Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Rule 4751(f)(7) Concerning the Processing of the Price To Comply Order, 31055-31057 [2012-12646]
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Federal Register / Vol. 77, No. 101 / Thursday, May 24, 2012 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 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
(ii) as to which the self-regulatory
organization consents, the Commission
will:
A. By order approve or disapprove
such proposed rule change; or
B. Institute proceedings to determine
whether the proposed rule change
should be 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 email to rulecomments@sec.gov. Please include File
Number SR–Phlx–2012–68 on the
subject line.
srobinson on DSK4SPTVN1PROD with NOTICES
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–Phlx–2012–68. This file
number should be included on the
subject line if email 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
VerDate Mar<15>2010
16:31 May 23, 2012
Jkt 226001
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
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–Phlx–
2012–68 and should be submitted on or
before June 14, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–12619 Filed 5–23–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67024; File No. SR–
NASDAQ–2012–060]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Rule
4751(f)(7) Concerning the Processing
of the Price To Comply Order
May 18, 2012.
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 May 8,
2012, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the Exchange.
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 proposes to clarify how
the processing of a Price to Comply
Order under Rule 4751(f)(7) operates
based on the method of entry. The
Exchange will implement the change
effective May 14, 2012.
The text of the proposed rule change
is below. Proposed new language is
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
31055
italics; proposed deletions are in
brackets.
*
*
*
*
*
4751. Definitions
The following definitions apply to the
Rule 4600 and 4750 Series for the
trading of securities listed on Nasdaq or
a national securities exchange other
than Nasdaq.
(a)–(e)
(f) The term ‘‘Order Type’’ shall mean
the unique processing prescribed for
designated orders that are eligible for
entry into the System, and shall include:
(1)–(6) No change.
(7) ‘‘Price to Comply Order’’ are
orders that, if, at the time of entry, a
Price to Comply Order would lock or
cross the quotation of an external
market, the order will be priced to the
current low offer (for bids) or to the
current best bid (for offers) and
displayed at a price one minimum price
increment lower than the offer (for bids)
or higher than the bid (for offers). The
displayed and undisplayed prices of a
Price to Comply order entered through
an OUCH port may be adjusted once or
multiple times depending upon [the
method of order entry and]the election
of the member firm and changes to the
prevailing NBBO. The displayed and
undisplayed prices of a Price to Comply
order entered through a RASH port may
be adjusted multiple times, depending
upon changes to the prevailing NBBO.
(8)–(14) No change.
(g)–(i) 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
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 these
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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ is proposing to clarify the
effect that the methods of order entry
have on the processing of a Price to
Comply Order, as described in Rule
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31056
Federal Register / Vol. 77, No. 101 / Thursday, May 24, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
4751(f)(7).3 A Price to Comply Order
allows a member firm to quote
aggressively and still comply with the
locked and crossed markets provisions
of Regulation NMS.4 Prior to June 2008,
if at the time of entry a Price to Comply
Order would create a violation of SEC
Rule 610(d) by locking or crossing the
protected quote of an external market or
would cause a violation of SEC Rule 611
by trading through such a protected
quote, the order was converted by the
NASDAQ system to a Non-Displayed
Order, as defined in Rule 4751(e)(3),5
and re-priced to the current low offer
(for bids) or to the current best bid (for
offers). Thereafter, such a NonDisplayed Order would be cancelled by
the NASDAQ system if the market
moved through the price of the order
after the order was accepted.
In June 2008, NASDAQ amended Rule
4751(f)(7).6 The amendment changed
how the Price to Comply Order operates
so that a locking or crossing order is no
longer converted to a Non-Displayed
Order, but rather is displayed at the
most aggressive price possible, one
minimum price increment worse than
the locking price. NASDAQ also added
language to the rule, which noted that
the Exchange may adjust the displayed
and undisplayed prices of a Price to
Comply Order once or multiple times,
depending on the method of order entry
and changes to the National Best Bid
and Offer (‘‘NBBO’’). In the discussion
of the rule change, NASDAQ explained
that the displayed and undisplayed
price of an individual order may be
modified one or more times depending
upon the manner of order entry into the
system. In particular, if a member
chooses to enter a Price to Comply
Order via NASDAQ’s RASH protocol,
the order is priced upon entry and may
be adjusted multiple times in response
to changes in the prevailing NBBO to
move the displayed price closer to the
original entered price and display the
best possible price consistent with the
provisions of Regulation NMS. In
addition, each time the displayed price
is adjusted, the order will receive a new
3 ‘‘Price to Comply Order’’ is an order such that,
if, at the time of entry, it would lock or cross the
quotation of an external market, the order will be
priced to the current low offer (for bids) or to the
current best bid (for offers) and displayed at a price
one minimum price increment lower than the offer
(for bids) or higher than the bid (for offers).
4 17 CFR 242.610.
5 ‘‘Non-Displayed Order’’ is a limit order that is
not displayed in the NASDAQ system, but
nevertheless remains available for potential
execution against all incoming orders until
executed in full or cancelled.
6 Securities Exchange Act Release No. 57910
(June 3, 2008), 73 FR 32776 (June 10, 2008) (SR–
NASDAQ–2008–049).
VerDate Mar<15>2010
16:31 May 23, 2012
Jkt 226001
timestamp for purposes of determining
its price/time priority according to
NASDAQ’s existing processing rules. If
a Price to Comply Order is entered via
NASDAQ’s OUCH protocol, however,
the order will be repriced only upon
entry and the order is not repriced in
the event the prevailing NBBO changes.
NASDAQ is proposing to amend Rule
4751(f)(7) to clarify the effect that the
method of order entry has on the
processing of the Price to Comply Order.
As noted above, the method of entry of
a Price to Comply Order determines
whether the order is repriced once or
multiple times. This will continue to be
the case under the amended rule;
however, an OUCH subscriber will be
afforded the choice to have its Price to
Comply Order be subject to repricing
either only once or multiple times.
Member firms will designate each
OUCH protocol order port to use either
the single or multiple repricing
functionality for any Price to Comply
Order entered via that port.7 A RASH
subscriber will continue to have the
Price to Comply Order repriced multiple
times, when appropriate. The
methodology for repricing the Price to
Comply Order will not vary based on
how the order is entered. Like a RASHentered Price to Comply Order, each
time the OUCH-entered order is
repriced it will receive a new timestamp
for purposes of determining its price/
time priority. As such, a repriced Price
to Comply Order is treated as a new
order in terms of priority and, as such,
there is no guarantee that the OUCHentered Price to Comply Order will
receive priority when it becomes
actionable after repricing.
NASDAQ believes that the new
functionality and related rule change
will serve to reduce the order traffic
received using the OUCH protocol.
NASDAQ notes that, in certain cases, a
member will submit a Price to Comply
Order at an aggressive price that it
anticipates will be at the NBBO. Often
such an order is not submitted at the
NBBO and is not executed after
repricing because the market does not
move to the adjusted order price. In
such cases, the member firm will
typically submit additional aggressive
orders, which likewise are not executed.
Because the OUCH protocol is used by
member firms that are able to submit a
large volume of orders, NASDAQ
believes that offering such firms the
ability to have NASDAQ reprice a Price
to Comply Order multiple times will
serve to reduce the excessive volume of
7 In the absence of designation from a member
firm, NASDAQ will default the member’s OUCH
port(s) to single repricing.
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
orders entered into the System and
ultimately canceled.
As noted, NASDAQ will continue to
offer OUCH subscribers an alternative to
the multiple repricing functionality so
that such member firms may elect to
have a locked or crossed Price to
Comply Order repriced only once,
consistent with the current process.
NASDAQ believes that this will
accommodate member firms that seek
the certainty of repricing at most once
or whose trading systems depend on the
existing repricing mechanism.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,8 in
general, and with Section 6(b)(5) of the
Act 9 in particular, in that the proposal
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
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, 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. NASDAQ believes this
proposal is consistent with the
Exchange Act and, specifically, Rules
610 and 611of Regulation NMS in that
it is designed to prevent orders from
locking and crossing market or trading
through protected quotes, while also
promoting a more efficient market. In
this regard, NASDAQ believes that the
proposed rule change will promote the
efficient use of the Exchange by
reducing the number of orders entered
into the market and ultimately canceled.
The proposed rule change will
accomplish this by providing the
member firms that tend to enter the
greatest number of such orders an
option to have the Exchange reprice a
single order multiple times. NASDAQ
also believes that permitting a high
volume user the option to continue to
have the Exchange reprice its Price to
Comply Order only upon order entry,
when appropriate, will ensure member
firms with internal systems that act in
reliance of this function will continue to
operate without disruption.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
8 15
9 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
E:\FR\FM\24MYN1.SGM
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Federal Register / Vol. 77, No. 101 / Thursday, May 24, 2012 / Notices
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
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 from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(ii) of the Act 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.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. The Exchange
has provided the Commission written
notice of its intent to file the proposed
rule change, along with a brief
description and text of the proposed
rule change, at least five business days
prior to the date of filing of the
proposed rule change.
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 email to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2012–060 on the
subject line.
All submissions should refer to File
Number SR–NASDAQ–2012–060. This
file number should be included on the
subject line if email 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
10:00 a.m. and 3:00 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
publicly available. All submissions
should refer to File Number SR–
NASDAQ–2012–060 and should be
submitted on or before June 14, 2012.
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2012–12646 Filed 5–23–12; 8:45 am]
[Release No. 34–67027; File No. SR–
NASDAQ–2012–061]
Self-Regulatory Organizations; the
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change for the
NASDAQ Options Market To Accept
Inbound Orders From NASDAQ OMX
BX’s New Options Market
srobinson on DSK4SPTVN1PROD with NOTICES
May 18, 2012.
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 May 15,
VerDate Mar<15>2010
16:31 May 23, 2012
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Jkt 226001
1. Purpose
In conjunction with a proposal by
NASDAQ OMX BX (‘‘BX’’) to establish
a new options market and provide
outbound routing services to all markets
using its affiliated routing broker, NOS,3
NASDAQ proposes that NOS be
permitted to route orders from BX to
NASDAQ on a one year pilot basis.
NOS is a broker-dealer and member of
NASDAQ, BX and NASDAQ OMX
PHLX (‘‘PHLX’’). NOS provides all
routing functions for NASDAQ 4 and
3 See
12 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(6).
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASDAQ is filing with the
Commission a proposal for the
NASDAQ Options Market (‘‘NOM’’) to
accept inbound orders routed by
NASDAQ Options Services LLC
(‘‘NOS’’) from NASDAQ OMX BX’s new
options market (with the attendant
obligations and conditions), as
described further below, on a one year
pilot basis.
The text of the proposed rule change
is available at https://
nasdaq.cchwallstreet.com, at
NASDAQ’s principal office, and at the
Commission’s Public Reference Room.
BILLING CODE 8011–01–P
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
11 17
2012, The NASDAQ Stock Market LLC
(‘‘Exchange’’ or ‘‘NASDAQ’’) 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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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 these
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 aspects of such
statements.
Paper Comments
10 15
31057
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
SR–BX–2012–030.
NOM Rules Chapter VI, Section 11(e). See
also Securities Exchange Act Release No. 57478
4 See
Continued
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]]>Agencies
[Federal Register Volume 77, Number 101 (Thursday, May 24, 2012)]
[Notices]
[Pages 31055-31057]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12646]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67024; File No. SR-NASDAQ-2012-060]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Rule 4751(f)(7) Concerning the Processing of the Price To Comply Order
May 18, 2012.
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 May 8, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been 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 Substance
of the Proposed Rule Change
The Exchange proposes to clarify how the processing of a Price to
Comply Order under Rule 4751(f)(7) operates based on the method of
entry. The Exchange will implement the change effective May 14, 2012.
The text of the proposed rule change is below. Proposed new
language is italics; proposed deletions are in brackets.
* * * * *
4751. Definitions
The following definitions apply to the Rule 4600 and 4750 Series
for the trading of securities listed on Nasdaq or a national securities
exchange other than Nasdaq.
(a)-(e)
(f) The term ``Order Type'' shall mean the unique processing
prescribed for designated orders that are eligible for entry into the
System, and shall include:
(1)-(6) No change.
(7) ``Price to Comply Order'' are orders that, if, at the time of
entry, a Price to Comply Order would lock or cross the quotation of an
external market, the order will be priced to the current low offer (for
bids) or to the current best bid (for offers) and displayed at a price
one minimum price increment lower than the offer (for bids) or higher
than the bid (for offers). The displayed and undisplayed prices of a
Price to Comply order entered through an OUCH port may be adjusted once
or multiple times depending upon [the method of order entry and]the
election of the member firm and changes to the prevailing NBBO. The
displayed and undisplayed prices of a Price to Comply order entered
through a RASH port may be adjusted multiple times, depending upon
changes to the prevailing NBBO.
(8)-(14) No change.
(g)-(i) 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 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 these 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 aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is proposing to clarify the effect that the methods of order
entry have on the processing of a Price to Comply Order, as described
in Rule
[[Page 31056]]
4751(f)(7).\3\ A Price to Comply Order allows a member firm to quote
aggressively and still comply with the locked and crossed markets
provisions of Regulation NMS.\4\ Prior to June 2008, if at the time of
entry a Price to Comply Order would create a violation of SEC Rule
610(d) by locking or crossing the protected quote of an external market
or would cause a violation of SEC Rule 611 by trading through such a
protected quote, the order was converted by the NASDAQ system to a Non-
Displayed Order, as defined in Rule 4751(e)(3),\5\ and re-priced to the
current low offer (for bids) or to the current best bid (for offers).
Thereafter, such a Non-Displayed Order would be cancelled by the NASDAQ
system if the market moved through the price of the order after the
order was accepted.
---------------------------------------------------------------------------
\3\ ``Price to Comply Order'' is an order such that, if, at the
time of entry, it would lock or cross the quotation of an external
market, the order will be priced to the current low offer (for bids)
or to the current best bid (for offers) and displayed at a price one
minimum price increment lower than the offer (for bids) or higher
than the bid (for offers).
\4\ 17 CFR 242.610.
\5\ ``Non-Displayed Order'' is a limit order that is not
displayed in the NASDAQ system, but nevertheless remains available
for potential execution against all incoming orders until executed
in full or cancelled.
---------------------------------------------------------------------------
In June 2008, NASDAQ amended Rule 4751(f)(7).\6\ The amendment
changed how the Price to Comply Order operates so that a locking or
crossing order is no longer converted to a Non-Displayed Order, but
rather is displayed at the most aggressive price possible, one minimum
price increment worse than the locking price. NASDAQ also added
language to the rule, which noted that the Exchange may adjust the
displayed and undisplayed prices of a Price to Comply Order once or
multiple times, depending on the method of order entry and changes to
the National Best Bid and Offer (``NBBO''). In the discussion of the
rule change, NASDAQ explained that the displayed and undisplayed price
of an individual order may be modified one or more times depending upon
the manner of order entry into the system. In particular, if a member
chooses to enter a Price to Comply Order via NASDAQ's RASH protocol,
the order is priced upon entry and may be adjusted multiple times in
response to changes in the prevailing NBBO to move the displayed price
closer to the original entered price and display the best possible
price consistent with the provisions of Regulation NMS. In addition,
each time the displayed price is adjusted, the order will receive a new
timestamp for purposes of determining its price/time priority according
to NASDAQ's existing processing rules. If a Price to Comply Order is
entered via NASDAQ's OUCH protocol, however, the order will be repriced
only upon entry and the order is not repriced in the event the
prevailing NBBO changes.
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 57910 (June 3, 2008), 73
FR 32776 (June 10, 2008) (SR-NASDAQ-2008-049).
---------------------------------------------------------------------------
NASDAQ is proposing to amend Rule 4751(f)(7) to clarify the effect
that the method of order entry has on the processing of the Price to
Comply Order. As noted above, the method of entry of a Price to Comply
Order determines whether the order is repriced once or multiple times.
This will continue to be the case under the amended rule; however, an
OUCH subscriber will be afforded the choice to have its Price to Comply
Order be subject to repricing either only once or multiple times.
Member firms will designate each OUCH protocol order port to use either
the single or multiple repricing functionality for any Price to Comply
Order entered via that port.\7\ A RASH subscriber will continue to have
the Price to Comply Order repriced multiple times, when appropriate.
The methodology for repricing the Price to Comply Order will not vary
based on how the order is entered. Like a RASH-entered Price to Comply
Order, each time the OUCH-entered order is repriced it will receive a
new timestamp for purposes of determining its price/time priority. As
such, a repriced Price to Comply Order is treated as a new order in
terms of priority and, as such, there is no guarantee that the OUCH-
entered Price to Comply Order will receive priority when it becomes
actionable after repricing.
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\7\ In the absence of designation from a member firm, NASDAQ
will default the member's OUCH port(s) to single repricing.
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NASDAQ believes that the new functionality and related rule change
will serve to reduce the order traffic received using the OUCH
protocol. NASDAQ notes that, in certain cases, a member will submit a
Price to Comply Order at an aggressive price that it anticipates will
be at the NBBO. Often such an order is not submitted at the NBBO and is
not executed after repricing because the market does not move to the
adjusted order price. In such cases, the member firm will typically
submit additional aggressive orders, which likewise are not executed.
Because the OUCH protocol is used by member firms that are able to
submit a large volume of orders, NASDAQ believes that offering such
firms the ability to have NASDAQ reprice a Price to Comply Order
multiple times will serve to reduce the excessive volume of orders
entered into the System and ultimately canceled.
As noted, NASDAQ will continue to offer OUCH subscribers an
alternative to the multiple repricing functionality so that such member
firms may elect to have a locked or crossed Price to Comply Order
repriced only once, consistent with the current process. NASDAQ
believes that this will accommodate member firms that seek the
certainty of repricing at most once or whose trading systems depend on
the existing repricing mechanism.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general, and with Section
6(b)(5) of the Act \9\ in particular, in that the proposal 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 regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, 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. NASDAQ believes this
proposal is consistent with the Exchange Act and, specifically, Rules
610 and 611of Regulation NMS in that it is designed to prevent orders
from locking and crossing market or trading through protected quotes,
while also promoting a more efficient market. In this regard, NASDAQ
believes that the proposed rule change will promote the efficient use
of the Exchange by reducing the number of orders entered into the
market and ultimately canceled. The proposed rule change will
accomplish this by providing the member firms that tend to enter the
greatest number of such orders an option to have the Exchange reprice a
single order multiple times. NASDAQ also believes that permitting a
high volume user the option to continue to have the Exchange reprice
its Price to Comply Order only upon order entry, when appropriate, will
ensure member firms with internal systems that act in reliance of this
function will continue to operate without disruption.
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\8\ 15 U.S.C. 78f.
\9\ 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
result in any burden on competition that is not
[[Page 31057]]
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
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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(6).
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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. The Exchange has
provided the Commission written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing of the proposed rule change.
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 email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2012-060 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-2012-060. This
file number should be included on the subject line if email 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
10:00 a.m. and 3:00 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 publicly available. All
submissions should refer to File Number SR-NASDAQ-2012-060 and should
be submitted on or before June 14, 2012.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12646 Filed 5-23-12; 8:45 am]
BILLING CODE 8011-01-P
