[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Notices]
[Pages 44076-44078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-18492]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64899; File No. SR-NASDAQ-2011-097]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend NASDAQ Stock Market Equities Trading Rules 4757 and 4758 and
NASDAQ Options Market Rules Chapter VI
July 18, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on July 13, 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 prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 amend NASDAQ
Stock Market equities trading Rules 4757 and 4758 and NASDAQ Options
Market Rules Chapter VI, Section 10 and 11.
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 those statements may be examined at the places specified in
Item IV below. The
[[Page 44077]]
Exchange has prepared summaries, set forth in sections A, B, and C
below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On November 3, 2010, the Commission adopted the Market Access
Rule,\3\ pursuant to which, among other things, broker-dealers
providing market access are required to implement certain pre-order
entry checks in order to manage the financial, regulatory, and other
risks associated with providing its customers with market access. In
anticipation of the upcoming July 14, 2011 compliance date for the
Market Access Rule, the Exchange is proposing to amend NASDAQ Stock
Market equities trading Rules 4757 and 4758 and NASDAQ Options Market
Rules Chapter VI, Section 10 and 11 to describe the manner in which the
Exchange's affiliated routing broker-dealers, NASDAQ Execution Services
(``NES'') and NASDAQ Options Services (``NOS'') will handle routable
orders consistent with the Market Access Rule.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 63241 (November 3,
2010), 75 FR 69792 (November 15, 2010).
---------------------------------------------------------------------------
In order to comply with the Market Access Rule, NES and NOS propose
to implement, as part of the procedures of NES and NOS, certain tests,
on both an order-by-order basis and over a short period of time, that
are designed to limit the financial exposure that could arise as a
result of market access and to ensure compliance with all regulatory
requirements that are applicable in connection with market access.
Consistent with the requirements of the Market Access Rule, these tests
are designed to reject orders that NES and NOS deem to be erroneous or
duplicative, would cause the entering Member's credit exposure to
exceed a preset credit threshold, or are non-compliant with pre-trade
regulatory requirements (as defined in the Market Access Rule). To the
extent NES and NOS determine, based on these procedures, that an order
should be rejected, NES and NOS may also seek to cancel orders that
have already been routed away.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\4\ In particular, the
proposed change is consistent with Section 6(b)(5) of the Act,\5\
because it would promote just and equitable principles of trade, and,
in general, protect investors and the public interest. The proposed
rule is consistent with the requirements of the Act because the change
is necessary for the Exchange's affiliated broker-dealer, NES and NOS,
to comply with the Market Access Rule. The Exchange also believes that
the proposed changes will benefit Members of the Exchange because it
provides clarity on the procedures employed by NES and NOS consistent
with the Market Access Rule.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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. Rather, the change
will promote greater competition by allowing NASDAQ to adopt
functionality already in use at competing national securities
exchanges.
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 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6)
thereunder.\7\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \8\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\9\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange notes that
waiving the 30-day operative delay will permit the Exchange's
affiliated broker-dealers, NES and NOS, to comply with Rule 15c3-5
under the Act by July 14, 2011; \10\ the compliance date for Rule 15c3-
5. For this reason, the Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest, and designates the proposed rule change to be
operative upon filing with the Commission.\11\
---------------------------------------------------------------------------
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ 17 CFR 240.15c3-5.
\11\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-2011-097 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-2011-097. 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
[[Page 44078]]
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 such 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-2011-097 and should be submitted
on or before August 12, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18492 Filed 7-21-11; 8:45 am]
BILLING CODE 8011-01-P