[Federal Register Volume 76, Number 175 (Friday, September 9, 2011)]
[Notices]
[Pages 55954-55956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23034]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65246; File No. SR-NASDAQ-2011-120]


Self-Regulatory Organizations; the NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Fees for Members Using the NASDAQ Market Center

September 1, 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 August 25, 2011, The NASDAQ Stock Market LLC (the ``Exchange'' 
or ``NASDAQ'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III, below, which Items have been prepared by NASDAQ. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ proposes to modify pricing for NASDAQ members using the 
NASDAQ Market Center. NASDAQ will implement the proposed change on 
September 1, 2011. The text of the proposed rule change is available at 
http://nasdaq.cchwallstreet.com/, at NASDAQ's principal office, at the 
Commission's Public Reference Room, and at 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, 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.

[[Page 55955]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is amending Rule 7018 to make two modifications to its 
pricing schedule for routing and execution of quotes/orders through the 
NASDAQ Market Center of securities priced at $1 or more. First, NASDAQ 
is proposing to extend and modify, for one month the Attributable 
Market Provider pilot program to continue to encourage more extensive 
market making activity on NASDAQ. Under the pilot, set forth in NASDAQ 
Rule 7018(a)(4), a market maker with an MPID through which it has 
registered as a market maker in a daily average of more than 5,000 
securities during the month will receive an additional credit of 
$0.0004 per share executed with respect to attributable quotes/orders 
that provide liquidity through such MPID, in addition to the credit 
that it is otherwise entitled to receive under Rule 7018. Currently, 
the maximum additional rebate that a member can receive under this 
pilot program is $250,000 per month. NASDAQ is reducing the maximum 
from $250,000 to $100,000 during the one-month extension of the pilot.
    The cap applies on a per member basis, regardless of the number of 
MPIDs through which the member qualifies for the program. Through the 
program, NASDAQ hopes to see a continuation of increased market maker 
participation and contribution of attributable liquidity in order to 
enhance price discovery. Throughout the pilot period, NASDAQ will 
evaluate the costs and benefits of the program, and will then either 
allow the pilot to lapse or file to extend, modify, or make the program 
permanent.
    Second, NASDAQ is raising from $0.0027 to $0.0029 the charge for 
members entering Directed Orders sent to NASDAQ OMX PSX. The current 
charge of $0.0027 reflects a premium of $0.0002 above the standard 
charge for removing liquidity at NASDAQ OMX PSX. Effective September 1, 
2011, NASDAQ OMX PSX will be increasing by $0.0002 the charge for 
removing liquidity. Therefore, to maintain the $0.0002 premium above 
that rate, NASDAQ is increasing the rate for Directed Orders sent to 
NASDAQ OMX PSX by $0.0002 to $0.0029.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\3\ in general, and with Section 
6(b)(4) of the Act,\4\ 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. All similarly situated members are 
subject to the same fee structure, and access to NASDAQ is offered on 
fair and non-discriminatory terms.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Extending the proposed Attributable Market Provider program is 
reasonable because it will continue a fee reduction for members that 
qualify for the program, without increasing the costs borne by other 
members. It is reasonable that NASDAQ lowers the maximum credit due to 
its analysis of the current mix of usage of the pilot program by its 
various members. Moreover, the proposed program is consistent with an 
equitable allocation of fees because it allocates a higher rebate to 
members that make significant contributions to NASDAQ market quality by 
making markets in a large number of stocks and that contribute to price 
discovery by posting attributable quotes/orders. Although members 
qualifying for the program may use non-attributed and non-displayed 
orders, the enhanced rebate will be paid only with respect to 
attributable, displayed liquidity. Based on three months of experience 
with the pilot, NASDAQ believes that the program does encourage some 
market makers to become active in more stocks and display more shares 
of liquidity, thereby benefiting other market participants that will 
receive a more complete understanding of the supply and demand for 
particular stocks and that will be able to access the liquidity 
displayed by such market makers.
    With respect to the charge for sending Directed Orders to NASDAQ 
OMX PSX, NASDAQ believes that raising the fee by $0.0002 is reasonable 
and an equitable allocation of fees in that this increase maintains a 
stable premium of $0.0002 over the charge for removing liquidity on 
NASDAQ OMX PSX. This premium represents a fee for usage of NASDAQ's 
state-of-the-art routing service.
    Finally, NASDAQ notes that it operates in a highly competitive 
market in which market participants can readily favor competing venues 
if they deem fee levels at a particular venue to be excessive. In such 
an environment, NASDAQ must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges.

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. Because the market 
for order execution and routing is extremely competitive, members may 
readily opt to disfavor NASDAQ's execution services if they believe 
that alternatives offer them better value. For this reason and the 
reasons discussed in connection with the statutory basis for the 
proposed rule change, NASDAQ does not believe that the proposed changes 
will impair the ability of members or competing order execution venues 
to maintain their competitive standing in the financial markets.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\5\ 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(a)(ii).
---------------------------------------------------------------------------

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

[[Page 55956]]

Number SR-NASDAQ-2011-120 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-2011-120. 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-2011-120 and should be submitted on or before September 30, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

    Dated: September 1, 2011
Elizabeth M. Murphy
Secretary
[FR Doc. 2011-23034 Filed 9-8-11; 8:45 am]
BILLING CODE 8011-01-P