[Federal Register Volume 75, Number 198 (Thursday, October 14, 2010)]
[Notices]
[Pages 63235-63236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25745]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63055; File No. SR-NASDAQ-2010-124]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the NASDAQ Stock Market LLC 
Relating to Fees During Opening Cross

October 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 September 29, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify Exchange Rule 7050 governing 
pricing for NASDAQ members using the NASDAQ Options Market (``NOM''), 
NASDAQ's facility for executing and routing standardized equity and 
index options. Specifically, NOM proposes to amend the applicability of 
its Fees for Execution of Contracts on the NASDAQ Options Market to the 
Opening Cross.\3\
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    \3\ See Exchange Chapter VI, Section 8 titled Nasdaq Opening 
Cross.
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    While changes pursuant to this proposal are effective upon filing, 
the Exchange has designated these changes to be operative for 
transactions on October 1, 2010.
    The text of the proposed rule change is set forth below. Proposed 
new text is in italics and deleted text is in [lsqbb]brackets[rsqbb].
* * * * *

7050. NASDAQ Options Market

    The following charges shall apply to the use of the order execution 
and routing services of the NASDAQ Options Market for all securities.
    (1) Fees for Execution of Contracts on the NASDAQ Options Market

                                    Fees and Rebates (per executed contract)
----------------------------------------------------------------------------------------------------------------
                                                                                          Non-NOM
                                                                Customer       Firm        market     NOM market
                                                                                           maker        maker
----------------------------------------------------------------------------------------------------------------
Penny Pilot Options:                                          ...........  ...........  ...........  ...........
    Rebate to Add Liquidity.................................        $0.32        $0.10        $0.25        $0.30
    Fee for Removing Liquidity..............................        $0.43        $0.45        $0.45        $0.45
NDX and MNX:                                                  ...........  ...........  ...........  ...........
    Rebate to Add Liquidity.................................        $0.10        $0.10        $0.10        $0.20
    Fee for Removing Liquidity..............................        $0.50        $0.50        $0.50        $0.40
All Other Options:                                            ...........  ...........  ...........  ...........
    Fee for Adding Liquidity................................        $0.00        $0.45        $0.45        $0.30
    Fee for Removing Liquidity..............................        $0.43        $0.45        $0.45        $0.45
    Rebate to Add Liquidity.................................        $0.20        $0.00        $0.00        $0.00
----------------------------------------------------------------------------------------------------------------

    (2) Opening Cross
    All orders executed in the Opening Cross: [No Charge]
    Customer orders will receive the Rebate to Add Liquidity during the 
Exchange's Opening Cross, unless the contra-side is also a Customer. 
Firms, Non-NOM Market Makers and NOM Market Makers will be assessed the 
Fee for Removing Liquidity during the Exchange's Opening Cross.
    (3) Closing Cross
* * * * *
    The text of the proposed rule change is available on the Exchange's 
website at http://www.nasdaqomx.cchwallstreet.com, at the principal 
office of the Exchange, 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

    In its filing with the Commission, the Exchange 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. The Exchange 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 proposing to modify Rule 7050 governing the fees assessed 
for options orders entered into NOM. Specifically, NASDAQ is proposing 
to modify pricing for its Fees for Execution of Contracts on NOM with 
respect to orders during the Exchange's Opening Cross. The Exchange 
believes that its proposal will incentivize routers to send

[[Page 63236]]

increased order flow during the Opening Cross.
    The Exchange currently does not assess transaction fees during the 
Opening Cross. The Exchange is proposing to amend its fees to pay a 
rebate for Customer orders that are executed during the Opening Cross. 
The Exchange would not pay the rebate if a Customer were the contra-
side of the trade.
    Additionally, the Exchange is proposing to assess a Fee for 
Removing Liquidity to Firms, Non-Nom Market Makers and NOM Market 
Makers for executed transactions during the Exchange's Opening Cross.
    While changes pursuant to this proposal are effective upon filing, 
the Exchange has designated these changes to be operative for 
transactions on October 1, 2010.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\4\ in general, and with Section 
6(b)(4) of the Act,\5\ 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 Exchange believes the proposed 
amendments to the fees and rebates for adding and removing liquidity 
are equitable and reasonable because they are within the range of fees 
assessed by other exchanges employing similar pricing schemes and that 
the proposed fees apply fairly to all similarly situated participants 
on NOM for reasons discussed in greater detail below.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    With respect to the proposed rebates to Customer for executing 
orders during the Opening Cross, the Exchange believes that Customers 
will benefit from this rebate. Currently, there is no rebate and the 
rebate will only be proposed to be paid if another Customer is not on 
the contra-side of the transactions. This proposal will benefit 
Customers and incentivize market participant to route Customer orders 
to the Exchange. For these reasons, the Exchange believes that this 
proposal is both equitable and reasonable.
    The Exchange's proposal to assess a Fee for Removing Liquidity on 
all market participants other than Customers, namely Firms, Non-NOM 
Market Makers and NOM Market Makers, during the Opening Cross is 
reasonable because the fees are within the range of fees assessed by 
other exchanges employing similar pricing schemes. The proposal is 
equitable because it is being equally assessed on all market 
participants, other than Customers.
    NASDAQ is one of eight options market in the national market system 
for standardized options. It is a mature, robust market that is highly 
competitive. Joining NASDAQ and electing to trade options is entirely 
voluntary. Under these circumstances, NASDAQ's fees must be 
competitive, fair and just in order for NASDAQ to attract order flow, 
execute orders, and grow as a market. NASDAQ thus believes that its 
fees are equitable, fair and reasonable and consistent with the 
Exchange Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\6\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend 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. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASDAQ-2010-124 on the subject line.

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-2010-124. 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 inspection and copying in the 
Commission's Public Reference Room. Copies of the filing also will be 
available for inspection and copying at the principal office 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-2010-124 and 
should be submitted on or before November 4, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25745 Filed 10-13-10; 8:45 am]
BILLING CODE 8011-01-P