[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76513-76515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30833]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63419; File No. SR-NASDAQ-2010-149]


Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

December 2, 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 November 24, 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 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.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
December 1, 2010.
    The text of the proposed rule change is set forth below. Proposed 
new text is italicized and deleted text is in brackets.
* * * * *

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)-(3) No Change.
    (4) Fees for routing contracts to markets other than the NASDAQ 
Options Market shall be assessed as provided below. The current fees 
and a historical record of applicable fees shall

[[Page 76514]]

be posted on the NasdaqTrader.com Web site.

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                    Exchange                         Customer          Firm             MM         Professional
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BATS............................................           $0.36           $0.55           $0.55           $0.36
BOX.............................................            0.06            0.55            0.55            0.06
CBOE............................................            0.06            0.55            0.55            0.26
CBOE orders greater than 99 contracts in NDX,               0.24            0.55            0.55            0.26
 MNX ETFs, ETNs & HOLDRs........................
ISE.............................................            0.06            0.55            0.55            0.24
ISE Select Symbols \*\ of 100 or more contracts.            0.26            0.55            0.55            0.31
NYSE Arca Penny Pilot...........................            0.50            0.55            0.55            0.50
NYSE Arca Non Penny Pilot.......................            0.06            0.55            0.55            0.06
NYSE AMEX.......................................            0.06            0.55            0.55            0.26
PHLX (for all options other than PHLX Select                0.06            0.55            0.55            0.26
 Symbols).......................................
PHLX Select Symbols \**\........................            0.30            0.55            0.55            0.46
C2..............................................            0.21            0.55            0.55            0.46
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\*\ These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and
  Removing Liquidity in Select Symbols. See ISE's Schedule of Fees for the complete list of symbols that are
  subject to these fees.
\**\ These fees are applicable to orders routed to PHLX that are subject to Rebates and Fees for Adding and
  Removing Liquidity in Select Symbols. See PHLX's Fee Schedule for the complete list of symbols that are
  subject to these fees.

* * * * *
    The text of the proposed rule change is available on the Exchange's 
Web site 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 but routed to and executed on away 
markets (``routing fees'').
    NASDAQ Options Services LLC (``NOS''), a member of the Exchange, is 
the Exchange's exclusive order router. Each time NOS routes to away 
markets NOS is charged a $0.06 clearing fee and, in the case of certain 
exchanges, a transaction fee is also charged in certain symbols, which 
are passed through to the Exchange.
    The Exchange proposes to assess new fees for routing contracts to 
markets other than the NASDAQ Options Market to Rule 7050. 
Specifically, the Exchange is proposing to assess a routing fee of 
$0.24 per contract in Customer option orders that are routed to the 
Chicago Board Options Exchange, Incorporated (``CBOE''). This would 
apply to orders greater than 99 contracts in options traded under the 
symbol NDX (``NDX'') and options on the one-tenth value of the Nasdaq 
100 Index traded under the symbol MNX (``MNX'') as well as exchange-
traded funds (``ETFs''), exchange-traded notes (``ETNs'') and Holding 
Company Depositary Receipts (``HOLDRs''). The Exchange is proposing to 
caption these proposed fees ``CBOE orders greater than 99 contracts in 
NDX, MNX, ETFs, ETNs and HOLDRs.'' The CBOE current routing fee of 
$0.55 per contract would apply to Firms and Market Makers for CBOE 
orders greater than 99 contracts in NDX, MNX, ETFs, ETNs and HOLDRs.
    The Exchange is also proposing to adopt routing fees for a new type 
of participant called ``Professional''.\3\ The Exchange proposes to 
assess the following Professional routing fees, in addition to the 
current categories of Customer, Firm and Market Maker, to its members: 
(i) A $0.36 per contract fee for Professional orders routed to BATS 
Exchange, Inc. (``BATS'') in all options; (ii) a $0.06 per contract fee 
for Professional orders routed to the Boston Options Exchange Group LLC 
(``BOX'') in all options; (iii) a $0.26 per contract fee for 
Professional orders routed to the Chicago Board of Options Exchange, 
Inc. (``CBOE'') in all options \4\; (iv) a $.24 per contract fee for 
Professional orders routed to International Securities Exchange, LLC 
(``ISE'') in all options, except for Select Symbols of 100 or more 
contracts; (v) a $0.31 per contract fee for Professional orders routed 
to ISE in its Select Symbols of 100 or more contracts \5\; (vi) a $0.50 
per contract fee for Professional orders routed to NYSE Arca, Inc. 
(``NYSE Arca'') in Penny Pilot options; (vii) a $0.06 per contract fee 
for Professional orders routes to NYSE Arca in Non-Penny Pilot options; 
(viii) a $0.26 per contract fee for Professional orders routed to NYSE 
Amex LLC (``NYSE Amex'') in all options; (ix) a $0.26 per contract fee 
for Professional orders routed to NASDAQ OMX PHLX LLC (``PHLX'') in all 
option other than the PHLX Select Symbols; \6\ (x) a $0.46 per contract 
fee for Professional orders routed to PHLX in Select Symbols; \7\ and 
(xi) a $0.46 per contract fee for Professional orders routed to C2 
Options Exchange, Inc. (``C2'') in all options.
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    \3\ See Chapter I, Section I (Definitions). The term 
``Professional'' means any person or entity that (i) is not a broker 
or dealer in securities, and (ii) places more than 390 orders in 
listed options per day on average during a calendar month for its 
own beneficial account(s). A Participant or a Public Customer may, 
without limitation, be a Professional. All Professional orders shall 
be appropriately marked by Participants. See Securities Exchange Act 
Release Nos. 63028 (October 1, 2010), 75 FR 62443 (October 8, 2010) 
(SR-NASDAQ-2010-099); and 63151 (October 21, 2010), 75 FR 66811 
(October 29, 2010) (SR-NASDAQ-2010-132).
    \4\ A Professional would also be assessed the proposed $0.26 per 
contract for a CBOE order greater than 99 contracts in NDX, MNX, 
ETFs, ETNs and HOLDRs.
    \5\ See ISE's Schedule of Fees for the complete list of Select 
Symbols.
    \6\ See PHLX's Fee Schedule for the complete list of Select 
Symbols.
    \7\ See PHLX's Fee Schedule for the complete list of Select 
Symbols.
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    The Exchange is proposing these fees in order to recoup clearing 
and transaction charges incurred by the

[[Page 76515]]

Exchange when certain Customer options orders are routed to CBOE \8\ as 
well as when certain Professional options orders are routed to the 
various destination markets. Each destination market's transaction 
charge varies and there is a standard clearing charge for each 
transaction incurred by the Exchange. The Exchange believes that the 
routing fees proposed will enable the Exchange to recover the 
transaction fees assessed by away markets, where applicable, plus 
clearing fees for the execution of Customer, Firm, Market Maker and 
Professional orders. As with all fees, the Exchange may adjust these 
Routing Fees in response to competitive conditions by filing a new 
proposed rule change.
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    \8\ See Securities Exchange Act Release No. 62902 (September 14, 
2010), 75 FR 57313 (September 20, 2010) (SR-CBOE-2010-081) (a rule 
change to assess a transaction fee of $.18 per contract on public 
customer orders in options on Standard & Poor's Depositary Receipts, 
except for orders of 99 contracts or less).
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    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
December 1, 2010.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\9\ in general, and with Section 
6(b)(4) of the Act,\10\ 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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fees are reasonable because 
they seek to recoup costs that are incurred by the Exchange when 
routing Customer orders greater than 99 contracts in NDX, MNX, ETFs, 
ETNs and HOLDRs to CBOE and also when routing orders designated as 
Professional to the various destination markets listed herein, on 
behalf of its members. The Exchange also believes that the proposed 
fees are equitable because they will be uniformly applied to all 
Customers and Professionals.
    NASDAQ is one of nine options markets in the national market system 
for standardized options. Joining NASDAQ and electing to trade options 
is entirely voluntary. Under these circumstances, NASDAQ's fees must be 
competitive and low in order for NASDAQ to attract order flow, execute 
orders, and grow as a market. NASDAQ thus believes that its fees are 
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 \11\ and paragraph (f)(2) of Rule 19b-4 \12\ 
thereunder. 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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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
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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-2010-149 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-2010-149. 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 Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such 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 No. SR-NASDAQ-
2010-149 and should be submitted on or before December 29, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30833 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P