[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Notices]
[Pages 8517-8519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03009]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71504; File No. SR-NASDAQ-2014-010]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify NASDAQ's Rule Governing Directed Orders
February 6, 2014.
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 January 24, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in
[[Page 8518]]
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.
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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
The Exchange proposes to modify NASDAQ's rule governing Directed
Orders. The text of the proposed rule change is available on the
Exchange's Web site at http://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, at the Commission's Public Reference
Room, and on 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, 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ Rule 4751(f)(9) governs the use of Directed Orders on
NASDAQ. As described in the current rule, Directed Orders are orders
that are directed to an exchange other than NASDAQ, as directed by the
entering party, without checking the NASDAQ book. If a Directed Order
is unexecuted, the order (or unexecuted portion thereof) is returned to
the entering party. Thus, a Directed Order will execute at another
venue if the venue has liquidity available at the price of the order
and if its execution would be consistent with Regulation NMS. A
Directed Order may be designated as an Intermarket Sweep Order.
NASDAQ is proposing to modify the rule to make it clear that a
Directed Order may be sent to an exchange, or to any other automated
trading center. The change is necessitated by the fact that in the near
future (as early as February 3, 2014), an electronic communications
network that currently displays its automated quotations through
another exchange is expected to begin displaying its quotations through
the Financial Industry Regulatory Authority's Automated Display
Facility (the ``ADF'').\3\ Since a Directed Order sent to the ADF would
technically not be sent to an exchange, the change in the rule text
will accommodate this refinement to the Directed Order functionality.
The Directed Order functionality is not available, and will not under
the change be made available, to direct orders to trading venues that
do not display quotations.
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\3\ https://www.lavatrading.com/news/pdf/LavaFlow_ADF_Migration.pdf.
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2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\4\ in general, and with Section
6(b)(5) of the Act \5\ 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 will make it clear that NASDAQ may route
Directed Orders to the entities quoting on the ADF, as well as to
exchanges, thereby facilitating transactions in securities for which
entities quoting on the ADF are posting liquidity at prices favorable
to market participants.
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\4\ 15 U.S.C. 78f.
\5\ 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. Specifically, the
change has the potential to increase the competitiveness of NASDAQ's
routing functionality while also ensuring that NASDAQ members may use
NASDAQ to access liquidity available on entities that are quoting on
the ADF.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were either solicited or 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 \6\ and
subparagraph (f)(6) of Rule 19b-4 \7\ thereunder.
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\6\ 15 U.S.C. 78s(b)(3)(a)(ii).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of 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. The
Exchange has requested a waiver of this requirement.
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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.
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\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has requested the Commission to waive the 30-day
operative delay, as well as the 5-day pre-filing requirement, so that
the proposed rule change may become effective and operative upon
filing. The Commission believes that waiving the 30-day operative delay
and the 5-day pre-filing requirement are consistent with the protection
of investors and the public interest. NASDAQ wishes to modify its rule
to make it clear that a Directed Order may be sent to an exchange or to
any automated trading center. Waiver will allow the Exchange to
immediately implement the proposed rule change, thereby reducing the
potential for confusion among member organizations and the public about
whether a Directed Order can be sent to the ADF or any other automated
trading center. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\10\
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\10\ 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
[[Page 8519]]
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is: (i) Necessary or
appropriate in the public interest; (ii) for the protection of
investors; or (iii) 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-2014-010 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-2014-010. 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 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-2014-010, and should
be submitted on or before March 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03009 Filed 2-11-14; 8:45 am]
BILLING CODE 8011-01-P