[Federal Register Volume 77, Number 222 (Friday, November 16, 2012)]
[Notices]
[Pages 68877-68879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27924]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68187; File No. SR-NASDAQ-2012-125]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Routing Fees
November 8, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4thereunder,\2\ notice is hereby given that
on October 31, 2012, The NASDAQ Stock Market
[[Page 68878]]
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 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
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 pursuant to this proposal are
effective upon filing, the Exchange has designated the proposed
amendment to be operative on November 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 filing is to recoup costs that the Exchange
incurs for routing and executing certain orders in equity options to
the International Securities Exchange, LLC (``ISE'').
The Exchange's Pricing Schedule at Chapter XV, Section 2(4)
currently includes the following fees for routing Customer, Firm,
Market Maker and Professional orders to away markets:
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Exchange Customer Firm MM Professional
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BATS Penny...................................... $0.55 $0.55 $0.55 $0.55
BATS non-Penny.................................. 0.86 0.91 0.91 0.91
BOX............................................. 0.11 0.55 0.55 0.11
BX Options...................................... 0.11 0.54 0.54 0.54
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 *............................ 0.31 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 **.......................... 0.50 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 Pricing Schedule for the complete list of symbols that are
subject to these fees.
The Exchange is proposing to amend the ISE Select Symbol Customer
Routing Fee from $0.31 to $0.35 per contract when routing Select
Symbols to ISE. ISE amended its fee for removing liquidity for Priority
Customer orders from $0.20 to $0.25 per contract.\3\ The Exchange is
seeking to amend the Customer Routing Fee for ISE Select Symbols to
recoup the fee increase when routing to ISE.
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\3\ See Securities Exchange Act Release No. 67628 (August 9.
2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71).
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Nasdaq Options Services LLC (``NOS''), a member of the Exchange, is
the Exchange's exclusive order router.\4\ NOS is the Routing Facility
for NOM. Each time NOS routes to away markets NOS is charged a clearing
fee \5\ and, in the case of certain exchanges, a transaction fee is
also charged in certain symbols, which fees 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,
membership fees at away markets, and technical costs associated with
routing.\6\ The Exchange is proposing to assess a fixed fee of $0.10
per contract in addition to the actual transaction fee of $0.25 per
contract which is assessed by ISE when routing a Customer order in a
Select Symbol for a total of $0.35 per contract.
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\4\ See NASDAQ Rules at Chapter VI, Section 11(e) (Order
Routing).
\5\ The Options Clearing Corporation (``OCC'') recently amended
its clearing fee to $0.01 per contract side. See Securities Exchange
Act Release No. 68025 (October 10, 2012), 77 FR 63398 (October 16,
2012) (SR-OCC-2012-18).
\6\ The Exchange incurs costly connectivity charges related to
telecommunication lines and other related costs when routing orders.
Also, 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.
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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.
2. Statutory Basis
NASDAQ believes that its proposal to amend its rules is consistent
with Section 6(b) of the Act \7\ in general, and furthers the
objectives of Section 6(b)(4) of the Act \8\ in particular, in that it
is an equitable allocation of reasonable fees and other charges among
Exchange members.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed Customer ISE Select Symbols
Routing Fee is reasonable because the Exchange seeks to recoup costs
incurred by the Exchange when routing Customer orders to ISE in Select
Symbols on behalf of NOM Options Participants.
[[Page 68879]]
Each destination market's transaction charge varies and there is a
standard clearing charge for each transaction incurred by the Exchange
along with other administrative and technical costs that are incurred
by the Exchange. The Exchange believes that the proposed Customer
Routing Fee would enable the Exchange to recover the remove fee
assessed to NOM Options Participants by ISE in Select Symbols, plus
clearing and other administrative and technical fees for the execution
of certain Customer orders routed to ISE. The Exchange also believes
that the proposed Customer Routing Fee is equitable and not unfairly
discriminatory because the Exchange would assess the ISE Select Symbol
Customer Routing Fee uniformly to all Customer orders that are routed
to ISE.
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ 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. In addition, a NOM Options Participant may
designate an order as not available for routing to avoid routing
fees.\9\
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\9\ See NOM Rules at Chapter VI, Section 11.
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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.
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\10\ 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-2012-125 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-2012-125. 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 20549-1090, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at NASDAQ's principal office and
on its Internet Web site. 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-2012-125, and should be submitted on or before December 7,
2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27924 Filed 11-15-12; 8:45 am]
BILLING CODE 8011-01-P