Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt an Order Price Protection Feature, 23351-23352 [2011-9971]

Download as PDF Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Notices Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 the 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–2011–052 and should be submitted on or before May 17, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–9970 Filed 4–25–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt an Order Price Protection Feature srobinson on DSKHWCL6B1PROD with NOTICES April 20, 2011. 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 April 14, 2011, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:09 Apr 25, 2011 Jkt 223001 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change NASDAQ is filing with the Commission a proposal for the NASDAQ Options Market (‘‘NOM’’) to amend Chapter VI, Trading Systems, to adopt new Section 18, Order Price Protection. This change is scheduled to be implemented on NOM on or about August 1, 2011; the Exchange will announce the implementation schedule by Options Trader Alert, once the rollout schedule is finalized. The text of the proposed rule change is available at nasdaq.cchwallstreet.com, at NASDAQ’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASDAQ included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASDAQ has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [Release No. 34–64312; File No. SR– NASDAQ–2011–053] 7 17 notice to solicit comments on the proposed rule change from interested persons. 1. Purpose The purpose of the proposed rule change is to address risks to market participants of human error in entering orders at unintended prices. To that end, the Exchange has developed a program known as Order Price Protection (‘‘OPP’’), which would prevent certain orders from executing or being placed on the book at prices outside pre-set standard limits. The System would reject such orders rather than executing them automatically. The operation of the OPP, which is very similar to PHLX Rule 1080.07, would be set forth in new Section 18 of Chapter VI. The OPP feature would prevent certain day limit, good til cancelled or immediate or cancel orders at prices outside of certain pre-set limits from being accepted by the System. OPP PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 23351 would apply to all options, but would not apply to market orders or Intermarket Sweep Orders. OPP would be operational each trading day after the opening until the close of trading, except during trading halts. The Exchange would also be able to temporarily deactivate OPP from time to time on an intraday basis at its discretion if it determined that volatility warranted deactivation. Participants would be notified of intraday OPP deactivation due to volatility and any subsequent intraday reactivation by the Exchange through the issuance of system status messages. The OPP will help Participants control risk by checking each order, before it is accepted into the System, against certain parameters established by new Chapter VI, Section 18. It would compare price instructions on the order against the current contraside National Best Bid Offer (‘‘NBBO’’),3 and would automatically reject the order if it is priced outside the range established in Section 18. The range of permissible orders depends on whether the contra-side of an incoming order is greater than $1.00, or equal to or less than $1.00. If the NBBO on the contra-side of an incoming order were greater than $1.00, orders with a limit more than 50% through such contra-side NBBO would be rejected by the System upon receipt. For example, if the NBBO on the offer side were $1.10, an order to buy options for more than $1.65 would be rejected. Similarly, if the NBBO on the bid side were $1.10, an order to sell options for less than $0.55 would be rejected. If the NBBO on the contra-side of an incoming order were less than or equal to $1.00, orders with a limit more than 100% through such contra-side NBBO would be rejected by the System upon receipt. For example, if the NBBO on the offer side were $1.00, an order to buy options for more than $2.00 would be rejected. However, if the NBBO of the bid side of an incoming order to sell were less than or equal to $1.00, the OPP limits set forth above would result in all incoming sell orders being accepted regardless of their limit. Like the PHLX’s OPP, NOM’s will be available for Participants’ orders, but not for market making. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 4 in general, and furthers the 3 See 4 15 E:\FR\FM\26APN1.SGM Chapter I, Section 1(a)(33). U.S.C. 78f(b). 26APN1 23352 Federal Register / Vol. 76, No. 80 / Tuesday, April 26, 2011 / Notices objectives of Section 6(b)(5) of the Act 5 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanisms of a free and open market and a national market system, and, in general, to protect investors and the public interest, by mitigating risks to market participants of human error in entering orders at clearly unintended prices. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action srobinson on DSKHWCL6B1PROD with NOTICES Because the foregoing 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 for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b– 4(f)(6) 7 thereunder. 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. 5 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 7 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. The Exchange has satisfied this requirement. 6 15 VerDate Mar<15>2010 16:09 Apr 25, 2011 Jkt 223001 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–9971 Filed 4–25–11; 8:45 am] BILLING CODE 8011–01–P Electronic Comments DEPARTMENT OF STATE • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2011–053 on the subject line. [Public Notice 7400] U.S. Advisory Commission on Public Diplomacy; Notice of Meeting The U.S. Advisory Commission on Public Diplomacy will hold a public meeting from 9 a.m. to 11 a.m. on May 12, 2011, in Conference Room 1107 of the State Department’s Harry S Truman Paper Comments building at 2201 C Street, NW. The Commission will hear an update • Send paper comments in triplicate on the ‘‘strategic framework’’ on public to Elizabeth M. Murphy, Secretary, diplomacy released in March 2010 and Securities and Exchange Commission, discuss whether U.S. Public diplomacy 100 F Street, NE., Washington, DC is striking the right balance when 20549–1090. engaging youth, elite, online or offline audiences. The Commission welcomes All submissions should refer to File commentary from the public on these Number SR–NASDAQ–2011–053. This and other topics relevant to its mission. file number should be included on the This meeting is open to the public, subject line if e-mail is used. To help the the State Department, Defense Commission process and review your Department, Congress, and other comments more efficiently, please use only one method. The Commission will organizations. Seating is limited. To post all comments on the Commission’s attend or request further information, contact the Commission at (202) 203– Internet Web site (http://www.sec.gov/ 7463 or pdcommission@state.gov by 5 rules/sro.shtml). Copies of the p.m. on May 9, 2011. Please arrive for submission, all subsequent the meeting by 8:45 a.m. amendments, all written statements As access to the Department of State with respect to the proposed rule is controlled, members of the public change that are filed with the wishing to attend the meeting must Commission, and all written notify the Commission, no later than 5 communications relating to the p.m., May 9, 2011, providing the proposed rule change between the information below. If notified after this Commission and any person, other than date, the Department’s Bureau of those that may be withheld from the Diplomatic Security may not be able to public in accordance with the complete the necessary processing provisions of 5 U.S.C. 552, will be required to attend the meeting. Any available for website viewing and person requesting reasonable printing in the Commission’s Public accommodation should notify the Reference Room, 100 F Street, NE., Commission by the same date. Washington, DC 20549, on official Each member of the public wishing to business days between the hours of 10 attend the meeting should provide: his/ a.m. and 3 p.m. Copies of the filing also her name, company or organizational will be available for inspection and affiliation; phone number; date of birth; copying at the principal offices of the and identifying data such as driver’s Exchange. All comments received will license number, U.S. Government ID, or be posted without change; the U.S. Military ID, to the Commission. A Commission does not edit personal RSVP list will be provided to identifying information from Diplomatic Security. One of the following forms of valid photo submissions. You should submit only identification will be required for information that you wish to make admission to the Department of State available publicly. building: U.S. driver’s license, passport, All submissions should refer to File U.S. Government ID or other valid photo Number SR–NASDAQ–2011–053 and ID. Personal data is requested pursuant should be submitted on or before May 16, 2011. 8 17 CFR 200.30–3(a)(12). PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 E:\FR\FM\26APN1.SGM 26APN1

Agencies

[Federal Register Volume 76, Number 80 (Tuesday, April 26, 2011)]
[Notices]
[Pages 23351-23352]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9971]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64312; File No. SR-NASDAQ-2011-053]


 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt an Order Price Protection Feature

April 20, 2011.
    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 April 14, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    NASDAQ is filing with the Commission a proposal for the NASDAQ 
Options Market (``NOM'') to amend Chapter VI, Trading Systems, to adopt 
new Section 18, Order Price Protection.
    This change is scheduled to be implemented on NOM on or about 
August 1, 2011; the Exchange will announce the implementation schedule 
by Options Trader Alert, once the rollout schedule is finalized.
    The text of the proposed rule change is available at 
nasdaq.cchwallstreet.com, at NASDAQ's principal office, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to address risks to 
market participants of human error in entering orders at unintended 
prices. To that end, the Exchange has developed a program known as 
Order Price Protection (``OPP''), which would prevent certain orders 
from executing or being placed on the book at prices outside pre-set 
standard limits. The System would reject such orders rather than 
executing them automatically. The operation of the OPP, which is very 
similar to PHLX Rule 1080.07, would be set forth in new Section 18 of 
Chapter VI.
    The OPP feature would prevent certain day limit, good til cancelled 
or immediate or cancel orders at prices outside of certain pre-set 
limits from being accepted by the System. OPP would apply to all 
options, but would not apply to market orders or Intermarket Sweep 
Orders. OPP would be operational each trading day after the opening 
until the close of trading, except during trading halts. The Exchange 
would also be able to temporarily deactivate OPP from time to time on 
an intraday basis at its discretion if it determined that volatility 
warranted deactivation. Participants would be notified of intraday OPP 
deactivation due to volatility and any subsequent intraday reactivation 
by the Exchange through the issuance of system status messages.
    The OPP will help Participants control risk by checking each order, 
before it is accepted into the System, against certain parameters 
established by new Chapter VI, Section 18. It would compare price 
instructions on the order against the current contraside National Best 
Bid Offer (``NBBO''),\3\ and would automatically reject the order if it 
is priced outside the range established in Section 18.
---------------------------------------------------------------------------

    \3\ See Chapter I, Section 1(a)(33).
---------------------------------------------------------------------------

    The range of permissible orders depends on whether the contra-side 
of an incoming order is greater than $1.00, or equal to or less than 
$1.00. If the NBBO on the contra-side of an incoming order were greater 
than $1.00, orders with a limit more than 50% through such contra-side 
NBBO would be rejected by the System upon receipt. For example, if the 
NBBO on the offer side were $1.10, an order to buy options for more 
than $1.65 would be rejected. Similarly, if the NBBO on the bid side 
were $1.10, an order to sell options for less than $0.55 would be 
rejected.
    If the NBBO on the contra-side of an incoming order were less than 
or equal to $1.00, orders with a limit more than 100% through such 
contra-side NBBO would be rejected by the System upon receipt. For 
example, if the NBBO on the offer side were $1.00, an order to buy 
options for more than $2.00 would be rejected. However, if the NBBO of 
the bid side of an incoming order to sell were less than or equal to 
$1.00, the OPP limits set forth above would result in all incoming sell 
orders being accepted regardless of their limit.
    Like the PHLX's OPP, NOM's will be available for Participants' 
orders, but not for market making.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \4\ in general, and furthers the

[[Page 23352]]

objectives of Section 6(b)(5) of the Act \5\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system, 
and, in general, to protect investors and the public interest, by 
mitigating risks to market participants of human error in entering 
orders at clearly unintended prices.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(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, as amended.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing 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 for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) \7\ 
thereunder.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2011-053 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-2011-053. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
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 the 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-2011-053 and 
should be submitted on or before May 16, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-9971 Filed 4-25-11; 8:45 am]
BILLING CODE 8011-01-P