80 FR 70282 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Chapter XV, Entitled “Options Pricing,” at Section 2 Governing Pricing for NASDAQ Members

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 219 (November 13, 2015)

[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70282-70284]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28810]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76386; File No. SR-NASDAQ-2015-128]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Chapter XV, Entitled ``Options Pricing,'' at Section 2 Governing 
Pricing for NASDAQ Members

November 6, 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 October 27, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's transaction fees at 
Chapter XV, Section 2 entitled ``NASDAQ Options Market--Fees and 
Rebates,'' which governs pricing for NASDAQ members using the NASDAQ 
Options Market (``NOM''), NASDAQ's facility for executing and routing 
standardized equity and index options.
    While these amendments are effective upon filing, the Exchange has

[[Page 70283]]

designated the proposed amendments to be operative on November 2, 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 change 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 \3\ options 
program.
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    \3\ The Penny Pilot was established in March 2008 and has since 
been expanded and extended through June 30, 2016. 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 [sic] 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 [sic] (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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    The proposed change is as follows:
    Fees for Removing Liquidity in Penny Pilot Options: the Exchange 
proposes to:
    1. Increase the Customer \4\ Fee for Removing Liquidity in Penny 
Pilot Options from $0.48 to $0.50 per contract.
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    \4\ The term ``Customer'' applies to any transaction that is 
identified by a Participant for clearing in the Customer range at 
The Options Clearing Corporation (``OCC'') which is not for the 
account of [sic] broker or dealer or for the account of a 
``Professional'' (as that term is defined in Chapter I, Section 
1(a)(48)).
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    This rule change is described in greater detail below.
Customer Fee for Removing Liquidity in Penny Pilot Options
    The Exchange proposes, beginning November 2, 2015, to increase the 
Customer Fee for Removing Liquidity in Penny Pilot Options from $0.48 
per contract to $0.50 per contract. The Exchange notes that the Fees 
for Removing Liquidity for other Participants in Penny Pilot Options 
will remain the same.\5\
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    \5\ Non-Customers will continue to be assessed a $0.50 per 
contract Fee for Removing Liquidity in Penny Pilot Options.
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    The purpose of the proposed fee change is to increase the 
transaction fee for Customers to the same fee level that is assessed 
today to Professionals,\6\ Firms,\7\ NOM Market Makers,\8\ Non-NOM 
Market Makers \9\ and Broker-Dealers.\10\ With this proposal all market 
participants will be assessed the same Fee for Removing Liquidity in 
Penny Pilot Options of $0.50 per contract. Despite the increase, the 
Exchange believes that Customers will continue to send order flow to 
NOM.
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    \6\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s) pursuant to Chapter 
I, Section 1(a)(48). All Professional orders shall be appropriately 
marked by Participants.
    \7\ The term ``Firm'' or (``F'') applies to any transaction that 
is identified by a Participant for clearing in the Firm range at 
OCC.
    \8\ The term ``NOM Market Maker'' or (``M'') is a Participant 
that has registered as a Market Maker on NOM pursuant to Chapter 
VII, Section 2, and must also remain in good standing pursuant to 
Chapter VII, Section 4. In order to receive NOM Market Maker pricing 
in all securities, the Participant must be registered as a NOM 
Market Maker in at least one security.
    \9\ The term ``Non-NOM Market Maker'' or (``O'') is a registered 
market maker on another options exchange that is not a NOM Market 
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market 
Maker designation to orders routed to NOM.
    \10\ The term ``Broker-Dealer'' or (``B'') applies to any 
transaction which is not subject to any of the other transaction 
fees applicable within a particular category.
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2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\11\ in general, and with 
Section 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which Nasdaq operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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Customer Fee for Removing Liquidity in Penny Pilot Options
    The Exchange's proposal to increase the Customer Fee for Removing 
Liquidity in Penny Pilot Options from $0.48 per contract to $0.50 is 
reasonable because all other market participants are currently assessed 
a fee of $0.50 per contract today. The Exchange's increase would result 
in all market participants being assessed the same Fee for Removing 
Liquidity in Penny Pilot Options.
    The Exchange's proposal to increase the Customer Fee for Removing 
Liquidity in Penny Pilot Options from $0.48 per contract to $0.50 is 
equitable and not unfairly discriminatory because all market 
participants would be uniformly assessed the same rate of $0.50 per 
contract.

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's proposal to 
increase the Customer Fee for Removing Liquidity in Penny Pilot Options 
from $0.48 per contract to $0.50 will result in all market participants 
being uniformly assessed the same fee for transactions in Penny Pilot 
Options.
    The Exchange notes that it operates in a highly competitive market 
in which

[[Page 70284]]

market participants can readily favor competing venues if they deem fee 
levels at a particular venue to be excessive. In such an environment, 
the Exchange must continually adjust its fees to remain competitive 
with other exchanges and to attract order flow. The Exchange believes 
that the proposal reflects this competitive environment.

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.\13\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (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
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2015-128 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-2015-128. 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 such 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-2015-128 and should 
be submitted on or before December 4, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28810 Filed 11-12-15; 8:45 am]
BILLING CODE 8011-01-P