80_FR_56692 80 FR 56511 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Transaction Fees at Chapter XV, Section 2 Entitled “NASDAQ Options Market-Fees and Rebates”

80 FR 56511 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Transaction Fees at Chapter XV, Section 2 Entitled “NASDAQ Options Market-Fees and Rebates”

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 181 (September 18, 2015)

Page Range56511-56515
FR Document2015-23396

Federal Register, Volume 80 Issue 181 (Friday, September 18, 2015)
[Federal Register Volume 80, Number 181 (Friday, September 18, 2015)]
[Notices]
[Pages 56511-56515]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23396]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75910; File No. SR-NASDAQ-2015-102]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Transaction Fees at Chapter XV, Section 2 Entitled ``NASDAQ 
Options Market--Fees and Rebates''

September 14, 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 September 1, 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 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 these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on September 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 the following five [sic] changes to the NOM 
transaction fees set forth at Chapter XV, Section 2 for executing and 
routing standardized equity and index options under the Penny Pilot 
options program. The Penny Pilot was established in March 2008 and has 
since been expanded and extended through June 30, 2016.\3\
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    \3\ 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) (SR-NASDAQ-2015-063) (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.

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[[Page 56512]]

    The proposed changes are as follows:
    Rebate to Add Liquidity in Penny Pilot Options: the Exchange 
proposes to
    1. Increase the rebates to Participants that qualify for Tiers 8 of 
the Customer \4\ and Professional \5\ rebate program and that add 
greater than 1.40 percent of total Customer interest for the month.
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    \4\ The term ``Customer'' refers to a customer in a transaction 
that is marked by a Participant in the Customer range for clearing 
purposes at The Options Clearing Corporation (``OCC''). Such a 
transaction is not for the account of a broker, dealer or 
``Professional'' (see next footnote).
    \5\ 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), See Chapter I, 
Section 1(a)(48). All Professional orders must be appropriately 
marked by Participants.
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    Fee for Removing Liquidity in Penny Pilot Options: the Exchange 
proposes to:
    2. Increase fees from $0.50 to $0.54 per contract for all 
Participant categories other than Customer, which remains at $0.48. 
Fees for removing liquidity in SPY \6\ will remain unchanged by this 
proposal.
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    \6\ SPDR[supreg] S&P 500[supreg] ETF Trust.
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    3. Increase the fee for removing liquidity for Participants that 
qualify for Tiers 7 and 8 of the Customer and Professional rebate 
program.
    Each specific change is described in greater detail below.
Change 1
    The Exchange is proposing to increase the rebates paid for 
providing Customer and Professional liquidity in Penny Pilot options. 
Currently, the Exchange offers eight volume-based rebate Tiers for 
Participants providing Customer or Professional liquidity in Penny 
Pilot options. These rebates range from $0.20 (Tier 1) to $0.48 (Tier 
8) per contract depending upon the level of liquidity provided. Tiers 1 
through 4 are based on Participants adding Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Pilot Options and/or Non-Penny Pilot Options as a percentage of total 
industry customer equity and ETF option ADV contracts per day in a 
month. Participants qualifying for Tiers 1 through 4 earn a rebate of 
$0.20 to $0.43 per contract. Tiers 5 through 7 add other, challenging 
volume-based requirements and offer rebates of $0.45 to $0.47 per 
contract of Customer or Professional liquidity provided in Penny Pilot 
options. Tiers 1 through 7 of the Customer or Professional rebate 
program will remain unchanged.
    The Exchange is proposing to change only Tier 8 which currently 
offers a $0.48 rebate for executed Customer or Professional liquidity 
where:

    Participant adds Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or 
Non-Penny Pilot Options above 0.75% or more of total industry 
customer equity and ETF option ADV contracts per day in a month or 
Participant adds (1) Customer and/or Professional liquidity in Penny 
Pilot Options and/or Non-Penny Pilot Options of 30,000 or more 
contracts per day in a month, (2) the Participant has certified for 
the Investor Support Program set forth in Rule 7014, and (3) the 
Participant qualifies for rebates under the Qualified Market Maker 
(``QMM'') Program set forth in Rule 7014.

    In addition, Participants that qualify for Tier 8 can get a 
supplemental rebate if they add:

    Customer, Professional, Firm, Non-NOM Market Maker and/or 
Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny 
Pilot Options of 1.15% or more of total industry customer equity and 
ETF option ADV contracts per day in a month will receive an 
additional $0.02 per contract Penny Pilot Options Customer Rebate to 
Add Liquidity for each transaction which adds liquidity in Penny 
Pilot Options in that month.

Participants that qualify for Tier 8 and the supplemental rebate 
receive a total rebate of $0.50 per contract of Customer liquidity 
provided in Penny Pilot options.
    Beginning September 1, the Exchange is proposing to offer an 
increased supplemental rebate for certain Participants that qualify for 
Tier 8. Specifically, the Exchange proposes to offer an additional 
$0.05 rebate per contract for adding Customer liquidity in Penny Pilot 
Options in that month for Participants that add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Pilot Options and/or Non- Penny Pilot Options of 1.40% or more of total 
industry customer equity and ETF option ADV contracts per day in a 
month. Participants that qualify for Tier 8 and the new supplemental 
rebate will receive a total rebate of $0.53 per contract of Customer 
liquidity executed in Penny Pilot options. This represents an increase 
of $0.03 per contract for Participants qualifying for this new 
supplemental rebate.
Change 2
    The Exchange also proposes, beginning September 1, to increase from 
$0.50 to $0.54 per contract the fees assessed for removing liquidity in 
Penny Pilot options for all Participant categories other than Customer, 
which will remain unchanged at $0.48. This will represent an increase 
of $0.04 per contract of liquidity removed in the Professional, Firm, 
NOM Market Maker, Non-NOM Market Maker, and Broker Dealer categories 
for Participants that qualify for no fee reductions. For executions in 
SPY, the fees will remain unchanged by this proposal. Specially, the 
fees assessed for executions in SPY will remain $0.48 per contact for 
Customer and $0.50 per contract for all other Participants.
Change 3
    The Exchange proposes to increase the fee assessed for removing 
liquidity for Participants that qualify for Tiers 7 and 8 of the 
Customer and Professional rebate program. As described above, the 
Exchange currently offers eight tiers of volume-based rebates for 
Participants that add Customer or Professional liquidity in Penny Pilot 
options. Relative to other Participants, Participants that qualify for 
Tiers 7 and 8 receive increased rebates for adding liquidity, and they 
also are assessed reduced fees for removing liquidity. Specifically, 
Participants that qualify for Customer or Professional Rebate to Add 
Liquidity Tiers 7 or 8 in a given month are assessed a Professional, 
Firm, Non-NOM Market Maker, NOM Market Maker or Broker-Dealer Fee for 
Removing Liquidity in Penny Pilot Options of $0.48 per contract and a 
Customer Fee for Removing Liquidity in Penny Pilot Options of $0.47 per 
contract. Participants that do not qualify for Tiers 7 and 8 currently 
pay $0.50 per contract for removing liquidity in the Professional, 
Firm, Non-NOM Market Maker, NOM Market Maker or Broker-Dealer 
categories, and $0.48 per contract for removing liquidity in the 
Customer category. In other words, this represents a relative reduction 
of $0.02 in the Professional, Firm, Non-NOM Market Maker, NOM Market 
Maker or Broker-Dealer categories, and a $0.01 relative reduction in 
the Customer liquidity category.
    Beginning September 1, the Exchange proposes to charge these same 
Participants (those that qualify for Customer or Professional Rebate to 
Add Liquidity Tiers 7 or 8 in a given month) a fee of $0.50 for 
removing liquidity for Professional, Firm, Non-NOM Market Maker, NOM 
Market Maker or Broker-

[[Page 56513]]

Dealer in Penny Pilot Options. As described above, also beginning 
September 1, Participants that do not qualify for Tiers 7 and 8 will 
pay $0.54 per contract for removing liquidity in the Professional, 
Firm, Non-NOM Market Maker, NOM Market Maker or Broker-Dealer 
categories, and $0.48 per contract for removing liquidity in the 
Customer category. As a result, beginning September 1, Participants 
that qualify for Tiers 7 and 8 will enjoy a relative fee reduction of 
$0.04 in the Professional, Firm, Non-NOM Market Maker, NOM Market Maker 
or Broker-Dealer categories, and will pay the same Customer fee for 
removing liquidity of $0.48 per contract as is the case for all other 
Participants.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with Section 
6(b)(4) and 6(b)(5) of the Act,\8\ 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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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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Change 1
    The Exchange believes that it is an equitable allocation of 
reasonable fees to offer an additional $0.05 rebate per contract for 
adding Customer liquidity in Penny Pilot Options in that month for 
Participants that add Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- 
Penny Pilot Options of 1.40% or more of total industry customer equity 
and ETF option ADV contracts per day in a month. As stated above, the 
use of volume-based rebate tiers is well accepted as consistent with an 
equitable allocation of reasonable fees under the Act. In fact, the 
Exchange's proposal represents only a minor extension of the rebate 
program that already exists on the Exchange: Participants that qualify 
for Tier 8 and the new supplemental rebate will receive a total rebate 
of $0.53 per contract of Customer liquidity executed in Penny Pilot 
options which is an increase of $0.03 per contract beyond the existing 
supplemental rebate of $0.02.
    The Exchange's proposal to increase the supplemental rebate for 
providing Customer liquidity in Penny Pilot options is also equitable 
and not unfairly discriminatory under the Act. As stated above, the use 
of volume-based incentives has long been accepted as an equitable and 
not unfairly discriminatory pricing practice employed at multiple 
competing options exchanges. In fact, the specific volume-based 
incentive proposed here--a supplemental rebate for providing greater 
amounts of Customer liquidity in Penny Pilot options--is currently 
employed by NOM and it has been accepted as equitable and not unfairly 
discriminatory under the Act. As is true of the existing supplemental 
rebate, the proposed $0.03 additional supplement is a ``fair'' form of 
discrimination because it benefits all market Participants by 
attracting valuable liquidity to the market and thereby enhancing the 
trading quality and efficiency of all.
Change 2
    It is also an equitable allocation of reasonable fees for the 
Exchange to increase from $0.50 to $0.54 per contract the fees assessed 
for removing liquidity in Penny Pilot options for all Participant 
categories other than Customer, while the rebate [sic] for Customer 
liquidity remains unchanged at $0.48. The increase of $0.04 per 
contract of liquidity removed in the Professional, Firm, NOM Market 
Maker, Non-NOM Market Maker, and Broker Dealer categories results in a 
maximum fee that is within the range of maximum fees at other exchanges 
Penny Pilot options that have been accepted as an equitable allocation 
of reasonable fees under the Act.\9\ The total differential of $0.06 
also is below the maximum differentials employed by other exchanges 
that have previously been and currently are accepted as equitable and 
reasonable under the Act. Finally, this proposed fee increase for 
removing liquidity must be read in conjunction with Change 1, which 
increase rebates for providing liquidity, when determining the overall 
equity and reasonableness of this proposed rule change.
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    \9\ For example, MIAX charges $0.55 for executions in the 
following penny pilot options: EEM, GLD, IWM, QQQ and SPY (see MIAX 
fee schedule). BOX assesses fees greater than $0.55 to Non-customers 
for executions in Penny Pilot options (see BOX Options fee 
schedule).
---------------------------------------------------------------------------

    The Exchange also believes that maintaining the current execution 
prices for SPY while raising fees for other options is consistent with 
an equitable allocation of reasonable fees and is not unfairly 
discriminatory. Multiple exchanges have adopted pricing for a select 
group of symbols, a practice that has been accepted as consistent with 
an equitable allocation of reasonable fees under the Act.\10\ The 
unique nature of trading in SPY, the most actively traded standardized 
option in the U.S, justifies differentiating it from other symbols, 
particularly where that differentiation results in maintaining lower 
execution fees.
---------------------------------------------------------------------------

    \10\ See, e.g., fee schedules of MIAX and CBOE (both CBOE and 
C2).
---------------------------------------------------------------------------

    The Exchange's proposal is equitable and not unfairly 
discriminatory for many of the same reasons. It is common practice 
among options exchanges to differentiate between fees for removing 
Customer liquidity and fees for removing other categories of liquidity, 
and such differentiation has been accepted as not unfairly 
discriminatory under the Act. Charging lower fees for removing Customer 
liquidity has been considered beneficial in that attracting this 
liquidity benefits all market Participants by improving the overall 
quality of trading on the Exchange. The level of differentiation 
($0.06) is also within the bounds of what has been accepted as not 
unfairly discriminatory under the Act. Finally, the proposed fees will 
be imposed equally within each category of liquidity removed among all 
Participants.
Change 3
    It is an equitable allocation of reasonable fees for the Exchange 
to charge Participants that qualify for Customer or Professional Rebate 
to Add Liquidity Tiers 7 or 8 in a given month a fee of $0.50 (an 
increase from $0.48) for removing liquidity in Penny Pilot Options for 
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee and $0.48 (an increase from $0.47) for removing Customer 
liquidity. The total maximum fee for qualifying Participants will be 
$0.50, which is below the maximum fees assessed by other exchanges for 
similar executions. Moreover, the increase of $0.01 for the removal of 
liquidity in the Customer category and $0.02 for removing liquidity in 
all other categories is a modest increase in isolation, and even more 
so when read in conjunction with the proposed increased rebates for 
providing liquidity described above regarding Changes 1, 2, and 3. 
Finally, Participants that qualify for Tiers 7 and 8 and that pay this 
increased fee will actually enjoy a slightly higher differential of 
$0.04 as opposed to the current differentials of $0.01 and $0.02 
relative to non-qualifying Participants.

[[Page 56514]]

    The Exchange's proposal is equitable and not unfairly 
discriminatory for many of the same reasons. It is common practice 
among options exchanges to differentiate between fees for removing 
Customer liquidity and fees for removing other categories of liquidity, 
and such differentiation has been accepted as not unfairly 
discriminatory under the Act. In fact, the NOM fee reductions for 
Participants qualifying for Tiers 7 and 8 of the Customer and 
Professional rebate program has existed and been accepted as consistent 
with the Act for some time. The level of differentiation created by 
this minor revision ($0.04) is within the bounds of what has been 
accepted as not unfairly discriminatory under the Act. Finally, the 
proposed fees will be imposed equally within each category of liquidity 
removed among all Participants.

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

    The Exchange 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 operates in a 
highly competitive market in which many sophisticated and knowledgeable 
market participants can readily and do send order flow to competing 
exchanges if they deem fee levels or rebate incentives at a particular 
exchange to be excessive or inadequate. Additionally, new competitors 
have entered the market and still others are reportedly entering the 
market shortly. These market forces ensure that the Exchange's fees and 
rebates remain competitive with the fee structures at other trading 
platforms. In that sense, the Exchange's proposal is actually pro-
competitive because the Exchange is simply responding to competition by 
adjusting rebates and fees in order to remain competitive in the 
current environment.
Change 1
    The Exchange does not believe that increasing the rebates to 
Participants that qualify for Tiers 8 of the Customer and Professional 
rebate program and that add greater than 1.40 percent of total Customer 
interest for the month places any burden on competition not necessary 
or appropriate in furtherance of the purposes of the Act. As described 
above, the use of volume-based tiers has been accepted as consistent 
with the Act, including Tiers 1 through 8 of the existing Customer and 
Professional rebate program for Penny Pilot options. Volume-based fee 
reductions such as that proposed here are recognized by economists as a 
pro-competitive reflection of a competitive marketplace such as the SEC 
has fostered in the national market system for standardized options.
    Additionally, the proposed change is pro-competitive because it 
encourages Participants to add more liquidity to the NOM market and 
thereby strengthen NOM's competitive position. Greater liquidity 
benefits all market participants by providing more trading 
opportunities and attracting greater participation by market makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads. All Participants are eligible to 
participate in the Firm category if they choose, and each can thereby 
become eligible to earn the rebates by transacting the requisite 
volume.
Change 2
    The Exchange does not believe that increase fees from $0.50 to 
$0.54 per contract for all Participant categories other than Customer, 
which remains at $0.48 places any burden on competition not necessary 
or appropriate in furtherance of the purposes of the Act. In a 
competitive marketplace such as that for trading of standardized 
options, the Exchange is constrained from raising prices to super-
competitive levels by the risk of losing out to better-priced 
competitors. The resulting fee of $0.54 is below fees charged by other 
Exchanges, which have themselves been considered consistent with the 
Act. In addition, the fee increase should be read in conjunction with 
increased rebates (lower fees) described above that offset the fee 
increase and that the Exchange believes are necessary and well-targeted 
to increase the overall competitiveness of the market.
    The Exchange does not believe that maintaining existing fees for 
executions in SPY ($0.48 per contract for Customer liquidity and $0.50 
for all other liquidity), which remains at $0.48 places any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. Rather, the Exchange believes that distinguishing between 
SPY and all other options is pro-competitive in that it reflects the 
unique nature of the fierce competition that exists in SPY as the most 
actively traded multiply listed option in the U.S. Multiple exchanges 
set prices that apply to a select group of symbols and those pricing 
programs have been accepted as consistent with the Act.\11\
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    \11\ For example, MIAX charges $0.55 for executions in the 
following penny pilot options: EEM, GLD, IWM, QQQ and SPY (see MIAX 
fee schedule). See also CBOE and C2 fee schedules.
---------------------------------------------------------------------------

Change 3
    The Exchange does not believe that increasing the fee for removing 
liquidity for Participants that qualify for Tiers 7 and 8 of the 
Customer and Professional rebate program places any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. In a competitive marketplace such as that for trading of 
standardized options, the Exchange is constrained from raising prices 
to super-competitive levels by the risk of losing out to better-priced 
competitors. The fee increases of $0.02 or $0.01 are modest, and the 
resulting fees of $0.50 and $0.48 are below fees charged by other 
Exchanges, which have themselves been considered consistent with the 
Act. In addition, the fee increase should be read in conjunction with 
increased rebates (lower fees) described above that offset the fee 
increase and that the Exchange believes are necessary and well-targeted 
to increase the overall competitiveness of the market.

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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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.

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

[[Page 56515]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2015-102 on the subject line.

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-2015-102. 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-2015-102 and should 
be submitted on or before October 9, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-23396 Filed 9-17-15; 8:45 am]
BILLING CODE 8011-01-P



                                                                          Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices                                                  56511

                                              Commission takes such action, the                         For the Commission, by the Division of              II. Self-Regulatory Organization’s
                                              Commission shall institute proceedings                  Trading and Markets, pursuant to delegated            Statement of the Purpose of, and
                                              to determine whether the proposed rule                  authority.19                                          Statutory Basis for, the Proposed Rule
                                              should be approved or disapproved.                      Brent J. Fields,                                      Change
                                              IV. Solicitation of Comments                            Secretary.                                               In its filing with the Commission, the
                                                                                                      [FR Doc. 2015–23399 Filed 9–17–15; 8:45 am]           Exchange included statements
                                                Interested persons are invited to                     BILLING CODE 8011–01–P                                concerning the purpose of and basis for
                                              submit written data, views and                                                                                the proposed rule change and discussed
                                              arguments concerning the foregoing,                                                                           any comments it received on the
                                              including whether the proposed rule                     SECURITIES AND EXCHANGE                               proposed rule change. The text of these
                                              change is consistent with the Act.                      COMMISSION                                            statements may be examined at the
                                              Comments may be submitted by any of                                                                           places specified in Item IV below. The
                                              the following methods:                                  [Release No. 34–75910; File No. SR–                   Exchange has prepared summaries, set
                                                                                                      NASDAQ–2015–102]                                      forth in sections A, B, and C below, of
                                              Electronic Comments                                                                                           the most significant aspects of such
                                                • Use the Commission’s Internet                       Self-Regulatory Organizations; The                    statements.
                                              comment form (http://www.sec.gov/                       NASDAQ Stock Market LLC; Notice of                    A. Self-Regulatory Organization’s
                                              rules/sro.shtml); or                                    Filing and Immediate Effectiveness of                 Statement of the Purpose of, and
                                                • Send an email to rule-comments@                     Proposed Rule Change To Amend                         Statutory Basis for, the Proposed Rule
                                              sec.gov. Please include File Number SR–                 Transaction Fees at Chapter XV,                       Change
                                              BATS–2015–71 on the subject line.                       Section 2 Entitled ‘‘NASDAQ Options
                                                                                                      Market—Fees and Rebates’’                             1. Purpose
                                              Paper Comments                                                                                                   The Exchange proposes the following
                                                                                                      September 14, 2015.                                   five [sic] changes to the NOM
                                                • Send paper comments in triplicate                      Pursuant to Section 19(b)(1) of the                transaction fees set forth at Chapter XV,
                                              to Secretary, Securities and Exchange                   Securities Exchange Act of 1934                       Section 2 for executing and routing
                                              Commission, 100 F Street NE.,                           (‘‘Act’’),1 and Rule 19b–4 thereunder,2               standardized equity and index options
                                              Washington, DC 20549–1090.                              notice is hereby given that on                        under the Penny Pilot options program.
                                              All submissions should refer to File                    September 1, 2015, The NASDAQ Stock                   The Penny Pilot was established in
                                              Number SR–BATS–2015–71. This file                       Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’)               March 2008 and has since been
                                              number should be included on the                        filed with the Securities and Exchange                expanded and extended through June
                                              subject line if email is used. To help the              Commission (‘‘SEC’’ or ‘‘Commission’’)                30, 2016.3
                                              Commission process and review your                      the proposed rule change as described
                                                                                                                                                               3 See Securities Exchange Act Release Nos. 57579
                                              comments more efficiently, please use                   in Items I, II, and III, below, which Items
                                                                                                                                                            (March 28, 2008), 73 FR 18587 (April 4, 2008) (SR–
                                              only one method. The Commission will                    have been prepared by the Exchange.                   NASDAQ–2008–026) (notice of filing and
                                              post all comments on the Commission’s                   The Commission is publishing this                     immediate effectiveness establishing Penny Pilot);
                                              Internet Web site (http://www.sec.gov/                  notice to solicit comments on the                     60874 (October 23, 2009), 74 FR 56682 (November
                                                                                                                                                            2, 2009) (SR–NASDAQ–2009–091) (notice of filing
                                              rules/sro.shtml). Copies of the                         proposed rule change from interested                  and immediate effectiveness expanding and
                                              submission, all subsequent                              persons.                                              extending Penny Pilot); 60965 (November 9, 2009),
                                              amendments, all written statements                                                                            74 FR 59292 (November 17, 2009) (SR–NASDAQ–
                                              with respect to the proposed rule                       I. Self-Regulatory Organization’s                     2009–097) (notice of filing and immediate
                                              change that are filed with the                          Statement of the Terms of Substance of                effectiveness adding seventy-five classes to Penny
                                                                                                      the Proposed Rule Change                              Pilot); 61455 (February 1, 2010), 75 FR 6239
                                              Commission, and all written                                                                                   (February 8, 2010) (SR–NASDAQ–2010–013)
                                              communications relating to the                             The Exchange proposes to amend                     (notice of filing and immediate effectiveness adding
                                              proposed rule change between the                                                                              seventy-five classes to Penny Pilot); 62029 (May 4,
                                                                                                      transaction fees at Chapter XV, Section               2010), 75 FR 25895 (May 10, 2010) (SR–NASDAQ–
                                              Commission and any person, other than                   2 entitled ‘‘NASDAQ Options Market—                   2010–053) (notice of filing and immediate
                                              those that may be withheld from the                     Fees and Rebates,’’ which governs                     effectiveness adding seventy-five classes to Penny
                                              public in accordance with the                           pricing for NASDAQ members using the
                                                                                                                                                            Pilot); 65969 (December 15, 2011), 76 FR 79268
                                              provisions of 5 U.S.C. 552, will be                                                                           (December 21, 2011) (SR–NASDAQ–2011–169)
                                                                                                      NASDAQ Options Market (‘‘NOM’’),                      (notice of filing and immediate effectiveness
                                              available for Web site viewing and
                                                                                                      NASDAQ’s facility for executing and                   extension and replacement of Penny Pilot); 67325
                                              printing in the Commission’s Public                                                                           (June 29, 2012), 77 FR 40127 (July 6, 2012) (SR–
                                                                                                      routing standardized equity and index
                                              Reference Room, 100 F Street NE.,                                                                             NASDAQ–2012–075) (notice of filing and
                                                                                                      options.                                              immediate effectiveness and extension and
                                              Washington, DC 20549, on official
                                                                                                         While these amendments are effective               replacement of Penny Pilot through December 31,
                                              business days between the hours of                                                                            2012); 68519 (December 21, 2012), 78 FR 136
                                              10:00 a.m. and 3:00 p.m. Copies of such                 upon filing, the Exchange has                         (January 2, 2013) (SR–NASDAQ–2012–143) (notice
                                              filing will also be available for                       designated the proposed amendments to                 of filing and immediate effectiveness and extension
                                              inspection and copying at the principal                 be operative on September 1, 2015.                    and replacement of Penny Pilot through June 30,
                                                                                                                                                            2013); 69787 (June 18, 2013), 78 FR 37858 (June 24,
                                              office of the Exchange. All comments                       The text of the proposed rule change               2013) (SR–NASDAQ–2013–082) (notice of filing
                                              received will be posted without change;                 is available on the Exchange’s Web site               and immediate effectiveness and extension and
                                              the Commission does not edit personal                   at http://nasdaq.cchwallstreet.com, at                replacement of Penny Pilot through December 31,
                                              identifying information from                                                                                  2013); 71105 (December 17, 2013), 78 FR 77530
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                                                                                                      the principal office of the Exchange, and             (December 23, 2013) (SR–NASDAQ–2013–154)
                                              submissions. You should submit only                     at the Commission’s Public Reference                  (notice of filing and immediate effectiveness and
                                              information that you wish to make                       Room.                                                 extension and replacement of Penny Pilot through
                                              available publicly. All submissions                                                                           June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR
                                              should refer to File Number SR–BATS–                                                                          31151 (May 30, 2014) (SR–NASDAQ–2014–056)
                                                                                                        19 17 CFR 200.30–3(a)(12).                          (notice of filing and immediate effectiveness and
                                              2015–71 and should be submitted on or                     1 15 U.S.C. 78s(b)(1).                              extension and replacement of Penny Pilot through
                                              before October 9, 2015.                                   2 17 CFR 240.19b–4.                                                                            Continued




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                                              56512                         Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices

                                                 The proposed changes are as follows:                    to $0.47 per contract of Customer or                Change 2
                                                 Rebate to Add Liquidity in Penny Pilot                  Professional liquidity provided in                    The Exchange also proposes,
                                              Options: the Exchange proposes to                          Penny Pilot options. Tiers 1 through 7              beginning September 1, to increase from
                                                 1. Increase the rebates to Participants                 of the Customer or Professional rebate              $0.50 to $0.54 per contract the fees
                                              that qualify for Tiers 8 of the Customer 4                 program will remain unchanged.                      assessed for removing liquidity in
                                              and Professional 5 rebate program and
                                                                                                           The Exchange is proposing to change               Penny Pilot options for all Participant
                                              that add greater than 1.40 percent of
                                                                                                         only Tier 8 which currently offers a                categories other than Customer, which
                                              total Customer interest for the month.
                                                 Fee for Removing Liquidity in Penny                     $0.48 rebate for executed Customer or               will remain unchanged at $0.48. This
                                              Pilot Options: the Exchange proposes to:                   Professional liquidity where:                       will represent an increase of $0.04 per
                                                 2. Increase fees from $0.50 to $0.54                       Participant adds Customer, Professional,         contract of liquidity removed in the
                                              per contract for all Participant categories                Firm, Non-NOM Market Maker and/or                   Professional, Firm, NOM Market Maker,
                                              other than Customer, which remains at                      Broker-Dealer liquidity in Penny Pilot              Non-NOM Market Maker, and Broker
                                              $0.48. Fees for removing liquidity in                      Options and/or Non-Penny Pilot Options              Dealer categories for Participants that
                                              SPY 6 will remain unchanged by this                        above 0.75% or more of total industry               qualify for no fee reductions. For
                                              proposal.                                                  customer equity and ETF option ADV                  executions in SPY, the fees will remain
                                                 3. Increase the fee for removing                        contracts per day in a month or Participant         unchanged by this proposal. Specially,
                                              liquidity for Participants that qualify for                adds (1) Customer and/or Professional               the fees assessed for executions in SPY
                                              Tiers 7 and 8 of the Customer and                          liquidity in Penny Pilot Options and/or Non-        will remain $0.48 per contact for
                                              Professional rebate program.                               Penny Pilot Options of 30,000 or more               Customer and $0.50 per contract for all
                                                 Each specific change is described in                    contracts per day in a month, (2) the               other Participants.
                                              greater detail below.                                      Participant has certified for the Investor
                                                                                                         Support Program set forth in Rule 7014, and         Change 3
                                              Change 1                                                   (3) the Participant qualifies for rebates under        The Exchange proposes to increase
                                                 The Exchange is proposing to increase                   the Qualified Market Maker (‘‘QMM’’)
                                                                                                                                                             the fee assessed for removing liquidity
                                              the rebates paid for providing Customer                    Program set forth in Rule 7014.
                                                                                                                                                             for Participants that qualify for Tiers 7
                                              and Professional liquidity in Penny                           In addition, Participants that qualify           and 8 of the Customer and Professional
                                              Pilot options. Currently, the Exchange                     for Tier 8 can get a supplemental rebate            rebate program. As described above, the
                                              offers eight volume-based rebate Tiers                     if they add:                                        Exchange currently offers eight tiers of
                                              for Participants providing Customer or                                                                         volume-based rebates for Participants
                                              Professional liquidity in Penny Pilot                         Customer, Professional, Firm, Non-NOM
                                                                                                                                                             that add Customer or Professional
                                              options. These rebates range from $0.20                    Market Maker and/or Broker-Dealer liquidity
                                                                                                                                                             liquidity in Penny Pilot options.
                                              (Tier 1) to $0.48 (Tier 8) per contract                    in Penny Pilot Options and/or Non- Penny
                                                                                                         Pilot Options of 1.15% or more of total
                                                                                                                                                             Relative to other Participants,
                                              depending upon the level of liquidity                                                                          Participants that qualify for Tiers 7 and
                                                                                                         industry customer equity and ETF option
                                              provided. Tiers 1 through 4 are based on                   ADV contracts per day in a month will               8 receive increased rebates for adding
                                              Participants adding Customer,                              receive an additional $0.02 per contract            liquidity, and they also are assessed
                                              Professional, Firm, Non-NOM Market                         Penny Pilot Options Customer Rebate to Add          reduced fees for removing liquidity.
                                              Maker and/or Broker-Dealer liquidity in                    Liquidity for each transaction which adds           Specifically, Participants that qualify for
                                              Penny Pilot Options and/or Non-Penny                       liquidity in Penny Pilot Options in that            Customer or Professional Rebate to Add
                                              Pilot Options as a percentage of total                     month.                                              Liquidity Tiers 7 or 8 in a given month
                                              industry customer equity and ETF                                                                               are assessed a Professional, Firm, Non-
                                              option ADV contracts per day in a                          Participants that qualify for Tier 8 and            NOM Market Maker, NOM Market
                                              month. Participants qualifying for Tiers                   the supplemental rebate receive a total             Maker or Broker-Dealer Fee for
                                              1 through 4 earn a rebate of $0.20 to                      rebate of $0.50 per contract of Customer            Removing Liquidity in Penny Pilot
                                              $0.43 per contract. Tiers 5 through 7                      liquidity provided in Penny Pilot                   Options of $0.48 per contract and a
                                              add other, challenging volume-based                        options.                                            Customer Fee for Removing Liquidity in
                                              requirements and offer rebates of $0.45                       Beginning September 1, the Exchange              Penny Pilot Options of $0.47 per
                                                                                                         is proposing to offer an increased                  contract. Participants that do not qualify
                                              December 31, 2014); 73686 (December 2, 2014), 79           supplemental rebate for certain                     for Tiers 7 and 8 currently pay $0.50 per
                                              FR 71477 (November 25, 2014) (SR–NASDAQ–
                                              2014–115) (notice of filing and immediate                  Participants that qualify for Tier 8.               contract for removing liquidity in the
                                              effectiveness and extension and replacement of             Specifically, the Exchange proposes to              Professional, Firm, Non-NOM Market
                                              Penny Pilot through June 30, 2015) and 75283 (June         offer an additional $0.05 rebate per                Maker, NOM Market Maker or Broker-
                                              24, 2015), 80 FR 37347 (June 30, 2015) (SR–                contract for adding Customer liquidity              Dealer categories, and $0.48 per contract
                                              NASDAQ–2015–063) (Notice of Filing and
                                              Immediate Effectiveness of a Proposed Rule Change          in Penny Pilot Options in that month for            for removing liquidity in the Customer
                                              Relating to Extension of the Exchange’s Penny Pilot        Participants that add Customer,                     category. In other words, this represents
                                              Program and Replacement of Penny Pilot Issues              Professional, Firm, Non-NOM Market                  a relative reduction of $0.02 in the
                                              That Have Been Delisted.) See also NOM Rules,              Maker and/or Broker-Dealer liquidity in             Professional, Firm, Non-NOM Market
                                              Chapter VI, Section 5.
                                                 4 The term ‘‘Customer’’ refers to a customer in a       Penny Pilot Options and/or Non- Penny               Maker, NOM Market Maker or Broker-
                                              transaction that is marked by a Participant in the         Pilot Options of 1.40% or more of total             Dealer categories, and a $0.01 relative
                                              Customer range for clearing purposes at The                industry customer equity and ETF                    reduction in the Customer liquidity
                                              Options Clearing Corporation (‘‘OCC’’). Such a             option ADV contracts per day in a                   category.
                                              transaction is not for the account of a broker, dealer
                                              or ‘‘Professional’’ (see next footnote).
                                                                                                         month. Participants that qualify for Tier              Beginning September 1, the Exchange
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                                                 5 The term ‘‘Professional’’ means any person or         8 and the new supplemental rebate will              proposes to charge these same
                                              entity that (i) is not a broker or dealer in securities,   receive a total rebate of $0.53 per                 Participants (those that qualify for
                                              and (ii) places more than 390 orders in listed             contract of Customer liquidity executed             Customer or Professional Rebate to Add
                                              options per day on average during a calendar month         in Penny Pilot options. This represents             Liquidity Tiers 7 or 8 in a given month)
                                              for its own beneficial account(s), See Chapter I,
                                              Section 1(a)(48). All Professional orders must be          an increase of $0.03 per contract for               a fee of $0.50 for removing liquidity for
                                              appropriately marked by Participants.                      Participants qualifying for this new                Professional, Firm, Non-NOM Market
                                                 6 SPDR® S&P 500® ETF Trust.                             supplemental rebate.                                Maker, NOM Market Maker or Broker-


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                                                                             Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices                                                 56513

                                              Dealer in Penny Pilot Options. As                          options is also equitable and not                     practice that has been accepted as
                                              described above, also beginning                            unfairly discriminatory under the Act.                consistent with an equitable allocation
                                              September 1, Participants that do not                      As stated above, the use of volume-                   of reasonable fees under the Act.10 The
                                              qualify for Tiers 7 and 8 will pay $0.54                   based incentives has long been accepted               unique nature of trading in SPY, the
                                              per contract for removing liquidity in                     as an equitable and not unfairly                      most actively traded standardized
                                              the Professional, Firm, Non-NOM                            discriminatory pricing practice                       option in the U.S, justifies
                                              Market Maker, NOM Market Maker or                          employed at multiple competing                        differentiating it from other symbols,
                                              Broker-Dealer categories, and $0.48 per                    options exchanges. In fact, the specific              particularly where that differentiation
                                              contract for removing liquidity in the                     volume-based incentive proposed                       results in maintaining lower execution
                                              Customer category. As a result,                            here—a supplemental rebate for                        fees.
                                              beginning September 1, Participants that                   providing greater amounts of Customer                   The Exchange’s proposal is equitable
                                              qualify for Tiers 7 and 8 will enjoy a                     liquidity in Penny Pilot options—is                   and not unfairly discriminatory for
                                              relative fee reduction of $0.04 in the                     currently employed by NOM and it has                  many of the same reasons. It is common
                                              Professional, Firm, Non-NOM Market                         been accepted as equitable and not                    practice among options exchanges to
                                              Maker, NOM Market Maker or Broker-                         unfairly discriminatory under the Act.                differentiate between fees for removing
                                              Dealer categories, and will pay the same                   As is true of the existing supplemental               Customer liquidity and fees for
                                              Customer fee for removing liquidity of                     rebate, the proposed $0.03 additional                 removing other categories of liquidity,
                                              $0.48 per contract as is the case for all                  supplement is a ‘‘fair’’ form of                      and such differentiation has been
                                              other Participants.                                        discrimination because it benefits all                accepted as not unfairly discriminatory
                                                                                                         market Participants by attracting                     under the Act. Charging lower fees for
                                              2. Statutory Basis
                                                                                                         valuable liquidity to the market and                  removing Customer liquidity has been
                                                 NASDAQ believes that the proposed                       thereby enhancing the trading quality
                                              rule change is consistent with the                                                                               considered beneficial in that attracting
                                                                                                         and efficiency of all.                                this liquidity benefits all market
                                              provisions of Section 6 of the Act,7 in
                                              general, and with Section 6(b)(4) and                      Change 2                                              Participants by improving the overall
                                              6(b)(5) of the Act,8 in particular, in that                   It is also an equitable allocation of              quality of trading on the Exchange. The
                                              it provides for the equitable allocation                   reasonable fees for the Exchange to                   level of differentiation ($0.06) is also
                                              of reasonable dues, fees and other                         increase from $0.50 to $0.54 per                      within the bounds of what has been
                                              charges among members and issuers and                      contract the fees assessed for removing               accepted as not unfairly discriminatory
                                              other persons using any facility or                        liquidity in Penny Pilot options for all              under the Act. Finally, the proposed
                                              system which NASDAQ operates or                            Participant categories other than                     fees will be imposed equally within
                                              controls, and is not designed to permit                    Customer, while the rebate [sic] for                  each category of liquidity removed
                                              unfair discrimination between                              Customer liquidity remains unchanged                  among all Participants.
                                              customers, issuers, brokers, or dealers.                   at $0.48. The increase of $0.04 per                   Change 3
                                                                                                         contract of liquidity removed in the
                                              Change 1                                                   Professional, Firm, NOM Market Maker,                    It is an equitable allocation of
                                                 The Exchange believes that it is an                     Non-NOM Market Maker, and Broker                      reasonable fees for the Exchange to
                                              equitable allocation of reasonable fees to                 Dealer categories results in a maximum                charge Participants that qualify for
                                              offer an additional $0.05 rebate per                       fee that is within the range of maximum               Customer or Professional Rebate to Add
                                              contract for adding Customer liquidity                     fees at other exchanges Penny Pilot                   Liquidity Tiers 7 or 8 in a given month
                                              in Penny Pilot Options in that month for                   options that have been accepted as an                 a fee of $0.50 (an increase from $0.48)
                                              Participants that add Customer,                            equitable allocation of reasonable fees               for removing liquidity in Penny Pilot
                                              Professional, Firm, Non-NOM Market                         under the Act.9 The total differential of             Options for Professional, Firm, Non-
                                              Maker and/or Broker-Dealer liquidity in                    $0.06 also is below the maximum                       NOM Market Maker, NOM Market
                                              Penny Pilot Options and/or Non- Penny                      differentials employed by other                       Maker or Broker-Dealer Fee and $0.48
                                              Pilot Options of 1.40% or more of total                    exchanges that have previously been                   (an increase from $0.47) for removing
                                              industry customer equity and ETF                           and currently are accepted as equitable               Customer liquidity. The total maximum
                                              option ADV contracts per day in a                          and reasonable under the Act. Finally,                fee for qualifying Participants will be
                                              month. As stated above, the use of                         this proposed fee increase for removing               $0.50, which is below the maximum
                                              volume-based rebate tiers is well                          liquidity must be read in conjunction                 fees assessed by other exchanges for
                                              accepted as consistent with an equitable                   with Change 1, which increase rebates                 similar executions. Moreover, the
                                              allocation of reasonable fees under the                    for providing liquidity, when                         increase of $0.01 for the removal of
                                              Act. In fact, the Exchange’s proposal                      determining the overall equity and                    liquidity in the Customer category and
                                              represents only a minor extension of the                   reasonableness of this proposed rule                  $0.02 for removing liquidity in all other
                                              rebate program that already exists on the                  change.                                               categories is a modest increase in
                                              Exchange: Participants that qualify for                       The Exchange also believes that                    isolation, and even more so when read
                                              Tier 8 and the new supplemental rebate                     maintaining the current execution                     in conjunction with the proposed
                                              will receive a total rebate of $0.53 per                   prices for SPY while raising fees for                 increased rebates for providing liquidity
                                              contract of Customer liquidity executed                    other options is consistent with an                   described above regarding Changes 1, 2,
                                              in Penny Pilot options which is an                         equitable allocation of reasonable fees               and 3. Finally, Participants that qualify
                                              increase of $0.03 per contract beyond                      and is not unfairly discriminatory.                   for Tiers 7 and 8 and that pay this
                                              the existing supplemental rebate of                        Multiple exchanges have adopted                       increased fee will actually enjoy a
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                                              $0.02.                                                     pricing for a select group of symbols, a              slightly higher differential of $0.04 as
                                                 The Exchange’s proposal to increase                                                                           opposed to the current differentials of
                                              the supplemental rebate for providing                        9 For example, MIAX charges $0.55 for executions
                                                                                                                                                               $0.01 and $0.02 relative to non-
                                                                                                         in the following penny pilot options: EEM, GLD,       qualifying Participants.
                                              Customer liquidity in Penny Pilot                          IWM, QQQ and SPY (see MIAX fee schedule). BOX
                                                                                                         assesses fees greater than $0.55 to Non-customers
                                                7 15   U.S.C. 78f.                                       for executions in Penny Pilot options (see BOX          10 See, e.g., fee schedules of MIAX and CBOE
                                                8 15   U.S.C. 78f(b)(4) and (5).                         Options fee schedule).                                (both CBOE and C2).



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                                              56514                       Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices

                                                The Exchange’s proposal is equitable                  reflection of a competitive marketplace               Change 3
                                              and not unfairly discriminatory for                     such as the SEC has fostered in the                      The Exchange does not believe that
                                              many of the same reasons. It is common                  national market system for standardized               increasing the fee for removing liquidity
                                              practice among options exchanges to                     options.                                              for Participants that qualify for Tiers 7
                                              differentiate between fees for removing                    Additionally, the proposed change is               and 8 of the Customer and Professional
                                              Customer liquidity and fees for                         pro-competitive because it encourages                 rebate program places any burden on
                                              removing other categories of liquidity,                 Participants to add more liquidity to the             competition not necessary or
                                              and such differentiation has been                       NOM market and thereby strengthen                     appropriate in furtherance of the
                                              accepted as not unfairly discriminatory                 NOM’s competitive position. Greater                   purposes of the Act. In a competitive
                                              under the Act. In fact, the NOM fee                     liquidity benefits all market participants            marketplace such as that for trading of
                                              reductions for Participants qualifying                  by providing more trading opportunities               standardized options, the Exchange is
                                              for Tiers 7 and 8 of the Customer and                   and attracting greater participation by               constrained from raising prices to super-
                                              Professional rebate program has existed                 market makers. An increase in the                     competitive levels by the risk of losing
                                              and been accepted as consistent with                    activity of these market participants in              out to better-priced competitors. The fee
                                              the Act for some time. The level of                     turn facilitates tighter spreads. All                 increases of $0.02 or $0.01 are modest,
                                              differentiation created by this minor                   Participants are eligible to participate in           and the resulting fees of $0.50 and $0.48
                                              revision ($0.04) is within the bounds of                the Firm category if they choose, and                 are below fees charged by other
                                              what has been accepted as not unfairly                  each can thereby become eligible to earn              Exchanges, which have themselves been
                                              discriminatory under the Act. Finally,                  the rebates by transacting the requisite              considered consistent with the Act. In
                                              the proposed fees will be imposed                                                                             addition, the fee increase should be read
                                                                                                      volume.
                                              equally within each category of liquidity                                                                     in conjunction with increased rebates
                                              removed among all Participants.                         Change 2                                              (lower fees) described above that offset
                                              B. Self-Regulatory Organization’s                          The Exchange does not believe that                 the fee increase and that the Exchange
                                              Statement on Burden on Competition                      increase fees from $0.50 to $0.54 per                 believes are necessary and well-targeted
                                                                                                      contract for all Participant categories               to increase the overall competitiveness
                                                 The Exchange does not believe that
                                              the proposed rule change will impose                    other than Customer, which remains at                 of the market.
                                              any burden on competition not                           $0.48 places any burden on competition                C. Self-Regulatory Organization’s
                                              necessary or appropriate in furtherance                 not necessary or appropriate in                       Statement on Comments on the
                                              of the purposes of the Act. The                         furtherance of the purposes of the Act.               Proposed Rule Change Received From
                                              Exchange operates in a highly                           In a competitive marketplace such as                  Members, Participants, or Others
                                              competitive market in which many                        that for trading of standardized options,
                                                                                                                                                              No written comments were either
                                              sophisticated and knowledgeable                         the Exchange is constrained from raising
                                                                                                                                                            solicited or received.
                                              market participants can readily and do                  prices to super-competitive levels by the
                                              send order flow to competing exchanges                  risk of losing out to better-priced                   III. Date of Effectiveness of the
                                              if they deem fee levels or rebate                       competitors. The resulting fee of $0.54               Proposed Rule Change and Timing for
                                              incentives at a particular exchange to be               is below fees charged by other                        Commission Action
                                              excessive or inadequate. Additionally,                  Exchanges, which have themselves been                    The foregoing rule change has become
                                              new competitors have entered the                        considered consistent with the Act. In                effective pursuant to Section
                                              market and still others are reportedly                  addition, the fee increase should be read             19(b)(3)(A)(ii) of the Act.12
                                              entering the market shortly. These                      in conjunction with increased rebates                    At any time within 60 days of the
                                              market forces ensure that the Exchange’s                (lower fees) described above that offset              filing of the proposed rule change, the
                                              fees and rebates remain competitive                     the fee increase and that the Exchange                Commission summarily may
                                              with the fee structures at other trading                believes are necessary and well-targeted              temporarily suspend such rule change if
                                              platforms. In that sense, the Exchange’s                to increase the overall competitiveness               it appears to the Commission that such
                                              proposal is actually pro-competitive                    of the market.                                        action is: (i) Necessary or appropriate in
                                              because the Exchange is simply                             The Exchange does not believe that                 the public interest; (ii) for the protection
                                              responding to competition by adjusting                  maintaining existing fees for executions              of investors; or (iii) otherwise in
                                              rebates and fees in order to remain                     in SPY ($0.48 per contract for Customer               furtherance of the purposes of the Act.
                                              competitive in the current environment.                 liquidity and $0.50 for all other                     If the Commission takes such action, the
                                              Change 1                                                liquidity), which remains at $0.48                    Commission shall institute proceedings
                                                                                                      places any burden on competition not                  to determine whether the proposed rule
                                                The Exchange does not believe that                                                                          should be approved or disapproved.
                                                                                                      necessary or appropriate in furtherance
                                              increasing the rebates to Participants
                                                                                                      of the purposes of the Act. Rather, the               IV. Solicitation of Comments
                                              that qualify for Tiers 8 of the Customer
                                                                                                      Exchange believes that distinguishing
                                              and Professional rebate program and                                                                             Interested persons are invited to
                                                                                                      between SPY and all other options is
                                              that add greater than 1.40 percent of                                                                         submit written data, views, and
                                                                                                      pro-competitive in that it reflects the
                                              total Customer interest for the month                                                                         arguments concerning the foregoing,
                                                                                                      unique nature of the fierce competition
                                              places any burden on competition not                                                                          including whether the proposed rule
                                                                                                      that exists in SPY as the most actively
                                              necessary or appropriate in furtherance                                                                       change is consistent with the Act.
                                                                                                      traded multiply listed option in the U.S.
                                              of the purposes of the Act. As described                                                                      Comments may be submitted by any of
                                                                                                      Multiple exchanges set prices that apply
                                              above, the use of volume-based tiers has                                                                      the following methods:
                                                                                                      to a select group of symbols and those
tkelley on DSK3SPTVN1PROD with NOTICES




                                              been accepted as consistent with the
                                                                                                      pricing programs have been accepted as                Electronic Comments
                                              Act, including Tiers 1 through 8 of the
                                                                                                      consistent with the Act.11
                                              existing Customer and Professional                                                                              • Use the Commission’s Internet
                                              rebate program for Penny Pilot options.                   11 For example, MIAX charges $0.55 for
                                                                                                                                                            comment form (http://www.sec.gov/
                                              Volume-based fee reductions such as                     executions in the following penny pilot options:      rules/sro.shtml); or
                                              that proposed here are recognized by                    EEM, GLD, IWM, QQQ and SPY (see MIAX fee
                                              economists as a pro-competitive                         schedule). See also CBOE and C2 fee schedules.          12 15   U.S.C. 78s(b)(3)(A)(ii).



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                                                                            Federal Register / Vol. 80, No. 181 / Friday, September 18, 2015 / Notices                                                  56515

                                                • Send an email to rule-comments@                       SECURITIES AND EXCHANGE                               1934 (‘‘Act’’) 2 and Rule 608
                                              sec.gov. Please include File Number SR–                   COMMISSION                                            thereunder,3 a proposal to amend the
                                              NASDAQ–2015–102 on the subject line.                                                                            Plan.4 The proposal reflects changes
                                                                                                        [Release No. 34–75917; File No. 4–631]
                                                                                                                                                              unanimously approved by the
                                              Paper Comments                                                                                                  Participants. The Amendment to the
                                                                                                        Joint Industry Plan; Notice of Filing of
                                                • Send paper comments in triplicate                     the Ninth Amendment to the National                   Plan proposes to extend the pilot period
                                                                                                        Market System Plan To Address                         of the Plan from October 23, 2015 to
                                              to Brent J. Fields, Secretary, Securities
                                                                                                        Extraordinary Market Volatility by                    April 22, 2016. A copy of the Plan, as
                                              and Exchange Commission, 100 F Street
                                                                                                        BATS Exchange, Inc., BATS                             proposed to be amended is attached as
                                              NE., Washington, DC 20549–1090.                                                                                 Exhibit A hereto. The Commission is
                                                                                                        Y-Exchange, Inc., Chicago Board
                                              All submissions should refer to File                      Options Exchange, Inc., Chicago Stock                 publishing this notice to solicit
                                              Number SR–NASDAQ–2015–102. This                                                                                 comments from interested persons on
                                                                                                        Exchange, Inc., EDGA Exchange, Inc.,
                                              file number should be included on the                                                                           the Amendment to the Plan.5
                                                                                                        EDGX Exchange, Inc., Financial
                                              subject line if email is used. To help the                Industry Regulatory Authority, Inc.,                  II. Description of the Plan
                                              Commission process and review your                        NASDAQ OMX BX, Inc., NASDAQ OMX                          Set forth in this Section II is the
                                              comments more efficiently, please use                     PHLX LLC, The Nasdaq Stock Market                     statement of the purpose and summary
                                              only one method. The Commission will                      LLC, National Stock Exchange, Inc.,                   of the Amendment, along with the
                                              post all comments on the Commission’s                     New York Stock Exchange LLC, NYSE                     information required by Rule 608(a)(4)
                                              Internet Web site (http://www.sec.gov/                    MKT LLC, and NYSE Arca, Inc.                          and (5) under the Exchange Act,6
                                              rules/sro.shtml). Copies of the                                                                                 prepared and submitted by the
                                                                                                        September 14, 2015.
                                              submission, all subsequent                                                                                      Participants to the Commission.7
                                              amendments, all written statements                        I. Introduction
                                              with respect to the proposed rule                                                                               A. Statement of Purpose and Summary
                                                                                                           On July 31, 2015, the New York Stock               of the Plan Amendment
                                              change that are filed with the                            Exchange LLC (‘‘NYSE’’), on behalf of
                                              Commission, and all written                               the following parties to the National                    The Participants filed the Plan on
                                              communications relating to the                                                                                  April 5, 2011, to create a market-wide
                                                                                                        Market System Plan to Address
                                              proposed rule change between the                                                                                limit up-limit down mechanism
                                                                                                        Extraordinary Market Volatility (the
                                              Commission and any person, other than                                                                           intended to address extraordinary
                                                                                                        ‘‘Plan’’): 1 BATS Exchange, Inc., BATS
                                              those that may be withheld from the                                                                             market volatility in NMS Stocks, as
                                                                                                        Y-Exchange, Inc., Chicago Board
                                              public in accordance with the                                                                                   defined in Rule 600(b)(47) of Regulation
                                                                                                        Options Exchange, Incorporated
                                                                                                                                                              NMS under the Exchange Act. The Plan
                                              provisions of 5 U.S.C. 552, will be                       (‘‘CBOE’’), Chicago Stock Exchange,
                                                                                                                                                              sets forth procedures that provide for
                                              available for Web site viewing and                        Inc., EDGA Exchange, Inc., EDGX
                                                                                                                                                              market-wide limit up-limit down
                                              printing in the Commission’s Public                       Exchange, Inc., Financial Industry
                                                                                                                                                              requirements that would prevent trades
                                              Reference Room, 100 F Street NE.,                         Regulatory Authority, Inc., NASDAQ
                                                                                                                                                              in individual NMS Stocks from
                                              Washington, DC 20549, on official                         OMX BX, Inc., NASDAQ OMX PHLX
                                                                                                                                                              occurring outside of the specified price
                                              business days between the hours of                        LLC, the Nasdaq Stock Market LLC, and                 bands. These limit up-limit down
                                              10:00 a.m. and 3:00 p.m. Copies of the                    National Stock Exchange, Inc., NYSE                   requirements are coupled with Trading
                                              filing also will be available for                         MKT LLC, and NYSE Arca, Inc.                          Pauses, as defined in Section I(Y) of the
                                              inspection and copying at the principal                   (collectively with the NYSE, the                      Plan, to accommodate more
                                              office of the Exchange. All comments                      ‘‘Participants’’), filed with the Securities          fundamental price moves. In particular,
                                              received will be posted without change;                   and Exchange Commission                               the Participants adopted this Plan to
                                              the Commission does not edit personal                     (‘‘Commission’’) pursuant to Section                  address the type of sudden price
                                                                                                        11A of the Securities Exchange Act of                 movements that the market experienced
                                              identifying information from
                                              submissions. You should submit only                          1 On May 31, 2012, the Commission approved the
                                                                                                                                                              on the afternoon of May 6, 2010.
                                              information that you wish to make                         Plan, as modified by Amendment No. 1. See
                                                                                                                                                                 As set forth in more detail in the Plan,
                                              available publicly. All submissions                       Securities Exchange Act Release No. 67091, 77 FR      all trading centers in NMS Stocks,
                                              should refer to File Number SR–                           33498 (Jun. 6, 2012) (File No. 4–631). On February    including both those operated by
                                                                                                        26, 2013, the Commission published for immediate      Participants and those operated by
                                              NASDAQ–2015–102 and should be                             effectiveness the Second Amendment to the Plan.
                                              submitted on or before October 9, 2015.                   See Securities Exchange Act Release No. 68953
                                                                                                                                                              members of Participants, shall establish,
                                                                                                        (Feb. 20, 2013), 78 FR 13113. On April 3, 2013, the   maintain, and enforce written policies
                                                For the Commission, by the Division of                  Commission approved the Third Amendment to the        and procedures that are reasonably
                                              Trading and Markets, pursuant to delegated                Plan. See Securities Exchange Act Release No.         designed to comply with the limit up-
                                              authority.13                                              69287, 78 FR 21483 (Apr. 10, 2013). On September
                                                                                                        3, 2013, the Commission published for immediate
                                                                                                                                                              limit down requirements specified in
                                              Brent J. Fields,                                          effectiveness the Fourth Amendment to the Plan.       the Plan. More specifically, the single
                                              Secretary.                                                See Securities Exchange Act Release No. 70273         plan processor responsible for
                                              [FR Doc. 2015–23396 Filed 9–17–15; 8:45 am]               (Aug. 27, 2013), 78 FR 54321 (Fourth Amendment).      consolidation of information for an
                                                                                                        On September 26, 2013, the Commission approved
                                              BILLING CODE 8011–01–P                                    the Fifth Amendment to the Plan. See Securities
                                                                                                                                                              NMS Stock pursuant to Rule 603(b) of
                                                                                                        Exchange Act Release No. 70530, 78 FR 60937 (Oct.     Regulation NMS under the Exchange
                                                                                                        2, 2013). On January 13, 2014, the Commission         Act will be responsible for calculating
                                                                                                        published for immediate effective the Sixth
                                                                                                        Amendment to the Plan. See Securities Exchange
tkelley on DSK3SPTVN1PROD with NOTICES




                                                                                                                                                                2 15 U.S.C. 78k–1.
                                                                                                        Act Release No. 71247 (Jan. 7, 2014), 79 FR 2204        3 17 CFR 242.608.
                                                                                                        (Sixth Amendment). On April 3, 2014, the                4 See Letter from Elizabeth King, General Counsel,
                                                                                                        Commission approved the Seventh Amendment to
                                                                                                        the Plan. See Securities Exchange Act Release No.     NYSE, to Brent Fields, Secretary, Commission,
                                                                                                        71851, 79 FR 19687 (Apr. 9, 2014). On February 19,    dated July 31, 2015 (‘‘Transmittal Letter’’).
                                                                                                                                                                5 17 CFR 242.608.
                                                                                                        2015, the Commission approved the Eight
                                                                                                                                                                6 See 17 CFR 242.608(a)(4) and (a)(5).
                                                                                                        Amendment to the Plan. See Securities Exchange
                                                13 17   CFR 200.30–3(a)(12).                            Act Release No. 74323, 80 FR 10169 (Feb. 25, 2015).     7 See Transmittal Letter, supra note 3.




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Document Created: 2015-12-15 09:27:37
Document Modified: 2015-12-15 09:27:37
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 56511 

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