[Federal Register Volume 77, Number 61 (Thursday, March 29, 2012)]
[Notices]
[Pages 19044-19045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-7526]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66652; File No. SR-NASDAQ-2012-038]


Self-Regulatory Organizations; the NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 4120

March 23, 2012.
    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 March 19, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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 proposing to amend Rule 4120 to adopt a modification in 
the process for initiating trading of a security that is the subject of 
an initial public offering (an ``IPO'') on NASDAQ. The text of the 
proposed rule change is available at http://nasdaq.cchwallstreet.com/, 
at the Exchange's principal office, on the Commission's Web site at 
http://www.sec.gov/, 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, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is proposing to make a minor modification to its process for 
commencing trading of a security that is the subject of an IPO on 
NASDAQ. Rule 4120(a)(7) provides that trading in an IPO security is 
halted until the security is released for trading. Rule 4120(c)(7)(B) 
establishes the process for lifting the halt and commencing trading. 
Under that rule, prior to terminating the halt, there is a 15-minute 
Display-Only Period during which market participants may enter quotes 
and orders into the NASDAQ Market Center. At the conclusion of the 
Display-Only Period, trading commences through the halt cross process 
provided for in Rule 4753. However, if at the end of a Display-Only 
Period, NASDAQ detects an order imbalance in the security, the halt may 
be extended for up to six additional Display-Only Periods of five 
minutes each.
    Under the current process, quotes and orders in the IPO security 
may not be entered until the commencement of the Display-Only Period. 
However, NASDAQ believes that the quality of its process for commencing 
IPO trading would be enhanced by allowing market participants to begin 
entering orders at 7 a.m., to be held and not displayed until the 
beginning of the Display-Only Period. Specifically, NASDAQ believes 
that this change will provide for a greater number of orders being 
entered prior to commencement of trading, resulting in a higher level 
of order interaction at the open.
    To effect this change, NASDAQ proposes amending Rule 4120(c)(7)(B) 
to provide that beginning at 7 a.m., market participants may enter 
Market Hours Day Orders (``MDAY Orders'') in a security that is the 
subject of an IPO on NASDAQ and designate such orders to be held until 
the beginning of the Display-Only Period. Such orders will be held in 
an undisplayed state until the beginning of the Display-Only Period, at 
which time they will be entered into the system. Market participants 
may cancel orders entered in this manner in the same way they would 
cancel any other order. Orders entered prior to the Display-Only Period 
will be cancelled

[[Page 19045]]

back to the entering participant unless they are designated for 
holding.
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)(5) of the Act,\4\ 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. Specifically, NASDAQ 
believes that the proposed rule change will result in a greater number 
of orders being entered prior to commencement of trading of IPO 
securities, resulting in a higher level of order interaction at the 
open. Thus, NASDAQ believes that the change will remove impediments to 
and perfect the mechanism of a free and open market.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(5).
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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, as amended. NASDAQ believes 
that the proposed rule change will result in a greater number of orders 
being entered prior to commencement of trading of IPO securities, 
resulting in a higher level of order interaction at the open. NASDAQ 
believes that this change will enhance competition by increasing its 
attractiveness as a venue for trading IPO securities.

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 proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act \5\ and paragraph (f)(6) of Rule 19b-4 
thereunder,\6\ in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided the self-regulatory organization has given 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
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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.

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 email to [email protected]. Please include 
File No. SR-NASDAQ-2012-038 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 No. SR-NASDAQ-2012-038. This file 
number should be included on the subject line if email 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 such 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 No. SR-NASDAQ-2012-038 and should be 
submitted on or before April 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7526 Filed 3-28-12; 8:45 am]
BILLING CODE 8011-01-P