[Federal Register Volume 77, Number 36 (Thursday, February 23, 2012)]
[Notices]
[Pages 10794-10797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4149]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66409; File No. SR-NASDAQ-2012-027]


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

February 16, 2012.
    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 February 13, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by NASDAQ. 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.

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

[[Page 10795]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASDAQ Stock Market LLC proposes to modify Chapter XV, Section 
2, governing pricing for NASDAQ members using the NASDAQ Options Market 
(``NOM''), NASDAQ's facility for executing and routing standardized 
equity and index options.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on March 1, 2012.
    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. 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
    The purpose of this rule filing is to recoup costs that the 
Exchange incurs for routing and executing Customer, Firm, Market Maker 
and Professional orders in equity and index options. The Exchange's 
Routing Fees are located at Chapter XV, Section 2, entitled ``NASDAQ 
Options Market-Fees,'' and are as follows:
    (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............................................           $0.50           $0.55           $0.55           $0.50
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........................
C2..............................................            0.50            0.55            0.55            0.51
ISE.............................................            0.06            0.55            0.55            0.24
ISE Select Symbols \*\..........................            0.18            0.55            0.55            0.34
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
----------------------------------------------------------------------------------------------------------------
\*\ 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 Exchange proposes to amend its Routing Fees as follows:
    (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............................................           $0.55           $0.55           $0.55           $0.55
BOX.............................................            0.11            0.55            0.55            0.11
CBOE............................................            0.11            0.55            0.55            0.31
CBOE orders greater than 99 contracts in NDX,               0.29            0.55            0.55            0.31
 MNX ETFs, ETNs & HOLDRs........................
C2..............................................            0.55            0.55            0.55            0.55
ISE.............................................            0.11            0.55            0.55            0.29
ISE Select Symbols \*\..........................            0.23            0.55            0.55            0.39
NYSE Arca Penny Pilot...........................            0.55            0.55            0.55            0.55
NYSE Arca Non Penny Pilot.......................            0.11            0.55            0.55            0.11
NYSE AMEX.......................................            0.11            0.55            0.55            0.31
PHLX (for all options other than PHLX Select                0.11            0.55            0.55            0.31
 Symbols).......................................
PHLX Select Symbols \**\........................            0.35            0.55            0.55            0.51
----------------------------------------------------------------------------------------------------------------
\*\ 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.

    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

[[Page 10796]]

transaction fee is also charged in certain symbols, which are passed 
through to the Exchange. The Exchange currently recoups clearing and 
transaction charges incurred by the Exchange when Customer, Firm, 
Market Maker and Professional orders are routed to an away market. At 
this time, the Exchange is proposing to recoup certain other costs 
incurred by the Exchange when routing to away markets, such as 
administrative and technical costs associated with operating NOS, the 
Exchange's exclusive order router; the Exchange's membership fees at 
away markets; and technical costs associated with routing.\3\ The 
Exchange is proposing to increase all Customer and Professional Routing 
Fees. The Exchange is increasing all Customer and Professional Routing 
Fees by $0.05 per contract with the exception of the C2 Professional 
Fee, which is being increased to $0.55 per contract (instead of $0.56 
per contract).\4\ The Exchange is not proposing to amend Firm and 
Market Maker Routing Fees at this time. The Exchange does not believe 
it is necessary to increase Firm and Market Maker Routing Fees beyond 
that which Firms and Market Makers are assessed today for routing 
away.\5\
---------------------------------------------------------------------------

    \3\ In addition to membership fees and transaction fees, the 
Exchange also incurs an Options Regulatory Fee when routing to an 
away market that assesses that fee.
    \4\ The Professional Routing Fee to C2 is currently $0.51 per 
contract.
    \5\ Today, Firms and Market Makers are assessed a Routing Fee of 
$0.55 per contract when routing to any away market.
---------------------------------------------------------------------------

    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change. While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on March 1, 2012.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\6\ in general, and with Section 
6(b)(4) of the Act,\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed Routing Fees are reasonable 
because the fees would allow the Exchange to recoup costs associated 
with routing both Customer and Professional orders to away markets. The 
Exchange believes that these fees will assist it in recouping costs the 
Exchange incurs by utilizing NOS, maintaining membership fees at away 
markets and technical expenses associated with the routing process.\8\ 
The proposed fees also continue to recoup transaction fees assessed by 
the respective away market, which vary, and standard clearing charges 
for each transaction, which fees are incurred by the Exchange when 
routing to away markets. Firms may avoid routing charges by either 
routing orders themselves directly to the away market that is at the 
NBBO, or by marking the order with an instruction to not route the 
order.
---------------------------------------------------------------------------

    \8\ In addition to membership fees and transaction fees, the 
Exchange also incurs an Options Regulatory Fee when routing to an 
away market that assesses that fee.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed Routing Fees are 
equitable and not unfairly discriminatory because the fees would be 
uniformly applied to all Customers and Professionals. The Exchange's 
proposed fees are calculated to distribute the costs associated with 
routing among the various away markets. The Exchange determined not to 
amend the Firm and Market Maker Routing Fees, which are currently the 
highest Routing Fees ($0.55 per contract) for each away market. In 
addition, the Exchange determined to increase the C2 Professional 
Routing Fee to $0.55 per contract, instead of $0.56 per contract \9\ in 
order that the Routing Fee would not exceed those fees currently 
assessed for Firm and Market Maker orders that are routed to an away 
market. The Exchange determined that in light of other fees, the 
current Firm and Market Maker Routing Fees for routing to all away 
markets are within the range of fees that are proposed for other away 
markets. The Exchange does not believe that it is necessary at this 
time to assess additional Routing Fees to Firms and Market Makers to 
route to an away market.
---------------------------------------------------------------------------

    \9\ The Exchange is increasing all Customer and Professional 
Routing Fees by $0.05 per contract with the exception of the C2 
Professional Fee, which is being increased to $0.55 per contract.
---------------------------------------------------------------------------

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\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 email to [email protected]. Please include 
File Number SR-NASDAQ-2012-027on 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-2012-027. This 
file number should be included on the subject line if email 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

[[Page 10797]]

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 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-2012-027 and should 
be submitted on or before March 15, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4149 Filed 2-22-12; 8:45 am]
BILLING CODE 8011-01-P