[Federal Register Volume 76, Number 12 (Wednesday, January 19, 2011)]
[Notices]
[Pages 3188-3189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-950]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63705; File No. SR-NASDAQ-2011-006]


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

January 12, 2011.
    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 January 6, 2011, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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.
    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 be posted on the 
NasdaqTrader.com Web site.

----------------------------------------------------------------------------------------------------------------
                         Exchange                            Customer       Firm          MM       Professional
----------------------------------------------------------------------------------------------------------------
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, MNX ETFs,           0.24         0.55         0.55            0.26
 ETNs & HOLDRs...........................................
ISE......................................................         0.06         0.55         0.55            0.24
ISE Select Symbols* [of 100 or more contracts]...........     0.[26]18         0.55         0.55         0.3[1]4
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 Symbols)....         0.06         0.55         0.55            0.26
PHLX Select Symbols\**\..................................         0.30         0.55         0.55            0.46
C2.......................................................         0.21         0.55         0.55            0.46
----------------------------------------------------------------------------------------------------------------
* 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.nasdaq.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''). Specifically, the Exchange is proposing to 
amend its current Routing Fees that are currently assessed on orders 
routed to the International Securities Exchange LLC (``ISE'') in Select 
Symbols \3\ for orders of 100 or more contracts. ISE recently amended 
its fees and the amendments proposed herein reflect the proposed ISE 
amendments.\4\
---------------------------------------------------------------------------

    \3\ Select Symbols refer to the symbols which are subject to 
ISE's Rebates and Fees for Adding and Removing Liquidity in Select 
Symbols in ISE's Schedule of Fees.
    \4\ See SR-ISE-2010-120.
---------------------------------------------------------------------------

    The Exchange proposes to assess Customers a fee of $0.18 per 
contract and Professionals a fee of $0.34 per contract for orders 
routed to ISE in Select Symbols. The Routing Fees currently assessed on 
Firms and Market Makers will remain unchanged. Currently, the Exchange 
assesses the following fees to route to ISE in Select Symbols of 100 or 
more contracts: $.26 per contract for Customers, $0.55 per contract for 
Firms \5\ and Market Makers \6\ and $0.31 per contract for 
Professionals.

[[Page 3189]]

All other orders that are routed to ISE, including orders that are less 
than 100 contracts, are assessed the rates labeled ``ISE''.
---------------------------------------------------------------------------

    \5\ Firm is an order that clears as ``Firm'' with the Options 
Clearing Corporation (``OCC''). This fee of $0.55 is a fixed routing 
fee for routing orders for the account(s) of Firms.
    \6\ This fee of $0.55 is a fixed routing fee for routing orders 
for the account(s) of Market Makers. The Exchange notes that some 
other options exchanges include Market Maker transaction and 
clearing fees as ``broker-dealer'' fees.
---------------------------------------------------------------------------

    The Exchange also proposes to amend the title of the Routing Fees 
in ISE Select Symbols to state ``ISE Select Symbols'' rather than ``ISE 
Select Symbols of 100 or more contracts'' to reflect the recent 
amendments to ISE's fees which eliminate the fee differential between 
priority customers with 100 or more contracts and priority customers 
with less than 100 contracts.\7\ All other orders that are routed to 
ISE, which are not in the Select Symbols, would be assessed the rates 
labeled ``ISE''.
---------------------------------------------------------------------------

    \7\ See SR-ISE-2010-120.
---------------------------------------------------------------------------

    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. Each destination market's 
transaction charge varies for each transaction incurred by the 
Exchange. The Exchange is proposing this amendment in order to recoup 
clearing and transaction charges incurred by the Exchange when orders 
are routed to ISE in the ISE Select Symbols.

2. Statutory Basis

    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ 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 that these 
fees are reasonable because the Exchange is seeking to recoup costs 
that it incurs when routing orders to ISE in Select Symbols on behalf 
of its members. The Exchange believes that the proposed fee amendments 
are equitable because these amendments mirror recent proposed 
amendments to ISE's Schedule of Fees and are being uniformly applied to 
the Exchange's members.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    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 \10\ and paragraph (f)(2) of Rule 19b-4 \11\ 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2011-006 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-2011-006. 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-
2011-006 and should be submitted on or before February 9, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-950 Filed 1-18-11; 8:45 am]
BILLING CODE 8011-01-P