[Federal Register Volume 76, Number 201 (Tuesday, October 18, 2011)]
[Notices]
[Pages 64411-64413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26856]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65536; File No. SR-NASDAQ-2011-140]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify the Minimum Quantity Order
October 12, 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 September 30, 2011, 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 Substance
of the Proposed Rule Change
NASDAQ is filing this proposed rule change to modify the operation
of its Minimum Quantity Order. NASDAQ proposes to implement the rule
change on a date that is at least thirty days after the date of the
filing, but prior to November 30, 2011. 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
[[Page 64412]]
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
In order to provide enhanced functionality, NASDAQ is proposing to
modify the functionality of its Minimum Quantity Order. Minimum
Quantity Orders allow a market participant to specify a minimum share
amount that the market participant seeks to obtain; accordingly, a
Minimum Quantity Order will not execute unless the volume of liquidity
available to execute against the order exceeds the designated minimum.
A Minimum Quantity Order provides a means by which a market participant
may avoid partial executions of orders at sizes that it considers
inadequate to achieve its purposes. For example, a market participant
seeking to sell a large position in a trading session with high
volatility may use the order type to avoid selling only a small portion
of the order at the price it considers acceptable.
Currently, Minimum Quantity Orders must be designated with a time-
in-force of System Hours Immediate or Cancel or Market Hours Immediate
or Cancel. As a result, the order can only be used to ``ping'' the
NASDAQ book to see if there is any posted liquidity that would allow
the minimum execution. NASDAQ is proposing to remove this restriction
so that a Minimum Quantity Order could post to the book if it cannot be
executed immediately. Once posted, the order will execute if an
incoming order that is marketable against it would satisfy its minimum
quantity requirement. A Minimum Quantity Order that posts to the book
is not displayed. Upon entry, a Minimum Quantity Order must have a size
and a minimum quantity condition of at least one round lot.
In the event that the shares remaining in the size of a Minimum
Quantity Order following a partial execution are less than the minimum
quantity specified by the market participant entering the order, the
minimum quantity value of the order will be reduced to the number of
shares remaining. Thus, for example, if a market participant entered a
Minimum Quantity Order with a size of 1,000 and a minimum quantity of
500, and the order was marketable against a 600 share order on the
book, the remaining 400 shares of the Minimum Quantity Order would post
to the book with a minimum quantity restriction of 400 shares.
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)(5) of the Act,\4\ 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. Specifically, NASDAQ
believes that the change to the functioning of the Minimum Quantity
Order will provide market participants with better control over their
trading patterns, thereby providing them with greater potential to
improve the quality of their order executions.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(5).
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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. The changes to the
Minimum Quantity Order will enhance the functionality offered by NASDAQ
to its members, thereby promoting its competitiveness with other
exchanges and non-exchange trading venues that already offer similar
functionality.
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 \5\ and Rule 19b-
4(f)(6) thereunder.\6\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
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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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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-2011-140 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-2011-140. 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 NASDAQ.
All comments received will
[[Page 64413]]
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-2011-140 and should be submitted
on or before November 8, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26856 Filed 10-17-11; 8:45 am]
BILLING CODE 8011-01-P