Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change To Amend Rule 4758(a)(1)(A) To Reflect a Change in NASDAQ's Routing Functionality, 49034-49035 [2012-20040]
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49034
Federal Register / Vol. 77, No. 158 / Wednesday, August 15, 2012 / Notices
Holders in good standing would be
permitted to nominate additional
eligible candidates if a written petition
of at least 10 percent of ETP Holders in
good standing were submitted to the
Equities Nominating Committee within
two weeks after the Announcement
Date. Each petition candidate would be
required to include a completed
questionnaire used to gather
information concerning director
candidates, and the Equities Nominating
Committee would determine whether
the petition candidate is eligible to serve
on the Equities Board or NYSE Arca
Board (including whether such person
was free of a statutory disqualification
under Section 3(a)(39) of the Act), and
such determination would be final and
conclusive. According to the Exchange,
the proposed rule change would amend
this process to align it with the NYSE
and NYSE MKT processes and proposed
NYSE Arca Rule 3.2(b)(2)(C) for the
same reasons stated above with respect
to proposed NYSE Arca Rule 3.2.16
Contested Nominations
Currently, in the event that there is a
contested nomination, the Equities
Nominating Committee submits such
contested nomination to the ETP
Holders, which may select two
nominees for the contested seat on the
Equities Board and one nominee for the
contested seat on the NYSE Arca Board.
The Exchange proposes to simplify this
text to align it with the proposed
changes to NYSE Arca Rule
3.2(b)(2)(C)(iii).17
srobinson on DSK4SPTVN1PROD with NOTICES
III. Discussion and Commission
Findings
The Commission has reviewed
carefully the proposed rule changes and
finds that the proposed rule changes are
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.18 In particular, the
Commission finds that the proposed
rule changes are consistent with Section
written petition of at least 10 percent of ETP
Holders in good standing is submitted to the
Equities Nominating Committee within 45 days
preceding the expiration of the current term, such
person is also nominated by the Equities
Nominating Committee.
16 See Notice, supra note 4 at 38703.
17 Current NYSE Arca Equities Rule
3.2(b)(2)(C)(ii) does not describe the voting process.
The proposed rule changes would amend the rule
to explicitly provide that ETP Holders would be
afforded no less than 20 calendar days to submit
their votes on a confidential basis. The Exchange
also proposes certain technical and conforming
changes.
18 In approving the proposed rule changes, the
Commission has considered their impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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17:49 Aug 14, 2012
Jkt 226001
6(b)(3) of the Act,19 which, among other
things, requires that the rules of an
exchange assure a fair representation of
its members in the selection of its
directors and administration of its
affairs and provides that one or more
directors shall be representative of
issuers and investors and not be
associated with a member of the
exchange, broker or dealer. The
Commission also notes that the
proposed rule changes are substantially
similarly to the nominating and fair
representation policies and procedures
of NYSE and NYSE MKT. Furthermore,
the proposed rule changes would not
amend the fair representation
requirements as set forth in Sections
3.02 of both the NYSE Arca Bylaws and
the Equities Bylaws.
IV. Conclusion
For the foregoing reasons, the
Commission finds that the proposed
rule changes are consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities exchange.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 20 that the
proposed rule changes (SR–NYSEArca–
2012–67), are approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–19958 Filed 8–14–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67639; File No. SR–
NASDAQ–2012–071]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change To
Amend Rule 4758(a)(1)(A) To Reflect a
Change in NASDAQ’s Routing
Functionality
August 10, 2012.
I. Introduction
On June 14, 2012, The NASDAQ
Stock Market LLC (‘‘NASDAQ’’ or
‘‘Exchange’’), 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
19 15
U.S.C. 78f(b)(3).
U.S.C. 78s(b)(2).
21 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
20 15
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
thereunder,2 a proposed rule change to
amend Rule 4758(a)(1)(A) to reflect a
change in NASDAQ’s routing
functionality. The proposed rule change
was published for comment in the
Federal Register on June 29, 2012.3 The
Commission received no comment
letters regarding the proposed rule
change. This order approves the
proposed rule change.
II. Description
NASDAQ has proposed to amend
Rule 4758(a)(1)(A) to reflect a change in
NASDAQ’s order routing functionality,
which will allow routable orders 4 to
simultaneously execute against
NASDAQ available shares and route to
other markets for execution of the
remainder of the order. Currently, when
a routable order is entered into the
NASDAQ system, the NASDAQ book is
first checked for available shares. If such
an order is not filled or filled only
partially, then the order is routed to
away markets with the best bid or best
offer pursuant to NASDAQ’s System
routing table.5
NASDAQ stated that it has observed
that upon partial execution of a routable
order at NASDAQ market participants
often react to the order by cancelling
their orders on other markets and
entering new orders at inferior prices.
This occurs because the current process
directs the order to NASDAQ before
attempting to access available liquidity
at other markets and thereby allows
market participants to react to the
execution (an effect known as ‘‘market
impact’’ or ‘‘information leakage’’). As a
consequence, the available shares at the
away market are no longer available,
resulting in a lower likelihood of
successfully accessing liquidity on away
markets (i.e., the ‘‘fill rate’’) and an
increased likelihood of ultimately
receiving an execution at an inferior
price. As such, NASDAQ has proposed
to address this by changing how the
routing process will operate.
NASDAQ has proposed to execute
routable orders against the NASDAQ
book for available shares and to
simultaneously route any remaining
shares to additional markets.
Specifically, under the proposed change
a routable order would attempt to
execute against the available shares at
2 17
CFR 240.19b–4.
Securities Exchange Act Release No. 67246
(June 25, 2012), 77 FR 38875 (‘‘Notice’’).
4 For purposes of this filing, a ‘‘routable order’’ is
an order entered into the NASDAQ System, which
is not of an Order Type precluded from routing to
other markets.
5 The ‘‘System routing table’’ is the proprietary
process for determining the specific trading venues
to which the System routes orders and the order in
which it routes them. See Rule 4758(a)(1)(A).
3 See
E:\FR\FM\15AUN1.SGM
15AUN1
Federal Register / Vol. 77, No. 158 / Wednesday, August 15, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
NASDAQ and, to the extent the order
would not be filled by such available
shares, NASDAQ would simultaneously
route the remainder of the order to other
venues, according to NASDAQ’s System
routing table, in a manner consistent
with Regulation NMS (i.e., satisfying all
displayed protected quotes). In the
event that the amount of shares on other
markets is insufficient to completely fill
the order, or the order fails to
completely execute, NASDAQ would
then post the remaining shares on the
NASDAQ book or cancel the remaining
shares per the routed order’s
instructions. NASDAQ believes that this
simultaneous execution against
NASDAQ available shares and routing
to other venues’ shares will avoid the
deleterious effect of market impact
discussed above and result in overall
faster and better executions of its
members’ routable orders.
NASDAQ noted, in its proposal, that
it is not changing the execution and
routing sequence of all routable orders.
The TFTY, SAVE, SOLV, and CART
orders are designed to execute serially
as part of their strategies, which is
generally to reduce the blended fees
associated with transacting on multiple
markets. As such, simultaneous routing
of such orders would not result in a
better execution in terms of the goals of
these routable order types.
III. Discussion and Commission’s
Findings
After careful review, 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.6 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,7 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 proposed rule change meets these
requirements in that it promotes
efficiency in the market, and should, as
represented by NASDAQ, increase the
likelihood that a routable order will
receive faster and better executions. As
a result, the proposed rule change could
6 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(5).
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17:49 Aug 14, 2012
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improve NASDAQ’s ability to
effectively process routable orders. For
these reasons, the Commission believes
that the proposed change is consistent
with Section 6(b)(5) of the Act.8
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,9 that the
proposed rule change (SR–NASDAQ–
2012–071) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–20040 Filed 8–14–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67635; File No. SR–
NYSEMKT–2012–34]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Amendments
to the NYSE Amex Options Fee
Schedule Regarding a Rebate for
Order Flow Providers, an Increase in
the Service Fee Applicable to Market
Makers, and a Fee for Market Maker
Executions of SPY Options
August 9, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on July 31,
2012, NYSE MKT LLC (the ‘‘Exchange’’
or ‘‘NYSE MKT’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to proposes to
[sic] amend the NYSE Amex Options
Fee Schedule to (i) Establish a rebate for
Order Flow Providers (‘‘OFPs’’) 4 based
8 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(2).
10 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 An OFP is any ATP Holder that submits, as
agent, orders to the Exchange. See Rule
900.2NY(57).
49035
on the average daily volume (‘‘ADV’’) of
Customer 5 Electronic Complex Orders 6
executed by an OFP on the Exchange;
(ii) increase the service fee applicable to
NYSE Amex Options Market Makers 7
that have reached the monthly Market
Maker fee cap, from $0.05 per contract
to $0.10 per contract for executions of
Electronic Complex Orders; and (iii)
establish a fee of $0.10 per contract for
NYSE Amex Options Market Maker
executions of SPY options as part of an
Electronic Complex Order. The text of
the proposed rule change is available on
the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, 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 IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to (i) Establish a rebate for
OFPs based on the ADV of Customer
Electronic Complex Orders executed by
an OFP on the Exchange; (ii) increase
the service fee applicable to NYSE
Amex Options Market Makers that have
reached the monthly Market Maker fee
cap, from $0.05 per contract to $0.10 per
contract for executions of Electronic
Complex Orders; and (iii) establish a fee
of $0.10 per contract for NYSE Amex
Options Market Maker executions of
SPY options as part of an Electronic
Complex Order. The Exchange proposes
to implement these changes on August
1, 2012.
The Exchange proposes to establish a
rebate for OFPs based on the ADV of
Customer Electronic Complex Orders
9 15
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
5 The term ‘‘Customer’’ means an individual or
organization that is not a broker-dealer. See Rule
900.2NY(18).
6 See Rule 980NY.
7 References herein to Market Makers include
Specialists and e-Specialists. See Rule 900.2NY(76).
See also Rule 927.4NY.
E:\FR\FM\15AUN1.SGM
15AUN1
]]>Agencies
[Federal Register Volume 77, Number 158 (Wednesday, August 15, 2012)]
[Notices]
[Pages 49034-49035]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20040]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67639; File No. SR-NASDAQ-2012-071]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change To Amend Rule 4758(a)(1)(A) To Reflect
a Change in NASDAQ's Routing Functionality
August 10, 2012.
I. Introduction
On June 14, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange''), 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 amend Rule 4758(a)(1)(A) to reflect a change in
NASDAQ's routing functionality. The proposed rule change was published
for comment in the Federal Register on June 29, 2012.\3\ The Commission
received no comment letters regarding the proposed rule change. This
order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 67246 (June 25,
2012), 77 FR 38875 (``Notice'').
---------------------------------------------------------------------------
II. Description
NASDAQ has proposed to amend Rule 4758(a)(1)(A) to reflect a change
in NASDAQ's order routing functionality, which will allow routable
orders \4\ to simultaneously execute against NASDAQ available shares
and route to other markets for execution of the remainder of the order.
Currently, when a routable order is entered into the NASDAQ system, the
NASDAQ book is first checked for available shares. If such an order is
not filled or filled only partially, then the order is routed to away
markets with the best bid or best offer pursuant to NASDAQ's System
routing table.\5\
---------------------------------------------------------------------------
\4\ For purposes of this filing, a ``routable order'' is an
order entered into the NASDAQ System, which is not of an Order Type
precluded from routing to other markets.
\5\ The ``System routing table'' is the proprietary process for
determining the specific trading venues to which the System routes
orders and the order in which it routes them. See Rule
4758(a)(1)(A).
---------------------------------------------------------------------------
NASDAQ stated that it has observed that upon partial execution of a
routable order at NASDAQ market participants often react to the order
by cancelling their orders on other markets and entering new orders at
inferior prices. This occurs because the current process directs the
order to NASDAQ before attempting to access available liquidity at
other markets and thereby allows market participants to react to the
execution (an effect known as ``market impact'' or ``information
leakage''). As a consequence, the available shares at the away market
are no longer available, resulting in a lower likelihood of
successfully accessing liquidity on away markets (i.e., the ``fill
rate'') and an increased likelihood of ultimately receiving an
execution at an inferior price. As such, NASDAQ has proposed to address
this by changing how the routing process will operate.
NASDAQ has proposed to execute routable orders against the NASDAQ
book for available shares and to simultaneously route any remaining
shares to additional markets. Specifically, under the proposed change a
routable order would attempt to execute against the available shares at
[[Page 49035]]
NASDAQ and, to the extent the order would not be filled by such
available shares, NASDAQ would simultaneously route the remainder of
the order to other venues, according to NASDAQ's System routing table,
in a manner consistent with Regulation NMS (i.e., satisfying all
displayed protected quotes). In the event that the amount of shares on
other markets is insufficient to completely fill the order, or the
order fails to completely execute, NASDAQ would then post the remaining
shares on the NASDAQ book or cancel the remaining shares per the routed
order's instructions. NASDAQ believes that this simultaneous execution
against NASDAQ available shares and routing to other venues' shares
will avoid the deleterious effect of market impact discussed above and
result in overall faster and better executions of its members' routable
orders.
NASDAQ noted, in its proposal, that it is not changing the
execution and routing sequence of all routable orders. The TFTY, SAVE,
SOLV, and CART orders are designed to execute serially as part of their
strategies, which is generally to reduce the blended fees associated
with transacting on multiple markets. As such, simultaneous routing of
such orders would not result in a better execution in terms of the
goals of these routable order types.
III. Discussion and Commission's Findings
After careful review, 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.\6\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\7\ 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.
---------------------------------------------------------------------------
\6\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed rule change meets these requirements in that it
promotes efficiency in the market, and should, as represented by
NASDAQ, increase the likelihood that a routable order will receive
faster and better executions. As a result, the proposed rule change
could improve NASDAQ's ability to effectively process routable orders.
For these reasons, the Commission believes that the proposed change is
consistent with Section 6(b)(5) of the Act.\8\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NASDAQ-2012-071) is approved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-20040 Filed 8-14-12; 8:45 am]
BILLING CODE 8011-01-P
