[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11257-11258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03545]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68899; File No. SR-NASDAQ-2013-027]


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

February 11, 2013.
    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 4, 2013, 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 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 add references to certain terms in Chapter XV, 
entitled ``Options Pricing,'' which governs pricing for NASDAQ members 
using the NASDAQ Options Market (``NOM''), NASDAQ's facility for 
executing and routing standardized equity and index options. The 
Exchange also proposes a technical amendment to Section 2 of Chapter 
XV, entitled ``NASDAQ Options Market--Fees and Rebates.''
    The text of the proposed rule change is also 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to add certain references to Chapter 
XV in order to provide greater clarity to the terms used throughout 
this Chapter for the purpose of assessing fees and paying rebates. 
Specifically, the Exchange proposes to add the terms ``Customer,'' 
``NOM Market Maker,'' ``Non-NOM Market Maker,'' ``Firm,'' 
``Professional,'' and ``Broker-Dealer'' to Chapter XV to provide 
guidance on how the Exchange applies the fees and rebates in Chapter XV 
to these categories of market participants. The Exchange proposes to 
state that the term ``Customer'' or (``C'') applies to any transaction 
that is identified by a NOM Participant for clearing in the Customer 
range at The Options Clearing Corporation (``OCC'') which is not for 
the account of a broker or dealer or for the account of a 
``Professional'' (as that term is defined in Chapter I, Section 
1(a)(48)). The Exchange proposes to state that the term ``NOM Market 
Maker'' or (``M'') is a NOM Participant that has registered as a Market 
Maker on NOM pursuant to Chapter VII, Section 2, and must also remain 
in good standing pursuant to Chapter VII, Section 4. In order to 
receive NOM Market Maker pricing in all securities, the NOM Participant 
must be registered as a NOM Market Maker in at least one security. The 
Exchange proposes to state that the term ``Non-NOM Market Maker'' or 
(``O'') is a registered market maker on another options exchange that 
is not a NOM Market Maker. A Non-NOM Market Maker must append the 
proper Non-NOM Market Maker designation to orders routed to NOM. The 
Exchange proposes to state that the term ``Firm'' or (``F'') applies to 
any transaction that is identified by a NOM Participant for clearing in 
the Firm range at OCC. The Exchange proposes to state that the term 
``Professional'' or (``P'') 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) pursuant to Chapter I, Section 1(a)(48). All 
Professional orders shall be appropriately marked by NOM Participants. 
Finally, the Exchange proposes to state that the term ``Broker-Dealer'' 
or (``B'') applies to any transaction which is not subject to any of 
the other transaction fees applicable within a particular category. The 
order capacity codes, ``C,'' ``M,'' ``O,'' ``F,'' ``P,'' and ``B'' are 
codes that have been established by the Exchange related to the order 
entry ports using the Financial Information Exchange (``FIX'') 
protocol.
    The Exchange also proposes to define the term ``Common Ownership'' 
in Chapter XV. That term is currently defined and used throughout 
Section 2 of Chapter XV. The Exchange proposes to define it once at the 
beginning of Chapter XV as Participants under 75% common ownership or 
control and remove all other definitions in Section 2. The Exchange is 
not amending the current use of that term, but rather proposing to 
create a single definition for ease of reference.
    The Exchange also proposes to define the terms ``adding liquidity'' 
and ``removing liquidity'' for purposes of Chapter XV, Section 2(1) 
pricing. Specifically, the Exchange proposes to state that ``[w]ith 
respect to Chapter XV, Sections 2(1) and (2) the order that is received 
by the trading system first in time shall be considered an order adding 
liquidity and an order that trades against that order shall be 
considered an order removing liquidity.'' The Exchange believes that 
specifying which orders are considered adding and which orders are 
considered removing liquidity would further clarify NOM's pricing.
    Finally, the Exchange proposes to amend the numbering in Section 2 
of Chapter XV to renumber the current Section 2(4). The Exchange 
recently filed a rule change to eliminate Section 2(3).\3\ At this 
time, the Exchange is proposing to renumber Section 2(4) as Section 
2(3).
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    \3\ See SR-NASDAQ-2013-013 (not yet published).
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2. Statutory Basis
    NASDAQ believes that its proposal to amend Chapter XV of the Rules 
to add references to various terms is consistent with Section 6(b) of 
the Act \4\ in general, and furthers the objectives of Section 6(b)(5) 
of the Act \5\ in particular. The Exchange's proposal to clarify its 
pricing is intended to provide additional guidance to market 
participants with respect to the application of fees and rebates in 
Chapter XV, similar to other options exchanges.\6\ Further, the 
Exchange also proposes to provide clarification regarding the manner in 
which the Exchange applies fee and rebates for adding and removing 
liquidity and define Common Ownership for ease of

[[Page 11258]]

reference. The Exchange believes the addition of these references will 
provide additional transparency to Chapter XV of the Exchange's Rules.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5) [sic].
    \6\ See NASDAQ OMX PHLX LLC's Pricing Schedule. See also the 
International Securities Exchange, LLC's Fee Schedule.
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    The Exchange does not believe that there is confusion among market 
participants with respect to the terms described herein, but rather 
that the addition of these terms to Chapter XV would serve to provide 
transparency and guidance to the benefit of all market participants. 
The Exchange believes that the proposal is consistent with Section 
6(b)(5) in that it is designed to promote just and equitable principles 
of trade, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general to 
protect investors and the public interest, by clarifying what fees and 
rebate in Chapter XV apply to certain transactions and market 
participants.
    The Exchange is not amending the manner in which it applies pricing 
to various Participants. The proposed terms merely codify the manner in 
which the Exchange assesses fees and pays rebates today and defines 
Common Ownership today. Similarly, the manner in which fees and rebates 
for adding and removing liquidity are applied is not changing but 
merely codified by the addition of the terms to Chapter XV.

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. The Exchange is merely filing this 
clarification to specify how certain fees and rebates in Chapter XV are 
applied to market participants. The Exchange believes that this 
clarification will provide greater transparency to market participants. 
The Exchange does not believe that this amendment creates intramarket 
competition among Participants as it is applied uniformly to all 
Participants. The Exchange believes that clarifying the applicability 
of certain fees and rebates for adding and removing liquidity within 
the Pricing Schedule provides market participants clear guidance.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \7\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \8\ 17 CFR 240.19b-4(f)(6).
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    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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. The Exchange has 
provided the Commission written notice of its intent to file the 
proposed rule change, along with a brief description and text of the 
proposed rule change, at least five business days prior to the date of 
filing of the proposed rule change.

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-2013-027 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-2013-027. 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 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at NASDAQ's principal office. 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-2013-027, and should 
be submitted on or before March 8, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03545 Filed 2-14-13; 8:45 am]
BILLING CODE 8011-01-P