[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Notices]
[Pages 9395-9397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3584]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63893; File No. SR-NASDAQ-2011-023]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add Routing Option SOLV and Corresponding Fees

February 11, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\

[[Page 9396]]

notice is hereby given that on February 4, 2011, The NASDAQ Stock 
Market LLC (the ``Exchange'' or ``Nasdaq'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been substantially 
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 proposes to amend NASDAQ Rule 4758 to add a new routing 
option, SOLV, and add corresponding fees to the fee schedule.
    The text of the proposed rule change is available on Nasdaq's Web 
site 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, 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. Nasdaq 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to add a routing strategy, SOLV, that will 
offer members a means of accessing liquidity in a wide range of 
execution venues at varying price levels. SOLV will operate in the same 
manner as the current SAVE strategy in most respects, but will differ 
in the treatment of shares that remain unexecuted after completing the 
order route and posting to the NASDAQ book. Whereas such shares under 
SAVE, if locked or crossed by another market center, are not routed to 
the locking or crossing market center, SOLV orders will be routed out 
for execution at the other market center.
    Under the new SOLV routing option, like under the current SAVE 
routing option, a market participant may specify that an order will 
either (i) route to NASDAQ OMX BX (``BX'') and NASDAQ OMX PSX 
(``PSX''), then check the NASDAQ book, and then route to other venues 
on the SOLV System routing table, or (ii) check the NASDAQ book first 
and then route to destinations on the SOLV System routing table.\3\ 
Under the second option, the applicable routing table includes BX and 
PSX, and as is the case with all market destinations, the placement of 
BX and PSX on the routing table depends on NASDAQ's ongoing assessments 
of factors such as latency, fill rates, reliability, and cost. Under 
either routing option in SOLV and SAVE, shares that remain unexecuted 
after this routing are then posted on the NASDAQ book.\4\ Under SOLV, 
however, unlike under SAVE, unexecuted shares posted to the NASDAQ book 
will be routed out if the order is locked or crossed by another market 
center.
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    \3\ As provided in Rule 4758(a)(1)(A), 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.
    \4\ Pursuant to NASDAQ Rule 4758(a)(1)(B), if a routed order is 
returned, in whole or in part, that order will receive a new time 
stamp reflecting the time of its return to the System.
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    NASDAQ has designed SOLV to comply with the requirements of Rule 
611 of Regulation NMS, and believes that SOLV, like all NASDAQ routing 
strategies, conforms to Reg-NMS requirements.
    SOLV is similar in concept to a routing strategy offered by BATS 
called ``SLIM,'' under which an order checks the System for available 
shares, is routed to BATS Y-Exchange, Inc. and then is sent to 
destinations on the System routing table before posting to the book.\5\
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    \5\ Securities Exchange Act Release No. 63147 (October 21, 
2010), 75 FR 66183 (October 27, 2010) (SR-BATS-2010-029).
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    This rule change also amends the fee schedule to account for the 
SOLV routing strategy. The fees charged for SOLV are the same as 
currently charged under SAVE. Under Rule 7018, NASDAQ passes through, 
without modification, applicable BX and PSX fees or rebates. In the 
case of BX, this means that NASDAQ passes through the $0.0014 per share 
executed credit paid by BX to market participants when accessing 
liquidity, and in the case of PSX, NASDAQ will pass through the fee 
charged by PSX to market participants when accessing liquidity.\6\ SOLV 
thus provides market participants with the option of routing to a venue 
with a negative execution cost (BX) and a relatively lower execution 
cost (PSX) before accessing liquidity on NASDAQ and other venues. 
Market participants that wish to access NASDAQ before routing to BX and 
PSX may also do so using SOLV, and will receive the same pricing as 
those that opt to route to BX and PSX first, subject to the fact that 
they are likely to have more shares executed on NASDAQ, at a higher 
cost, than those that use SOLV to route to BX and PSX first. SOLV 
orders that execute at venues other than NASDAQ, BX or PSX or NYSE will 
be charged $0.0026 per share executed, orders that execute at NYSE will 
be charged $0.0022 per share executed, and orders that execute in 
NASDAQ are charged the same execution fee as SAVE, which is $0.0027 per 
share executed.
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    \6\ The fee is currently $0.0013 per share executed, but NASDAQ 
OMX PSX anticipates increasing the fee to $0.0025 per share executed 
as of February 1, 2011.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and with 
Sections 6(b)(5) of the Act,\8\ 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 routing option will accomplish those ends by 
providing more flexible options, insomuch as it offers NASDAQ members a 
routing strategy with a wide range of execution venues at varying price 
levels.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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    The rule change is also consistent with Section 6 of the Act,\9\ in 
general, and with Sections 6(b)(5) of the Act,\10\ 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. The fees assessed 
for SOLV are the same fees and rebates currently charged for the 
similar routing strategy SAVE. Use of the routing option is, of course, 
entirely voluntary.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).

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[[Page 9397]]

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.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the 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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 satisfied this requirement.
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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-2011-023 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-2011-023. 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 the 
Exchange.\15\ 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-2011-023 and should be submitted on or before March 10, 2011.
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    \15\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3584 Filed 2-16-11; 8:45 am]
BILLING CODE 8011-01-P