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)
Federal Register Volume 80, Issue 181 (September 18, 2015)
| Page Range | 56511-56515 | |
| FR Document | 2015-23396 |
[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] ----------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- [[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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \6\ SPDR[supreg] S&P 500[supreg] ETF Trust. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f. \8\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \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\ --------------------------------------------------------------------------- \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\ --------------------------------------------------------------------------- \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 CommentsUse 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\ --------------------------------------------------------------------------- \13\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- 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
tkelley on DSK3SPTVN1PROD with NOTICES
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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![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
tkelley on DSK3SPTVN1PROD with NOTICES
$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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![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
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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