Subject: File No. SR-NASDAQ-2012-043
From: Mark Connell
Affiliation: Attorney

April 19, 2012

I get word that NASDAQ has a proposal to have companies that sponsor ETFs pay market makers to quote those ETFs. There are currently over 1500 ETFs and many of them die each year due to the lack of volume. No volume means no fees for the ETF sponsor. Of course, these ETF engineers want to earn more fees and are now willing to give up a piece of their profits to encourage market makers to quote.

There is one small problem with NASDAQs plan: its illegal since FINRA banned payments to market makers in 1997. But if the SEC approves NASDAQs plan, which is known as Rule 5950 or the Market Quality Program, then I understand FINRA plans to ease the rule. Amazing how rules can be broken when big bucks are on the line. This new payment for order flow plan strikes me as odd or manipulative.