[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32495-32496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12818]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69631; File No. SR-NASDAQ-2013-078]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt a New Routing Option, MOPB, Under Rule 4758(a)(1)(A)
May 23, 2013.
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 May 15, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I, II and
III 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.
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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 adopt a new routing option, MOPB, under Rule
4758(a)(1)(A). NASDAQ plans to offer the proposed routing option on
June 3, 2013. Proposed deletions are in brackets; new language is in
italics.
4758. Order Routing
(a) Order Routing Process
(1) The Order Routing Process shall be available to Participants
from 4:00 a.m. until 8:00 p.m. Eastern Time, and shall route orders as
described below. All routing of orders shall comply with Rule 611 of
Regulation NMS under the Exchange Act.
(A) The System provides a variety of routing options. Routing
options may be combined with all available order types and times-in-
force, with the exception of order types and times-in-force whose terms
are inconsistent with the terms of a particular routing option. The
System will consider the quotations only of accessible markets. 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. The System routing options are:
(i)-(xiii) No change.
(xiv) MOPB is a routing option under which orders route only to
Protected Quotations and only for displayed size. If shares remain
unexecuted after routing, they will be immediately cancelled. The
entire MOPB order will be cancelled immediately if, at the time of
entry, there is an insufficient share quantity in the MOPB order to
fulfill the displayed size of all Protected Quotations.
Orders that do not check the System for available shares prior to
routing may not be sent to a facility of an exchange that is an
affiliate of Nasdaq, except for orders that are sent to the NASDAQ OMX
BX Equities Market or to the NASDAQ OMX PSX facility of NASDAQ OMX
PHLX.
(B) No change.
(b)-(d) No change.
* * * * *
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 those 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 parts of such
statements.
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 MOPB routing option. The proposed MOPB
routing option is very similar to the MOPP routing option, in that both
order types require the member firm to enter the size and limit price
of the order, which then routes only to protected quotations
(``Protected Quotes''),\3\ including the NASDAQ Market Center, but only
for displayed size. Unlike MOPP orders, the MOPB orders will not route
if, at the time of entry, the MOPB order's quantity is insufficient to
clear the entire size of Protected Quotes, which are better than or
equal to the order's limit price. In such a case, a MOPB order will
instead cancel back immediately thus avoiding any execution. Also
unlike MOPP orders, if shares of a MOPB order remain un-executed after
routing they will be immediately cancelled back to the member rather
than posting to the NASDAQ book.
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\3\ As defined by Rule 600(b)(58) of Regulation NMS.
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Member firms often use the MOPP routing option to sweep all
Protected Quotes, and then print an internalized crossed execution to
the FINRA/NASDAQ Trade Reporting Facility, which occurs subsequent to
the execution of the MOPP order and that would otherwise, but for the
execution of the MOPP order, violate Rule 611 of Regulation NMS. Such
member firms will enter the size of the MOPP order based on their
perception of what the current size of the protected quote is on each
of the markets. In some cases member firms may have incorrect
information, which would result in an order that is not of sufficient
size to sweep all Protected Quotes and would lead to a trade through
violation \4\ pursuant to Regulation NMS if the internal cross occurs.
The MOPB routing option is designed to cancel any order that does not
meet the size necessary to sweep the Protected Quotes on the various
markets, thus allowing the member firm to avoid the trade through
violation of an internally-crossed trade and reenter a MOPB order with
adequate Protected Quote size information. Accordingly, the MOPB
routing option provides member firms with an additional check to avoid
a
[[Page 32496]]
trade through violation of Regulation NMS.
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\4\ Rule 611 of Regulation NMS.
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NASDAQ notes that the proposed MOPB routing option is very similar
to the SWPB routing option of the EDGX Exchange, Inc.\5\ The SWPB
routing option checks the market's order book and then is sent to
Protected Quotations, only for displayed size. Like the proposed MOPB,
an SWPB order must be of sufficient size to execute against all
Protected Quotations or the entire SWPB order will be immediately
cancelled back to the member firm.
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\5\ See EDGX Rule 11.9(b)(2)(p); see also Securities Exchange
Act Release No. 63779 (January 26, 2011), 76 FR 5636 (February 1,
2011) (SR-EDGX-2011-01).
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2. Statutory Basis
The statutory basis for the proposed rule change is Section 6(b)(5)
of the Act,\6\ 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 proposed rule change to
introduce the MOPB routing option will provide market participants with
a useful order type that will help member firms avoid inadvertent
violation of Rule 611 of Regulation NMS in an internally-crossed trade
by cancelling an order that, although intended to fully sweep Protected
Quotes, will not do so. As noted, the proposed routing option is very
similar to the SWPB routing option of the EDGX Exchange, Inc., and
therefore raises no novel issues.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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. The proposed
change is designed to provide a new routing option that will serve as
an additional safeguard to prevent the execution of an internally-
crossed order that would violate Rule 611 of Regulation NMS. As such,
NASDAQ does not believe the proposed change will have any impact
whatsoever on competition, but does believe that it is entirely
appropriate in furtherance of the purposes of the Act.
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)(ii) of the Act \7\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii).
\8\ 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 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 email to [email protected]. Please include
File Number SR-NASDAQ-2013-078 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-2013-078. This
file number should be included on the subject line if email 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal offices of
NASDAQ. 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-2013-078, and should be submitted on or before June 20, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12818 Filed 5-29-13; 8:45 am]
BILLING CODE 8011-01-P