
[Federal Register: June 12, 2008 (Volume 73, Number 114)]
[Notices]               
[Page 33477-33479]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jn08-114]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57924; File No. SR-NASDAQ-2008-048]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Modifying Pricing for Nasdaq Members Using the Nasdaq Market Center

June 5, 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 30, 2008, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``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 prepared substantially by Nasdaq. 
Nasdaq has designated this proposal as one establishing or changing a 
member due, fee, or other charge imposed by Nasdaq 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 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 June 2, 
2008. The text of the proposed rule change is available at http://
www.nasdaq.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 proposing to increase the liquidity provider credit paid 
to high volume liquidity providers with respect to their transactions 
in securities listed on exchanges other than Nasdaq and the New York 
Stock Exchange (``Tape B Securities''). At the same time, Nasdaq is 
proposing to eliminate its market data revenue sharing program for 
executions of Tape B Securities occurring on Nasdaq. Finally, Nasdaq is 
proposing to delete Nasdaq Rule 7024, which formerly established a 
revenue sharing program for market participants trading on Nasdaq's 
discontinued SuperMontage trading system.
    Currently, members that provide an average daily volume through the 
Nasdaq Market Center in all securities during the month of more than 35 
million shares of liquidity provided receive a credit of $0.0028 per 
share for executions against displayed liquidity and $0.0015 per share 
for executions against non-displayed liquidity. For executions in Tape 
B Securities only, Nasdaq is increasing the credit for executions 
against displayed liquidity to $0.0031.
    As is currently the case, 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 (but that do not 
qualify for the higher credit described in the preceding sentence) will 
receive a credit of $0.0025 per share for executions against displayed 
liquidity and $0.001 per share for executions against non-displayed 
liquidity; and other members will receive a credit of $0.002 per share 
for executions against displayed liquidity and $0.001 per share for 
executions against non-displayed liquidity.
    At the same time, Nasdaq is eliminating its program for market data 
revenue sharing in Tape B securities. Currently, Nasdaq pays to 
liquidity providers in Tape B Securities 50% of the market data revenue 
associated with transactions in Tape B Securities executed through the 
Nasdaq Market

[[Page 33478]]

Center. Nasdaq believes that by focusing incentives for liquidity 
provision solely on direct transaction credits and away from market 
data revenue sharing, Nasdaq will enhance the transparency of its 
pricing. Nasdaq believes that market participants will prefer this 
approach because revenue sharing is paid on an estimated monthly basis 
with a quarterly ``true-up'', and therefore the value of revenue 
sharing is difficult for market participants to predict in advance. As 
a result of the change, Nasdaq will no longer share market data revenue 
with its market participants. Revenue sharing with firms reporting 
over-the-counter trades to the FINRA/NASDAQ Trade Reporting Facility 
will continue, however, as provided by NASD Rule 7001B.
    These changes reflect the continued extent of competition among 
transaction execution venues for all securities, including Tape B 
Securities. Notably, NYSE Arca has recently submitted a proposed rule 
change to reduce Tape B Securities execution and routing fees for 
market participants with high volumes of order execution, routing and 
liquidity provision.\5\ Nasdaq believes that by increasing the 
liquidity provider credit for market participants with high volumes of 
liquidity provision while simplifying pricing through the elimination 
of market data revenue sharing, Nasdaq will attract higher levels of 
liquidity and transparency to its market, notwithstanding pricing 
changes by competing venues.
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    \5\ SR-NYSEArca-2008-53.
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    Finally, Nasdaq is deleting Rule 7024, which is now obsolete and 
may be removed from the Nasdaq rulebook. The rule provided for sharing 
a percentage of operating revenue, as determined by the Nasdaq Board of 
Directors, with ``Nasdaq Quoting Market Participants,'' as defined in 
former Rule 4701. Rule 4701 defined categories of participants in 
Nasdaq's former SuperMontage execution system, which ended operations 
in 2006.\6\ Accordingly, the rule became obsolete at that time, and 
revenue sharing under the rule was discontinued.
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    \6\ Securities Exchange Act Release No. 54155 (July 14, 2006), 
71 FR 41291 (July 20, 2006) (SR-NASDAQ-2006-001).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The impact of the changes upon the net fees paid by a particular 
market participant will depend upon a number of variables, including 
its monthly volume, the order types it uses, and the prices of its 
quotes and orders (i.e., its propensity to add or remove liquidity). 
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. Although 
the proposed rule change may increase net charges for market 
participants that trade Tape B Securities through Nasdaq but that do 
not provide high levels of liquidity, Nasdaq believes that its 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.

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. 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 \9\ and Rule 19b-
4(f)(2) \10\ 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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    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.

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-2008-048 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-048. 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 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-2008-048 and should 
be submitted on or before July 3, 2008.


[[Page 33479]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-13158 Filed 6-11-08; 8:45 am]

BILLING CODE 8010-01-P
