web
site 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to add a routing strategy, SOLV, that will
offer members a means of accessing liquidity in a wide range of
execution venues at varying price levels. SOLV will operate in the same
manner as the current SAVE strategy in most respects, but will differ
in the treatment of shares that remain unexecuted after completing the
order route and posting to the NASDAQ book. Whereas such shares under
SAVE, if locked or crossed by another market center, are not routed to
the locking or crossing market center, SOLV orders will be routed out
for execution at the other market center.
Under the new SOLV routing option, like under the current SAVE
routing option, a market participant may specify that an order will
either (i) route to NASDAQ OMX BX (``BX'') and NASDAQ OMX PSX
(``PSX''), then check the NASDAQ book, and then route to other venues
on the SOLV System routing table, or (ii) check the NASDAQ book first
and then route to destinations on the SOLV System routing table.\3\
Under the second option, the applicable routing table includes BX and
PSX, and as is the case with all market destinations, the placement of
BX and PSX on the routing table depends on NASDAQ's ongoing assessments
of factors such as latency, fill rates, reliability, and cost. Under
either routing option in SOLV and SAVE, shares that remain unexecuted
after this routing are then posted on the NASDAQ book.\4\ Under SOLV,
however, unlike under SAVE, unexecuted shares posted to the NASDAQ book
will be routed out if the order is locked or crossed by another market
center.
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\3\ As provided in Rule 4758(a)(1)(A), the term ``System routing
table'' refers to the proprietary process for determining the
specific trading venues to which the System routes orders and the
order in which it routes them. NASDAQ reserves the right to maintain
a different System routing table for different routing options and
to modify the System routing table at any time without notice.
\4\ Pursuant to NASDAQ Rule 4758(a)(1)(B), if a routed order is
returned, in whole or in part, that order will receive a new time
stamp reflecting the time of its return to the System.
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NASDAQ has designed SOLV to comply with the requirements of Rule
611 of Regulation NMS, and believes that SOLV, like all NASDAQ routing
strategies, conforms to Reg-NMS requirements.
SOLV is similar in concept to a routing strategy offered by BATS
called ``SLIM,'' under which an order checks the System for available
shares, is routed to BATS Y-Exchange, Inc. and then is sent to
destinations on the System routing table before posting to the book.\5\
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\5\ Securities Exchange Act Release No. 63147 (October 21,
2010), 75 FR 66183 (October 27, 2010) (SR-BATS-2010-029).
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This rule change also amends the fee schedule to account for the
SOLV routing strategy. The fees charged for SOLV are the same as
currently charged under SAVE. Under Rule 7018, NASDAQ passes through,
without modification, applicable BX and PSX fees or rebates. In the
case of BX, this means that NASDAQ passes through the $0.0014 per share
executed credit paid by BX to market participants when accessing
liquidity, and in the case of PSX, NASDAQ will pass through the fee
charged by PSX to market participants when accessing liquidity.\6\ SOLV
thus provides market participants with the option of routing to a venue
with a negative execution cost (BX) and a relatively lower execution
cost (PSX) before accessing liquidity on NASDAQ and other venues.
Market participants that wish to access NASDAQ before routing to BX and
PSX may also do so using SOLV, and will receive the same pricing as
those that opt to route to BX and PSX first, subject to the fact that
they are likely to have more shares executed on NASDAQ, at a higher
cost, than those that use SOLV to route to BX and PSX first. SOLV
orders that execute at venues other than NASDAQ, BX or PSX or NYSE will
be charged $0.0026 per share executed, orders that execute at NYSE will
be charged $0.0022 per share executed, and orders that execute in
NASDAQ are charged the same execution fee as SAVE, which is $0.0027 per
share executed.
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\6\ The fee is currently $0.0013 per share executed, but NASDAQ
OMX PSX anticipates increasing the fee to $0.0025 per share executed
as of February 1, 2011.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\7\ in general, and with
Sections 6(b)(5) of the Act,\8\ 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 Exchange
believes that the proposed routing option will accomplish those ends by
providing more flexible options, insomuch as it offers NASDAQ members a
routing strategy with a wide range of execution venues at varying price
levels.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
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The rule change is also consistent with Section 6 of the Act,\9\ in
general, and with Sections 6(b)(5) of the Act,\10\ 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 fees assessed
for SOLV are the same fees and rebates currently charged for the
similar routing strategy SAVE. Use of the routing option is, of course,
entirely voluntary.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
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[[Page 9397]]
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of 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. The
Exchange has satisfied this requirement.
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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.
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-2011-023 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-2011-023. 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 the filing also will be
available for inspection and copying at the principal office of the
Exchange.\15\ 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-2011-023 and should be submitted on or before March 10, 2011.
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\15\ The text of the proposed rule change is available on the
Commission's Web site at http://www.sec.gov.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3584 Filed 2-16-11; 8:45 am]
BILLING CODE 8011-01-P