Description and Responsibilities

The NASDAQ MarketWatch Department provides real-time surveillance for activity on the NASDAQ Stock Market, NASDAQ OMX BX and the NASDAQ Options Market to maintain an orderly marketplace and level playing field for investors, market participants and listed companies. In an effort to foster marketplace integrity, MarketWatch oversees the complete and timely disclosure of material information by NASDAQ-listed companies. In addition, MarketWatch monitors compliance with Exchange rules and policies through real-time surveillance of price and volume information reported by market participants in both equities and options transactions. The MarketWatch Department works closely with NASDAQ business lines and FINRA in an effort to provide fair and equitable regulation for the NASDAQ markets. When activity is suspected of being potentially in violation of Exchange rules and policies, MarketWatch refers the activity to FINRA’s Market Regulation Department for further review and potential disciplinary action. Information received by MarketWatch is confidential and used strictly for regulatory purposes. MarketWatch implements fair and independent decisions within the scope of its authority and without influence from other NASDAQ departments.

Disclosure

NASDAQ Stock Market Rules require that, except in unusual circumstances, companies make prompt disclosure to the public through any Regulation FD-compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors’ decisions. Prior to the public release of certain material news announcements, companies are required to notify MarketWatch. Prior notification should be provided to MarketWatch through the Electronic Disclosure submission system accessible at www.nasdaq.net. MarketWatch does not accept material news disclosures by fax or phone, except in emergency situations. MarketWatch business hours are from 6:30 a.m. to 8:00 p.m. Eastern Time, Monday through Friday. Companies are still obligated to provide MarketWatch with prior notification of material disclosures even if it is outside of normal business hours. NASDAQ MarketWatch assesses company disclosures for materiality and in certain circumstances, may implement a temporary trading halt to allow for even dissemination. A trading halt provides the public with an opportunity to evaluate material information and consider it in making investment decisions. MarketWatch monitors real time trading in all NASDAQ securities during the trading day for price and volume activity utilizing automated surveillance systems. The analysts determine if there is a reasonable explanation for the unusual trading activity. In the event of certain price and volume movements, the MarketWatch Department may contact a Company in order to review the unusual market activity. The MarketWatch Department treats the information provided by the Company and other sources in a highly confidential manner, and uses it to assess market activity and assist in maintaining fair and orderly markets. A NASDAQ listing includes an obligation to disclose to the MarketWatch Department information that the Company is not otherwise disclosing to the investing public or the financial community.

Trading Halts

MarketWatch makes reasonable efforts to conduct timely reviews of material news notifications, reach appropriate determinations regarding the materiality of the announcement, monitor newswires for material news affecting NASDAQ companies and when appropriate, implement temporary trading halts prior to the public dissemination of the material news. The consideration of temporary trading halts occurs during regular market hours as well as during pre-market and after-hours trading sessions. Generally, a trading halt may not be necessary when coverage of a material news announcement is fully disseminated prior to 7:00 a.m. or after 8:00 p.m. Eastern Time (ET). A temporary trading halt benefits existing and potential shareholders by ensuring that material news is distributed equally among all market participants and by ensuring that all trading is based on publicly held facts. Trading is normally resumed in a stock about thirty minutes following the dissemination of the material announcement through the news media or another Regulation FD-compliant manner, although NASDAQ may vary the length of the trading halt in consultation with the company, or when NASDAQ is scheduling trading resumptions around the open or close of regular market hours. NASDAQ usually reaches out to the company before making a halt determination. MarketWatch may need to ask questions and review the news content in more depth with the company. This is especially common when reviewing disclosures related to clinical trials, FDA-related issues, developments regarding customers or suppliers and legal or regulatory developments. If MarketWatch is unable to reach a company official to review the materiality of the announcement before the news is made public, it is possible that a halt may not be implemented prior to dissemination because an evaluation with the company could not be completed. Prior to implementing a trading halt, MarketWatch will verify the news with a company official to ensure the security of the disclosure information. The staff will call the corporate officer at the company’s main number or will call the corporate officer directly at the phone number on file with NASDAQ in order to complete this verification. If MarketWatch is unable to verify the information with the company before the release of the material news announcement, MarketWatch may halt trading once the news disclosure is made public, (e.g. if the news disclosure is a press release, the trading halt will be implemented once the news crosses the newswires). In cases where MarketWatch does not receive prior notification of material news (for example, a company does not submit the prior notification), or is unaware material news is being made public (such as might occur in the case of an unsolicited tender offer), MarketWatch monitors the newswires and may have to make an assessment once the news is public whether any further steps are appropriate. There may be situations where, due to the passage of time, NASDAQ determines that a trading halt would not be in the best interests of the market. In general, any trades that occur during the period after news dissemination but before implementation of the trading halt, or that occur if no halt is implemented, will stand unless these trades result from a trading error that meets the requirements of NASDAQ Rule 11890. NASDAQ also follows regulatory halts implemented in non-NASDAQ-listed securities by the listing exchange. MarketWatch is informed of these regulatory halts by data feed or other notification by the listing exchange. MarketWatch attempts to implement these halts as rapidly as possible after notification, but timing is affected by factors similar to those outlined above, including delays in notification by the listing exchange. NASDAQ will determine the status of trades that occur prior to NASDAQ implementing a halt in non-NASDAQ-listed securities on a case by case basis after consultation with other affected markets. (This Trading Halt description is for informational purposes only. NASDAQ reserves the right to take any and all actions, at any time, to halt or resume trading in securities trading in any of its systems.)

Compliance

The NASDAQ MarketWatch Department monitors trading compliance in the NASDAQ Stock Market and NASDAQ OMX BX for equities, options and PORTAL trading. It is the MarketWatch analysts’ responsibility to protect marketplace integrity by reviewing alerts generated by real-time automated detection systems. MarketWatch immediately resolves any trade reporting issues relating to the accuracy of price and volume information reported by market participants trading and quoting NASDAQ- or exchange-listed securities in NASDAQ Systems. MarketWatch performs several regulatory functions related to Reg NMS Compliance including Trade Through, Locked and Crossed markets and Self Help compliance. MarketWatch actively monitors IPO’s during the opening quote process to facilitate an orderly open and may extend the quote window if required. The trade adjudication process for NASDAQ equity and option transactions is administered by MarketWatch. This includes coordination with other markets when larger trading issues affect multiple market centers.

Regulatory Technology

NASDAQ MarketWatch recognizes the need to have technical expertise on staff to assist with maintaining regulatory compliance when changes are made to NASDAQ trading systems, rule book, data feeds, and surveillance applications. The Regulatory Technology team is responsible for ensuring that both business and technical changes are in compliance with the NASDAQ rule book. This team is the liaison to other business units within NASDAQ as well as external regulatory groups.

MarketWatch Market Regulation

NASDAQ MarketWatch is responsible for overseeing the efficiency and effectiveness of FINRA regulatory programs undertaken by FINRA Market Regulation on behalf of the NASDAQ Stock Market, NASDAQ OMX BX and the NASDAQ Options Market. MarketWatch’s primary task is to coordinate the services that NASDAQ purchases from FINRA Market Regulation. In this role, MarketWatch develops reporting standards for FINRA Market Regulation, manages the budget for allocated FINRA regulatory services, and reviews the activities of FINRA Market Regulation for consistency with NASDAQ’s self-regulatory responsibilities. MarketWatch assists the Chief Regulatory Officers of NASDAQ’s Exchanges and works closely with NASDAQ’s Information Technology business line and the Office of General Counsel to facilitate day-to-day information sharing between NASDAQ and the FINRA.