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SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-56905; File No. SR-NASDAQ-2007-087]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY: 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
DOCUMENT SUMMARY: December 5, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on October 31, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') 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 substantially prepared by the Exchange. The Exchange
filed the proposed rule change pursuant to section 19(b)(3)(A) of the
Act \3\ and Rule 19b4(f)(2) thereunder,\4\ which renders it effective
upon filing with the Commission. 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 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory 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 this proposed rule change
on November 1, 2007. The text of the proposed rule change is available
at the Exchange's Web site, the Exchange and the Commission's Public Reference Room.
II. SelfRegulatory 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
[[Page 73054]]
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.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Effective November 1, 2007, Nasdaq is implementing a set of pricing
changes relating to securities listed on exchanges other than Nasdaq
and the New York Stock Exchange (``NYSE'').\5\ Specifically, for
certain ``LowVolume Securities,'' Nasdaq is adopting an enhanced
liquidity provider rebate of $0.004 per share executed.\6\ A LowVolume
Security is defined as a security listed on an exchange other than
Nasdaq or the NYSE with an average daily volume on all venues during
the preceding month of less than 200,000 shares. For each calendar
month, the determination of LowVolume Securities will be made on the
25th day of the preceding month, based on trading volumes since the
25th day of the month before. For example, the determination of Low
Volume Securities for trading during the calendar month of November
would be made on October 25, based on trading volumes from September 25
until October 24. The list of LowVolume Securities will be posted on
the NasdaqTrader.com Web site. By announcing the list prior to the
first of the month, Nasdaq believes that it will enable market
participants to reflect on the list when making trading decisions at
the beginning of the month. A security with seven or fewer trading days
during an assessment period, such as a new listing, will not be
considered a LowVolume Security, regardless of its volume, since the
lack of trading data does not provide a meaningful basis for
determining the security's potential volume during the following month.
\5\ Transaction reports for these securities are disseminated by the Consolidated Tape Association (``CTA'') on ``Tape B.''
\6\ There is, however, no liquidity provider rebate if the execution price is less than $1 per share.
As a corollary to the enhanced liquidity provider rebate for Low Volume Securities, Nasdaq will be eliminating market data revenue sharing for these same securities. Nasdaq's existing program for sharing 50% of market data revenue with liquidity providers in Tape B securities will remain in effect for Tape B securities that are not LowVolume Securities.
Nasdaq believes that because the amount of a liquidity provider rebate is known by market participants prior to order execution, it provides a more direct incentive for liquidity provision than market data revenue sharing, the exact amount of which is estimated monthly but confirmed on a quarterly basis and depends upon a range of factors beyond the control of a particular market participant. Accordingly, Nasdaq believes that substituting an enhanced rebate for market data revenue sharing may encourage market participants to make greater use of Nasdaq for trading the securities covered by the program.
At present, Nasdaq's only active program for market data revenue
sharing is for liquidity providers in Tape B securities.\7\
Accordingly, the proposed enhanced rebate applies only to these
securities. Moreover, Nasdaq's initial focus is on LowVolume
Securities (as defined above and in the rule) because Nasdaq believes
that an enhanced credit may encourage tighter spreads and more overall
activity in these stocks. Moreover, the focus on these securities will
allow Nasdaq to evaluate the financial and market behavior impact of
the change without materially increasing the overall amount of liquidity provider credits that it pays.
\7\ The Financial Industry Regulatory Authority (``FINRA'')/
NASDAQ Trade Reporting Facility also maintains a revenue sharing
program, but Nasdaq's program under Rule 7024, which allows for
discretionary sharing of an unspecified percentage of certain operating revenues, is not currently in use.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of section 6 of the Act,\8\ in general, and with section
6(b)(4) of the Act,\9\ 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. The change responds to fee changes
by NYSE to ensure that Nasdaq's fees for routing to NYSE are generally
consistent with charges that NYSE imposes on Nasdaq when it routes orders to it.
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
Written comments on the proposed rule change were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing proposed rule change is filed pursuant to section
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b4
thereunder \11\ because it establishes or changes a due, fee, or other
charge applicable only to a member imposed by a selfregulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate 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.
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b4(f)(2).
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
Paper comments
All submissions should refer to File Number SRNASDAQ2007087. 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
[[Page 73055]]
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 inspection and copying 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 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 SRNASDAQ2007087 and should be submitted on or before January 16, 2008.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\
\12\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E724897 Filed 122107; 8:45 am]
BILLING CODE 801101P
SUMMARY: NASDAQ Stock Market LLC,
DOCUMENT BODY 2: December 5, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on October 31, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') 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 substantially prepared by the Exchange. The Exchange
filed the proposed rule change pursuant to section 19(b)(3)(A) of the
Act \3\ and Rule 19b4(f)(2) thereunder,\4\ which renders it effective
upon filing with the Commission. 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 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory 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 this proposed rule change
on November 1, 2007. The text of the proposed rule change is available
at the Exchange's Web site, the Exchange and the Commission's Public Reference Room.
II. SelfRegulatory 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
[[Page 73054]]
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.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Effective November 1, 2007, Nasdaq is implementing a set of pricing
changes relating to securities listed on exchanges other than Nasdaq
and the New York Stock Exchange (``NYSE'').\5\ Specifically, for
certain ``LowVolume Securities,'' Nasdaq is adopting an enhanced
liquidity provider rebate of $0.004 per share executed.\6\ A LowVolume
Security is defined as a security listed on an exchange other than
Nasdaq or the NYSE with an average daily volume on all venues during
the preceding month of less than 200,000 shares. For each calendar
month, the determination of LowVolume Securities will be made on the
25th day of the preceding month, based on trading volumes since the
25th day of the month before. For example, the determination of Low
Volume Securities for trading during the calendar month of November
would be made on October 25, based on trading volumes from September 25
until October 24. The list of LowVolume Securities will be posted on
the NasdaqTrader.com Web site. By announcing the list prior to the
first of the month, Nasdaq believes that it will enable market
participants to reflect on the list when making trading decisions at
the beginning of the month. A security with seven or fewer trading days
during an assessment period, such as a new listing, will not be
considered a LowVolume Security, regardless of its volume, since the
lack of trading data does not provide a meaningful basis for
determining the security's potential volume during the following month.
\5\ Transaction reports for these securities are disseminated by the Consolidated Tape Association (``CTA'') on ``Tape B.''
\6\ There is, however, no liquidity provider rebate if the execution price is less than $1 per share.
As a corollary to the enhanced liquidity provider rebate for Low Volume Securities, Nasdaq will be eliminating market data revenue sharing for these same securities. Nasdaq's existing program for sharing 50% of market data revenue with liquidity providers in Tape B securities will remain in effect for Tape B securities that are not LowVolume Securities.
Nasdaq believes that because the amount of a liquidity provider rebate is known by market participants prior to order execution, it provides a more direct incentive for liquidity provision than market data revenue sharing, the exact amount of which is estimated monthly but confirmed on a quarterly basis and depends upon a range of factors beyond the control of a particular market participant. Accordingly, Nasdaq believes that substituting an enhanced rebate for market data revenue sharing may encourage market participants to make greater use of Nasdaq for trading the securities covered by the program.
At present, Nasdaq's only active program for market data revenue
sharing is for liquidity providers in Tape B securities.\7\
Accordingly, the proposed enhanced rebate applies only to these
securities. Moreover, Nasdaq's initial focus is on LowVolume
Securities (as defined above and in the rule) because Nasdaq believes
that an enhanced credit may encourage tighter spreads and more overall
activity in these stocks. Moreover, the focus on these securities will
allow Nasdaq to evaluate the financial and market behavior impact of
the change without materially increasing the overall amount of liquidity provider credits that it pays.
\7\ The Financial Industry Regulatory Authority (``FINRA'')/
NASDAQ Trade Reporting Facility also maintains a revenue sharing
program, but Nasdaq's program under Rule 7024, which allows for
discretionary sharing of an unspecified percentage of certain operating revenues, is not currently in use.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of section 6 of the Act,\8\ in general, and with section
6(b)(4) of the Act,\9\ 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. The change responds to fee changes
by NYSE to ensure that Nasdaq's fees for routing to NYSE are generally
consistent with charges that NYSE imposes on Nasdaq when it routes orders to it.
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
Written comments on the proposed rule change were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing proposed rule change is filed pursuant to section
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b4
thereunder \11\ because it establishes or changes a due, fee, or other
charge applicable only to a member imposed by a selfregulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate 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.
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b4(f)(2).
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
Paper comments
All submissions should refer to File Number SRNASDAQ2007087. 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
[[Page 73055]]
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 inspection and copying 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 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 SRNASDAQ2007087 and should be submitted on or before January 16, 2008.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\
\12\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E724897 Filed 122107; 8:45 am]
BILLING CODE 801101P
Common CFR Searches
14 CFR Part 39 40 CFR Part 52 14 CFR Part 71 33 CFR Part 165 50 CFR Part 679 26 CFR Part 1 40 CFR Part 180 47 CFR Part 73 50 CFR Part 17 33 CFR Part 117 44 CFR Part 67 50 CFR Part 648 14 CFR Part 97 33 CFR Part 100 40 CFR Part 63 26 CFR Part 301 50 CFR Part 622 39 CFR Part 111 40 CFR Part 300 44 CFR Part 65 50 CFR Part 660 40 CFR Part 271 40 CFR Parts 52 and 81 47 CFR Part 64 50 CFR Part 665 49 CFR Part 571 44 CFR Part 64 21 CFR Part 522 14 CFR Part 23 47 CFR Part 76