Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC To Clarify the Exclusion of Partial Trading Days From Certain Calculations Within the Investor Support Program, 76505-76506 [2010-30803]

Download as PDF Federal Register / Vol. 75, No. 235 / Wednesday, December 8, 2010 / Notices 2010–083 and should be submitted on or before December 29, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.5 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–30804 Filed 12–7–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63414; File No. SR– NASDAQ–2010–153] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC To Clarify the Exclusion of Partial Trading Days From Certain Calculations Within the Investor Support Program December 2, 2010. 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 November 24, 2010, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. jlentini on DSKJ8SOYB1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASDAQ is filing with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a proposal for the NASDAQ Options Market (‘‘NOM’’ or ‘‘Exchange’’) to clarify that partial trading days will not be counted toward the calculation of certain Investor Support Program (‘‘ISP’’) credit eligibility requirements pursuant to subsection (c)(2) of the rule. The text of the proposed rule change is available from NASDAQ’s Web site at https://nasdaq.cchwallstreet.com/ Filings/, at NASDAQ’s principal office, and at the Commission’s Public Reference Room. 5 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 18:23 Dec 07, 2010 Jkt 223001 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend Rule 7014 to clarify that partial trading days will not be counted toward the calculation of certain ISP credit eligibility requirements pursuant to subsection (c)(2) of the rule, particularly the average daily number of shares of liquidity provided in orders entered by the member through its ISP-designated ports and executed in the Nasdaq Market Center during the month. The Exchange established an Investor Support Program that enables NASDAQ members to earn a monthly fee credit for providing additional liquidity to NASDAQ and increasing the NASDAQtraded volume of what are generally considered to be retail and institutional investor orders in exchange-traded securities (‘‘targeted liquidity’’).3 The goal of the ISP is to incentivize members to provide such targeted liquidity to the NASDAQ Market Center.4 The Exchange noted in the ISP Filing that maintaining 3 For a detailed description of the Investor Support Program, see Securities Exchange Act Release No. 63270 (November 8, 2010), 75 FR 69489 (November 12, 2010) (NASDAQ–2010–141) (notice of filing and immediate effectiveness) (the ‘‘ISP Filing’’). 4 The Commission has recently expressed its concern that a significant percentage of the orders of individual investors are executed at over the counter (‘‘OTC’’) markets, that is, at off-exchange markets; and that a significant percentage of the orders of institutional investors are executed in dark pools. Securities Exchange Act Release No. 61358 (January 14, 2010), 75 FR 3594 (January 21, 2010) (Concept Release on Equity Market Structure, ‘‘Concept Release’’). See also Mary L. Schapiro, Strengthening Our Equity Market Structure (Speech at the Economic Club of New York, Sept. 7, 2010) (‘‘Schapiro Speech,’’ available on the Commission Web site) (comments of Commission Chairman on what she viewed as a troubling trend of reduced participation in the equity markets by individual investors, and that nearly 30 percent of volume in U.S.-listed equities is executed in venues that do not display their liquidity or make it generally available to the public). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 76505 and increasing the proportion of orders in exchange-listed securities executed on a registered exchange (rather than relying on any of the available offexchange execution methods) would help raise investors’ confidence in the fairness of their transactions and would benefit all investors by deepening NASDAQ’s liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. Partial trading days are not excluded from the average daily number of shares of liquidity provided and executed pursuant to certain ISP credit eligibility criteria in the rule and the Exchange now proposes a change to do so.5 To further the ISP goal of attracting certain targeted retail and institution liquidity, the ISP limits ISP credit eligibility to targeted liquidityenhancing orders in large part by: Establishing a monthly ISP Execution Ratio 6 of 10 or above (subsection (c)(1)); and a monthly cap of 10 million for the average daily number of shares of liquidity provided in orders entered by the member through its ISP-designated ports and executed in the NASDAQ Market Center during the month (subsection (c)(2)). As noted, in the ISP Filing the Exchange did not exclude partial trading days from the calculation of order numbers pursuant to subsection (c)(2) of the rule. The Exchange believes that the inclusion of partial trading days 7 may serve to improperly skew the operative calculations. As such, the Exchange proposes to add new section (c)(3) that states that for purposes of determining the average daily number of shares of liquidity provided pursuant to subsection (c)(2) of this Rule, any day that the market is not open for the entire trading day will be excluded from such calculation.8 5 NASDAQ notes that exclusion of partial trading days would be consistent with how the Exchange treats partial trading days for tabulation of pricing tiers under Rule 7018(j). 6 The term ‘‘ISP Execution Ratio’’ is defined as: The ratio of (i) the total number of liquidityproviding orders entered by a member through its ISP-designated ports during the specified time period to (ii) the number of liquidity-providing orders entered by such member through its ISPdesignated ports and executed (in full or partially) in the NASDAQ Market Center during such time period (provided that: (i) No order shall be counted as executed more than once; (ii) no Pegged Orders, odd-lot orders, or MIOC or SIOC orders shall be included in the tabulation; and (iii) no order shall be included in the tabulation if it executes but does not add liquidity). Rule 7014 (d)(3). 7 A partial trading day may occur, as an example, immediately after the Thanksgiving holiday. 8 There have been no partial trading days in the month of November previous to the date of submission of the filing and it would therefore not be retroactive in effect. E:\FR\FM\08DEN1.SGM 08DEN1 76506 Federal Register / Vol. 75, No. 235 / Wednesday, December 8, 2010 / Notices The Exchange believes that the proposed change to the ISP, which will be equally applicable to all ISP participants, should be conducive to further enhancing the program’s fairness and equitability. 2. Statutory Basis NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,9 in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,10 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 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, in general, to protect investors and the public interest. The rule change enhances the Investor Support Program, which helps to raise investors’ confidence in the fairness of their transactions and benefit all investors by deepening NASDAQ’s liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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. jlentini on DSKJ8SOYB1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.11 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend 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. If the Commission takes such action, the Commission shall 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(4) and (5). 11 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 18:23 Dec 07, 2010 Jkt 223001 institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2010–153 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–2010–153. 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–2010–153 and should be submitted on or before December 29, 2010. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–30803 Filed 12–7–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63415; File No. SR–DTC– 2010–16] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating To Extending the End-of-Day Cutoff Time for Processing to The Federal Reserve and To Reflect Other Changes Requested by the Federal Reserve December 2, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on November 18, 2010, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared primarily by DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b–4(f)(4) 3 thereunder so that the proposal was 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 The proposed rule change will extend the end of day cutoff time for processing to the Federal Reserve and will reflect other changes requested by the Federal Reserve. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC 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. DTC has prepared 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(iii). 3 17 CFR 240.19b–4(f)(4). 1 15 E:\FR\FM\08DEN1.SGM 08DEN1

Agencies

[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76505-76506]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30803]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63414; File No. SR-NASDAQ-2010-153]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by The NASDAQ Stock Market LLC 
To Clarify the Exclusion of Partial Trading Days From Certain 
Calculations Within the Investor Support Program

December 2, 2010.
    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 November 24, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ is filing with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') a proposal for the NASDAQ Options Market 
(``NOM'' or ``Exchange'') to clarify that partial trading days will not 
be counted toward the calculation of certain Investor Support Program 
(``ISP'') credit eligibility requirements pursuant to subsection (c)(2) 
of the rule.
    The text of the proposed rule change is available from NASDAQ's Web 
site at https://nasdaq.cchwallstreet.com/Filings/, at NASDAQ's principal 
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASDAQ included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. NASDAQ has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend Rule 7014 to clarify that 
partial trading days will not be counted toward the calculation of 
certain ISP credit eligibility requirements pursuant to subsection 
(c)(2) of the rule, particularly the average daily number of shares of 
liquidity provided in orders entered by the member through its ISP-
designated ports and executed in the Nasdaq Market Center during the 
month.
    The Exchange established an Investor Support Program that enables 
NASDAQ members to earn a monthly fee credit for providing additional 
liquidity to NASDAQ and increasing the NASDAQ-traded volume of what are 
generally considered to be retail and institutional investor orders in 
exchange-traded securities (``targeted liquidity'').\3\ The goal of the 
ISP is to incentivize members to provide such targeted liquidity to the 
NASDAQ Market Center.\4\ The Exchange noted in the ISP Filing that 
maintaining and increasing the proportion of orders in exchange-listed 
securities executed on a registered exchange (rather than relying on 
any of the available off-exchange execution methods) would help raise 
investors' confidence in the fairness of their transactions and would 
benefit all investors by deepening NASDAQ's liquidity pool, supporting 
the quality of price discovery, promoting market transparency and 
improving investor protection.
---------------------------------------------------------------------------

    \3\ For a detailed description of the Investor Support Program, 
see Securities Exchange Act Release No. 63270 (November 8, 2010), 75 
FR 69489 (November 12, 2010) (NASDAQ-2010-141) (notice of filing and 
immediate effectiveness) (the ``ISP Filing'').
    \4\ The Commission has recently expressed its concern that a 
significant percentage of the orders of individual investors are 
executed at over the counter (``OTC'') markets, that is, at off-
exchange markets; and that a significant percentage of the orders of 
institutional investors are executed in dark pools. Securities 
Exchange Act Release No. 61358 (January 14, 2010), 75 FR 3594 
(January 21, 2010) (Concept Release on Equity Market Structure, 
``Concept Release''). See also Mary L. Schapiro, Strengthening Our 
Equity Market Structure (Speech at the Economic Club of New York, 
Sept. 7, 2010) (``Schapiro Speech,'' available on the Commission Web 
site) (comments of Commission Chairman on what she viewed as a 
troubling trend of reduced participation in the equity markets by 
individual investors, and that nearly 30 percent of volume in U.S.-
listed equities is executed in venues that do not display their 
liquidity or make it generally available to the public).
---------------------------------------------------------------------------

    Partial trading days are not excluded from the average daily number 
of shares of liquidity provided and executed pursuant to certain ISP 
credit eligibility criteria in the rule and the Exchange now proposes a 
change to do so.\5\
---------------------------------------------------------------------------

    \5\ NASDAQ notes that exclusion of partial trading days would be 
consistent with how the Exchange treats partial trading days for 
tabulation of pricing tiers under Rule 7018(j).
---------------------------------------------------------------------------

    To further the ISP goal of attracting certain targeted retail and 
institution liquidity, the ISP limits ISP credit eligibility to 
targeted liquidity-enhancing orders in large part by: Establishing a 
monthly ISP Execution Ratio \6\ of 10 or above (subsection (c)(1)); and 
a monthly cap of 10 million for the average daily number of shares of 
liquidity provided in orders entered by the member through its ISP-
designated ports and executed in the NASDAQ Market Center during the 
month (subsection (c)(2)). As noted, in the ISP Filing the Exchange did 
not exclude partial trading days from the calculation of order numbers 
pursuant to subsection (c)(2) of the rule. The Exchange believes that 
the inclusion of partial trading days \7\ may serve to improperly skew 
the operative calculations. As such, the Exchange proposes to add new 
section (c)(3) that states that for purposes of determining the average 
daily number of shares of liquidity provided pursuant to subsection 
(c)(2) of this Rule, any day that the market is not open for the entire 
trading day will be excluded from such calculation.\8\
---------------------------------------------------------------------------

    \6\ The term ``ISP Execution Ratio'' is defined as: The ratio of 
(i) the total number of liquidity-providing orders entered by a 
member through its ISP-designated ports during the specified time 
period to (ii) the number of liquidity-providing orders entered by 
such member through its ISP-designated ports and executed (in full 
or partially) in the NASDAQ Market Center during such time period 
(provided that: (i) No order shall be counted as executed more than 
once; (ii) no Pegged Orders, odd-lot orders, or MIOC or SIOC orders 
shall be included in the tabulation; and (iii) no order shall be 
included in the tabulation if it executes but does not add 
liquidity). Rule 7014 (d)(3).
    \7\ A partial trading day may occur, as an example, immediately 
after the Thanksgiving holiday.
    \8\ There have been no partial trading days in the month of 
November previous to the date of submission of the filing and it 
would therefore not be retroactive in effect.

---------------------------------------------------------------------------

[[Page 76506]]

    The Exchange believes that the proposed change to the ISP, which 
will be equally applicable to all ISP participants, should be conducive 
to further enhancing the program's fairness and equitability.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\9\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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 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, in general, to protect investors and the public interest. The rule 
change enhances the Investor Support Program, which helps to raise 
investors' confidence in the fairness of their transactions and benefit 
all investors by deepening NASDAQ's liquidity pool, supporting the 
quality of price discovery, promoting market transparency and improving 
investor protection.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\11\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend 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. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2010-153 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-2010-153. 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-2010-153 and should be submitted on or before December 29, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30803 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P
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