Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify NASDAQ's Fee Schedule Governing Order Routing, 47896-47897 [2012-19629]

Download as PDF 47896 Federal Register / Vol. 77, No. 155 / Friday, August 10, 2012 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–19667 Filed 8–9–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67594; File No. SR– NASDAQ–2012–093] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify NASDAQ’s Fee Schedule Governing Order Routing August 6, 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 July 31, 2012, 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. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change NASDAQ proposes to modify NASDAQ’s fee schedule governing order routing. NASDAQ will implement the proposed change on August 1, 2012. 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. mstockstill on DSK4VPTVN1PROD with NOTICES 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 those statements may be examined at the places specified in Item III [sic] below. The Exchange has prepared summaries, set forth in sections A, B, 11 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 18:02 Aug 09, 2012 Jkt 226001 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 NASDAQ is making a minor modification to the schedule governing fees for use of its routing services. Effective August 1, 2012, the NASDAQ OMX PSX (‘‘PSX’’) facility of NASDAQ OMX PHLX LLC (‘‘Phlx’’) has increased the fees that it charges for accessing liquidity.3 Accordingly, NASDAQ is making a conforming change to the fee that it charges for routing directed orders to PSX, increasing the charge from $0.0005 per share executed to $0.0029 per share executed. 2. Statutory Basis NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,4 in general, and with Sections 6(b)(4) and (5) of the Act,5 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 is not designed to permit unfair discrimination between customers, issuers, brokers or dealers. All similarly situated members are subject to the same fee structure, and access to NASDAQ is offered on fair and nondiscriminatory terms. The change is reasonable because the proposed fee for routing directed orders to PSX reflects the fact that PSX is increasing the fee that it charges NASDAQ with respect to such orders.6 The change is consistent 3 See SR–Phlx–2012–102 (July 31, 2012). In making this change, Phlx undid a pricing change made for July 2012 and reverted to the pricing in effect prior to July 2, 2012. See Securities Exchange Act Release No. 67387 (July 10, 2012), 77 FR 41838 (July 16, 2012) (SR–Phlx–2012–87). Similarly, NASDAQ adjusted its routing fees in July 2012 to reflect the change made by Phlx and is now reverting to the fees formerly in effect. See Securities Exchange Act Release No. 67355 (July 5, 2012), 77 FR 40926 (July 11, 2012) (SR–NASDAQ– 2012–079). 4 15 U.S.C. 78f. 5 15 U.S.C. 78f(b)(4) and (5). 6 Depending on the listing venue of the security, NASDAQ will be charged either $0.0019 or $0.0027 per share executed. NASDAQ believes that it is appropriate to charge a markup with respect to directed orders to reflect the costs of offering routing services and the value of such services. Notably, in all instances NASDAQ charges a markup with respect to the special processing associated with the use of directed orders. NASDAQ further notes that it does not currently charge a markup with respect to non-directed orders that are routed to PSX, so the markup with respect to directed orders provides an opportunity PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 with an equitable allocation of fees because it will bring the economic attributes of routing directed orders to PSX more in line with the cost of executing orders there. Finally, the change is not unfairly discriminatory because it applies solely to members that opt to route directed orders to PSX. Finally, NASDAQ notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, NASDAQ must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. NASDAQ believes that the proposed rule change reflects this competitive environment because it is designed to ensure that the charges for use of the NASDAQ routing facility to route to PSX reflect an increase in the cost of such routing. 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. Because the market for order execution is extremely competitive, members may readily opt to disfavor NASDAQ’s routing services if they believe that alternatives offer them better value. The proposed change is designed to ensure that the charges for use of the NASDAQ routing facility to route to PSX reflect an increase in the cost of such routing, thereby ensuring that it does not incur a loss when routing to PSX. 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.7 At any time to recoup a portion of the general costs associated with operating a routing service. Although the amount of the markup varies depending on the listing venue of the security, NASDAQ believes that it is not inappropriate to charge a uniform fee for the service of routing directed orders to a particular venue, and further notes that the fee for routing directed orders to PSX is lower than the $0.0035 per share executed fee for routing directed orders to other venues. 7 15 U.S.C. 78s(b)(3)(a)(ii) [sic]. E:\FR\FM\10AUN1.SGM 10AUN1 Federal Register / Vol. 77, No. 155 / Friday, August 10, 2012 / Notices 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: mstockstill on DSK4VPTVN1PROD with NOTICES 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–2012–093 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–2012–093. 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 on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal offices of NASDAQ. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You VerDate Mar<15>2010 18:02 Aug 09, 2012 Jkt 226001 should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2012–093, and should be submitted on or before August 31, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–19629 Filed 8–9–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–67602; File No. SR–ISE– 2012–52] Self-Regulatory Organizations; International Securities Exchange, LLC; Order Granting Approval of Proposed Rule Change To Allow Competitive Market Makers To Use Their Membership Points To Enter Multiple Quotes in an Options Class I. Introduction On June 6, 2012, International Securities Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to allow Competitive Market Makers (‘‘CMMs’’) to use their membership points to enter multiple quotes in an options class. The proposed rule change was published for comment in the Federal Register on June 25, 2012.3 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. II. Description of the Proposal The Exchange’s structure of CMM appointments allows market makers flexibility in choosing the options classes to which they are appointed.4 On a quarterly basis, the Exchange assigns point values to options classes based on their percentage of overall industry volume (not including exclusively traded index options).5 A 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 67216 (June 19, 2012), 77 FR 37944. 4 See Securities Exchange Act Release Nos. 65534 (October 12, 2011), 76 FR 64417 (October 18, 2011)(SR–ISE–2011–58); and 65100 (Aug. 11, 2011), 76 FR 51075 (Aug. 17, 2011). 5 See ISE Rule 802(c)(1). 1 15 Frm 00098 Fmt 4703 CMM is allowed to seek appointments to options classes that total twenty points for the first CMM trading right owned or leased by a member, and ten points for each subsequent CMM trading right owned or leased by the same member.6 The Exchange proposes to adopt .03 of the Supplementary Material to Rule 802 (Appointment of Market Makers) to allow CMMs to seek appointment to options classes in which it or an affiliated market maker holds a CMM or Primary Market Maker appointment. Thus, the proposed rule would allow CMMs to use their membership points to enter multiple quotes in an options class, provided that such Member has sufficient CMM points for each such appointment. The Exchange states that the quoting requirements for CMMs would be applicable to each set of quotes that the CMM enters, and CMMs will not be permitted to aggregate multiple quotes in an options class in order to meet the quoting requirements under ISE rules. III. Discussion and Commission Findings August 6, 2012. PO 00000 47897 Sfmt 4703 The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.7 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,8 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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. The proposal allows CMMs to seek appointment to options classes in which it or an affiliated market maker holds a CMM or Primary Market Maker appointment. The Commission believes that the proposal is consistent with the Act. The Commission notes that the proposal should allow CMMs more flexibility in using their membership points. The proposal may also promote 6 CMMs can select the options classes to which they seek appointment, but the Exchange retains the authority to make such appointments and to remove appointments from CMMs based on their performance. See ISE Rule 802(d). 7 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(5). E:\FR\FM\10AUN1.SGM 10AUN1

Agencies

[Federal Register Volume 77, Number 155 (Friday, August 10, 2012)]
[Notices]
[Pages 47896-47897]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19629]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67594; File No. SR-NASDAQ-2012-093]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify NASDAQ's Fee Schedule Governing Order Routing

August 6, 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 July 31, 2012, 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 proposes to modify NASDAQ's fee schedule governing order 
routing. NASDAQ will implement the proposed change on August 1, 2012. 
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.

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 those statements may be examined at 
the places specified in Item III [sic] 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
    NASDAQ is making a minor modification to the schedule governing 
fees for use of its routing services. Effective August 1, 2012, the 
NASDAQ OMX PSX (``PSX'') facility of NASDAQ OMX PHLX LLC (``Phlx'') has 
increased the fees that it charges for accessing liquidity.\3\ 
Accordingly, NASDAQ is making a conforming change to the fee that it 
charges for routing directed orders to PSX, increasing the charge from 
$0.0005 per share executed to $0.0029 per share executed.
---------------------------------------------------------------------------

    \3\ See SR-Phlx-2012-102 (July 31, 2012). In making this change, 
Phlx undid a pricing change made for July 2012 and reverted to the 
pricing in effect prior to July 2, 2012. See Securities Exchange Act 
Release No. 67387 (July 10, 2012), 77 FR 41838 (July 16, 2012) (SR-
Phlx-2012-87). Similarly, NASDAQ adjusted its routing fees in July 
2012 to reflect the change made by Phlx and is now reverting to the 
fees formerly in effect. See Securities Exchange Act Release No. 
67355 (July 5, 2012), 77 FR 40926 (July 11, 2012) (SR-NASDAQ-2012-
079).
---------------------------------------------------------------------------

2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\4\ in general, and with 
Sections 6(b)(4) and (5) of the Act,\5\ 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 is not 
designed to permit unfair discrimination between customers, issuers, 
brokers or dealers. All similarly situated members are subject to the 
same fee structure, and access to NASDAQ is offered on fair and non-
discriminatory terms. The change is reasonable because the proposed fee 
for routing directed orders to PSX reflects the fact that PSX is 
increasing the fee that it charges NASDAQ with respect to such 
orders.\6\ The change is consistent with an equitable allocation of 
fees because it will bring the economic attributes of routing directed 
orders to PSX more in line with the cost of executing orders there. 
Finally, the change is not unfairly discriminatory because it applies 
solely to members that opt to route directed orders to PSX.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
    \6\ Depending on the listing venue of the security, NASDAQ will 
be charged either $0.0019 or $0.0027 per share executed. NASDAQ 
believes that it is appropriate to charge a markup with respect to 
directed orders to reflect the costs of offering routing services 
and the value of such services. Notably, in all instances NASDAQ 
charges a markup with respect to the special processing associated 
with the use of directed orders. NASDAQ further notes that it does 
not currently charge a markup with respect to non-directed orders 
that are routed to PSX, so the markup with respect to directed 
orders provides an opportunity to recoup a portion of the general 
costs associated with operating a routing service. Although the 
amount of the markup varies depending on the listing venue of the 
security, NASDAQ believes that it is not inappropriate to charge a 
uniform fee for the service of routing directed orders to a 
particular venue, and further notes that the fee for routing 
directed orders to PSX is lower than the $0.0035 per share executed 
fee for routing directed orders to other venues.
---------------------------------------------------------------------------

    Finally, NASDAQ notes that it operates in a highly competitive 
market in which market participants can readily favor competing venues 
if they deem fee levels at a particular venue to be excessive. In such 
an environment, NASDAQ must continually adjust its fees to remain 
competitive with other exchanges and with alternative trading systems 
that have been exempted from compliance with the statutory standards 
applicable to exchanges. NASDAQ believes that the proposed rule change 
reflects this competitive environment because it is designed to ensure 
that the charges for use of the NASDAQ routing facility to route to PSX 
reflect an increase in the cost of such routing.

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. Because the market 
for order execution is extremely competitive, members may readily opt 
to disfavor NASDAQ's routing services if they believe that alternatives 
offer them better value. The proposed change is designed to ensure that 
the charges for use of the NASDAQ routing facility to route to PSX 
reflect an increase in the cost of such routing, thereby ensuring that 
it does not incur a loss when routing to PSX.

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.\7\ At any time

[[Page 47897]]

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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
---------------------------------------------------------------------------

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-2012-093 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-2012-093. 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 on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of such filing also will be available for inspection and copying at the 
principal offices of NASDAQ. 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-2012-093, and should be submitted on or before 
August 31, 2012.

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

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19629 Filed 8-9-12; 8:45 am]
BILLING CODE 8011-01-P
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