[Federal Register Volume 74, Number 34 (Monday, February 23, 2009)]
[Notices]
[Pages 8130-8132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-3741]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59405; File No. SR-NASDAQ-2009-008]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Modify Rule 7050 Governing 
Pricing for Nasdaq Members Using the NASDAQ Options Market (``NOM'')

February 13, 2009.
    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 February 5, 2009, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. Nasdaq has filed this proposal pursuant to Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
Nasdaq has designated this proposal as establishing or changing a due, 
fee, or other charge applicable only to members, which renders the 
proposed rule change effective upon filing. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq has filed a proposed rule change to modify Rule 7050 
governing pricing for Nasdaq members using the NASDAQ Options Market 
(``NOM''), Nasdaq's facility for executing and routing standardized 
equity and index options. Proposed new language is italicized; proposed 
deletions are in brackets.\5\
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    \5\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://
nasdaqomx.cchwallstreet.com.
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* * * * *

7050. NASDAQ Options Market

    The following charges shall apply to the use of the order execution 
and routing services of the NASDAQ Options Market by members for all 
securities that it trades.
    (1) Fees for Execution of Contracts on the NASDAQ Options Market

[[Page 8131]]



Except as specified below, the charge to       $0.45 per executed
 member entering order that executes in the     contract.
 NASDAQ Options Market.
For a pilot period ending July 31, 2009,       $0.45 per executed
 charge for members or non-members entering     contract.
 order via the Options Intermarket Linkage
 that executes in the Nasdaq Options Market.
Charge to members entering orders in options   No fee.
 on QQQQ, SPY, DIA, [and] IWM, AAPL, BAC, C,
 GS, JPM, RIMM, XLE, XLF, and XOM with an
 account type ``Customer'' that executes and
 remove liquidity entered by another member.
Credit to member providing liquidity through   $0.30 per executed
 the NASDAQ Options Market:.                    contract.
Credit to member providing liquidity using     $0.35 per executed
 price-improving orders through the NASDAQ      contract.
 Options Market:
 

    (2)-(4) 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 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 is proposing to lower the fee for the execution of options 
contracts for certain orders in certain options on the NASDAQ Options 
Market (``NOM''). On January 12, 2009, Nasdaq began permitting orders 
with an account type of ``Customer'' to take liquidity \6\ for free in 
certain options. Nasdaq applied the new fee provision to options on 
four exchange-traded funds: QQQQ, SPY, DIA, and IWM. That proposal 
accomplished its goal of attracting liquidity to the Nasdaq Options 
Market.
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    \6\ An order that takes liquidity is one that is entered into 
NOM and that executes against an order resting on the NOM book.
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    Accordingly, Nasdaq now proposes to expand the application of that 
rule to additional options classes. Specifically, Nasdaq is proposing 
to apply the new fee provision to options on the following equities: 
AAPL, BAC, C, GS, JPM, RIMM, XLE, XLF, and XOM. Nasdaq will monitor the 
trading of options on these equities to ensure that the proposal is 
operating in a fashion that promotes the interests of investors.
    To ensure that this reduction applies only to customers, the fee 
reduction will apply only when a customer order entered by one member 
takes liquidity provided by a different member. When a trade occurs in 
an included options class and the trade involves a customer removing 
liquidity that has been provided by the same broker dealer, the 
customer side of the transaction will be charged the standard rate for 
removing liquidity. For example, if participant A enters an order and 
then participant A accesses that liquidity with an order with an 
account type of ``Customer'', the ``Customer'' order is still charged 
$0.45 per executed contract.
    This proposed rule change does not impact the liquidity provider 
rebates set forth in Nasdaq Rule 7050. Nor does it impact the fees 
assessed for orders executed in the Opening and Closing Crosses, or 
those orders routed to away markets.
    Nasdaq believes that the proposed fees are competitive, fair and 
reasonable, and non-discriminatory in that they apply equally to all 
members and customers. As with all fees, Nasdaq may adjust these 
proposed fees in response to competitive conditions by filing a new 
proposed rule change.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ 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. As the seventh options market in the 
national market system, Nasdaq's fees must be competitive and low in 
order for Nasdaq to attract order flow, execute orders, and grow as a 
market. Nasdaq believes that its fees are fair and reasonable and 
consistent with the Exchange Act.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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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. To the contrary, Nasdaq has 
designed its fees to compete effectively for the execution of options 
contracts and to reduce the overall cost to investors of options 
trading.

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act \9\ and Rule 19b-
4(f)(2) thereunder,\10\ Nasdaq has designated this proposal as 
establishing or changing a due, fee, or other charge applicable only to 
members, which renders the proposed rule change effective upon filing. 
Nasdaq will make the proposed pricing schedule operational on February 
9, 2009.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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-2009-008 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 8132]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NASDAQ-2009-008. 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 inspection 
and copying 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 will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-2009-008 and should be submitted on or before March 16, 2009.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-3741 Filed 2-20-09; 8:45 am]
BILLING CODE 8011-01-P