[Federal Register Volume 80, Number 136 (Thursday, July 16, 2015)]
[Notices]
[Pages 42137-42139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17396]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75423; File No. SR-NASDAQ-2015-070]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Relating to Non-Penny Pilot Options Fees
July 10, 2015.
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 June 30, 2015, 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 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
The Exchange proposes to amend the Exchange's transaction fees at
chapter XV, section 2 entitled ``NASDAQ Options Market--Fees and
Rebates,'' which governs pricing for NASDAQ members using the NASDAQ
Options Market (``NOM''), NASDAQ's facility for executing and routing
standardized equity and index options.
While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on July 1,
2015.
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.
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 and
discussed any comments it received on 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 Exchange proposes to amend the Non-Penny Pilot Options \3\ Fees
for Removing Liquidity \4\ for all market participants, except
Customers.\5\ The Exchange is also proposing to remove all fees for
options overlying the PHLX Semiconductor Sector\SM\ (SOX\SM\).
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\3\ The Penny Pilot was established in March 2008 is currently
expanded and extended through June 30, 2015. See Securities Exchange
Act Release Nos. 57579 (March 28, 2008), 73 FR 18587 (April 4, 2008)
(SR-NASDAQ-2008-026) (notice of filing and immediate effectiveness
establishing Penny Pilot); 60874 (October 23, 2009), 74 FR 56682
(November 2, 2009)(SR-NASDAQ-2009-091) (notice of filing and
immediate effectiveness expanding and extending Penny Pilot); 60965
(November 9, 2009), 74 FR 59292 (November 17, 2009)(SR-NASDAQ-2009-
097) (notice of filing and immediate effectiveness adding seventy-
five classes to Penny Pilot); 61455 (February 1, 2010), 75 FR 6239
(February 8, 2010) (SR-NASDAQ-2010-013) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
62029 (May 4, 2010), 75 FR 25895 (May 10, 2010) (SR-NASDAQ-2010-053)
(notice of filing and immediate effectiveness adding seventy-five
classes to Penny Pilot); 65969 (December 15, 2011), 76 FR 79268
(December 21, 2011) (SR-NASDAQ-2011-169) (notice of filing and
immediate effectiveness extension and replacement of Penny Pilot);
67325 (June 29, 2012), 77 FR 40127 (July 6, 2012) (SR-NASDAQ-2012-
075) (notice of filing and immediate effectiveness and extension and
replacement of Penny Pilot through December 31, 2012); 68519
(December 21, 2012), 78 FR 136 (January 2, 2013) (SR-NASDAQ-2012-
143) (notice of filing and immediate effectiveness and extension and
replacement of Penny Pilot through June 30, 2013); 69787 (June 18,
2013), 78 FR 37858 (June 24, 2013) (SR-NASDAQ-2013-082) (notice of
filing and immediate effectiveness and extension and replacement of
Penny Pilot through December 31, 2013); 71105 (December 17, 2013),
78 FR 77530 (December 23, 2013) (SR-NASDAQ-2013-154) (notice of
filing and immediate effectiveness and extension and replacement of
Penny Pilot through June 30, 2014); 79 FR 31151 (May 23, 2014), 79
FR 31151 (May 30, 2014) (SR-NASDAQ-2014-056) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through December 31, 2014); 73686 (December 2, 2014), 79 FR 71477
(November 25, 2014) (SR-NASDAQ-2014-115) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through June 30, 2015); and 75283 (June 24, 2015), 80 FR 37347 (June
30, 2015) (notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Extension of the Exchange's Penny
Pilot Program and Replacement of Penny Pilot Issues That Have Been
Delisted). See also NOM Rules, chapter VI, section 5.
\4\ The Non-Penny Pilot Options pricing includes options
overlying the Nasdaq 100 Index traded under the symbol NDX. For
transactions in NDX, a surcharge of $0.15 per contract will be added
to the Fee for Adding Liquidity and the Fee for Removing Liquidity
in Non-Penny Pilot Options, except for a Customer who will not be
assessed a surcharge.
\5\ The term ``Customer'' applies to any transaction that is
identified by a Participant for clearing in the Customer range at
The Options Clearing Corporation (``OCC'') which is not for the
account of broker or dealer or for the account of a ``Professional''
(as that term is defined in chapter I, section 1(a)(48)).
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Non-Penny Pilot Options Fees for Removing Liquidity
The Exchange proposes to amend the Non-Penny Pilot Options Fees for
Removing Liquidity (including NDX) for Professionals,\6\ Firms,\7\ Non-
NOM Market Makers,\8\ NOM Market Makers \9\ and Broker-Dealers \10\
from $0.89 to $0.94 per contract. Customers will continue to be
assessed a Non-Penny Pilot Options Fee for Removing Liquidity of $0.85
per contract. The Exchange believes that despite this fee increase,
Fees for Removing Liquidity in Non-Penny Pilot Options remain
competitive.
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\6\ The term ``Professional'' 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 Participants.
\7\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC.
\8\ 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.
\9\ The term ``NOM Market Maker'' means a 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 Participant must be registered as a NOM Market Maker
in at least one security.
\10\ 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.
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SOX
The Exchange is proposing to remove all fees related to SOX from
chapter XV, section 2 of the NOM Rules. Currently, chapter XV, section
2 specifies the following fees related to SOX:
[[Page 42138]]
Fees and Rebates
[Per executed contract]
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Non-NOM market
Customer Professional Firm maker NOM Market maker Broker-dealer
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SOX:
Fee for Adding Liquidity.......... $0.40 $0.89 $0.89 $0.89 $0.40 $0.89
Fee for Removing Liquidity........ 0.40 0.89 0.89 0.89 0.40 0.89
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The Exchange is proposing to remove the above-referenced fees as will
delist SOX from NOM as of July 1, 2015.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of section 6 of the Act,\11\ in general, and with
section 6(b)(4) and 6(b)(5) of the Act,\12\ 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, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(4) and (5).
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Non-Penny Pilot Options Fees for Removing Liquidity
The Exchange's proposal to increase the Professional, Firm, Non-NOM
Market Maker, NOM Market Maker and Broker-Dealer Non-Penny Pilot
Options Fees for Removing Liquidity from $0.89 to $0.94 per contract is
reasonable because this fee remains competitive with fees at other
exchanges.\13\ Further, these fees are designed to attract and compete
for order flow to the Exchange, which provides a greater opportunity
for trading by all market participants.\14\ In addition, the increased
Non-Penny Pilot Options Fees for Removing Liquidity are reasonable
because the fees generate revenue that would support the various
rebates which NOM pays for adding liquidity, which attracts order flow
to the Exchange.
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\13\ See NYSE Arca's Options Fees and Charges. NYSE Arca
assesses a take liquidity fee of $0.94 per contract to Professional
Customers, Firms and Broker-Dealers in Non-Penny Pilot Options. A
NYSE Market Maker is assessed a take liquidity fee of $0.92 per
contract in Non-Penny Pilot Options. A Customer is assessed a take
liquidity fee of $0.85 per contract in Non-Penny Pilot Options.
\14\ Id.
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The Exchange's proposal to increase the Professional, Firm, Non-NOM
Market Maker, NOM Market Maker and Broker-Dealer Non-Penny Pilot
Options Fee for Removing Liquidity from $0.89 to $0.94 per contract is
equitable and not unfairly discriminatory because the Exchange would
uniformly assess all non-Customers a Non-Penny Pilot Options Fee for
Removing Liquidity of $0.94 per contract. Customers would be assessed
the lowest Non-Penny Pilot Options Fee for Removing Liquidity of $0.85
per contract. Customer order flow enhances liquidity on the Exchange
for the benefit of all market participants and benefits all market
participants by providing more trading opportunities, which attracts
market makers. An increase in the activity of these market participants
in turn facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
SOX
The Exchange's proposal to remove the Fees for Adding and Removing
Liquidity in options overlying SOX is reasonable because the Exchange
is delisting SOX from NOM on July 1, 2015.
The Exchange's proposal to remove the Fees for Adding and Removing
Liquidity in options overlying SOX is equitable and not unfairly
discriminatory because the Exchange is delisting SOX from NOM on July
1, 2015 and therefore no market participant will be subject to these
fees.
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's proposal to increase the
Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker-
Dealer Non-Penny Pilot Options Fee for Removing Liquidity from $0.89 to
$0.94 per contract does not create an undue burden on competition. All
market participants, other than Customers, will be assessed a Non-Penny
Pilot Options Fee for Removing Liquidity of $0.94 per contract.
Customers are assessed a lower Non-Penny Pilot Options Fee for Removing
Liquidity because Customer order flow enhances liquidity on the
Exchange for the benefit of all market participants.
The Exchange's proposal to remove the Fees for Adding and Removing
Liquidity in options overlying SOX does not create an undue burden on
competition because no market participant will be subject to these
fees.
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.\15\ 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.
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\15\ 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-2015-070 on the subject line.
[[Page 42139]]
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-070. 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 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-2015-070 and should
be submitted on or before August 6, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-17396 Filed 7-15-15; 8:45 am]
BILLING CODE 8011-01-P