[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Notices]
[Pages 9397-9399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3645]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63900; File No. SR-NASDAQ-2011-026]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Offer Additional Routing Option
February 14, 2011.
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 February 10, 2011, 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 and
II below, which Items have been prepared by the Exchange. NASDAQ has
designated the proposed rule change as constituting a rule change under
Rule 19b-4(f)(6) under the Act,\3\ which renders the proposal effective
upon filing with the Commission. 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing this proposed rule change to offer an
additional routing option. NASDAQ proposes to implement the proposed
rule change on February 22, 2011 or as soon thereafter as practicable.
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, the Exchange 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. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 9398]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is amending Rule 4758, which describes its order routing
processes, to add the new CART routing option. Under this routing
option, the use of which is wholly voluntary, a market participant may
specify that an order will route to NASDAQ OMX BX (``BX'') and NASDAQ
OMX PSX (``PSX'') and then check the NASDAQ book, with any unexecuted
shares posting to the NASDAQ book or cancelling, depending on the time-
in-force of the order. Shares posted to the NASDAQ book are not routed
out again. CART, like of all of NASDAQ's routing strategies, is
designed to comply with the SEC Rule 611 and the other provisions of
Regulation NMS.\4\
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\4\ 17 CFR 242.611.
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The rule change also introduces fees for the CART strategy. With
respect to orders executed in BX or PSX, NASDAQ will pass along the
applicable fee or rebate. 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 passes through the fee of $0.0025 per share executed charged by
PSX to market participants when accessing liquidity. CART orders that
access liquidity at NASDAQ will pay the standard NASDAQ take rate of
$0.0030 per share executed, and CART orders that provide liquidity
after posting to the NASDAQ book will receive the rebate for which the
market participant otherwise qualifies under NASDAQ's fee schedule.
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
Sections 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 Exchange
believes that the proposed routing option will accomplish those ends by
providing market participants with an additional voluntary routing
option that will enable them easily to access liquidity available on
all of the national securities exchanges operated by The NASDAQ OMX
Group. NASDAQ expects the routing strategy will benefit firms that do
not employ high-frequency trading strategies under which the firm
itself would rapidly access liquidity provided on the multiple venues.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(5).
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The rule change is also consistent with Section 6 of the Act,\7\ in
general, and with Sections 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. The fees assessed
for CART for routing to BX and PSX are the same as the fees and rebates
that are charged and offered to NASDAQ by these exchanges, and the fees
associated with accessing or providing liquidity on NASDAQ through the
strategy are the same as the fees and rebates applicable to orders that
access NASDAQ without using the strategy. Use of the routing option is
voluntary.
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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. NASDAQ provides
routing services in a highly competitive market in which participants
may avail themselves of a wide variety of routing options offered by
self-regulatory organizations, alternative trading systems, other
broker-dealers, market participants' own proprietary routing systems,
and service bureaus. In such an environment, system enhancements such
as the changes proposed in this rule filing do not burden competition,
because they can succeed in attracting order flow to NASDAQ only if
they offer investors higher quality and better value than services
offered by others. Encouraging competitors to provide higher quality
and better value is the essence of a well-functioning competitive
marketplace.
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). 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \12\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. NASDAQ requests that
the Commission waive the 30-day operative delay because it currently
has the technological changes ready to support the proposed rule
change, and believes that the benefits of greater flexibility that are
expected from the rule change should not be delayed. The Commission
believes that accelerating the 30-day operative delay \13\ is
consistent with the protection of investors and the public interest and
designates the proposal operative upon filing.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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:
[[Page 9399]]
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-2011-026 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-2011-026. 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,\14\ 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. 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 publicly available. All submissions should refer to
File Number SR-NASDAQ-2011-026 and should be submitted on or before
March 10, 2011.
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\14\ 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.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3645 Filed 2-16-11; 8:45 am]
BILLING CODE 8011-01-P