[Federal Register Volume 78, Number 249 (Friday, December 27, 2013)]
[Notices]
[Pages 79055-79057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30939]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 71158; File No. SR-NASDAQ-2013-158]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Acceptable Trade Range

December 20, 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 December 16, 2013, 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 and 
II, 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.
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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 delay the implementation of a recent proposed 
amendment to rule text related to Acceptable Trade Range.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaq.cchwallstreet.com, at the principal 
office of the Exchange, at the Commission's Public Reference Room, and 
on 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, 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

[[Page 79056]]

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
    The purpose of the proposed rule change is to delay the 
implementation of a recent proposed amendment to rule text in Chapter 
VI, Section 10 entitled ``Book Processing'' to add additional rule text 
regarding Acceptable Trade Range. The Acceptable Trade Range 
enhancements would be implemented as of December 23, 2013.\3\ At this 
time, the Exchange needs additional time to implement the applicable 
technology. Accordingly, the Exchange seeks to be able to implement the 
changes in January 2014. The Exchange will announce the specific date 
in advance through an Options Trader Alert.
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    \3\ Securities Exchange Act Release No. 70985 (December 4, 
2013), 78 FR 74206, (December 10, 2013) (SR-NASDAQ-2013-145).
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    The Acceptable Trade Range is a mechanism to prevent the system \4\ 
[sic] from experiencing dramatic price swings by creating a level of 
protection that prevents the market from moving beyond set thresholds. 
The thresholds consist of a Reference Price plus (minus) set dollar 
amounts based on the nature of the option and the premium of the 
option.
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    \4\ The term ``System'' shall mean the automated System for 
order execution and trade reporting owned and operated by The Nasdaq 
Options Market LLC. See NOM Rules at Chapter VI, Section 1(a).
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    With the rule amendment, the System will calculate an Acceptable 
Trade Range by taking the reference price, plus or minus a value to be 
determined by the Exchange. (i.e., the reference price--(x) for sell 
orders and the reference price + (x) for buy orders).\5\ Upon receipt 
of a new order, the reference price is the National Best Bid (NBB) for 
sell orders and the National Best Offer (NBO) for buy orders or the 
last price at which the order is posted whichever is higher for a buy 
order or lower for a sell order. If an order reaches the outer limit of 
the Acceptable Trade Range (the ``Threshold Price'') without being 
fully executed, it will be posted at the Threshold Price for a brief 
period, not to exceed one second (``Posting Period''), to allow more 
liquidity to be collected. Upon posting, either the current Threshold 
Price of the order or an updated NBB for buy orders or the NBO for sell 
orders (whichever is higher for a buy order/lower for a sell order) 
then becomes the reference price for calculating a new Acceptable Trade 
Range. If the order remains unexecuted, a new Acceptable Trade Range 
will be calculated and the order will execute, route, or post up to the 
new Acceptable Trade Range Threshold Price. Today, this process will 
repeat until either (i) the order/quote is executed, cancelled, or 
posted at its limit price or (ii) the order has been subject to a 
configurable number of instances of the Acceptable Trade Range as 
determined by the Exchange.\6\ Once the maximum number of instances has 
been reached, the order is returned.
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    \5\ The Acceptable Trade Range settings are tied to the option 
premium.
    \6\ NOM Participants may elect to have their orders cancelled by 
the System after the first iteration.
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    The Exchange posts a maximum number of Acceptable Trade Range 
iterations, until the order is cancelled on its Trading System Settings 
page located on the NASDAQTrader.com Web site.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \8\ in particular, in that it 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 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 by enhancing the ATR [sic] to make 
the Exchange's markets more efficient, to the benefit of the investing 
public. Although the Exchange needs additional time to finalize the 
enhancements, the delay is expected to be short and will involve 
advance notice to the Exchange membership.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange believes this proposed rule change would provide 
NOM Participants greater certainty when transacting orders on the 
Exchange and continue to reduce the negative impacts of sudden, 
unanticipated volatility in and enhance the price-discovery process.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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. The 
Exchange has satisfied this requirement.
    \11\ 15 U.S.C. 78s(b)(3)(A)
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ 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 Commission notes that 
waiver of the operative delay would permit the Exchange to delay the 
implementation of a recent proposed amendment to rule text related to 
Acceptable Trade Range.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    Under the proposal, the Exchange would delay the implementation of 
the Acceptable Trade Range rule text changes from December 23, 2013, to 
January on a specific date to be announced in advance through an 
Options Trader Alert. The Exchange represents that a waiver of the 30-
day operative delay is necessary and appropriate to ensure that the

[[Page 79057]]

technology for the changes is ready for implementation. The Exchange 
further represents that the delay will be short and that it will 
provide advance notice of the implementation date to its membership. 
Based on the Exchange's representations, the Commission waives the 30-
day operative delay requirement and designates the proposed rule change 
as operative upon filing.\15\
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    \15\ For purposes only of waiving the 30-day operative delay, 
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 such 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 under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(2)(B).
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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-2013-158 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-2013-158. 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 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-2013-158 and should 
be submitted on or before January 17, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30939 Filed 12-26-13; 8:45 am]
BILLING CODE 8011-01-P