

[Federal Register: January 22, 2008 (Volume 73, Number 14)]
[Notices]               
[Page 3788-3790]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22ja08-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57147; File No. SR-NASDAQ-2008-001]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
and Amendment No. 1 Thereto To Modify Fees for Members Using the Nasdaq 
Market Center

January 14, 2008.
    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 January 2, 2008, 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 prepared substantially by the Nasdaq. On January 11, 2008, Nasdaq 
filed Amendment No. 1 to the proposed rule change for the purpose of 
providing a more detailed description of the statutory basis for the 
proposed rule change and correcting a minor typographical error. Nasdaq 
has designated this proposal as one establishing or changing a member 
due, fee, or other charge imposed by the Exchange under section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory 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 rule change on January 
2, 2008. The text of the proposed rule change is available at http://www.nasdaq.complinet.com
, the principal offices of the Exchange, and 

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

1. Purpose
    Nasdaq is revising its pricing schedule for transaction execution 
and routing to enhance incentives for liquidity provision and display 
of quotes/orders that provide liquidity. Nasdaq is also adopting 
different pricing schedules for each of the types of securities that it 
trades that reflect modest increases in some of the fees to access 
liquidity or route orders. For securities listed on Nasdaq,\5\ the fees 
are largely unchanged, except that the liquidity provider rebate will 
be reduced by $0.0001 per share executed for quotes/orders that are 
designated for posting to the Nasdaq book without being displayed to 
other market participants. Although Nasdaq, like other markets, gives 
market participants the option of posting undisplayed liquidity, Nasdaq 
believes that it is appropriate to use pricing incentives to encourage 
display of liquidity to the greatest extent possible.
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    \5\ As described in Nasdaq Interpretive Material 4390, 
securities that are dually listed on Nasdaq and the New York Stock 
Exchange (``NYSE'') are treated as NYSE-listed securities for most 
purposes under Nasdaq rules, including execution and routing fees.
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    With regard to fees for executing orders in securities listed on 
NYSE, routing such orders to venues other than NYSE, and routing of 
orders for exchange-traded funds (``ETFs'') to NYSE for execution, 
Nasdaq is increasing both its order execution and routing fees and its 
liquidity provider rebate. For these transactions, members with an 
average daily volume through the Nasdaq Market Center in all securities 
during the month of (i) more than 35 million shares of liquidity 
provided, and (ii) more than 55 million shares of liquidity accessed 
and/or routed; or members with an average daily volume through the 
Nasdaq Market Center in all securities during the month of (i) more 
than 25 million shares of liquidity provided, and (ii) more than 65 
million shares of liquidity accessed and/or routed, will pay $0.0028 
per share executed (up from $0.0026 per share executed) for order 
execution and routing of orders that check the Nasdaq book for the full 
size of the order prior to routing. Members with an average daily 
volume through the Nasdaq Market Center in all securities during the 
month of (i) more than 20 million shares of liquidity provided, and 
(ii) more than 35 million shares of liquidity accessed and/or routed 
will pay $0.0029 per share executed (up from $0.0028 per share 
executed). Other members will continue to pay $0.003 per share 
executed. However, the liquidity provider rebates for these securities 
will also increase as follows: Members with an average daily volume 
through the Nasdaq Market Center in all securities during the month of 
more than 35 million shares of liquidity provided will receive $0.0027 
per share executed (up from $0.0025 per share executed). Members with 
an average daily volume through the Nasdaq Market Center in all 
securities during the month of more than 20 million shares of liquidity 
provided will receive $0.0023 per share executed (up from $0.0022), and 
other members will

[[Page 3789]]

continue to receive $0.0020. As with Nasdaq-listed securities, however, 
these liquidity provider rebates will be reduced by $0.0001 per share 
executed for quotes/orders that are not displayed.
    With regard to fees for routing orders for securities other than 
ETFs to the NYSE, Nasdaq is making slight increases to the fees for 
orders that are routed without attempting to execute in Nasdaq for the 
full size of the order prior to routing, to enhance incentives for 
market participants to enter orders that check the Nasdaq book before 
routing. Specifically, the fee for a Directed Intermarket Sweep Order 
and an order that attempts to execute solely against displayed interest 
prior to routing will increase to $0.001 per share executed from 
$0.0009 per share executed. For members with an average daily volume 
through the Nasdaq Market Center in all securities during the month of 
more than 35 million shares of liquidity provided, the fee for other 
orders that do not attempt to execute for full size before routing will 
increase to $0.0009 from $0.0008; for members with an average daily 
volume in all securities during the month of more than 60 million 
shares of liquidity routed to the NYSE without attempting to execute in 
the Nasdaq Market Center in any respect (other than Directed 
Intermarket Sweep Orders) the fee for these orders will increase from 
$0.000825 to $0.0009, and for all other members, the fee will increase 
from either $0.00085 or $0.0009 to $0.001.
    For securities listed on exchanges other than Nasdaq and the NYSE, 
the fees to execute orders in these securities on Nasdaq will remain 
unchanged. The fees to route orders in these securities that check the 
Nasdaq book for the full size of the order prior to routing to other 
exchanges will increase as follows: Members with an average daily 
volume through the Nasdaq Market Center in all securities during the 
month of (i) more than 35 million shares of liquidity provided, and 
(ii) more than 55 million shares of liquidity accessed and/or routed; 
or members with an average daily volume through the Nasdaq Market 
Center in all securities during the month of (i) more than 25 million 
shares of liquidity provided, and (ii) more than 65 million shares of 
liquidity accessed and/or routed, will pay $0.0028 per share executed 
(up from $0.0026 per share executed). Members with an average daily 
volume through the Nasdaq Market Center in all securities during the 
month of (i) more than 20 million shares of liquidity provided, and 
(ii) more than 35 million shares of liquidity accessed and/or routed 
will pay $0.0029 per share executed (up from $0.0028 per share 
executed), and other members will continue to pay $0.003 per share 
executed. As with the liquidity provider rebates for other securities, 
the rebates paid with respect to securities listed on exchanges other 
than Nasdaq and NYSE will be reduced by $0.0001 per share executed for 
quotes/orders that are not displayed.
    Finally, in order to accurately reflect these changes, the proposed 
rule change also includes a non-substantive restructuring of the rule 
text. Thus, many of the provisions of new paragraphs 7018(a)(2) and 
(a)(4) that appear as new rule text reflect existing fees that are 
currently reflected in paragraph (a)(1).
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\6\ in general, and with section 
6(b)(4) of the Act,\7\ 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 changes enhance incentives for 
liquidity provision, display of executable orders on the Nasdaq book, 
and use of orders that check the Nasdaq book prior to routing while 
instituting increases in certain routing and execution fees that are 
balanced by increases in liquidity provider rebates. The impact of the 
changes upon the net fees paid by a particular market participant will 
depend upon a number of variables, including the types of securities 
that it trades through Nasdaq, its monthly volume, the order types it 
uses, and the prices of its quotes and orders. Nasdaq notes that it 
operates in a highly competitive market in which market participants 
can readily direct order flow to competing venues if they deem fee 
levels at a particular venue to be excessive. Accordingly, to the 
extent that certain routing and execution fees are increasing, Nasdaq 
believes that these fees remain competitive with those charged by other 
venues and therefore continue to be reasonable and equitably allocated 
to those members that opt to direct orders to Nasdaq rather than 
competing venues.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will impose 
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 foregoing proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-
4(f)(2) \9\ thereunder, because it establishes or changes a due, fee, 
or other charge imposed on members by Nasdaq. Accordingly, the proposal 
is effective upon filing with the Commission. 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\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on January 11, 2008, the date on which Nasdaq filed 
Amendment No. 1.
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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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-NASDAQ-2008-001 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2008-001. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use

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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 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 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 publicly available. All submissions 
should refer to File Number SR-NASDAQ-2008-001 and should be submitted 
on or before February 12, 2008.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-994 Filed 1-18-08; 8:45 am]

BILLING CODE 8011-01-P
