[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32495-32496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12818]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69631; File No. SR-NASDAQ-2013-078]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt a New Routing Option, MOPB, Under Rule 4758(a)(1)(A)

May 23, 2013.
    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 May 15, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a 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 proposes to adopt a new routing option, MOPB, under Rule 
4758(a)(1)(A). NASDAQ plans to offer the proposed routing option on 
June 3, 2013. Proposed deletions are in brackets; new language is in 
italics.
4758. Order Routing
(a) Order Routing Process
    (1) The Order Routing Process shall be available to Participants 
from 4:00 a.m. until 8:00 p.m. Eastern Time, and shall route orders as 
described below. All routing of orders shall comply with Rule 611 of 
Regulation NMS under the Exchange Act.
    (A) The System provides a variety of routing options. Routing 
options may be combined with all available order types and times-in-
force, with the exception of order types and times-in-force whose terms 
are inconsistent with the terms of a particular routing option. The 
System will consider the quotations only of accessible markets. 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. The System routing options are:
    (i)-(xiii) No change.
    (xiv) MOPB is a routing option under which orders route only to 
Protected Quotations and only for displayed size. If shares remain 
unexecuted after routing, they will be immediately cancelled. The 
entire MOPB order will be cancelled immediately if, at the time of 
entry, there is an insufficient share quantity in the MOPB order to 
fulfill the displayed size of all Protected Quotations.
    Orders that do not check the System for available shares prior to 
routing may not be sent to a facility of an exchange that is an 
affiliate of Nasdaq, except for orders that are sent to the NASDAQ OMX 
BX Equities Market or to the NASDAQ OMX PSX facility of NASDAQ OMX 
PHLX.
    (B) No change.
    (b)-(d) No change.
* * * * *

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 those 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 parts of such 
statements.

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

1. Purpose
    NASDAQ is amending Rule 4758, which describes its order routing 
processes, to add the new MOPB routing option. The proposed MOPB 
routing option is very similar to the MOPP routing option, in that both 
order types require the member firm to enter the size and limit price 
of the order, which then routes only to protected quotations 
(``Protected Quotes''),\3\ including the NASDAQ Market Center, but only 
for displayed size. Unlike MOPP orders, the MOPB orders will not route 
if, at the time of entry, the MOPB order's quantity is insufficient to 
clear the entire size of Protected Quotes, which are better than or 
equal to the order's limit price. In such a case, a MOPB order will 
instead cancel back immediately thus avoiding any execution. Also 
unlike MOPP orders, if shares of a MOPB order remain un-executed after 
routing they will be immediately cancelled back to the member rather 
than posting to the NASDAQ book.
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    \3\ As defined by Rule 600(b)(58) of Regulation NMS.
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    Member firms often use the MOPP routing option to sweep all 
Protected Quotes, and then print an internalized crossed execution to 
the FINRA/NASDAQ Trade Reporting Facility, which occurs subsequent to 
the execution of the MOPP order and that would otherwise, but for the 
execution of the MOPP order, violate Rule 611 of Regulation NMS. Such 
member firms will enter the size of the MOPP order based on their 
perception of what the current size of the protected quote is on each 
of the markets. In some cases member firms may have incorrect 
information, which would result in an order that is not of sufficient 
size to sweep all Protected Quotes and would lead to a trade through 
violation \4\ pursuant to Regulation NMS if the internal cross occurs. 
The MOPB routing option is designed to cancel any order that does not 
meet the size necessary to sweep the Protected Quotes on the various 
markets, thus allowing the member firm to avoid the trade through 
violation of an internally-crossed trade and reenter a MOPB order with 
adequate Protected Quote size information. Accordingly, the MOPB 
routing option provides member firms with an additional check to avoid 
a

[[Page 32496]]

trade through violation of Regulation NMS.
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    \4\ Rule 611 of Regulation NMS.
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    NASDAQ notes that the proposed MOPB routing option is very similar 
to the SWPB routing option of the EDGX Exchange, Inc.\5\ The SWPB 
routing option checks the market's order book and then is sent to 
Protected Quotations, only for displayed size. Like the proposed MOPB, 
an SWPB order must be of sufficient size to execute against all 
Protected Quotations or the entire SWPB order will be immediately 
cancelled back to the member firm.
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    \5\ See EDGX Rule 11.9(b)(2)(p); see also Securities Exchange 
Act Release No. 63779 (January 26, 2011), 76 FR 5636 (February 1, 
2011) (SR-EDGX-2011-01).
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2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act,\6\ 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 rule change to 
introduce the MOPB routing option will provide market participants with 
a useful order type that will help member firms avoid inadvertent 
violation of Rule 611 of Regulation NMS in an internally-crossed trade 
by cancelling an order that, although intended to fully sweep Protected 
Quotes, will not do so. As noted, the proposed routing option is very 
similar to the SWPB routing option of the EDGX Exchange, Inc., and 
therefore raises no novel issues.
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    \6\ 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 any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
change is designed to provide a new routing option that will serve as 
an additional safeguard to prevent the execution of an internally-
crossed order that would violate Rule 611 of Regulation NMS. As such, 
NASDAQ does not believe the proposed change will have any impact 
whatsoever on competition, but does believe that it is entirely 
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

    Written comments were neither solicited nor 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 Section 19(b)(3)(A)(ii) of the Act \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 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 Number SR-NASDAQ-2013-078 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-2013-078. 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal offices of 
NASDAQ. 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-2013-078, and should be submitted on or before June 20, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12818 Filed 5-29-13; 8:45 am]
BILLING CODE 8011-01-P