Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Institute a Pricing Incentive Program for Market Makers in Exchange-Traded Funds and Index-Linked Securities, 42163-42165 [E7-14841]
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Federal Register / Vol. 72, No. 147 / Wednesday, August 1, 2007 / Notices
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange,7 and, in
particular, the requirements of section
6(b) of the Act 8 and the rules and
regulations thereunder. The
Commission finds that the proposed
rule change is consistent with section
6(b)(4) of the Act,9 which requires that
the rules of the Exchange provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members and other persons using its
facilities. The Commission believes that
the extension of the Linkage fee pilot
until July 31, 2008 will give the
Exchange and the Commission further
opportunity to evaluate whether such
fees are appropriate.
The Commission also finds good
cause for approving the proposed rule
change prior to the 30th day after the
date of publication of the notice of filing
thereof in the Federal Register. The
Commission believes that granting
accelerated approval of the proposed
rule change will preserve the
Exchange’s existing pilot program for
Linkage fees without interruption as the
Exchange and the Commission continue
considering the appropriateness of
Linkage fees. Therefore, the Commission
finds good cause, consistent with
section 19(b)(2) of the Exchange Act,10
to approve the proposed rule change on
an accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,11 that the
proposed rule change (SR–ISE–2007–
55), be and it hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14832 Filed 7–31–07; 8:45 am]
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BILLING CODE 8010–01–P
7 In approving this rule change, the Commission
notes that it has considered the proposal’s impact
on efficiency, competition, and capital formation.
See 15 U.S.C. 78c(f).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(4).
10 15 U.S.C. 78s(b)(2).
11 15 U.S.C. 78s(b)(2).
12 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56130; File No. SR–
NASDAQ–2007–061]
Self-Regulatory Organizations; the
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Institute a
Pricing Incentive Program for Market
Makers in Exchange-Traded Funds and
Index-Linked Securities
Date: July 25, 2007.
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 July 18,
2007, 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
Exchange has designated this proposal
as one establishing or changing a due,
fee, or other charge imposed by a selfregulatory organization pursuant to
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to institute a pricing
incentive program for market makers in
exchange-traded funds (‘‘ETFs’’) and
index-linked securities (‘‘ILSs’’) listed
on Nasdaq.5 Nasdaq plans to implement
the proposed rule change on August 1,
2007. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nasdaq.com/about/
LegalCompliance.stm.
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
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
5 The Exchange’s proposed rule text is contained
in the Nasdaq 7000 Series (Charges for Membership,
Services, and Equipment) at paragraph (g) of Rule
7018 (Nasdaq Market Center Order Execution and
Routing).
PO 00000
1 15
2 17
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42163
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, Proposed Rule
Change
1. Purpose
Nasdaq proposes to introduce a
pricing incentive program for market
makers in ETFs and ILSs listed on
Nasdaq. In April 2007, Nasdaq executed
34.8% of all transactions in ETFs listed
on U.S. exchanges, making it the largest
market for ETF transactions. Nasdaq
also executes a large percentage of
transactions in ILSs. However, Nasdaq
currently lists fewer ETFs and ILSs than
the New York Stock Exchange LLC and
the American Stock Exchange LLC. The
proposal is designed both to enhance
Nasdaq’s competitiveness as a listing
venue for ETFs and ILSs and further
strengthen its market quality as a
transaction venue for ETFs and ILSs.
Nasdaq proposes to adopt rules that
are similar to those regarding NYSE
Arca, Inc.’s (‘‘NYSE Arca’s’’) program
for Designated Market Makers.6 Under
NYSE Arca’s program, a Designated
Market Maker for a security listed on
NYSE Arca is required to maintain
minimum performance standards with
regard to (1) Percent of time at the
national best bid (best offer) (‘‘NBBO’’),
(2) percent of executions better than the
NBBO, (3) average displayed size, (4)
average quoted spread, and (5) in the
case of derivative securities, the ability
of the Designated Market Maker to
transact in underlying markets. In
return, the Designated Market Maker
pays $0.0025 per share when accessing
liquidity in stocks for which it is the
Lead Market Maker, and receives a
$0.004 per share credit when providing
liquidity.
Under Nasdaq’s proposed program, a
market maker in an ETF or ILS may
become a ‘‘Designated Liquidity
Provider’’ in a ‘‘Qualified Security’’ and
receive similarly favorable incentive
pricing. A Qualified Security must be an
ETF or ILS listed on Nasdaq, have at
least one Designated Liquidity Provider,
and have a Nasdaq-designated
maximum trading volume. Specifically,
a security is no longer eligible to be a
6 See NYSE Arca Equities Rule 7.24 (Designated
Market Maker Performance Standards) and NYSE
Arca Schedule of Fees and Charges for Exchange
Services (https://www.nyse.com/pdfs/
NYSEArca_Equities_Fees.pdf).
E:\FR\FM\01AUN1.SGM
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42164
Federal Register / Vol. 72, No. 147 / Wednesday, August 1, 2007 / Notices
Qualified Security once there have been
two calendar months in any three
calendar-month period during which its
average daily volume on Nasdaq
exceeded 250,000 shares. Thus, the
program is designed to encourage
support of ETFs and ILSs during their
period of initial listing, when the
security must develop an active trading
market in order to succeed. Once the
volume threshold is reached, the pricing
for the ETF or ILS would be consistent
with pricing for other securities traded
on Nasdaq.
A ‘‘Designated Liquidity Provider’’ is
a registered Nasdaq market maker in a
Qualified Security that has committed
to maintain minimum performance
standards. Designated Liquidity
Providers would be selected by Nasdaq
based on factors including, but not
limited to, experience with making
markets in ETFs and ILSs, adequacy of
capital, willingness to promote Nasdaq
as a marketplace, issuer preference,
operational capacity, support personnel,
and history of adherence to Nasdaq
rules and securities laws. Nasdaq may
limit the number of Designated
Liquidity Providers in a Qualified
Security, or modify a previously
established limit, upon prior written
notice to members. Specifically, Nasdaq
may modify such limit either to increase
or decrease the number of Designated
Liquidity Providers for a Qualified
Security upon providing such prior
written notice.
As is true under the equivalent rules
of NYSE Arca, the minimum
performance standards applicable to a
Designated Liquidity Provider may be
determined from time to time by Nasdaq
and may vary depending on the price,
liquidity, and volatility of a particular
Qualified Security. The performance
measurements would include: (1)
Percent of time at the NBBO; (2) percent
of executions better than the NBBO; (3)
average displayed size; and (4) average
quoted spread. Nasdaq may remove
Designated Liquidity Providers that do
not meet the performance standards or
that decide to change their status at any
time.
When accessing liquidity in a
Qualified Security or routing to another
market, the Designated Liquidity
Provider would pay $0.003 per share
executed; when providing liquidity, the
Designated Liquidity Provider would
receive a credit of $0.004 per share
executed. Consistent with the
requirements of Rule 610 of Regulation
NMS,7 however, in the unlikely event
that the security trades at less than $1
per share, the normal execution fee and
7 17
credit schedule in Nasdaq Rule 7018(a)
regarding securities trading less than $1
would apply.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of section 6 of the Act,8 in
general, and sections 6(b)(4) and 6(b)(5)
of the Act,9 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, and
is designed to promote just and
equitable principles of trade, 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, respectively. Nasdaq
believes that by allocating pricing
benefits to certain market makers that
make tangible commitments to
enhancing market quality for ETFs and
ILSs listed on Nasdaq, the proposal will
encourage the development of new
financial products, provide a better
trading environment for investors in
ETFs and ILSs, and encourage greater
competition between listing venues for
ETFs and ILSs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq believes that the proposed
rule change will encourage greater
competition among venues that list
ETFs and ILSs and further strengthen
the quality of the Nasdaq market as a
venue for transactions in ETFs and ILSs.
Accordingly, 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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Nasdaq states that written comments
were neither solicited nor received with
respect to the proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective pursuant to section
19(b)(3)(A)(ii) of the Act 10 and Rule
19b–4(f)(2) 11 thereunder because it
establishes or changes a due, fee, or
CFR 242.610.
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8 15
U.S.C. 78f.
U.S.C. 78f(b)(4) and (5).
10 15 U.S.C. 78s(b)(3)(A)(ii).
11 17 CFR 19b–4(f)(2).
9 15
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other charge imposed by the Exchange.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2007–061 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–2007–061. 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 (https://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 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
E:\FR\FM\01AUN1.SGM
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Federal Register / Vol. 72, No. 147 / Wednesday, August 1, 2007 / Notices
you wish to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2007–061 and
should be submitted on or before
August 22, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14841 Filed 7–31–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56124; File No. SR–NASD–
2007–042]
Self-Regulatory Organizations:
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to Delay the
Implementation of NASD Interpretive
Material 2210–4, which Requires
Certain Member Firms to Provide a
Hyperlink to https://www.nasd.com.
July 24, 2007.
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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 June 27,
2007, the National Association of
Securities Dealers, Inc. (‘‘NASD’’ 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
prepared by NASD. NASD filed the
proposed rule change pursuant to
section 19(b)(3)(A)(i) of the Act,3 and
Rule 19b–4(f)(1) thereunder,4 as one
constituting a stated policy, practice, or
interpretation with respect to the
meaning, administration, or
enforcement of an existing rule, which
renders the proposed rule change
effective upon filing with the
Commission. On July 20, 2007, NASD
filed Amendment No. 1 to the proposed
rule change. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(i).
4 17 CFR 240.19b–4(f)(1).
1 15
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASD is proposing to delay, until
October 31, 2007, implementation of an
amendment to Interpretive Material
2210–4 (‘‘IM 2210–4’’) 5 that was
scheduled to be implemented on July 7,
2007.6 The recent amendment to IM–
2210–4 requires an NASD member
referring to its NASD membership on its
Web site to provide a hyperlink to the
Internet domain https://www.nasd.com
(‘‘hyperlink requirement’’). There are no
proposed changes to the text of NASD
rules.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASD included statements concerning
the purpose of and basis for the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below.
NASD 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
On November 9, 2006, the SEC
approved an amendment to IM–2210–4
establishing the hyperlink requirement.7
On January 8, 2007, NASD published
Notice to Members 07–02, which
announced the Commission’s approval
of the hyperlink requirement and
established July 7, 2007 as its
implementation date.8 Following SEC
approval of the hyperlink requirement,
NASD and NYSE Group, Inc. (‘‘NYSE’’)
announced a plan to consolidate their
member regulation operations into a
combined organization that will be the
5 See Securities Exchange Act Release No. 54740
(November 9, 2006), 71 FR 67184 (November 20,
2006) (SR–NASD–2006–073) (Order Approving
Proposed Rule Change and Amendment No. 1
thereto and Notice of Filing and Order Granting
Accelerated Approval to Amendment No. 2 to
Amend NASD Interpretive Material 2210–4 to
Require Certain Member Firms to Provide a
Hyperlink to the NASD’s Internet Home Page)
(‘‘Approval Order’’).
6 As required by the Approval Order, unless
amended, the implementation date of the hyperlink
requirement will be 180 days following publication
of Notice to Members 07–02, which announces
Commission approval of the hyperlink requirement.
Notice to Members 07–02 was published on January
8, 2007.
7 See Approval Order.
8 See NASD Notice to Members 07–02 (January
2007).
PO 00000
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42165
sole U.S. private-sector provider of
member firm regulation for securities
firms that do business with the public.9
To reflect this consolidation, NASD will
be changing its name to the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) and changing its internet
domain. NASD is delaying
implementation of the hyperlink
requirement until its new name and
internet domain are established and is
providing sufficient time for firms to
make the necessary changes to their
Web sites. NASD will submit a separate
rule change to amend IM–2210–4 to
reflect its new corporate name and
internet domain.
NASD has filed the proposed rule
change for immediate effectiveness to
immediately postpone, until October 31,
2007, the implementation date of the
hyperlink requirement, which otherwise
would have been implemented on July
7, 2007.
2. Statutory Basis
NASD believes that the proposed rule
change is consistent with the provisions
of section 15A(b)(6) of the Act,10 which
requires, among other things, that
NASD’s rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. NASD is delaying
implementation of the hyperlink
requirement until its new name and
internet domain are established and is
providing sufficient time for firms to
make the necessary changes to their
Web sites.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASD 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.
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.
9 See SR–NASD–2007–023, which proposes to
amend the By-Laws of NASD to implement
governance and related changes to accommodate
the consolidation of the member firm regulatory
functions of NASD and NYSE Regulation, Inc.,
Securities Exchange Act Release No. 55495 (March
20, 2007), 72 FR 14149 (March 26, 2007).
10 15 U.S.C. 78o–3(b)(6).
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]]>Agencies
[Federal Register Volume 72, Number 147 (Wednesday, August 1, 2007)]
[Notices]
[Pages 42163-42165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14841]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56130; File No. SR-NASDAQ-2007-061]
Self-Regulatory Organizations; the NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Institute a Pricing Incentive Program for Market Makers in Exchange-
Traded Funds and Index-Linked Securities
Date: July 25, 2007.
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 July 18, 2007, 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 Exchange has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by a self-regulatory
organization pursuant to 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to institute a pricing incentive program for market
makers in exchange-traded funds (``ETFs'') and index-linked securities
(``ILSs'') listed on Nasdaq.\5\ Nasdaq plans to implement the proposed
rule change on August 1, 2007. The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
https://www.nasdaq.com/about/LegalCompliance.stm.
---------------------------------------------------------------------------
\5\ The Exchange's proposed rule text is contained in the Nasdaq
7000 Series (Charges for Membership, Services, and Equipment) at
paragraph (g) of Rule 7018 (Nasdaq Market Center Order Execution and
Routing).
---------------------------------------------------------------------------
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, Proposed Rule Change
1. Purpose
Nasdaq proposes to introduce a pricing incentive program for market
makers in ETFs and ILSs listed on Nasdaq. In April 2007, Nasdaq
executed 34.8% of all transactions in ETFs listed on U.S. exchanges,
making it the largest market for ETF transactions. Nasdaq also executes
a large percentage of transactions in ILSs. However, Nasdaq currently
lists fewer ETFs and ILSs than the New York Stock Exchange LLC and the
American Stock Exchange LLC. The proposal is designed both to enhance
Nasdaq's competitiveness as a listing venue for ETFs and ILSs and
further strengthen its market quality as a transaction venue for ETFs
and ILSs.
Nasdaq proposes to adopt rules that are similar to those regarding
NYSE Arca, Inc.'s (``NYSE Arca's'') program for Designated Market
Makers.\6\ Under NYSE Arca's program, a Designated Market Maker for a
security listed on NYSE Arca is required to maintain minimum
performance standards with regard to (1) Percent of time at the
national best bid (best offer) (``NBBO''), (2) percent of executions
better than the NBBO, (3) average displayed size, (4) average quoted
spread, and (5) in the case of derivative securities, the ability of
the Designated Market Maker to transact in underlying markets. In
return, the Designated Market Maker pays $0.0025 per share when
accessing liquidity in stocks for which it is the Lead Market Maker,
and receives a $0.004 per share credit when providing liquidity.
---------------------------------------------------------------------------
\6\ See NYSE Arca Equities Rule 7.24 (Designated Market Maker
Performance Standards) and NYSE Arca Schedule of Fees and Charges
for Exchange Services (https://www.nyse.com/pdfs/NYSEArca_Equities_
Fees.pdf).
---------------------------------------------------------------------------
Under Nasdaq's proposed program, a market maker in an ETF or ILS
may become a ``Designated Liquidity Provider'' in a ``Qualified
Security'' and receive similarly favorable incentive pricing. A
Qualified Security must be an ETF or ILS listed on Nasdaq, have at
least one Designated Liquidity Provider, and have a Nasdaq-designated
maximum trading volume. Specifically, a security is no longer eligible
to be a
[[Page 42164]]
Qualified Security once there have been two calendar months in any
three calendar-month period during which its average daily volume on
Nasdaq exceeded 250,000 shares. Thus, the program is designed to
encourage support of ETFs and ILSs during their period of initial
listing, when the security must develop an active trading market in
order to succeed. Once the volume threshold is reached, the pricing for
the ETF or ILS would be consistent with pricing for other securities
traded on Nasdaq.
A ``Designated Liquidity Provider'' is a registered Nasdaq market
maker in a Qualified Security that has committed to maintain minimum
performance standards. Designated Liquidity Providers would be selected
by Nasdaq based on factors including, but not limited to, experience
with making markets in ETFs and ILSs, adequacy of capital, willingness
to promote Nasdaq as a marketplace, issuer preference, operational
capacity, support personnel, and history of adherence to Nasdaq rules
and securities laws. Nasdaq may limit the number of Designated
Liquidity Providers in a Qualified Security, or modify a previously
established limit, upon prior written notice to members. Specifically,
Nasdaq may modify such limit either to increase or decrease the number
of Designated Liquidity Providers for a Qualified Security upon
providing such prior written notice.
As is true under the equivalent rules of NYSE Arca, the minimum
performance standards applicable to a Designated Liquidity Provider may
be determined from time to time by Nasdaq and may vary depending on the
price, liquidity, and volatility of a particular Qualified Security.
The performance measurements would include: (1) Percent of time at the
NBBO; (2) percent of executions better than the NBBO; (3) average
displayed size; and (4) average quoted spread. Nasdaq may remove
Designated Liquidity Providers that do not meet the performance
standards or that decide to change their status at any time.
When accessing liquidity in a Qualified Security or routing to
another market, the Designated Liquidity Provider would pay $0.003 per
share executed; when providing liquidity, the Designated Liquidity
Provider would receive a credit of $0.004 per share executed.
Consistent with the requirements of Rule 610 of Regulation NMS,\7\
however, in the unlikely event that the security trades at less than $1
per share, the normal execution fee and credit schedule in Nasdaq Rule
7018(a) regarding securities trading less than $1 would apply.
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\7\ 17 CFR 242.610.
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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,\8\ in general, and sections
6(b)(4) and 6(b)(5) of the Act,\9\ 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, and is designed to promote
just and equitable principles of trade, 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,
respectively. Nasdaq believes that by allocating pricing benefits to
certain market makers that make tangible commitments to enhancing
market quality for ETFs and ILSs listed on Nasdaq, the proposal will
encourage the development of new financial products, provide a better
trading environment for investors in ETFs and ILSs, and encourage
greater competition between listing venues for ETFs and ILSs.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq believes that the proposed rule change will encourage
greater competition among venues that list ETFs and ILSs and further
strengthen the quality of the Nasdaq market as a venue for transactions
in ETFs and ILSs. Accordingly, 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Nasdaq states that written comments were neither solicited nor
received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) \11\
thereunder because it establishes or changes a due, fee, or other
charge imposed by the Exchange. 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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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2007-061 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-2007-061. 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 (https://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 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
[[Page 42165]]
you wish to make available publicly. All submissions should refer to
File Number SR-NASDAQ-2007-061 and should be submitted on or before
August 22, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-14841 Filed 7-31-07; 8:45 am]
BILLING CODE 8010-01-P
