[Federal Register Volume 75, Number 237 (Friday, December 10, 2010)]
[Notices]
[Pages 77034-77036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31051]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63439; File No. SR-NASDAQ-2010-158]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Clarify Market Maker Quote Management Procedures

December 6, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on December 3, 2010, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in 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 is filing with the Commission a proposed rule change 
to clarify market maker quote management procedures.
    The text of the proposed rule change is below. Proposed new 
language is italicized and proposed deletions are in brackets.\3\
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    \3\ 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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* * * * *

4613. Market Maker Obligations

    A member registered as a Market Maker shall engage in a course of 
dealings for its own account to assist in the maintenance, insofar as 
reasonably practicable, of fair and orderly markets in accordance with 
this Rule.

(a) Quotation Requirements and Obligations

    (1) No Change.
    (2) Pricing Obligations. For NMS stocks (as defined in Rule 600 
under Regulation NMS) a Market Maker shall adhere to the pricing 
obligations established by this Rule during Regular Market Hours.
    (A)-(E) No Change.
    (F) Quotation Creation and Adjustment. For each Issue in which a 
Market Maker is registered, the System shall, in the absence of a 
quotation that complies with this Rule entered by that Market Maker, 
automatically create a quotation for display to comply with this Rule. 
System-created compliant displayed quotations will thereafter be 
allowed to rest and not be further adjusted by the System unless the 
relationship between the quotation and its related National Best Bid or 
National Best Offer, as appropriate, shrinks to the greater of: (a) 4 
percentage points, or, (b) one-quarter the applicable percentage 
necessary to trigger an individual stock trading pause as described in 
NASDAQ Rule 4120(a)(11), or expands to within that same percentage less 
0.5%, whereupon the System will immediately re-adjust and display the 
Market Maker's quote to the appropriate Designated Percentage set forth 
in section (D) above. [As the System allows for multiple attributable 
quotations by a Market Maker in an issue,] [q]Quotations originally 
entered by Market Makers which have not been modified by the System 
upon entry or after resting on the book shall be allowed to move freely 
towards [or away from] the National Best Bid or National Best Offer, as 
appropriate, for potential execution.
    (G)-(K) No Change.
    (b)-(e) No Change.
* * * * *

4752. Opening Process

    (a) No Change.

[[Page 77035]]

    (b) Trading Prior To Normal Market Hours. The system shall process 
all eligible Quotes/Orders at 7 a.m.:
    (1) No Change.
    (2) [At] No earlier than between 9:25 a.m. and 9:30 a.m., the 
system shall open all remaining unopened Quotes in accordance with each 
firm's instructions.
    (3)-(4) No Change.
    (c)-(d) No Change.
* * * * *
    (b) Not applicable.
    (c) Not applicable.

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
    Recently, the Exchange adopted rules enhancing market maker 
quotation obligations. In connection with the implementation with these 
new standards, the Exchange proposes to clarify its quote management 
procedures when market makers fail to enter quotations in compliance 
with these new rules. In short, should a market maker fail to enter, or 
appropriately update, their quotations so as to remain in compliance 
with the new standards, the Exchange will create or adjust such 
quotations to prices that will ensure compliance.
    In addition, the Exchange proposes to adjust the current fixed time 
of 9:25 a.m. for opening previously unopened quotations so as to allow 
the opening of such quotations at time periods closer to the 9:30 a.m. 
commencement of normal market trading.
    The Exchange believes that these proposals both enhance compliance 
with the new market maker quotation standards and recognize the 
increased liquidity being provided by marker makers in the minutes 
before market open.
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 
Sections 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. The Exchange 
believes that the proposed rule meets these requirements in that it 
enhances compliance with the new market maker quotation standards and 
recognizes the increased liquidity being provided by marker makers in 
the minutes before market open.
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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

    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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change 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: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6). When filing a proposed rule change 
pursuant to Rule 19b-4(f)(6) under the Act, an exchange is required 
to give the Commission written notice of its 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 Commission notes that the Exchange 
has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\8\ 
However, Rule 19b-4(f)(6) \9\ permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. Nasdaq has requested that the 
Commission waive the 30-day operative delay.
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    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ Id.
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    The Commission has considered Nasdaq's request to waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, as it will enable the Exchange to implement the 
proposed change consistent with the implementation date for the new 
market maker pricing obligations.\10\
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    \10\ For the purposes only of waiving the operative date of this 
proposal, 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 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.

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-2010-158 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-2010-158. This 
file number should be included on the

[[Page 77036]]

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-2010-158 and should be submitted on or before 
January 3, 2011.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31051 Filed 12-9-10; 8:45 am]
BILLING CODE 8011-01-P