[Federal Register Volume 76, Number 175 (Friday, September 9, 2011)]
[Notices]
[Pages 55954-55956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23034]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65246; File No. SR-NASDAQ-2011-120]
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 1, 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 August 25, 2011, The NASDAQ Stock Market LLC (the ``Exchange''
or ``NASDAQ'') filed with the Securities and Exchange Commission (the
``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 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
September 1, 2011. The text of the proposed rule change is available at
http://nasdaq.cchwallstreet.com/, at NASDAQ's principal office, at the
Commission's Public Reference Room, and at the Commission's Web site at
http://www.sec.gov.
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.
[[Page 55955]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is amending Rule 7018 to make two modifications to its
pricing schedule for routing and execution of quotes/orders through the
NASDAQ Market Center of securities priced at $1 or more. First, NASDAQ
is proposing to extend and modify, for one month the Attributable
Market Provider pilot program to continue to encourage more extensive
market making activity on NASDAQ. Under the pilot, set forth in NASDAQ
Rule 7018(a)(4), a market maker with an MPID through which it has
registered as a market maker in a daily average of more than 5,000
securities during the month will receive an additional credit of
$0.0004 per share executed with respect to attributable quotes/orders
that provide liquidity through such MPID, in addition to the credit
that it is otherwise entitled to receive under Rule 7018. Currently,
the maximum additional rebate that a member can receive under this
pilot program is $250,000 per month. NASDAQ is reducing the maximum
from $250,000 to $100,000 during the one-month extension of the pilot.
The cap applies on a per member basis, regardless of the number of
MPIDs through which the member qualifies for the program. Through the
program, NASDAQ hopes to see a continuation of increased market maker
participation and contribution of attributable liquidity in order to
enhance price discovery. Throughout the pilot period, NASDAQ will
evaluate the costs and benefits of the program, and will then either
allow the pilot to lapse or file to extend, modify, or make the program
permanent.
Second, NASDAQ is raising from $0.0027 to $0.0029 the charge for
members entering Directed Orders sent to NASDAQ OMX PSX. The current
charge of $0.0027 reflects a premium of $0.0002 above the standard
charge for removing liquidity at NASDAQ OMX PSX. Effective September 1,
2011, NASDAQ OMX PSX will be increasing by $0.0002 the charge for
removing liquidity. Therefore, to maintain the $0.0002 premium above
that rate, NASDAQ is increasing the rate for Directed Orders sent to
NASDAQ OMX PSX by $0.0002 to $0.0029.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\3\ in general, and with Section
6(b)(4) of the Act,\4\ 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. All similarly situated members are
subject to the same fee structure, and access to NASDAQ is offered on
fair and non-discriminatory terms.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(4).
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Extending the proposed Attributable Market Provider program is
reasonable because it will continue a fee reduction for members that
qualify for the program, without increasing the costs borne by other
members. It is reasonable that NASDAQ lowers the maximum credit due to
its analysis of the current mix of usage of the pilot program by its
various members. Moreover, the proposed program is consistent with an
equitable allocation of fees because it allocates a higher rebate to
members that make significant contributions to NASDAQ market quality by
making markets in a large number of stocks and that contribute to price
discovery by posting attributable quotes/orders. Although members
qualifying for the program may use non-attributed and non-displayed
orders, the enhanced rebate will be paid only with respect to
attributable, displayed liquidity. Based on three months of experience
with the pilot, NASDAQ believes that the program does encourage some
market makers to become active in more stocks and display more shares
of liquidity, thereby benefiting other market participants that will
receive a more complete understanding of the supply and demand for
particular stocks and that will be able to access the liquidity
displayed by such market makers.
With respect to the charge for sending Directed Orders to NASDAQ
OMX PSX, NASDAQ believes that raising the fee by $0.0002 is reasonable
and an equitable allocation of fees in that this increase maintains a
stable premium of $0.0002 over the charge for removing liquidity on
NASDAQ OMX PSX. This premium represents a fee for usage of NASDAQ's
state-of-the-art routing service.
Finally, NASDAQ notes that it operates in a highly competitive
market in which market participants can readily favor competing venues
if they deem fee levels at a particular venue to be excessive. In such
an environment, NASDAQ must continually adjust its fees to remain
competitive with other exchanges and with alternative trading systems
that have been exempted from compliance with the statutory standards
applicable to exchanges.
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 opt to disfavor NASDAQ's execution services if they believe
that alternatives offer them better value. For this reason and the
reasons discussed in connection with the statutory basis for the
proposed rule change, NASDAQ does not believe that the proposed changes
will impair the ability of members or competing order execution venues
to maintain their competitive standing in the financial markets.
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.\5\ 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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\5\ 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
[[Page 55956]]
Number SR-NASDAQ-2011-120 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-2011-120. 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. 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-2011-120 and should be submitted on or before September 30,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Dated: September 1, 2011
Elizabeth M. Murphy
Secretary
[FR Doc. 2011-23034 Filed 9-8-11; 8:45 am]
BILLING CODE 8011-01-P