
[Federal Register: May 22, 2008 (Volume 73, Number 100)]
[Notices]               
[Page 29800-29802]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22my08-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57822; File No. SR-NASDAQ-2008-045]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Modify the Opening of Trading on the NASDAQ Options Market

May 15, 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 May 13, 2008, 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, II, 
and III below, which Items have been substantially prepared by the 
Exchange. Nasdaq has filed the proposal pursuant to Section 19(b)(3)(A) 
of the Act \3\ and Rule 19b-4(f)(5) 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 
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).
    \4\ 17 CFR 240.19b-4(f)(5).

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[[Page 29801]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the opening of trading on the NASDAQ 
Options Market (``NOM'') as set forth in Chapter VI, Section 8 of the 
Nasdaq Rules governing options trading. The text of the proposed rule 
change is available at Nasdaq, the Commission's Public Reference Room, 
and http://nasdaq.complinet.com.

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
    Nasdaq proposes to modify Chapter VI, Section 8 of the rules 
governing NOM, and in particular governing the opening of trading in 
that market. Since Nasdaq launched NOM on March 31, 2008, Nasdaq has 
monitored the operation of the market to identify instances where 
market efficiency can be enhanced. Nasdaq believes that the opening of 
the market, while currently quite effective, can be further enhanced.
    Nasdaq's current opening processes are set to occur at a fixed time 
(9:30 a.m.) even when it appears that NOM would open at a price that is 
away from the prevailing market. Deviation from the prevailing market 
is somewhat reconciled by automated adjustments that occur within NOM's 
execution engine, preventing unacceptable harm to investors or NOM 
participants.
    Nonetheless, Nasdaq has determined that the opening of options 
trading can be enhanced by delaying the opening until such time as the 
execution of the Opening Cross or, where no Opening Cross will occur, 
the opening print is in line with the overall marketplace. 
Specifically, Nasdaq proposes to enhance its opening process by (1) 
delaying the Opening Cross in the event that after the execution of the 
Opening Cross the NOM best bid and offer would be outside certain pre-
determined threshold amounts, and (2) delaying the opening of trading 
if after the opening print the NOM best bid and offer would be outside 
the same pre-determined threshold amounts in instances where there is 
insufficient interest available to initiate the Opening Cross.
    Nasdaq believes this proposed modification is superior to the 
current process of opening of trading at a fixed time at a price that 
is adjusted to fall within the pre-determined threshold. Delaying the 
opening will allow NOM participants time to enter additional liquidity 
into the system, resulting in a more efficient opening process and 
reducing potential volatility around the open. If such a delay were to 
occur, the Opening Cross, and thus regular market trading, would not 
commence until such time as it is determined that the width 
requirements can be met. Nasdaq believes this amendment will increase 
efficiency of trading around the open. Nasdaq plans to use the 
threshold amounts prescribed in the obvious error guidelines set forth 
in Chapter V, Sec. 6 of the NOM rules.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6(b) of the Act,\5\ in general, and with 
Section 6(b)(5) of the Act,\6\ in particular, in that it is designed 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. Nasdaq believes that the proposal is 
consistent with this standard because the proposed rule change is 
designed to improve execution quality at the critical opening of the 
market.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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. To the contrary, Nasdaq 
believes that by enhancing NOM's opening of trading, the proposed rule 
change will require competing markets to improve their opening 
processes and thereby enhance competition between the markets.

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 proposed rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) have the effect of limiting 
the access to or availability of an existing order entry or trading 
system of the Exchange, the foregoing rule change has become effective 
immediately pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and 
Rule 19b-4(f)(5) thereunder.\8\ 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(5).
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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-2008-045 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-045. 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 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

[[Page 29802]]

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 the 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 SR-NASDAQ-2008-045 and should be submitted on or before 
June 12, 2008.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-11426 Filed 5-21-08; 8:45 am]

BILLING CODE 8010-01-P
