[Federal Register Volume 78, Number 167 (Wednesday, August 28, 2013)]
[Notices]
[Pages 53179-53181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20934]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70245; File No. SR-NASDAQ-2013-110]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Chapter VII, Section 6 of the Rules of the NASDAQ Options Market 
To Permit the Exchange To Establish Wider Bid/Ask Differentials for 
Certain Options With High Premiums or Other Special Characteristics

August 22, 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 August 19, 2013 The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a 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.
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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 is proposing to amend Chapter VII, Section 6 (Market Maker 
Quotations) of the rules of the NASDAQ Options Market (``NOM'') to 
permit the Exchange to establish wider bid/ask differentials for 
certain options with

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high premiums or other special characteristics.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASDAQ 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 those 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 parts 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 proposed rule change is to amend Chapter VII, 
Section 6 of the rules of NOM to permit the Exchange to establish wider 
bid/ask differentials for certain options with high premiums or other 
special characteristics.
    Currently, the spread on options on equities and index options must 
not exceed $5. For in-the-money series where the market for the 
underlying security is wider than $5, the bid/ask differential may be 
as wide as the quotation for the underlying security on the primary 
market.\3\
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    \3\ See NOM Rule Chapter VII Section 6(d)(ii).
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    In this filing, the Exchange seeks the capability to establish 
wider bid/ask differentials for options that have high premiums or 
other special characteristics. For high premium options, the current 
five dollar range can expose market makers to disproportionate risk in 
dealing with those issues thereby discouraging them from quoting in 
those instruments. As such, the Exchange proposes to be able to modify 
the bid/ask differential for one or more series or classes of options, 
as appropriate, in response to high differential prices, market 
conditions, or other special factors impacting a particular option, 
options series, or class of option.
    The Exchange notes that this flexibility is already permitted by 
the rules of many other options exchanges.\4\
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    \4\ See Phlx Rule 1014(c)(i)(A)(1)(a); CBOE Rule 44.4(e); ISE 
Rule 803(b)(4); NYSE MKT Rule 925NY(b)(4)(E).
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2. Statutory Basis
    The proposed rule change is consistent with the Act and the rules 
and regulations thereunder, including the requirements of Section 6(b) 
of the Act.\5\ In particular, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5) \6\ requirements that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, to prevent fraudulent and manipulative acts, to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, to remove impediments to and 
to perfect the mechanism for a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. Here, the proposal will allow the Exchange to adjust price 
differentials in a manner that encourages quoting and trading activity.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change will enhance 
competition because the Exchange will be able adjust bid/ask 
differentials in a manner similar to Phlx, CBOE, ISE, and NYSE [sic].

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

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. In this regard and as indicated above, the Exchange notes that 
the rule proposed here is already in use by other options exchanges.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor 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 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.

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-2013-110 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-2013-110. 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 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 the 
principal offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from

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submissions. You should submit only information that you wish to make 
available publicly.
    All submissions should refer to File Number SR-NASDAQ-2013-110, and 
should be submitted on or before September 18, 2013.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20934 Filed 8-27-13; 8:45 am]
BILLING CODE 8011-01-P