80 FR 42137 - 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

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 136 (July 16, 2015)

[Federal Register Volume 80, Number 136 (Thursday, July 16, 2015)]
[Notices]
[Pages 42137-42139]
From the Federal Register Online  [www.thefederalregister.org]
[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