Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Amend the Attestation Requirement of Rule 4780 To Allow a Retail Member Organization To Attest That “Substantially All” Orders Submitted to the Retail Price Improvement Program Will Qualify as “Retail Orders”, 15392-15394 [2013-05537]
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15392
Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 / Notices
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 Exchange consents,
the Commission shall: (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. The
Commission also requests and
encourages interested persons to submit
comments on the following specific
questions:
• Unlike the Directed Order rules of
other options exchanges, BX’s proposed
rule would not require that a Directed
Market Maker be quoting at the NBBO
at the time a Directed Order is received.
Would the lack of the NBBO quoting
requirement impact market makers’
incentives to quote competitively? If so,
how? If not, why? If other options
exchanges eliminated the requirement
that Directed Market Makers quote at
the NBBO to receive Directed Orders as
part of their Directed Order process,
what, if any impact would there be on
market maker quoting behavior, and
more generally on the quality of
quotations in the options markets?
• Under the proposed rule, a Directed
Market Maker to whom an order is
directed in an option subject to the
exchange’s Price/Time execution
algorithm would receive a 40%
allocation ahead of orders of other
market participants, including customer
orders that had time priority over the
Directed Market Maker’s quotation.
What, if any, concerns does this raise for
the options markets?
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 rulecomments@sec.gov. Please include File
Number SR–BX–2013–016 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–BX–2013–016. This file
number should be included on the
VerDate Mar<15>2010
16:19 Mar 08, 2013
Jkt 229001
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
available publicly. All submissions
should refer to File Number SR–BX–
2013–016, and should be submitted on
or before April 1, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–05543 Filed 3–8–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69039; File No. SR–
NASDAQ–2013–031]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Amend the Attestation Requirement of
Rule 4780 To Allow a Retail Member
Organization To Attest That
‘‘Substantially All’’ Orders Submitted
to the Retail Price Improvement
Program Will Qualify as ‘‘Retail
Orders’’
March 5, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00052
Fmt 4703
Sfmt 4703
notice is hereby given that on February
19, 2013, 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 selfregulatory 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
NASDAQ is filing with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) a proposed rule change
amend the attestation requirement of
NASDAQ Rule 4780 to allow a Retail
Member Organization (‘‘RMO’’) to attest
that ‘‘substantially all’’ orders submitted
to the Retail Price Improvement
Program (the ‘‘Program’’) will qualify as
‘‘Retail Orders.’’ NASDAQ Rule
4780(b)(2)(C) currently requires RMOs
to attest that ‘‘any order’’ will so qualify,
effectively preventing certain significant
retail brokers from participating in the
Program due to operational constraints.
The text of the proposed rule change
is available from NASDAQ’s Web site at
https://nasdaq.cchwallstreet.com/
Filings/, at NASDAQ’s principal office,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASDAQ included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below.
NASDAQ has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing an
amendment to NASDAQ Rule
4780(b)(2)(C) to provide that an RMO
may attest that ‘‘substantially all’’ of the
orders it submits to the Program are
Retail Orders, as defined in NASDAQ
Rule 4780(a)(2), replacing the
requirement that the RMO must attest
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Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 / Notices
that all submitted orders qualify as
Retail Orders.3
Under current NASDAQ Rule 4780, a
member organization wishing to become
an RMO must submit: (A) An
application form; (B) supporting
documentation; and (C) an attestation
that ‘‘any order’’ submitted as a Retail
Order will qualify as such under
NASDAQ Rule 4780.4
Accordingly, the Exchange is
proposing a de minimis relaxation of the
RMO attestation requirement in order to
accommodate these system limitations
and expand the access of retail
customers to the benefits of the
Program. Specifically, as proposed an
RMO would be permitted to send de
minimis quantities of agency orders to
the Exchange as Retail Orders that
cannot be explicitly attested to under
existing definitions of the Program.
The Exchange will issue an Equity
Trader Alert to make clear that the
‘‘substantially all’’ language is meant to
permit the presence of only isolated and
de minimis quantities of agency orders
that do not qualify as Retail Orders that
cannot be segregated from Retail Orders
due to systems limitations. In this
regard, an RMO would need to retain, in
its books and records, adequate
substantiation that substantially all
orders sent to the Exchange as Retail
Orders met the strict definition and that
those orders not meeting the strict
definition are agency orders that cannot
be segregated from Retail Orders due to
system limitations, and are de minimis
in terms of the overall number of Retail
Orders sent to the Exchange.5
2. Statutory Basis
mstockstill on DSK4VPTVN1PROD with NOTICES
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the Act.6
In particular, the Exchange believes the
proposed change furthers the objectives
3 See Securities Exchange Act Release No. 68747
(January 28, 2013) (SR–NYSE–2013–08)
(substantially similar to the filing at hand).
4 A Retail Order is defined in NASDAQ Rule
4780(a)(2), in part, as ‘‘an agency or riskless
principal order that originates from a natural person
and is submitted to NASDAQ by a Retail Member
Organization, provided that no change is made to
the terms of the order with respect to price (except
in the case that a market order is changed to a
marketable limit order) or side of market and the
order does not originate from a trading algorithm or
any other computerized methodology.’’
5 The Financial Industry Regulatory Authority,
Inc., on behalf of the Exchange, will review a
member organization’s compliance with these
requirements.
6 15 U.S.C. 78f(b).
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16:19 Mar 08, 2013
Jkt 229001
of Section 6(b)(5) of the Act,7 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 mechanism of a free and
open market and a national market
system.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices because, while the
proposed rule change represents a
relaxation of the attestation
requirements, the change is a de
minimis relaxation that still requires the
RMO applicant to attest that
‘‘substantially all’’ of its orders will
qualify as Retail Orders. The slight
relaxation will allow enough flexibility
to accommodate system limitations
while still ensuring that only a
fractional amount of orders submitted to
the Program would not qualify as Retail
Orders.
The Exchange believes that the
proposed rule change promotes just and
equitable principles of trade because it
will ensure that similarly situated
member organizations who have only
slight differences in the capability of
their systems will be able to equally
benefit from the Program.
The Exchange believes that the
proposed rule change will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system because it
will allow member organizations, who
are concerned about its system
limitations not allowing 100%
certification that submitted orders are
Retail Orders, to still participate in the
Program. By removing impediments to
participation in the Program, the
proposed change would permit
expanded access of retail customers to
the price improvement and
transparency offered by the Program and
thereby potentially stimulate further
price competition for retail orders.
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. The
Exchange believes that the amendment,
by increasing the level of participation
in the Program, will increase the level
of competition around retail executions
such that retail investors would receive
7 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00053
Fmt 4703
Sfmt 4703
15393
better prices than they currently do on
the Exchange and potentially through
bilateral internalization arrangements.
The Exchange believes that the
transparency and competitiveness of
operating a program such as the Retail
Price Improvement Program on an
exchange market would result in better
prices for retail investors, and benefits
retail investors by expanding the
capabilities of Exchanges to encompass
practices currently allowed on nonExchange venues.
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
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 Exchange consents,
the Commission shall: (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–NASDAQ–2013–031 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–2013–031. 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
E:\FR\FM\11MRN1.SGM
11MRN1
15394
Federal Register / Vol. 78, No. 47 / Monday, March 11, 2013 / Notices
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 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
publicly available. All submissions
should refer to File Number SR–
NASDAQ–2013–031 and should be
submitted on or before April 1, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–05537 Filed 3–8–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69045; File No. SR–NYSE–
2013–02]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Approving Proposed Rule Change
Adopting Investigation, Disciplinary,
Sanction, and Other Procedural Rules
That Are Modeled on the Rules of the
Financial Industry Regulatory
Authority and To Make Certain
Conforming and Technical Changes
mstockstill on DSK4VPTVN1PROD with NOTICES
March 5, 2013.
I. Introduction
On January 4, 2013, New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘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
8 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Mar<15>2010
16:19 Mar 08, 2013
Jkt 229001
thereunder,2 a proposed rule change to
adopt rules governing investigations,
discipline of members, sanctions that
can be imposed as a result of
disciplinary proceedings, cease and
desist authority, and other procedural
rules that are modeled on the rules of
the Financial Industry Regulatory
Authority (‘‘FINRA’’). The proposed
rule change was published for comment
in the Federal Register on January 24,
2013.3 The Commission received no
comments on the proposed rule change.
This order approves the proposed rule
change.
II. Description of the Proposal
On July 30, 2007, the National
Association of Securities Dealers, Inc.
(‘‘NASD’’), the Exchange, and NYSE
Regulation, Inc. (‘‘NYSER’’)
consolidated their member firm
regulation operations into a combined
organization, FINRA, and entered into a
plan to allocate to FINRA regulatory
responsibility for common rules and
common members (‘‘17d–2
Agreement’’).4 The 17d–2 Agreement
was entered into in accordance with the
requirements of Rule 17d–2 under the
Act,5 which permits self-regulatory
organizations (‘‘SROs’’) to allocate
regulatory responsibilities with respect
to common members and common
rules. In 2007, the parties also entered
into a Regulatory Services Agreement
(‘‘RSA’’), whereby FINRA was retained
to perform certain regulatory services on
behalf of NYSER for non-common rules.
On June 14, 2010, the Exchange,
NYSER, and FINRA amended the RSA
and retained FINRA to perform the
market surveillance and enforcement
functions that had previously been
performed by NYSER up to that point.6
Accordingly, since June 14, 2010,
FINRA has been performing all
enforcement-related regulatory services
on behalf of NYSER, including
disciplinary proceedings relating to
NYSE-only rules or against both dual
members and non-FINRA members.
According to the Exchange, to
facilitate FINRA’s performance of these
enforcement functions under the RSA
and to further harmonize the rules of
FINRA and NYSE generally, NYSE is
2 17
CFR 240.19b–4.
Exchange Act Release No. 68678
(January 16, 2013), 78 FR 5213 (January 24, 2013)
(‘‘Notice’’).
4 See Securities Exchange Act Release No. 56148
(July 26, 2007), 72 FR 42146 (August 1, 2007) (File
No. 4–544) (Notice of Filing and Order Approving
and Declaring Effective a Plan for the Allocation of
Regulatory Responsibilities).
5 17 CFR 240.17d–2.
6 See Securities Exchange Act Release No. 62355
(June 22, 2010), 75 FR 36729 (June 28, 2010) (SR–
NYSE–2010–46).
3 Securities
PO 00000
Frm 00054
Fmt 4703
Sfmt 4703
proposing to adopt the text of the
FINRA Rule 8000 Series and Rule 9000
Series, which set forth rules for
conducting investigations and
enforcement actions. The Exchange
proposes to adopt most of FINRA’s rules
that are set forth in FINRA Rule 8000
and 9000 Series with no modification or
only with conforming and technical
changes.7 However, in certain key
respects, the proposed NYSE rules
would continue to differ from FINRA’s
rules. Specifically, as described in more
detail below, NYSE proposes, in part, to
(1) establish processes for settling
disciplinary matters both before and
after the issuance of a complaint that
differ both from NYSE’s current
Stipulation and Consent process and
FINRA’s current settlement processes;
(2) retain the NYSE selection process for
Hearing Panelists, rather than use
FINRA’s Panelists; (3) retain the
substance of NYSE’s current appellate
process; (4) have NYSE’s Chief
Regulatory Officer (‘‘CRO’’) rather than
FINRA’s General Counsel make certain
procedural decisions in the proposed
rules; (5) have NYSE’s CRO rather than
FINRA’s CEO authorize certain
proceedings; (6) have FINRA’s Chief
Hearing Officer rather than FINRA’s
National Adjudicatory Council (‘‘NAC’’)
review certain decisions; (7) retain the
current NYSE list of minor rule
violations, with certain technical and
conforming amendments, while
adopting FINRA’s minor rule violation
fine levels and FINRA’s process for
imposing them; and (8) not allow
proceeds from fines and other monetary
sanctions to be used for general
corporate purposes. The major
differences from the FINRA rules are
highlighted below.8
7 The following proposed NYSE Rules would be
identical to the text of their counterpart FINRA
Rules: 9131–9134, 9136–9138, 9142, 9148, 9213–
9215, 9222, 9233–9241, 9261, 9263–9266, and 9290.
The Exchange also made only conforming and
technical changes to certain FINRA rules, such as
changing ‘‘member’’ and ‘‘associated person’’ to
‘‘member organization’’ and ‘‘covered person,’’
respectively; changing cross-references to FINRA
rules to cross-references to Exchange rules; and
other non-substantive changes. The following
proposed NYSE Rules include only such
conforming and technical amendments to their
counterpart FINRA rule text: 8110, 8120, 8210,
8211, 8311, 8330, 9110, 9143, 9145, 9252, 9262,
9267, 9521, 9527, 9620, and 9870. Proposed NYSE
Rule 8130 would set forth retention of jurisdiction
provisions modeled on Article IV, Section 6 and
Article V, Section 4 of the FINRA Bylaws. The text
of the proposed rule is substantially the same as the
text in FINRA’s Bylaws, except that in paragraph (d)
it contains a provision establishing how the
transition period from NYSE Rule 477 will work.
NYSE also made certain conforming changes to
cross-references outside the 8000 and 9000 series.
8 A detailed description of NYSE’s current rules
and proposed changes can be found in the Notice.
See supra note 3.
E:\FR\FM\11MRN1.SGM
11MRN1
]]>Agencies
[Federal Register Volume 78, Number 47 (Monday, March 11, 2013)]
[Notices]
[Pages 15392-15394]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05537]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69039; File No. SR-NASDAQ-2013-031]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Amend the Attestation
Requirement of Rule 4780 To Allow a Retail Member Organization To
Attest That ``Substantially All'' Orders Submitted to the Retail Price
Improvement Program Will Qualify as ``Retail Orders''
March 5, 2013.
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 February 19, 2013, 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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDAQ is filing with the Securities and Exchange Commission
(``SEC'' or ``Commission'') a proposed rule change amend the
attestation requirement of NASDAQ Rule 4780 to allow a Retail Member
Organization (``RMO'') to attest that ``substantially all'' orders
submitted to the Retail Price Improvement Program (the ``Program'')
will qualify as ``Retail Orders.'' NASDAQ Rule 4780(b)(2)(C) currently
requires RMOs to attest that ``any order'' will so qualify, effectively
preventing certain significant retail brokers from participating in the
Program due to operational constraints.
The text of the proposed rule change is available from NASDAQ's Web
site at https://nasdaq.cchwallstreet.com/Filings/, at NASDAQ's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASDAQ included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NASDAQ has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing an amendment to NASDAQ Rule 4780(b)(2)(C)
to provide that an RMO may attest that ``substantially all'' of the
orders it submits to the Program are Retail Orders, as defined in
NASDAQ Rule 4780(a)(2), replacing the requirement that the RMO must
attest
[[Page 15393]]
that all submitted orders qualify as Retail Orders.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 68747 (January 28,
2013) (SR-NYSE-2013-08) (substantially similar to the filing at
hand).
---------------------------------------------------------------------------
Under current NASDAQ Rule 4780, a member organization wishing to
become an RMO must submit: (A) An application form; (B) supporting
documentation; and (C) an attestation that ``any order'' submitted as a
Retail Order will qualify as such under NASDAQ Rule 4780.\4\
---------------------------------------------------------------------------
\4\ A Retail Order is defined in NASDAQ Rule 4780(a)(2), in
part, as ``an agency or riskless principal order that originates
from a natural person and is submitted to NASDAQ by a Retail Member
Organization, provided that no change is made to the terms of the
order with respect to price (except in the case that a market order
is changed to a marketable limit order) or side of market and the
order does not originate from a trading algorithm or any other
computerized methodology.''
---------------------------------------------------------------------------
Accordingly, the Exchange is proposing a de minimis relaxation of
the RMO attestation requirement in order to accommodate these system
limitations and expand the access of retail customers to the benefits
of the Program. Specifically, as proposed an RMO would be permitted to
send de minimis quantities of agency orders to the Exchange as Retail
Orders that cannot be explicitly attested to under existing definitions
of the Program.
The Exchange will issue an Equity Trader Alert to make clear that
the ``substantially all'' language is meant to permit the presence of
only isolated and de minimis quantities of agency orders that do not
qualify as Retail Orders that cannot be segregated from Retail Orders
due to systems limitations. In this regard, an RMO would need to
retain, in its books and records, adequate substantiation that
substantially all orders sent to the Exchange as Retail Orders met the
strict definition and that those orders not meeting the strict
definition are agency orders that cannot be segregated from Retail
Orders due to system limitations, and are de minimis in terms of the
overall number of Retail Orders sent to the Exchange.\5\
---------------------------------------------------------------------------
\5\ The Financial Industry Regulatory Authority, Inc., on behalf
of the Exchange, will review a member organization's compliance with
these requirements.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\6\ In particular, the
Exchange believes the proposed change furthers the objectives of
Section 6(b)(5) of the Act,\7\ 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 mechanism of a free and open
market and a national market system.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices because, while
the proposed rule change represents a relaxation of the attestation
requirements, the change is a de minimis relaxation that still requires
the RMO applicant to attest that ``substantially all'' of its orders
will qualify as Retail Orders. The slight relaxation will allow enough
flexibility to accommodate system limitations while still ensuring that
only a fractional amount of orders submitted to the Program would not
qualify as Retail Orders.
The Exchange believes that the proposed rule change promotes just
and equitable principles of trade because it will ensure that similarly
situated member organizations who have only slight differences in the
capability of their systems will be able to equally benefit from the
Program.
The Exchange believes that the proposed rule change will remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it will allow member organizations,
who are concerned about its system limitations not allowing 100%
certification that submitted orders are Retail Orders, to still
participate in the Program. By removing impediments to participation in
the Program, the proposed change would permit expanded access of retail
customers to the price improvement and transparency offered by the
Program and thereby potentially stimulate further price competition for
retail orders.
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. The Exchange believes that the
amendment, by increasing the level of participation in the Program,
will increase the level of competition around retail executions such
that retail investors would receive better prices than they currently
do on the Exchange and potentially through bilateral internalization
arrangements. The Exchange believes that the transparency and
competitiveness of operating a program such as the Retail Price
Improvement Program on an exchange market would result in better prices
for retail investors, and benefits retail investors by expanding the
capabilities of Exchanges to encompass practices currently allowed on
non-Exchange venues.
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
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 Exchange consents, the Commission shall: (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 rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2013-031 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-2013-031. 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
[[Page 15394]]
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 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 publicly available. All submissions should refer to
File Number SR-NASDAQ-2013-031 and should be submitted on or before
April 1, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-05537 Filed 3-8-13; 8:45 am]
BILLING CODE 8011-01-P
