Suspension and Order Instituting Proceedings to Determine Whether to Approve a Proposed Rule Change to Link Market Data Fees and Transaction Execution Fees

SEC Release 34-63796

January 28, 2011

The SEC suspended an order declaring immediately effective a Nasdaq proposal that was intended to reduce to the costs of trading by providing "depth of book" data products for Nasdaq firms that service "non-professional" (retail) users with which such firms have a brokerage relationship. The proposal contained a lengthy discussion from Nasdaq regarding competition in the market for transaction execution and routing services and suggested that "dark" markets were exploiting unfair advantages over exchanges, with whom they compete for order flow. The SEC order provides a brief discussion of the potential grounds for disapproving the rule - namely, that the rule could be viewed as unfairly discriminatory, by favoring participants in an exchange's market or penalizing participants in other markets.

SR-NASDAQ-2011-010