Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change as Modified by Amendment No. 1 Thereto To Reduce The Order Exposure Period on the NASDAQ Options Market, 5952-5954 [E9-2226]
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5952
Federal Register / Vol. 74, No. 21 / Tuesday, February 3, 2009 / Notices
(C) Self-Regulatory Organization’s
Statement on Comments Regarding the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or 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 8 and Rule 19b–4(f)(2) thereunder,9
because it establishes or changes a due,
fee or other charge imposed on members
by the Exchange. Accordingly, the
proposal is effective upon filing with
the Commission.
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 proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
yshivers on PROD1PC62 with NOTICES
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
No. SR–BATS–2009–005 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 No.
SR–BATS–2009–005. 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 changes 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 BATS. 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 No.
SR–BATS–2009–005 and should be
submitted on or before February 24,
2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2231 Filed 2–2–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59310; File No. SR–
NASDAQ–2009–005]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change as
Modified by Amendment No. 1 Thereto
To Reduce The Order Exposure Period
on the NASDAQ Options Market
January 28, 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 January
23, 2009, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) proposed rule change
as described in Items I and II below,
which Items have been prepared by the
Exchange. Amendment 1 was filed on
January 27, 2009. The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
8 15
U.S.C. 78s(b)(3)(A)(ii).
9 17 CFR 240.19b–4(f)(6) [sic].
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Specifically, NASDAQ is proposing to
amend Chapter VII, Section 12 of the
NASDAQ rule manual governing the
NASDAQ Options Market to provide
that: (i) Options Participants may not
execute as principal against orders on
the limit order book they represent as
agent unless such agency orders are first
exposed on the limit order book for at
least one (1) second, or the Options
Participant has been bidding or offering
on the Exchange for at least one (1)
second prior to receiving an agency
order that is executable against such
order, and (ii) Options Participants must
expose orders they represent as agent for
at least one (1) second before such
orders may be automatically executed,
in whole or in part, against orders
solicited from members and nonmember broker-dealers to transact with
such orders.3
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.4
*
*
*
*
*
Chapter VII, Market Participants:
Sec. 12 Order Exposure Requirements:
With respect to orders routed to NOM,
Options Participants may not execute as
principal orders they represent as agent
unless (i) agency orders are first exposed
on NOM for at least one (1) second
[three (3) seconds] or (ii) the Options
Participant has been bidding or offering
on NOM for at least one (1) second
[three (3) seconds] prior to receiving an
agency order that is executable against
such bid or offer.
Commentary:
.01 and .02 No change.
.03 With respect to non-displayed
trading interest, including the reserve
portion, the exposure requirement of
subsection (i) is satisfied if the
displayable portion of the order is
displayed at its displayable price for one
[three] seconds.
.04 No change.
*
*
*
*
*
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
self-regulatory organization included
statements concerning the purpose of,
3 Amendment 1 makes a technical correction to
conform Commentary .03 to the proposed new rule
language.
4 Changes are marked to the rule text that appears
in the electronic NASDAQ Manual found at https://
wallstreet.cch.com/nasdaq/.
E:\FR\FM\03FEN1.SGM
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Federal Register / Vol. 74, No. 21 / Tuesday, February 3, 2009 / Notices
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those 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 parts 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 the proposed rule
change is to reduce the exposure time
during which Options Participants may
not execute as principal against orders
they represent as agent while continuing
to afford the opportunity for other
market participants to execute at or
better than the limit order price during
such exposure period.
Chapter VII, Section 12 currently
provide that an Options Participant 5
may not execute as principal against
orders on the limit order book they
represent as agent unless: (a) Agency
orders are first exposed on the limit
order book for at least three seconds, or
(b) the Options Participant has been
bidding or offering on the Exchange for
at least three (3) seconds prior to
receiving an agency order that is
executable against such order.
In addition, Options Participants must
expose orders they represent as agent for
at least three (3) seconds before such
orders may be automatically executed,
in whole or in part, against orders
solicited from members and nonmember broker-dealers to transact with
such orders. Under the proposal, these
exposure periods would be reduced to
one second.
The Exchange adopted the 3-second
exposure period upon its initial
creation, based upon similar
requirements and functionality already
in existence on other options
exchanges.6 The three-second order
handling and exposure period assumes
that three seconds is not long enough to
permit human interaction with the
orders. Rather, market participants had
become sufficiently automated that they
could react to these orders
electronically. In this context, the
Exchange believes it would be in all
yshivers on PROD1PC62 with NOTICES
5 Pursuant
to Chapter I, Section 1(a)(40) of the
NOM Rules, the term ‘‘Options Participant’’ means
a firm, or organization that is registered with the
Exchange for purposes of participating in options
trading on NOM as a ‘‘Nasdaq Options Order Entry
Firm’’ or ‘‘Nasdaq Options Market Maker’’.
6 Securities Exchange Act Release No. 57478
(March 12, 2008), 73 FR 14521 (March 18, 2008)
(SR–NASDAQ–2007–004).
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market participants’ best interest to
minimize the exposure period to a time
frame that continues to allow adequate
time for market participants to respond
electronically, as both the order being
exposed and the participants
responding are subject to market risk
during the exposure period. In this
respect, the Exchange states that its
experience with the three-second
exposure time period indicates that one
second would provide an adequate
response time. The Exchange does not
believe it is necessary or beneficial to
the orders being exposed to continue to
subject them to market risk for a full
three seconds.
The Exchange has numerous market
participants that have the capability and
do opt to respond within a one-second
exposure period on the Exchange’s fully
automated trading platform for options.
Recently, the Exchange distributed a
survey to all NOM Options Participants.
To substantiate that its members could
receive, process, and communicate a
response back to the Exchange within
one second, the survey asked members
to identify how many milliseconds it
took for (i) a broadcast from the
Exchange to reach their systems; (ii)
their systems to generate responses; and
(iii) their responses to reach the
Exchange. The survey results indicate
that the time it takes a message to travel
between the Exchange and its members
is not more than 100 milliseconds each
way. The survey also indicated that it
typically takes not more than 50
milliseconds for member systems to
process the information and generate a
response. Thus, the survey indicated
that it typically takes not more than 250
milliseconds for members to receive,
process, and respond to broadcast
messages related to the various
Mechanisms. Additionally, all 8
members that responded to the survey
indicated that reducing the exposure
period to one second would not impair
their ability to participate in orders
affected by the proposal. The Exchange
believes that this information provides
additional support for its assertion that
reducing the exposure periods from
three seconds to one second will
continue to provide members with
sufficient time to ensure effective
interaction with orders.
The Exchange is submitting the
instant proposal in order to remain
competitive with other exchanges that
have reduced the exposure period from
3 seconds to 1 second.7 The Exchange
7 See Securities Exchange Act Release Nos. 57849
(May 22, 2008), 73 FR 31167 (May 30, 2008) (SR–
CBOE–2008–16); and 58224 (July 25, 2008), 73 FR
44303 (July 30, 2008) (SR–ISE–2007–94).
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5953
believes that reducing its order handling
and exposure periods from three
seconds to one second will benefit
market participants. The Exchange
further believes that reducing the time
periods to one second will allow it to
provide investors and other market
participants with more timely
executions, thereby reducing market
risk.8
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and furthers the
objectives of Section 6(b)(5) of the Act 10
in particular, in that it 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, by
providing investors with more timely
execution of their options orders, while
ensuring that there is adequate exposure
of limit orders in the Exchange’s
marketplace.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASDAQ does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. To the contrary,
NASDAQ is adopting this proposed rule
change in response to the competitive
advantage enjoyed by options exchanges
that have already reduced the order
exposure requirement from three
seconds to one second.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
None.
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
8 The Exchange believes that the proposed
timeframe would give market participants sufficient
time to respond, compete, and provide price
improvement for orders. The Exchange also notes
that electronic systems are readily available to, if
not already in place for, Exchange members that
allow them to respond in a meaningful way within
the proposed timeframe.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
E:\FR\FM\03FEN1.SGM
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5954
Federal Register / Vol. 74, No. 21 / Tuesday, February 3, 2009 / Notices
(ii) as to which the Phlx 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.
The Exchange has requested
accelerated approval of this proposed
rule change prior to the 30th day after
the date of publication of the notice in
the Federal Register. The Commission
is considering granting accelerated
approval of the proposed rule change at
the end of a 15-day comment period.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the proposal,
including whether it is consistent with
the Act. Comments may be submitted by
any of the following methods:
yshivers on PROD1PC62 with NOTICES
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–2009–005 on the
subject line.
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–2009–005 and
should be submitted on or before
February 18, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2226 Filed 2–2–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Release No. 34–59305; File No. SR–
NYSEArca–2009–04]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Arca, Inc. Amending Rules Governing
Flexible Exchange Options to Increase
Maximum Term
January 27, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
Paper Comments
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on January
• Send paper comments in triplicate
9, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’
to Elizabeth M. Murphy, Secretary,
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission,
Securities and Exchange Commission
100 F Street, NE., Washington, DC
(the ‘‘Commission’’) the proposed rule
20549–1090.
change as described in Items I, II, and
All submissions should refer to File
III below, which Items have been
Number SR–NASDAQ–2009–005. This
prepared by the self-regulatory
file number should be included on the
subject line if e-mail is used. To help the organization. The Commission is
publishing this notice to solicit
Commission process and review your
comments on the proposed rule change
comments more efficiently, please use
only one method. The Commission will from interested persons.
post all comments on the Commission’s I. Self-Regulatory Organization’s
Internet Web site (https://www.sec.gov/
Statement of the Terms of Substance of
rules/sro.shtml). Copies of the
the Proposed Rule Change
submission, all subsequent
The Exchange proposes to amend
amendments, all written statements
Exchange rules governing Flexible
with respect to the proposed rule
Exchange Options. A copy of this filing
change that are filed with the
is available on the Exchange’s Web site
Commission, and all written
at https://www.nyse.com, at the
communications relating to the
Exchange’s principal office and at the
proposed rule change between the
Commission’s Public Reference Room.
Commission and any person, other than
those that may be withheld from the
II. Self-Regulatory Organization’s
public in accordance with the
Statement of the Purpose of, and
provisions of 5 U.S.C. 552, will be
Statutory Basis for, the Proposed Rule
available for inspection and copying in
Change
the Commission’s Public Reference
In its filing with the Commission, the
Room on official business days between self-regulatory organization included
the hours of 10 a.m. and 3 p.m. Copies
statements concerning the purpose of,
of such filing also will be available for
inspection and copying at the principal
11 17 CFR 200.30–3(a)(12).
offices of the Exchange. All comments
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
received will be posted without change;
3 17 CFR 240.19b–4.
the Commission does not edit personal
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and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to increase the maximum term
for FLEX Options. Currently, the
maximum term for a FLEX Equity
Options 4 is three (3) years, provided an
OTP Holder may request a longer term
to a maximum of five (5) years,5 and for
FLEX Index Options the maximum term
is five (5) years.
NYSE Arca is proposing to increase
the maximum term for all FLEX Options
to fifteen years and to eliminate the
requirement that a FLEX Post Official
make a liquidity assessment. The
changes are being proposed to simplify
the process and in response to investor
interest in expanding the maximum
term, in order to accommodate their
desire to bring trades that are otherwise
conducted in the over-the-counter
(‘‘OTC’’) market to an exchange
environment.
The Exchange believes that expanding
the eligible term for FLEX Options as
proposed is important and necessary to
the Exchange’s efforts to create a
product and market that provides OTP
Holders, and other qualified investors
interested in FLEX-type options, with
an improved but comparable alternative
to the OTC market in customized
options, which can take on contract
characteristics similar to FLEX Options
but are not subject to the same
maximum term restriction. By
expanding the eligible term for FLEX
Options, market participants will now
have greater flexibility in determining
whether to execute their customized
options in an exchange environment or
in the OTC market. NYSE Arca believes
market participants benefit from being
able to trade these customized options
in an exchange environment in several
ways, including, but not limited to the
following: (1) Enhanced efficiency in
initiating and closing out positions; (2)
4 Flex Equity Options includes options on
specified equity securities or Exchange Traded
Fund Shares.
5 Pursuant to NYSE Arca Rule 5.32 (d)(1), upon
assessment by the FLEX Post Official that sufficient
liquidity exists, such request will be granted.
E:\FR\FM\03FEN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 21 (Tuesday, February 3, 2009)]
[Notices]
[Pages 5952-5954]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-2226]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59310; File No. SR-NASDAQ-2009-005]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change as Modified by Amendment No. 1
Thereto To Reduce The Order Exposure Period on the NASDAQ Options
Market
January 28, 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 January 23, 2009, The NASDAQ Stock Market LLC (``NASDAQ'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change as described in Items I and II below, which Items have been
prepared by the Exchange. Amendment 1 was filed on January 27, 2009.
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Specifically, NASDAQ is proposing to amend Chapter VII, Section 12
of the NASDAQ rule manual governing the NASDAQ Options Market to
provide that: (i) Options Participants may not execute as principal
against orders on the limit order book they represent as agent unless
such agency orders are first exposed on the limit order book for at
least one (1) second, or the Options Participant has been bidding or
offering on the Exchange for at least one (1) second prior to receiving
an agency order that is executable against such order, and (ii) Options
Participants must expose orders they represent as agent for at least
one (1) second before such orders may be automatically executed, in
whole or in part, against orders solicited from members and non-member
broker-dealers to transact with such orders.\3\
---------------------------------------------------------------------------
\3\ Amendment 1 makes a technical correction to conform
Commentary .03 to the proposed new rule language.
---------------------------------------------------------------------------
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\4\
---------------------------------------------------------------------------
\4\ Changes are marked to the rule text that appears in the
electronic NASDAQ Manual found at https://wallstreet.cch.com/nasdaq/.
---------------------------------------------------------------------------
* * * * *
Chapter VII, Market Participants:
Sec. 12 Order Exposure Requirements:
With respect to orders routed to NOM, Options Participants may not
execute as principal orders they represent as agent unless (i) agency
orders are first exposed on NOM for at least one (1) second [three (3)
seconds] or (ii) the Options Participant has been bidding or offering
on NOM for at least one (1) second [three (3) seconds] prior to
receiving an agency order that is executable against such bid or offer.
Commentary:
.01 and .02 No change.
.03 With respect to non-displayed trading interest, including the
reserve portion, the exposure requirement of subsection (i) is
satisfied if the displayable portion of the order is displayed at its
displayable price for one [three] seconds.
.04 No change.
* * * * *
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 self-regulatory organization
included statements concerning the purpose of,
[[Page 5953]]
and basis for, the proposed rule change and discussed any comments it
received on the proposed rule change. The text of those 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 parts 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 the proposed rule change is to reduce the exposure
time during which Options Participants may not execute as principal
against orders they represent as agent while continuing to afford the
opportunity for other market participants to execute at or better than
the limit order price during such exposure period.
Chapter VII, Section 12 currently provide that an Options
Participant \5\ may not execute as principal against orders on the
limit order book they represent as agent unless: (a) Agency orders are
first exposed on the limit order book for at least three seconds, or
(b) the Options Participant has been bidding or offering on the
Exchange for at least three (3) seconds prior to receiving an agency
order that is executable against such order.
---------------------------------------------------------------------------
\5\ Pursuant to Chapter I, Section 1(a)(40) of the NOM Rules,
the term ``Options Participant'' means a firm, or organization that
is registered with the Exchange for purposes of participating in
options trading on NOM as a ``Nasdaq Options Order Entry Firm'' or
``Nasdaq Options Market Maker''.
---------------------------------------------------------------------------
In addition, Options Participants must expose orders they represent
as agent for at least three (3) seconds before such orders may be
automatically executed, in whole or in part, against orders solicited
from members and non-member broker-dealers to transact with such
orders. Under the proposal, these exposure periods would be reduced to
one second.
The Exchange adopted the 3-second exposure period upon its initial
creation, based upon similar requirements and functionality already in
existence on other options exchanges.\6\ The three-second order
handling and exposure period assumes that three seconds is not long
enough to permit human interaction with the orders. Rather, market
participants had become sufficiently automated that they could react to
these orders electronically. In this context, the Exchange believes it
would be in all market participants' best interest to minimize the
exposure period to a time frame that continues to allow adequate time
for market participants to respond electronically, as both the order
being exposed and the participants responding are subject to market
risk during the exposure period. In this respect, the Exchange states
that its experience with the three-second exposure time period
indicates that one second would provide an adequate response time. The
Exchange does not believe it is necessary or beneficial to the orders
being exposed to continue to subject them to market risk for a full
three seconds.
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 57478 (March 12, 2008),
73 FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004).
---------------------------------------------------------------------------
The Exchange has numerous market participants that have the
capability and do opt to respond within a one-second exposure period on
the Exchange's fully automated trading platform for options. Recently,
the Exchange distributed a survey to all NOM Options Participants. To
substantiate that its members could receive, process, and communicate a
response back to the Exchange within one second, the survey asked
members to identify how many milliseconds it took for (i) a broadcast
from the Exchange to reach their systems; (ii) their systems to
generate responses; and (iii) their responses to reach the Exchange.
The survey results indicate that the time it takes a message to travel
between the Exchange and its members is not more than 100 milliseconds
each way. The survey also indicated that it typically takes not more
than 50 milliseconds for member systems to process the information and
generate a response. Thus, the survey indicated that it typically takes
not more than 250 milliseconds for members to receive, process, and
respond to broadcast messages related to the various Mechanisms.
Additionally, all 8 members that responded to the survey indicated that
reducing the exposure period to one second would not impair their
ability to participate in orders affected by the proposal. The Exchange
believes that this information provides additional support for its
assertion that reducing the exposure periods from three seconds to one
second will continue to provide members with sufficient time to ensure
effective interaction with orders.
The Exchange is submitting the instant proposal in order to remain
competitive with other exchanges that have reduced the exposure period
from 3 seconds to 1 second.\7\ The Exchange believes that reducing its
order handling and exposure periods from three seconds to one second
will benefit market participants. The Exchange further believes that
reducing the time periods to one second will allow it to provide
investors and other market participants with more timely executions,
thereby reducing market risk.\8\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 57849 (May 22,
2008), 73 FR 31167 (May 30, 2008) (SR-CBOE-2008-16); and 58224 (July
25, 2008), 73 FR 44303 (July 30, 2008) (SR-ISE-2007-94).
\8\ The Exchange believes that the proposed timeframe would give
market participants sufficient time to respond, compete, and provide
price improvement for orders. The Exchange also notes that
electronic systems are readily available to, if not already in place
for, Exchange members that allow them to respond in a meaningful way
within the proposed timeframe.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ in particular, in that it 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, by providing investors with more timely execution of their
options orders, while ensuring that there is adequate exposure of limit
orders in the Exchange's marketplace.
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\9\ 15 U.S.C. 78f(b).
\10\ 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 impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. To the contrary, NASDAQ is adopting this
proposed rule change in response to the competitive advantage enjoyed
by options exchanges that have already reduced the order exposure
requirement from three seconds to one second.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
None.
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
[[Page 5954]]
(ii) as to which the Phlx 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.
The Exchange has requested accelerated approval of this proposed
rule change prior to the 30th day after the date of publication of the
notice in the Federal Register. The Commission is considering granting
accelerated approval of the proposed rule change at the end of a 15-day
comment period.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the proposal, including whether it 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-2009-005 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-2009-005. 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 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 offices 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-2009-005 and
should be submitted on or before February 18, 2009.
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,
Deputy Secretary.
[FR Doc. E9-2226 Filed 2-2-09; 8:45 am]
BILLING CODE 8011-01-P
