[Federal Register Volume 77, Number 68 (Monday, April 9, 2012)]
[Notices]
[Pages 21130-21132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8461]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66719; File No. SR-NASDAQ-2012-046]


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

April 3, 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 March 28, 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.
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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

    NASDAQ proposes to modify Chapter XV, Options Pricing, Section 2, 
of the Options Rules portion of the NASDAQ Rulebook governing pricing 
for NASDAQ members using The NASDAQ Options Market (``NOM''), NASDAQ's 
facility for executing and routing standardized equity and index 
options. The proposed rule change amends certain Customer Routing Fees 
to recoup costs incurred by the Exchange in routing to away markets. 
While changes proposed herein are effective upon filing, the Exchange 
has designated these changes to be operative on April 2, 2012.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

[[Page 21131]]

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 filing is to recoup costs that the Exchange 
incurs for routing and executing certain Customer orders in equity and 
index options to the International Securities Exchange, LLC (``ISE'') 
and to the NASDAQ OMX PHLX, LLC (``PHLX''). Chapter XV, Section 2 
currently includes the following Routing Fees for routing Customer, 
Firm, Market Maker and Professional orders to away markets.

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             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                   0.29            0.55            0.55            0.31
 contracts in NDX, 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              0.11            0.55            0.55            0.31
 PHLX Select Symbols).............
PHLX Select Symbols \**\..........            0.35            0.55            0.55            0.51
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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 Exchange is proposing to amend the ``ISE Select Symbols'' \3\ 
Customer Routing Fee from $0.23 per contract to $0.31 per contract. ISE 
recently amended its ``taker'' fee for regular, or non-complex, 
Priority Customer orders in the Select Symbols, regardless of size, 
from $0.15 per contract to $0.20 per contract.\4\ In addition to the 
ISE taker fee, the Exchange also incurs other routing costs which it 
seeks to recoup.
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    \3\ See ISE's Schedule of Fees for the complete list of symbols 
that are subject to these fees.
    \4\ See ISE's Schedule of Fees. See also Securities Exchange Act 
Release No. 66597 (March 14, 2012), 77 FR 16295 (March 20, 2012) 
(SR-ISE-2012-17).
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    The Exchange is also proposing to amend the ``PHLX Select Symbols'' 
Customer Routing Fee from $0.35 per contract to $0.50 per contract. 
PHLX recently amended its Single contra-side Customer Fee for Removing 
Liquidity for its Select Symbols from $0.31 per contract to $0.39 per 
contract.\5\ In addition to the PHLX Single contra-side Customer Fee 
for Removing Liquidity for its Select Symbols, the Exchange also incurs 
other routing costs which it seeks to recoup.
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    \5\ See Securities Exchange Act Release No. 66367 (February 9, 
2012), 77 FR 8934 (February 15, 2012) (SR-Phlx-2012-15). See also 
Section I of PHLX's Pricing Schedule.
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    In addition, 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 
currently recoups clearing and transaction charges incurred by the 
Exchange as well as 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 membership fees at away 
markets; and technical costs associated with routing.\6\
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    \6\ The Exchange is therefore increasing the ISE Select Symbols 
Customer Routing Fee to $0.31 per contract to account for the $0.20 
ISE taker fee, the $0.06 clearing cost and another $0.05 per 
contract associated with administrative and technical costs 
associated with operating NOS. It is also increasing the PHLX Select 
Symbols Customer Routing Fee to $0.50 per contract to account for 
the $0.39 PHLX Customer Single contra-side Fee for Removing 
Liquidity for its Select Symbols, the $0.06 clearing cost and 
another $0.05 per contract associated with with administrative and 
technical costs associated with operating NOS.
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    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 April 2, 2012.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that these fees are reasonable because they 
seek to recoup costs that are incurred by the Exchange when routing 
Customer orders to ISE and PHLX on behalf of its members. 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 proposed Routing Fees would enable the 
Exchange to recover the customer taker fees assessed by ISE and 
customer Single contra-side Fee for Removing Liquidity assessed by 
PHLX, plus clearing fees for the execution of customer orders. The 
Exchange also believes that the proposed Routing Fees are equitable and 
not unfairly discriminatory because they would be uniformly applied to 
all Customers.

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

    The Exchange does not believe that the proposed rule change will 
impose

[[Page 21132]]

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.\9\ 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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    \9\ 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 email to [email protected]. Please include 
File Number SR-NASDAQ-2012-046 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-2012-046. 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 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 will also 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-2012-046 and should be 
submitted on or before April 30, 2012.
For the Commission, by the Division of Trading and Markets, pursuant to 
delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-8461 Filed 4-6-12; 8:45 am]
BILLING CODE 8011-01-P