Thursday, September 16, 2010

Equity Regulatory Alert #2010 - 12
Sponsored Access Agreements Required by October 27, 2010

What is Sponsored Access?

The NASDAQ OMX Sponsored Access program allows both members and non-members of NASDAQ OMX exchanges (Sponsored Participants) to access the applicable NASDAQ OMX trading systems and facilities to trade equities and options under the execution and clearing identity of an exchange member (Sponsoring Member).

Sponsored Access is the practice by a Sponsoring Member of providing access to one or more NASDAQ OMX markets to a Sponsored Participant whereby the Sponsored Participant enters orders into the market but the orders do not pass through a supervisory system administered and controlled exclusively by the Sponsoring Member prior to reaching a NASDAQ OMX system.

Firms must submit the necessary Sponsored Access agreements by Wednesday, October 27, 2010, to continue participating in Sponsored Access.

What agreements are required to participate?

Pursuant to NASDAQ Rule 4611(d)(1)(A), BX Rule 4611(d)(1)(A) and PHLX Rule 1094, a Sponsored Participant and its Sponsoring Member must have entered into and maintained agreements with The NASDAQ OMX Group Inc. The Sponsoring Member must designate the Sponsored Participant by name in such agreements.

The Sponsored Access Agreements support NASDAQ OMX’s overall efforts to identify, control and reduce counter-party and systemic risk, particularly in light of the events of May 6^th. In an effort to mitigate this risk, NASDAQ OMX requires that firms that participate in Sponsored Access on NASDAQ, BX, NOM and PHLX complete the necessary Sponsored Access agreements. Agreements will also be required for PSX once launched.

Firms must submit the necessary Sponsored Access agreements by Wednesday, October 27, 2010, to continue participating in the Sponsored Access programs.

The following agreements are required:

• Sponsoring Member Organization Access Agreement – The Sponsoring Member Organization must have entered into and maintained an Access Agreement with NASDAQ OMX.
• Sponsored Participant Agreement – The Sponsoring Member Organization and the Sponsored Participant must execute an agreement that contains specific sponsorship provisions found in the applicable Sponsored Access rules.
• Sponsored Participant Addendum to Access Agreement – The Sponsoring Member Organization must provide NASDAQ OMX with a Sponsored Participant Addendum to its Access Services Agreement acknowledging its responsibility for the orders, executions and actions of its Sponsored Participant.

Please note: These agreements are written as omnibus agreements to cover each of the markets identified in this alert. One copy can be executed per Sponsored Access relationship and identify each of the NASDAQ OMX markets to which the relationship pertains.

How do firms submit Sponsored Access Agreements?

Completed agreements should be faxed to the NASDAQ OMX Membership Department at +1 215 496 1519 or emailed to membership@nasdaqomx.com.

Agreements may also be mailed to:

NASDAQ OMX Membership Department
1900 Market Street
Philadelphia, PA 19103

Where can I find additional information?

• Refer to NASDAQ Rule 4611(d)(1)(A).
• Refer to BX Rule 4611(d)(1)(A).
• Refer to PHLX Rule 1094.
• Contact Transaction Services U.S. Market Sales at +1 800 846 0477.
• Contact NASDAQ OMX Membership at +1 215 496 5322.