
[Federal Register: May 13, 2009 (Volume 74, Number 91)]
[Notices]               
[Page 22619-22621]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my09-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59879; File No. SR-NASDAQ-2009-041]

 
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 and NASDAQ 
Options Market

May 6, 2009.
    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 1, 2009, 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 by the Exchange. 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 modify pricing for NASDAQ members using the 
Nasdaq Market Center. This proposed rule change, which is effective 
upon filing, will become operative on May 1, 2009. The text of the 
proposed rule change is available at http://
nasdaqomx.cchwallstreet.com/, at NASDAQ's principal office, and at 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 modifying the price of trading equities and options on 
NASDAQ in several ways. First, NASDAQ is increasing the rebate for 
providing liquidity in equities traded on NASDAQ for members that 
actively trade both equities and options on NASDAQ. Currently, NASDAQ 
offers rebates of $0.0020 to $0.00295 per share for all members that 
provide liquidity in equities traded on NASDAQ depending on the volume 
of liquidity provided in equities.
    Effective May 1, 2009, a member firm that accesses liquidity of 
more than 200,000 contracts per day from The NASDAQ Options Market 
(``NOM'') and provides average daily volume of liquidity exceeding 25 
million shares per day in the NASDAQ equities market, will be credited 
a rebate of $0.0029 for providing liquidity in securities listed on 
NASDAQ or the New York Stock Exchange (``NYSE'') or on other exchanges. 
A member that provides 25 million shares of liquidity per day in 
equities and does not have the requisite options participation receives 
a rebate of $0.0025 per share.
    Second, also effective May 1, 2009, member firms will have the 
opportunity to earn a waiver of applicable fees charged for executing 
Mid-point Pegged orders (as defined in Nasdaq Rule 4751(f)(4)). Firms 
can earn this fee waiver by providing average daily volume of liquidity 
through the Nasdaq Market Center in all securities during the month of 
more than 125 million shares.
    Third, NASDAQ is implementing pricing for the routing strategy set 
forth in Nasdaq Rule 4758(a)(1)(A)(i), as set forth in SR-NASDAQ-2009-
036.\3\ Specifically, NASDAQ modified Rule 4758, Order Routing, to 
provide market participants with the option of entering orders that do 
not check the Nasdaq Market Center book prior to routing. Market 
participants using that routing strategy for all securities will be 
assessed a fee of $0.0005 per share executed for orders that execute on 
venues other than in the NYSE or NASDAQ OMX BX. For securities that 
utilize this strategy and that execute on

[[Page 22620]]

NASDAQ OMX BX, NASDAQ will pass-through the fees or rebates currently 
assessed by NASDAQ OMX BX or $0.0006 rebate per share executed for 
Nasdaq-listed and NYSE-listed securities and $0.0014 charge per share 
executed for other securities. An order that is routed but does not 
execute and is returned to the Nasdaq Market Center will be assessed 
fees or provided rebates consistent with those approved for orders that 
execute or provide liquidity on the Nasdaq Market Center.
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    \3\ Securities Exchange Act Release No. 59807 (Apr. 21, 2009); 
74 FR 19251 (Apr. 28, 2009).
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    Fourth, NASDAQ is also eliminating from Rule 7018 all provisions 
related to process that were in effect from April 1 through April 14, 
2009.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\4\ in general, and with Section 
6(b)(4) of the Act,\5\ 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 proposed fee change applies 
uniformly to all similarly situated NASDAQ members. 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 in 
equities and options, the prices of its quotes and orders (i.e., its 
propensity to add or remove liquidity) in equities and options, and the 
listing venue for the securities that it trades.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    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. 
The proposed rule change reflects a significant reduction in the 
overall cost of trading on NASDAQ. NASDAQ believes that the applicable 
fees and credits 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.
    NASDAQ is also responding to the convergence of trading in which 
members simultaneously trade different asset classes within a single 
strategy. This has been true of equities and options trading which is 
increasing, and is now visible in equities and futures trading. For 
example, on April 1, 2009, NYSE Euronext LLC announced the ``Futures 
Incentive Program'' or ``FIP'' which coordinates fee schedules between 
NYSE Liffe US and NYSE Arca with respect to trading gold and silver 
futures contracts on NYSE Liffe US and gold and silver based exchange 
traded funds on NYSE Arca. Like the NYSE Euronext FIP proposal, 
NASDAQ's current proposal enables NASDAQ members to continue to 
recognize the full benefit of trading on NASDAQ.
    Additionally, NASDAQ and its members will both recognize additional 
operational and administrative efficiencies from linking the billing of 
equities and options trading. In addition to the efficiencies 
associated with existing volume discounts for equities trading, this 
proposal will enable NASDAQ to issue a single invoice to replace two 
invoices in various circumstances.
    Finally, this proposal is voluntary with respect to all firms and 
should be considered as one among many alternatives within NASDAQ's 
current tiered pricing structure. For example, Nasdaq is offering to 
waive execution fees for Mid-point Pegged Orders for firms with high 
equities trading volume. This fee waiver lowers the total cost of 
trading on Nasdaq, and responds to a similar waiver by the ArcaNYSE 
[sic] Exchange.

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 rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \6\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\7\ 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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    \6\ 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
    \7\ 17 CFR 240.19b-4(f)(2).
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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-2009-041 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2009-041. 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 the 
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-2009-041 and should be submitted on or before 
June 3, 2009.


[[Page 22621]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-11164 Filed 5-12-09; 8:45 am]

BILLING CODE 8010-01-P
