Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Concerning Intermarket Option Linkage, 22887-22889 [2010-10082]

Download as PDF Federal Register / Vol. 75, No. 83 / Friday, April 30, 2010 / Notices 22887 public interest. The Exchange believes that codifying certain provisions of the OLPP, as amended, serves to foster investor protection. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION Electronic Comments B. Self-Regulatory Organization’s Statement on Burden on Competition • 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–NYSEAmex–2010–39 on the subject line. [Release No. 34–61981; File No. SR– NASDAQ–2010–051] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Concerning Intermarket Option Linkage 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 7 and Rule 19b–4(f)(6) thereunder.8 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(6)(iii) thereunder.10 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 wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 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. 7 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied the pre-filing requirement. 8 17 VerDate Mar<15>2010 13:41 Apr 29, 2010 Jkt 220001 April 26, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 • Send paper comments in triplicate notice is hereby given that, on April 20, to Elizabeth M. Murphy, Secretary, 2010, The NASDAQ Stock Market LLC Securities and Exchange Commission, (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with 100 F Street, NE., Washington, DC the Securities and Exchange 20549–1090. Commission (the ‘‘Commission’’) the All submissions should refer to File proposed rule change as described in Number SR–NYSEAmex–2010–39. This Items I, II, and III below, which Items file number should be included on the have been prepared by the Nasdaq. The subject line if e-mail is used. To help the Commission is publishing this notice to Commission process and review your solicit comments on the proposed rule comments more efficiently, please use change from interested persons. only one method. The Commission will post all comments on the Commission’s I. Self-Regulatory Organization’s Statement of the Terms of Substance of Internet Web site (https://www.sec.gov/ the Proposed Rule Change rules/sro.shtml). Copies of the submission, all subsequent The Exchange is filing with the amendments, all written statements Commission a proposed rule change to with respect to the proposed rule delete its Temporary Rule Governing change that are filed with the Phase-Out of P and P/A Orders 3 and Commission, and all written amend several references in the rules to the Plan for the Purpose of Creating and communications relating to the Operating an Intermarket Linkage proposed rule change between the Commission and any person, other than (‘‘Linkage Plan’’).4 In addition, the Exchange also proposes to amend its those that may be withheld from the fees in Rule 7050, NASDAQ Options public in accordance with the Market, to discontinue its current pilot provisions of 5 U.S.C. 552, will be program (the ‘‘pilot’’) relating to options available for Web site viewing and printing in the Commission’s Public 1 15 U.S.C. 78s(b)(1). Reference Room, 100 F Street, NE., 2 17 CFR 240.19b–4. Washington, DC 20549, on official 3 See Chapter XII, Intermarket Linkage Rules, business days between the hours of 10 Section 4, Temporary Rule Governing Phase-Out of a.m. and 3 p.m. Copies of the filing also P and P/A Orders. 4 See Securities Exchange Act Release No. 57545 will be available for inspection and (March 21, 2008), 73 FR 16394 (March 27, 2008). copying at the principal office of the On July 28, 2000, the Commission approved a Exchange. All comments received will national market system plan for the purpose of be posted without change; the creating and operating an intermarket options Commission does not edit personal market linkage (‘‘Linkage’’) proposed by the then American Stock Exchange LLC, now NYSE Amex identifying information from LLC (‘‘NYSE Amex’’), Chicago Board Options submissions. You should submit only Exchange, Inc. (‘‘CBOE’’), and International information that you wish to make Securities Exchange LLC (‘‘ISE’’). See Securities available publicly. All submissions Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023, (August 4, 2000). Subsequently, should refer to File Number SR– Philadelphia Stock Exchange, Inc., now NASDAQ NYSEAmex–2010–39 and should be OMX PHLX, Inc. (‘‘Phlx’’), Pacific Exchange, Inc., submitted on or before May 21, 2010. now NYSE Arca, Inc. (‘‘NYSE Arca’’) and Boston Paper Comments For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–10081 Filed 4–29–10; 8:45 am] BILLING CODE 8011–01–P 11 17 PO 00000 CFR 200.30–3(a)(12). Frm 00152 Fmt 4703 Sfmt 4703 Stock Exchange, Inc., now NASDAQ OMX BX, Inc. (‘‘BSX’’) 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); and 49198 (February 5, 2004), 69 FR 7029, (February 12, 2004). The Exchange was added as a Participant to the Linkage Plan. Linkage was governed by the Options Linkage Authority under the conditions set forth under the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage approved by the Commission. E:\FR\FM\30APN1.SGM 30APN1 22888 Federal Register / Vol. 75, No. 83 / Friday, April 30, 2010 / Notices transaction fees for trades executed via the Intermarket Option Linkage (‘‘Linkage’’) on the Exchange. The text of the proposed rule change is available on the Exchange’s Web site at https://www.nasdaqtrader.com, on the Commission’s Web site at https:// www.sec.gov, at Nasdaq, 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, the Exchange 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 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 wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 The purpose of the proposed rule change is to eliminate existing references to the Linkage Plan and also replace some references to the Linkage Plan with references to the Options Order Protection and Locked/Crossed Market Plan (‘‘Plan’’) in order to clarify the current rules in effect. On June 17, 2008, the Exchange filed the Plan, joining all other approved options markets in adopting the Plan.5 The Plan requires each options exchange to adopt rules implementing various requirements specified in the Plan. The Plan replaces the former Linkage Plan. The Linkage Plan required Participating Exchanges to operate a stand-alone system or ‘‘Linkage’’ for sending order-flow between exchanges 5 See Securities Exchange Act Release Nos. 60405 (July 30, 2009), 74 FR 39362 (August 6, 2009) (National Market System Plan Relating to Options Order Protection and Locked/Crossed Markets). The Plan is a national market system plan proposed by the seven existing options exchanges and approved by the Commission. See Securities Exchange Act Release No. 59647 (March 30, 2009), 74 FR 15010 (April 2, 2009) (‘‘Plan Notice’’) and 60405 (July 30, 2009), 74 FR 39362 (August 6, 2009) (‘‘Plan Approval’’). The seven options exchanges are: Chicago Board Options Exchange, Incorporated (‘‘CBOE’’); International Securities Exchange LLC (‘‘ISE’’); NASDAQ OMX BX, Inc. (‘‘BOX’’); The NASDAQ Stock Market LLC (‘‘Nasdaq’’); NYSE Amex LLC (‘‘NYSE Amex’’); NYSE Arca, Inc. (‘‘NYSE Arca’’); and Phlx (each exchange individually a ‘‘Participant’’ and, together, the ‘‘Participating Options Exchanges’’). VerDate Mar<15>2010 13:41 Apr 29, 2010 Jkt 220001 to limit trade-throughs.6 The Options Clearing Corporation (‘‘OCC’’) operated the Linkage system (the ‘‘System’’).7 The Exchange adopted various new rules in connection with the Plan to avoid tradethroughs and locked markets, among other things.8 The Exchange currently offers private routing directly to away markets.9 The Exchange adopted a temporary rule entitled Temporary Rule Governing Phase-Out of P and P/A Orders (‘‘Temporary Rule’’),10 in order to facilitate the participation of certain Participating Exchanges who may require the use of Principal Acting as Agent Orders (‘‘P/A Orders’’) 11 and Principal Orders (‘‘P’’) 12 after implementation of the Plan.13 Certain Participating Exchanges required a temporary transition period during which they continued to utilize these order types that existed under the Linkage Plan. The Exchange proposed substantially similar rules with that of the other Participating Exchanges to accommodate the possibility of continued use of P/A Orders and P Orders. At this time all Participating Exchanges have discontinued use of the Linkage Plan. The Exchange proposes at this time to delete this Temporary Rule because it is no longer necessary in light of the discontinued use of the Linkage Plan. The Exchange also proposes to delete a reference to the Linkage Plan in Chapter VII, Market Participants, Section 5, Obligations of Market Makers. Additionally, the Exchange proposes to amend Section 1, Definitions, in Chapter XII, Intermarket Linkage Rules, 6 See footnote 4. 7 See footnote 4. 8 See footnote 5. 9 See Chapter VI, Trading Systems, Section 11, Order Routing. 10 See Chapter XII, Intermarket Linkage Rules, Section 4, Temporary Rule Governing Phase-Out of P and P/A Orders. 11 A P/A Order is an order for the principal account of a Primary Market Maker (or equivalent entity on another Eligible Exchange that is authorized to represent Public Customer orders), reflecting the terms of a related unexecuted Public Customer order for which the Primary Market Maker is acting as agent. See Chapter XII, Section 4(d)(4)(i). 12 A Principal Order is an order for the principal account of a market maker (or equivalent entity on another Eligible Exchange) and is not a P/A Order. See Chapter XII, Section 4 (d)(ii). 13 See Securities Exchange Act Release No. 60525 (August 18, 2009), 74 FR 43188 (August 26, 2009) (SR–NASDAQ–2009–056). Linkage was governed by the Options Linkage Authority under the conditions set forth under the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage approved by the Commission. The registered U.S. options markets were linked together on a real-time basis through a network capable of transporting orders and messages to and from each market. PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 to redefine ‘‘Plan’’ to comport with the new Plan. The Exchange proposes to discontinue the current pilot program related to transaction fees sent to the Exchange via Linkage. The current pilot is set to expire July 31, 2010.14 Under the Exchange’s current rule, the fee for members or non-members entering orders via Linkage that execute on the Exchange is $0.45 per executed contract. Because there are no longer any participant exchanges to the Linkage Plan, the Exchange proposes to discontinue the pilot. The Exchange also proposes to amend Rule 7050, NASDAQ Options Market, to remove all references to Linkage fees. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 15 in general, and furthers the objectives of Section 6(b)(5) of the Act 16 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 proposing the elimination of its Temporary Rule, which reflects usage of a former Linkage Plan that has since been replaced by a new Plan. In addition, the Exchange believes that amending its Rules to refer to the current Plan and by proposing to discontinue its pilot, to clarify that Linkage fees are no longer applicable, will provide its members clarity. 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 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 No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant 14 See Securities Exchange Act Release No. 60407 (July 30, 2009), 74 FR 39720 (August 7, 2009) (SR– NASDAQ–2009–073). 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). E:\FR\FM\30APN1.SGM 30APN1 Federal Register / Vol. 75, No. 83 / Friday, April 30, 2010 / Notices burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act 17 and Rule 19b–4(f)(6) 18 thereunder. 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. 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: wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1 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–2010–051 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–2010–051. 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 17 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. Nasdaq has satisfied this requirement. 18 17 VerDate Mar<15>2010 13:41 Apr 29, 2010 Jkt 220001 22889 provisions of 5 U.S.C. 552, will be available for Web site viewing and printing 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 available publicly. All submissions should refer to File Number SR– NASDAQ–2010–051 and should be submitted on or before May 21, 2010. site at https://www.sec.gov, and at the Commission’s Public Reference Room. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Florence E. Harmon, Deputy Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [FR Doc. 2010–10082 Filed 4–29–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61972; File No. SR–ISE– 2010–32] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes April 23, 2010. 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 April 14, 2010, the International Securities Exchange, LLC (the ‘‘Exchange’’ or the ‘‘ISE’’) 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 selfregulatory organization. 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 The Exchange is proposing to amend its Schedule of Fees. The text of the proposed rule change is available on the Exchange’s Web site (https:// www.ise.com), at the principal office of the Exchange, on the Commission’s Web CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 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, 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. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. 1. Purpose In SR–ISE–2009–26, the Exchange adopted the term ‘Singly Listed ETFs’ to identify those ETF products that are listed only on ISE and for which the Exchange charges a fee of $0.18 per contract for customer transactions. Currently, the First Trust ISE Water ETF (‘‘FIW’’), the Claymore China Technology ETF (‘‘CQQQ’’), the ProShares UltraPro Short Dow30 (‘‘SDOW’’), the ProShares UltraPro Dow30 (‘‘UDOW’’), the ProShares UltraPro Short MidCap400 (‘‘SMDD’’), the ProShares UltraPro MidCap400 (‘‘UMDD’’), the ProShares UltraPro Short Russell2000 (‘‘SRTY’’) and the ProShares UltraPro Russell2000 (‘‘URTY’’) are the only such ETFs listed on the Exchange’s fee schedule. On April 14, 2010, ISE began listing options on the First Trust ISE Global Copper Index Fund (‘‘CU’’) and the First Trust ISE Global Platinum Index Fund (‘‘PLTM’’). As of the date of this filing, CU and PLTM are both singly listed on ISE. The Exchange therefore proposes to charge a fee of $0.18 per contract for customer transactions in options on CU and PLTM. The Exchange also proposes to charge a Payment for Order Flow fee for transactions in options on these products. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,3 in general, and furthers the objectives of Section 6(b)(4),4 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and 19 17 1 15 PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 3 15 4 15 E:\FR\FM\30APN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4). 30APN1

Agencies

[Federal Register Volume 75, Number 83 (Friday, April 30, 2010)]
[Notices]
[Pages 22887-22889]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-10082]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61981; File No. SR-NASDAQ-2010-051]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Concerning Intermarket Option Linkage

April 26, 2010.
    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 April 20, 2010, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Nasdaq. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change 
to delete its Temporary Rule Governing Phase-Out of P and P/A Orders 
\3\ and amend several references in the rules to the Plan for the 
Purpose of Creating and Operating an Intermarket Linkage (``Linkage 
Plan'').\4\ In addition, the Exchange also proposes to amend its fees 
in Rule 7050, NASDAQ Options Market, to discontinue its current pilot 
program (the ``pilot'') relating to options

[[Page 22888]]

transaction fees for trades executed via the Intermarket Option Linkage 
(``Linkage'') on the Exchange.
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    \3\ See Chapter XII, Intermarket Linkage Rules, Section 4, 
Temporary Rule Governing Phase-Out of P and P/A Orders.
    \4\ See Securities Exchange Act Release No. 57545 (March 21, 
2008), 73 FR 16394 (March 27, 2008). On July 28, 2000, the 
Commission approved a national market system plan for the purpose of 
creating and operating an intermarket options market linkage 
(``Linkage'') proposed by the then American Stock Exchange LLC, now 
NYSE Amex LLC (``NYSE Amex''), Chicago Board Options Exchange, Inc. 
(``CBOE''), and International Securities Exchange LLC (``ISE''). See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023, (August 4, 2000). Subsequently, Philadelphia Stock Exchange, 
Inc., now NASDAQ OMX PHLX, Inc. (``Phlx''), Pacific Exchange, Inc., 
now NYSE Arca, Inc. (``NYSE Arca'') and Boston Stock Exchange, Inc., 
now NASDAQ OMX BX, Inc. (``BSX'') 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); and 49198 (February 5, 2004), 69 FR 
7029, (February 12, 2004). The Exchange was added as a Participant 
to the Linkage Plan. Linkage was governed by the Options Linkage 
Authority under the conditions set forth under the Plan for the 
Purpose of Creating and Operating an Intermarket Option Linkage 
approved by the Commission.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
Web site at https://www.nasdaqtrader.com, on the Commission's Web site 
at https://www.sec.gov, at Nasdaq, 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, the Exchange 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 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 eliminate existing 
references to the Linkage Plan and also replace some references to the 
Linkage Plan with references to the Options Order Protection and 
Locked/Crossed Market Plan (``Plan'') in order to clarify the current 
rules in effect.
    On June 17, 2008, the Exchange filed the Plan, joining all other 
approved options markets in adopting the Plan.\5\ The Plan requires 
each options exchange to adopt rules implementing various requirements 
specified in the Plan. The Plan replaces the former Linkage Plan. The 
Linkage Plan required Participating Exchanges to operate a stand-alone 
system or ``Linkage'' for sending order-flow between exchanges to limit 
trade-throughs.\6\ The Options Clearing Corporation (``OCC'') operated 
the Linkage system (the ``System'').\7\ The Exchange adopted various 
new rules in connection with the Plan to avoid trade-throughs and 
locked markets, among other things.\8\ The Exchange currently offers 
private routing directly to away markets.\9\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 60405 (July 30, 
2009), 74 FR 39362 (August 6, 2009) (National Market System Plan 
Relating to Options Order Protection and Locked/Crossed Markets). 
The Plan is a national market system plan proposed by the seven 
existing options exchanges and approved by the Commission. See 
Securities Exchange Act Release No. 59647 (March 30, 2009), 74 FR 
15010 (April 2, 2009) (``Plan Notice'') and 60405 (July 30, 2009), 
74 FR 39362 (August 6, 2009) (``Plan Approval''). The seven options 
exchanges are: Chicago Board Options Exchange, Incorporated 
(``CBOE''); International Securities Exchange LLC (``ISE''); NASDAQ 
OMX BX, Inc. (``BOX''); The NASDAQ Stock Market LLC (``Nasdaq''); 
NYSE Amex LLC (``NYSE Amex''); NYSE Arca, Inc. (``NYSE Arca''); and 
Phlx (each exchange individually a ``Participant'' and, together, 
the ``Participating Options Exchanges'').
    \6\ See footnote 4.
    \7\ See footnote 4.
    \8\ See footnote 5.
    \9\ See Chapter VI, Trading Systems, Section 11, Order Routing.
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    The Exchange adopted a temporary rule entitled Temporary Rule 
Governing Phase-Out of P and P/A Orders (``Temporary Rule''),\10\ in 
order to facilitate the participation of certain Participating 
Exchanges who may require the use of Principal Acting as Agent Orders 
(``P/A Orders'') \11\ and Principal Orders (``P'') \12\ after 
implementation of the Plan.\13\ Certain Participating Exchanges 
required a temporary transition period during which they continued to 
utilize these order types that existed under the Linkage Plan. The 
Exchange proposed substantially similar rules with that of the other 
Participating Exchanges to accommodate the possibility of continued use 
of P/A Orders and P Orders. At this time all Participating Exchanges 
have discontinued use of the Linkage Plan. The Exchange proposes at 
this time to delete this Temporary Rule because it is no longer 
necessary in light of the discontinued use of the Linkage Plan. The 
Exchange also proposes to delete a reference to the Linkage Plan in 
Chapter VII, Market Participants, Section 5, Obligations of Market 
Makers. Additionally, the Exchange proposes to amend Section 1, 
Definitions, in Chapter XII, Intermarket Linkage Rules, to redefine 
``Plan'' to comport with the new Plan.
---------------------------------------------------------------------------

    \10\ See Chapter XII, Intermarket Linkage Rules, Section 4, 
Temporary Rule Governing Phase-Out of P and P/A Orders.
    \11\ A P/A Order is an order for the principal account of a 
Primary Market Maker (or equivalent entity on another Eligible 
Exchange that is authorized to represent Public Customer orders), 
reflecting the terms of a related unexecuted Public Customer order 
for which the Primary Market Maker is acting as agent. See Chapter 
XII, Section 4(d)(4)(i).
    \12\ A Principal Order is an order for the principal account of 
a market maker (or equivalent entity on another Eligible Exchange) 
and is not a P/A Order. See Chapter XII, Section 4 (d)(ii).
    \13\ See Securities Exchange Act Release No. 60525 (August 18, 
2009), 74 FR 43188 (August 26, 2009) (SR-NASDAQ-2009-056). Linkage 
was governed by the Options Linkage Authority under the conditions 
set forth under the Plan for the Purpose of Creating and Operating 
an Intermarket Option Linkage approved by the Commission. The 
registered U.S. options markets were linked together on a real-time 
basis through a network capable of transporting orders and messages 
to and from each market.
---------------------------------------------------------------------------

    The Exchange proposes to discontinue the current pilot program 
related to transaction fees sent to the Exchange via Linkage. The 
current pilot is set to expire July 31, 2010.\14\
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 60407 (July 30, 
2009), 74 FR 39720 (August 7, 2009) (SR-NASDAQ-2009-073).
---------------------------------------------------------------------------

    Under the Exchange's current rule, the fee for members or non-
members entering orders via Linkage that execute on the Exchange is 
$0.45 per executed contract. Because there are no longer any 
participant exchanges to the Linkage Plan, the Exchange proposes to 
discontinue the pilot. The Exchange also proposes to amend Rule 7050, 
NASDAQ Options Market, to remove all references to Linkage fees.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \15\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \16\ 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 proposing the elimination of its Temporary Rule, which 
reflects usage of a former Linkage Plan that has since been replaced by 
a new Plan. In addition, the Exchange believes that amending its Rules 
to refer to the current Plan and by proposing to discontinue its pilot, 
to clarify that Linkage fees are no longer applicable, will provide its 
members clarity.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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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 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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant

[[Page 22889]]

burden on competition; and (iii) become operative for 30 days after the 
date of the filing, or such shorter time as the Commission may 
designate, it has become effective pursuant to 19(b)(3)(A) of the Act 
\17\ and Rule 19b-4(f)(6) \18\ thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
Nasdaq has satisfied this requirement.
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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.

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-2010-051 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-2010-051. 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 Web site 
viewing and printing 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 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2010-051 and should be submitted on or before May 21, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10082 Filed 4-29-10; 8:45 am]
BILLING CODE 8011-01-P
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