
[Federal Register: July 1, 2008 (Volume 73, Number 127)]
[Notices]               
[Page 37520-37521]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy08-83]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58014; File No. SR-NASDAQ-2008-055]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change Regarding Fees for Orders 
Routed via the Options Intermarket Linkage

June 24, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 18, 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 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 amend its fees related to orders routed to the 
NASDAQ Options Market (``NOM'') via the Options Intermarket Linkage 
(``Linkage'') \3\ to establish a Linkage Fee Pilot Program that is 
effective through July 31, 2009 and to clarify the application of 
options transaction fees for trades executed through Linkage on the 
Exchange. Nasdaq will implement the proposed rule upon approval. The 
text of the proposed rule change is available at Nasdaq, the 
Commission's Public Reference Room, and http://www.nasdaq.com.
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    \3\ On July 28, 2000, the Commission approved a national market 
system plan for the purpose of creating and operating an intermarket 
options market linkage proposed by the American Stock Exchange LLC, 
Chicago Board Options Exchange, Inc., and International Securities 
Exchange LLC. See Securities Exchange Act Release No. 43086 (July 
28, 2000), 65 FR 48023 (August 4, 2000). Subsequently, the 
Philadelphia Stock Exchange, Inc., Pacific Exchange, Inc. (n/k/a 
NYSE Arca), Boston Stock Exchange, Inc., and Nasdaq joined the 
Linkage Plan. See Securities Exchange Act Release Nos. 43573 
(November 16, 2000), 65 FR 70851 (November 28, 2000); 43574 
(November 16, 2000), 65 FR 70850 (November 28, 2000); 49198 
(February 5, 2004), 69 FR 7029 (February 12, 2004); and 57545 (March 
21, 2008), 73 FR 16394 (March 27, 2008).
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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
    The purpose of this proposed rule change is to establish a Linkage 
Fee Pilot Program that is effective through July 31, 2009 and to 
clarify the application of options transaction fees for trades executed 
through the Linkage on the Exchange. Under this pilot, the fees 
applicable to Nasdaq members entering orders directly into NOM systems 
will apply to Nasdaq members and non-members that enter orders into 
other options exchanges that are then routed to Nasdaq via the Linkage 
and executed on NOM.
    Under the Exchange's current Rule 7050(1), the fee for members 
entering an order that executes on the NOM is $.45 per executed 
contract. Nasdaq's current rule does not differentiate between orders 
entered directly into the NOM via Nasdaq systems and orders received by 
Nasdaq via the Linkage. Since the launch of the NOM, Nasdaq has been 
assessing the same fee for all orders executed on behalf of members on 
its market regardless of whether such orders were entered directly into 
Nasdaq systems or via the Linkage.
    Nasdaq did not differentiate between those groups because firms 
that are members of away markets are, by and large, also members of 
Nasdaq. Nasdaq states that, all orders received via the Linkage and 
executed by Nasdaq have been entered on away markets by firms that are 
also Nasdaq members. Nonetheless, the possibility exists that a firm 
that is not a Nasdaq member could enter an order that is routed to 
Nasdaq via the Linkage and executed by

[[Page 37521]]

Nasdaq. In that case, under Nasdaq's current rule, Nasdaq would lack an 
approved rule to assess an execution fee to that non-member.
    Nasdaq believes it is proper to charge the same fee for executions 
regardless of whether an order was entered directly into Nasdaq's 
systems or routed to Nasdaq via the Linkage. Since most firms join 
multiple exchanges, pricing that differentiates between orders 
originating in different markets tends to skew trading behaviors in 
ways that are unintended and possibly detrimental.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\4\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act,\5\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities. The proposed 
Linkage Fee Pilot Program will result in the same fee being charged for 
the execution of all orders regardless of the manner in which they are 
sent to the Exchange.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. To the contrary, Nasdaq 
notes that the options markets compete aggressively on the basis of 
execution price and that the proposal is part of Nasdaq's attempt to 
compete effectively.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 No. SR-NASDAQ-2008-055 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-055. 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, 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 available publicly. All submissions should refer to 
File Number SR-NASDAQ-2008-055 and should be submitted on or before 
July 22, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-14833 Filed 6-30-08; 8:45 am]

BILLING CODE 8010-01-P
