[Federal Register Volume 77, Number 218 (Friday, November 9, 2012)]
[Notices]
[Pages 67409-67410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27356]



[[Page 67409]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68153; File No. SR-NASDAQ-2012-124]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change, 
as Modified by Amendment No. 1 Thereto, To Amend Several NASDAQ Rules 
To Reflect Changes to Rules of the Financial Industry Regulatory 
Authority (``FINRA'')

November 5, 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 October 22, 2012, The NASDAQ Stock Market LLC (``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. On October 26, 2012, the 
Exchange submitted Amendment No. 1 to the proposed rule change.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as modified by Amendment No. 1 thereto, from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange amended Exhibit 1 to: (1) 
Explain the lapse of effectiveness of Nasdaq Rule 6958; (2) 
redesignate Rule 6958 as Rule 7470A; and (3) reinstate that Rule's 
effectiveness to grant Nasdaq exemptive authority with regard to the 
application of OATS rules. In addition, the Exchange made technical 
amendments to Exhibit 5 to reflect that prior Rule 6958 is being 
redesignated as Rule 7470A.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend several NASDAQ rules to reflect 
changes to rules of the Financial Industry Regulatory Authority 
(``FINRA''). NASDAQ will implement the proposed rule change thirty days 
after the date of the filing. The text of the proposed rule change is 
available at 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, 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
    Many of NASDAQ's rules governing member conduct are based on rules 
of FINRA (formerly the National Association of Securities Dealers 
(``NASD'')). During 2008, FINRA embarked on an extended process of 
moving rules formerly designated as ``NASD Rules'' into a consolidated 
FINRA rulebook. In most cases, FINRA has renumbered these rules, and in 
some cases has substantively amended them. Accordingly, NASDAQ has also 
been undertaking a process of modifying its rulebook to ensure that 
NASDAQ rules corresponding to FINRA/NASD rules continue to mirror them 
as closely as practicable. To the extent possible, NASDAQ will 
designate a NASDAQ rule that is intended to parallel a FINRA rule with 
the suffix ``A''. For example, the NASDAQ rule paralleling FINRA Rule 
5320 will be designated as Rule 5320A. This filing makes the following 
changes:
    (1) NASDAQ is redesignating IM-2110-2 (Trading Ahead of Customer 
Limit Order) and Rule 2111 (Trading Ahead of Customer Market Orders) as 
NASDAQ Rule 5320A, which incorporates FINRA Rule 5320 (Prohibition 
Against Trading Ahead of Customer Orders) by reference.\4\ FINRA Rule 
5320.02(b) and the reference to Rule 6420 contained therein, which 
relate to over-the-counter equity securities, will not be reflected in 
NASDAQ's rule since NASDAQ, unlike FINRA, does not regulate the over-
the-counter market.
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    \4\ See Securities Exchange Act Release No. 63895 (February 11, 
2011), 76 FR 9386 (February 17, 2011) (SR-FINRA-2009-090).
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    (2) NASDAQ is redesignating Rules 6950, 6951, 6952, 6953, 6954, 
6955, and 6956 as Rules 7400A (Order Audit Trail System), 7410A 
(Definitions), 7420A (Applicability), 7430A (Synchronization of Member 
Business Clocks), 7440A (Recording of Order Information), 7450A (Order 
Data Transmission Requirements), and 7460A (Violation of Order Audit 
Trail System Rules). NASDAQ is also deleting Rule 6957 (Effective 
Date), redesignating Rule 6958 as Rule 7470A, and amending that rule to 
reinstate its effectiveness until July 10, 2015 and make [sic] 
conforming changes to rule cross-references. By its terms, the 
effectiveness of the rule had lapsed on July 10, 2011. NASDAQ is 
reinstating the rule in order to ensure that NASDAQ has the same 
exemptive authority as FINRA with regard to the application of OATS 
rules, to ensure that its respective members are not subject to 
disparate requirements.\5\ NASDAQ is also making changes to rule text 
to conform to changes to corresponding FINRA rules.\6\
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    \5\ The Commission notes that no retroactive coverage is granted 
to Nasdaq for any actions taken under this Rule during its lapsed 
period.
    \6\ See Securities Exchange Act Release No. 58643 (September 25, 
2008), 73 FR 57174 (October 1, 2008) (SR-FINRA-2008-021, -022, -026, 
-028, -029).
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    (3) NASDAQ is redesignating Rule 2110 as Rule 2010A (Standards of 
Commercial Honor and Principles of Trade) and deleting IM-2110-1 
(Reserved).\7\
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    \7\ Id.
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    NASDAQ notes that in some instances, the amended rules reference 
rules that are being adopted by contemporaneous NASDAQ rule filings 
that have been filed on an immediately effective basis.\8\
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    \8\ See SR-NASDAQ-2012-122 (October 22, 2012); SR-NASDAQ-2012-
123 (October 22, 2012).
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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,\9\ in general, and with 
Section 6(b)(5) of the Act,\10\ 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 proposed 
changes will conform various NASDAQ Rules to changes made to 
corresponding FINRA rules, thus promoting application of consistent 
regulatory standards with respect to rules that FINRA enforces pursuant 
to its regulatory services agreement with NASDAQ.
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    \9\ 15 U.S.C. 78f.
    \10\ 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

[[Page 67410]]

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 proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act \11\ and paragraph (f)(6) of Rule 19b-4 
thereunder,\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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, as amended, 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 Number SR-NASDAQ-2012-124 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-2012-124. 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 on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2012-124, and should be submitted on or before 
November 30, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27356 Filed 11-8-12; 8:45 am]
BILLING CODE 8011-01-P