[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Notices]
[Pages 48925-48927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20100]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65024; File No. SR-NASDAQ-2011-102]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Introduce a Bulk-Quoting Interface

August 3, 2011.
    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 July 27, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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

    NASDAQ is filing with the Commission a proposal to introduce a 
bulk-quoting interface for NASDAQ market makers that will help them 
meet their obligations as market makers and to provide liquidity to the 
market in an efficient manner.

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 currently offers an order-based market making interface on 
its options trading platform (``NOM''). Market makers use this 
interface to provide a two-sided quotation on NOM. Since it is an 
order-based interface, a two-sided quotation requires the entry of both 
a buy and a sell order.
    As part of several technological enhancements NASDAQ plans to 
implement on NOM, NASDAQ proposes to introduce a bulk-quoting interface 
for market makers in order to offer an additional market making 
interface choice to NASDAQ market makers. The proposed bulk-quoting 
market making interface will be used by market makers to submit and 
update their quotations in the marketplace much like the current order-
based interface is used today. The bulk-quoting interface, however, 
allows market makers to provide both a bid and an offer in one message. 
In addition, the bulk-quoting interface allows market makers to bundle 
several quote updates into one bulk message. This is a useful feature 
for market makers that provide quotations in many different options. 
Furthermore, the bulk-quoting market making interface includes certain 
data elements (described below) which

[[Page 48926]]

provide market makers with information that will help them meet their 
obligations as market makers and to provide liquidity to the market in 
an efficient manner. NASDAQ also proposes to provide this data on the 
order-based market making interface (collectively, the ``Interfaces'').
    The data to be offered over the Interfaces either will be 
administrative in nature or used to attract liquidity to NASDAQ in 
response to an auction. NASDAQ believes the data included in this feed 
is necessary for participants who have written systems to interface 
with NASDAQ in the case of administrative messages or information 
regarding auctions and used to attract liquidity. Though these 
Interfaces are only available to market makers for quoting purposes, 
non-quoting firms will be allowed to connect to the Interfaces and 
receive the relevant information, but not send quotes or orders.
    Participants who have written interfaces to the NASDAQ system would 
use the administrative data to determine the current state of the 
trading system. For example, this data would show which symbols are 
trading on NASDAQ, the current state of an options symbol (i.e., open 
for trading, trading, halted or closed from trading). All of this 
information is vital to a participant's quoting application and by 
including this information on the Interface used for quoting, 
participants can streamline their respective system architectures.
    NASDAQ holds an opening auction as an efficient and robust 
mechanism to start each trading day. Additionally, NASDAQ uses an 
auction to resume trading after a trading halt. During these auction 
events, NASDAQ advertises the liquidity it has available for execution. 
This auction information is available on other data feeds and is made 
available to all exchange participants. The information being added to 
these market making Interfaces is for convenience purposes so that 
market participants utilizing them have an additional means to access 
the information directly impacting their quoting behavior and are not 
required to take other feeds simply in order to have access to these 
data elements.
    A participant's quoting application will then be able to receive 
these notifications over the same Interface by which it sends quotes to 
NASDAQ and could then use the data to respond to auctions quickly and 
efficiently. This data is not disseminated as a quote to the market 
because it represents interest that is not immediately executable, but 
rather interest that is currently gathering in an auction.
    Data proposed for these interfaces will initially include the 
following:
    (1) Options Auction Notifications (e.g., opening imbalance, 
imbalance after a halt);
    (2) Options Symbol Directory Messages;
    (3) System Event Messages (e.g., start of messages, start of system 
hours, start of quoting, start of opening); and
    (4) Option Trading Action Messages (e.g., halts, resumes).
2. Statutory Basis
    NASDAQ believes that its proposal is consistent with Section 6(b) 
of the Act \3\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \4\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
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    NASDAQ believes that this proposal is in keeping with those 
principles by protecting investors and the public interest, as well as 
promoting just and equitable principles of trade, through the addition 
of a new market making interface option for NASDAQ market makers, which 
by aiding market makers in their market making activities will help to 
enhance market liquidity for investors. Additionally, permitting the 
Interfaces to include data elements that are administrative in nature 
or that are used to attract liquidity to NASDAQ in response to the 
opening auction, serves to remove impediments to and acts to perfect 
the mechanism of a free and open market and a national market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition 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

    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 19(b)(3)(A) of the Act \5\ and Rule 19b-4(f)(6) 
thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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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    A proposed rule change filed under Rule 19b-4(f)(6) \7\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\8\ 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. The Exchange notes that 
the proposed rule change is a non-controversial system change to data 
and would not affect the execution of trades. The Exchange also notes 
that it is important to its internal technology roll-out to be able to 
have this proposed change in place by August 15, 2011, in order for 
other technological plans to be implemented, and that prompt 
implementation would extend the benefits and new features to users more 
quickly. For these reasons, the Commission believes that waiving the 
30-day operative delay is consistent with the protection of investors 
and the public interest, and designates the proposed rule change to be 
operative upon filing with the Commission.\9\
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    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 17 CFR 240.19b-4(f)(6)(iii).
    \9\ For purposes only of waiving the operative delay for 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

[[Page 48927]]

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-2011-102 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-2011-102. 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. 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-2011-102 and should be submitted on or before August 30, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20100 Filed 8-8-11; 8:45 am]
BILLING CODE 8011-01-P