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Notice

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fees for Members Using the NASDAQ Market Center

 

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April 6, 2010.

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 March 30, 2010, The NASDAQ Stock Market LLC (“NASDAQ”) 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 NASDAQ. Pursuant to Section 19(b)(3)(A)(ii) of the Act [3] and Rule 19b-4(f)(2) thereunder, [4] NASDAQ has designated this proposal as establishing or changing a due, fee, or other charge, which renders the proposed rule change effective upon filing. 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 Back to Top

NASDAQ proposes to modify pricing for NASDAQ members using the NASDAQ Market Center. NASDAQ will implement the proposed change on April 1, 2010. The text of the proposed rule change is available at http://nasdaqomx.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 Back to Top

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

NASDAQ is making modifications to its pricing schedule for execution of orders in securities priced at $1 or more through the NASDAQ Market Center. [5] First, NASDAQ is eliminating volume-based pricing tiers that currently apply to executions of orders in the NASDAQ Market Center for securities listed on NASDAQ or the New York Stock Exchange (“NYSE”). As a result of this change, the fee to access liquidity in the NASDAQ Market Center will be $0.0030 per share executed, regardless of whether the security being traded is listed on NASDAQ, NYSE, NYSE Amex, or any other listing venue. The change is designed to ensure that NASDAQ does not lose money on trade executions, as is currently the case when the order of a member in the most favorable “take” tier (fee of $0.0028 per share executed for members with an average daily volume of more than 145 million share of liquidity routed, removed, and/or provided, and more than 35 million shares of liquidity provided) is matched with the order of a member in the two most favorable liquidity provider rebate tiers (credit of $0.00295 per share executed for members providing an average of more than 95 million share of liquidity per day, or $0.0029 per share executed for members providing an average of more than 35 million share of liquidity per day).

Second, NASDAQ is increasing the liquidity provider rebate for securities listed on exchanges other than NASDAQ and NYSE. Currently, with respect to displayed quotes/orders, NASDAQ pays a liquidity provider rebate of $0.0025 per share executed to members providing an average of between 20,000,001 and 35 million shares of liquidity per day, and a rebate of $0.0020 per share executed to members providing 20 million or fewer shares of liquidity per day. As a result of the change, NASDAQ will provide a rebate of $0.0026 per share executed to members providing 35 million or fewer shares of liquidity per day. Rebates to members that provide more than 35 million shares of liquidity per day remain unchanged.

2. Statutory Basis

NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, [6] in general, and with Section 6(b)(4) of the Act, [7] 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. The impact of the price changes upon the net fees paid by a particular market participant will depend upon a number of variables, including the relative availability of liquidity on NASDAQ and other venues, the prices of the market participant's quotes and orders relative to the national best bid and offer (i.e., its propensity to add or remove liquidity), the types of securities that it trades, and the member's trading volumes. NASDAQ notes that the proposed elimination of “take” tiers will result in a fee schedule with less variability and will eliminate circumstances in which NASDAQ loses money on order executions by paying a rebate that is higher than the take fee it charges. The increase in the rebate for securities listed on exchanges other than NASDAQ and NYSE is intended to increase the attractiveness of NASDAQ as a venue for trading these securities.

NASDAQ notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive. Accordingly, if particular market participants object to the proposed fee changes, they can avoid paying the fees by directing orders to other venues. NASDAQ believes that its fees continue to be reasonable and equitably allocated to members on the basis of whether they opt to direct orders to NASDAQ.

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 and routing is extremely competitive, members may readily direct orders to NASDAQ's competitors if they object to the proposed rule change.

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 Back to Top

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act [8] and subparagraph (f)(2) of Rule 19b-4 thereunder. [9] At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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.

IV. Solicitation of Comments Back to Top

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

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-2010-044. This file number should be included on the subject line if e-mail is used.

To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2010-044, and should be submitted on or before May 4, 2010.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. [10]

Florence E. Harmon,

Deputy Secretary.

[FR Doc. 2010-8365 Filed 4-12-10; 8:45 am]

BILLING CODE 8011-01-P

Footnotes Back to Top

5. Fees and credits for executions of orders for securities priced below $1 remain unchanged.

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