80 FR 79375 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NASDAQ Options Market-Fees and Rebates
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 244 (December 21, 2015)
Federal Register Volume 80, Issue 244 (December 21, 2015)
| Page Range | 79375-79381 | |
| FR Document | 2015-31934 |
[Federal Register Volume 80, Number 244 (Monday, December 21, 2015)] [Notices] [Pages 79375-79381] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-31934] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76647; File No. SR-NASDAQ-2015-148] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NASDAQ Options Market--Fees and Rebates December 15, 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 December 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 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. 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 various changes to the NOM transaction fees and rebates set forth at Chapter XV, Section 2 for executing and routing standardized equity and index options under the Non-Penny Pilot Options program, as well as other changes. The proposed changes are as follows: Fees for Removing Liquidity in Non-Penny Pilot Options: The Exchange proposes to: 1. Increase fees from $0.94 to $1.10 per contract for all Participant categories other than Customer, which remains at $0.85 per contract. 2. Offer Participants that send Professional, Firm, Non-NOM Market Maker, NOM Market Maker and/or Broker-Dealer order flow an opportunity to lower the Fees for Removing Liquidity in Non-Penny Pilot Options from $1.10 to $1.03 per contract provided they qualify for Customer or Professional Penny Pilot \3\ Options Rebates to Add Liquidity Tiers 7 or 8. --------------------------------------------------------------------------- \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 (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 (November 25, 2014), 79 FR 71477 (December 2, 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. --------------------------------------------------------------------------- 3. Offer Participants that send NOM Market Maker order flow an opportunity to lower the Fee for Removing Liquidity in Non-Penny Pilot Options from $1.10 to $1.08 per contract provided they qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6. [[Page 79376]] Rebate to Add Liquidity in Non-Penny Pilot Options: the Exchange proposes to 1. Reduce the Customer Rebate to Add Liquidity in Non-Penny Pilot Options from $0.84 to $0.80 per contract. 2. Offer Participants that send Customer order flow an opportunity to increase the Non-Penny Pilot Options Rebate to Add Liquidity by $0.10 per contract by qualifying for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6 in a month for a total rebate of $.90 per contract. 3. Offer Participants that send Customer order flow an opportunity to increase the Non-Penny Pilot Options Rebate to Add Liquidity by qualifying for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 7 or 8 in a month, by increasing the current additional rebate from $0.01 to $0.20 per contract, in addition to the proposed $0.80 per contract Customer rebate for a total rebate of $1.00 per contract. Note ``c'' and note ``1'' of Chapter XV, Section 2(1): 1. Amend note ``c'' criteria (3)(a) to decrease the percentage of total industry customer equity and ETF option ADV contract per day in a month from 0.85% to 0.75%. 2. Amend note ``c'' criteria 3(b) to increase the amount of Consolidated Volume by increasing the percentage from 1.00% to 1.10% or more of Consolidated Volume in a month. 3. Conform the language in the rule text in note ``1'' and note ``c.'' Each specific change is described in greater detail below. Fees for Removing Liquidity in Non-Penny Pilot Options The Exchange proposes, beginning December 1, 2015, to increase the Professional,\4\ Firm,\5\ Non-NOM Market Maker,\6\ NOM Market Maker \7\ and Broker Dealer \8\ Non-Penny Pilot Options Fees for Removing Liquidity from $0.94 to $1.10 per contract.\9\ While the Exchange is increasing these fees, it will also offer Participants an opportunity to lower these fees by adding liquidity to NOM. Participants that qualify for the Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tier 7 or 8 in a month will be assessed a lower Non-Penny Pilot Options Fee for Removing Liquidity of $1.03 per contract, reduced from $1.10 per contract, for each transaction which removes liquidity in Non-Penny Pilot Options in a month. Participants that add NOM Market Maker Liquidity may also reduce the Non-Penny Pilot Options Fee for Removing Liquidity from $1.10 to $1.08 per contract for each transaction which removes liquidity in Non-Penny Pilot Options in a month, if they qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6. The Exchange believes that while the Non-Penny Pilot Options Fees for Removing Liquidity are being increased, the opportunity to earn a discounted fee by providing liquidity will incentivize Participants to select NOM as a venue and in turn benefit other market participants with the opportunity to interact with such liquidity. --------------------------------------------------------------------------- \4\ 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. \5\ The term ``Firm'' or (``F'') applies to any transaction that is identified by a Participant for clearing in the Firm range at OCC. \6\ 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. \7\ 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. \8\ 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. \9\ The Customer Non-Penny Pilot Options Fee for Removing Liquidity will remain at $0.85 per contract. --------------------------------------------------------------------------- Rebate To Add Liquidity in Non-Penny Pilot Options The Exchange proposes, beginning December 1, 2015, to decrease the Non-Penny Pilot Options Customer Rebate to Add Liquidity from $0.84 to $0.80 per contract. While the Exchange is decreasing this Customer rebate, it will also offer Participants an opportunity to obtain a higher rebate by adding liquidity to NOM. Participants that send Customer order flow will have an opportunity to earn an additional Non- Penny Pilot Options Rebate to Add Liquidity of $0.10 per contract, in addition to the proposed $0.80 per contract rebate, for a total rebate of $0.90 per contract, by qualifying for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6 in a month. Also Participants that send Customer order flow will continue to be offered an opportunity to earn an increased additional Non-Penny Pilot Options Rebate to Add Liquidity by qualifying for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 7 or 8 in a month, but the additional rebate will increase from $0.01 to $0.20 per contract, above the proposed $0.80 per contract rebate, for a total rebate of $1.00 per contract in a month. The Exchange believes that, while the Non-Penny Pilot Options Customer Rebate to Add Liquidity is being decreased, the opportunity to earn a higher rebate by adding liquidity will incentivize Participants to select NOM as a venue and in turn benefit other market participants with the opportunity to interact with such liquidity. Note ``c'' and Note ``1'' of Chapter XV, Section 2(1) The Exchange proposes to amend current note ``c'' which permits Participants that qualify for the Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity \10\ to achieve a higher rebate. Currently, note ``c'' states: ``[P]articipants that (1) 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; or (2) 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 will receive an additional $0.05 per contract Penny Pilot Options Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month; or (3) (a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options above 0.85% of total industry customer equity and ETF option ADV contracts per day in a [[Page 79377]] month and (b) has added liquidity in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1.00% or more of Consolidated Volume in a month will receive an additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options.'' \11\ --------------------------------------------------------------------------- \10\ Tier 8 of the Customer and Professional Rebate to Add Liquidity Tiers pays a $0.48 per contract rebate to 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 above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month or Participants that add (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. \11\ Consolidated Volume means the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of an equity member's trading activity, expressed as a percentage of or ratio to Consolidated Volume, the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member's trading activity. --------------------------------------------------------------------------- First, the Exchange proposes to amend note ``c'' to amend criteria (3)(a) to decrease the percentage of total industry customer equity and ETF option ADV contract per day in a month from 0.85% to 0.75%. The Exchange believes that this decrease will offer Participants an opportunity to qualify for this incentive by amending the qualification to require less volume. Second, the Exchange proposes to amend criteria 3(b) to increase the amount of Consolidated Volume by increasing the percentage from 1.00% to 1.10% or more of Consolidated Volume in a month to achieve the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options. While this note 3(b) incentive requirement is being increased, the other requirement in note 3(a) is being lowered. The Exchange believes that this incentive will continue to encourage Participants to add even more liquidity on NOM to earn a higher rebate. The Exchange is not amending the other criteria, (1) and (2), in note ``c'' to qualify for the additional rebate. Also, note ``c'' is being amended to add the phrase ``in a month'' for additional clarity. Finally, the Exchange proposes to conform the language in the rule text in note ``1'' of Chapter XV, Section 2(1) by rewording the rule text for consistency and also referring to ``a month'' instead of a ``given month.'' 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\12\ in general, and with Section 6(b)(4) and 6(b)(5) of the Act,\13\ 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. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f. \13\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- Fees for Removing Liquidity in Non-Penny Pilot Options The Exchange's proposal to increase the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $0.94 to $1.10 per contract is reasonable, because these fees serve to offset the Exchange's incentives to increase the Non-Penny Pilot Options Customer rebate up to $1.00 per contract. The Exchange is amending the Non-Penny Pilot Options Rebate to Add Liquidity to pay a proposed decreased rebate of $0.80 per contract, but with an opportunity to earn a higher rebate of $0.90 per contract or $1.00 per contract, depending on the Participant's qualifications for Customer or Professional Rebates to Add Liquidity in Penny Pilot Options. The Exchange seeks to encourage Participants to send more Customer or Professional Order flow to obtain an even higher Customer rebate than is offered today.\14\ The Exchange believes that this benefits the Exchange in two ways: (1) The Exchange is encouraging Participants to qualify for Customer or Professional Penny Pilot Options rebate tiers, which requires Participants to send Penny and/or Non-Penny Pilot Options order flow to the Exchange; and (2) the Exchange is incentivizing Participants to transact more Customer Non-Penny Pilot Options on NOM. Additional order flow benefits all market participants, because they are afforded an opportunity to interact with the increased order flow. Customer order flow enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers.\15\ An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Customers will continue to be assessed an $0.85 per contract Non-Penny Pilot Options Fee for Removing Liquidity, because Customer liquidity offers unique benefits to the market which benefits all market participants. Further, the Exchange believes the proposed fees for removing liquidity are consistent with fees assessed by other options exchanges.\16\ Also, the Exchange believes that encouraging Participants to add Professional liquidity creates competition among options exchanges because the Exchange believes that the rebates may cause market participants to select NOM as a venue to send Professional order flow. --------------------------------------------------------------------------- \14\ Today, the Customer Rebate to Add Liquidity in Non-Penny Pilot Options is $0.84 per contract. \15\ Customers continue to be assessed the lowest Non-Penny Pilot Options Fee for Removing Liquidity of $0.85 per contract. This fee is not being amended with this proposal. \16\ Today, BOX Options Exchange LLC assesses a $1.07 Non-Penny Pilot take fee to Professional Customers and Broker-Dealers when removing customer liquidity. See BOX Options Exchange Fee Schedule. --------------------------------------------------------------------------- The Exchange's proposal to increase the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $0.94 to $1.10 per contract is equitable and not unfairly discriminatory, because all Participants, other than Customers, are being assessed the same Non-Penny Pilot Options Fees for Removing Liquidity. Customer order flow, unlike other order flow, enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers. Customers continue to be assessed the lowest Non-Penny Pilot Options Fee for Removing Liquidity of $0.85 per contract. The Exchange's proposal to offer Participants an opportunity to reduce the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $1.10 to $1.03 per contract is reasonable, because the Exchange believes that offering Participants an opportunity to reduce fees by qualifying for Customer or Professional Rebates to Add Liquidity in Penny Pilot Options Tiers 7 or 8 will benefit all Participants from the increased liquidity such rebate tiers will attract to the Exchange, while reducing fees. The Exchange's proposal to offer Participants an opportunity to reduce the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $1.10 to $1.03 per contract is equitable and not unfairly discriminatory, because all non-Customer Participants may qualify for this fee discount. Customers pay a lower fee of $0.85 per contract, because Customer order flow enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more [[Page 79378]] trading opportunities, which attracts market makers. The Exchange's proposal to offer Participants that send NOM Market Maker order flow an opportunity to reduce the Non-Penny Pilot Options Fee for Removing Liquidity from $1.10 to $1.08 per contract is reasonable, because the Exchange seeks to encourage Participants to send more Penny and/or Non-Penny Pilot Options order flow to NOM to obtain the discount. Offering to reduce NOM Market Maker fees for Participants that qualify for the lower Customer or Professional Penny Pilot Options Tiers 2, 3, 4, 5 or 6, as well as the higher Tiers 7 and 8,\17\ should encourage Participants to send additional order flow to NOM to obtain a lower fee. --------------------------------------------------------------------------- \17\ Participants may qualify for the reduction of the Non-Penny Pilot Options Fee for Removing Liquidity from $1.10 to $1.03 per contract for all non-Customer order flow, provided the Participant qualifies for Tiers 2, 3, 4, 5 or 6 [sic] of the Customer or Professional Penny Pilot Option Rebate to Add Liquidity. --------------------------------------------------------------------------- The Exchange's proposal to offer Participants that send NOM Market Maker order flow an opportunity to reduce the Non-Penny Pilot Options Fee for Removing Liquidity from $1.10 to $1.08 per contract is equitable and not unfairly discriminatory, because NOM Market Makers, unlike other market participants, add value through continuous quoting \18\ and the commitment of capital. Further, encouraging NOM Market Makers to add greater liquidity benefits all Participants in the quality of order interaction. The Exchange believes that it is equitable and not unfairly discriminatory to only offer NOM Market Makers the opportunity to earn a discounted fee for qualifying for the lower Customer or Professional Penny Pilot Options Tiers 2, 3, 4, 5 or 6 because of the obligations borne by these market participants. Also, today Customers pay a lower fee of $0.85 per contract, as compared to NOM Market Makers. The Exchange believes it is equitable and not unfairly discriminatory to assess Customers a lower fee, because Customer order flow enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers. --------------------------------------------------------------------------- \18\ Pursuant to Chapter VII (Market Participants), Section 5 (Obligations of Market Makers), in registering as a market maker, an Options Participant commits himself to various obligations. Transactions of a Market Maker in its market making capacity must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings. Further, all Market Makers are designated as specialists on NOM for all purposes under the Act or rules thereunder. See Chapter VII, Section 5. --------------------------------------------------------------------------- Rebate To Add Liquidity in Non-Penny Pilot Options The Exchange's proposal to decrease the Non-Penny Pilot Options Customer Rebate to Add Liquidity from $0.84 to $0.80 per contract is reasonable, because although the rebate is being decreased by $0.04 per contract, the Exchange is also offering Participants an opportunity to earn a higher rebate by sending Customer or Professional order flow to NOM. The Exchange proposes to offer Participants the opportunity to increase the Non-Penny Pilot Options Customer Rebate to Add Liquidity to either $0.90 or $1.00 per contract, depending on the Participant's qualifications for Customer or Professional Rebates to Add Liquidity in Penny Pilot Options. Today, only Customers are entitled to receive a Non-Penny Pilot Options Customer Rebate to Add Liquidity of $0.84 per contract. The Exchange will continue to offer Participants the opportunity to receive a rebate for Customer orders, albeit a reduced rebate. Also, by offering an opportunity to earn a higher Customer rebate through the addition of certain order flow to NOM, the Exchange seeks to encourage Participants to send more Customer or Professional Order flow, which benefits all market participants because they are afforded an opportunity to interact with the increased order flow. Customer liquidity offers unique benefits to the market which benefits all market participants. Also, the Exchange believes that encouraging Participants to add Professional liquidity creates competition among options exchanges, because the Exchange believes that the rebates may cause market participants to select NOM as a venue to send Professional order flow. The Exchange's proposal to decrease the Non-Penny Pilot Options Customer Rebate to Add Liquidity from $0.84 to $0.80 per contract is equitable and not unfairly discriminatory, because, today, only Customers are entitled to such a rebate, because Customer order flow brings unique benefits to the market through increased liquidity which benefits all market participants. Customers will continue to be offered a rebate, unlike other market participants. The Exchange's proposal to offer Participants that send Customer order flow an opportunity to increase the proposed lower Customer Non- Penny Pilot Options Rebate to Add Liquidity from $0.80 to $0.90 per contract, provided the Participant qualifies for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6 is reasonable, because the Exchange will increase the $0.80 per contract rebate, thereby encouraging Participants to send more Customer or Professional Penny and/or Non-Penny Pilot Options order flow to the Exchange. This rebate incentive also incentivizes Participants to transact more Customer Non-Penny Pilot Options on NOM. The Exchange's proposal to offer Participants that send Customer order flow an opportunity to increase the proposed lower Customer Non- Penny Pilot Options Rebate to Add Liquidity from $0.80 to $0.90 per contract, provided the Participant qualifies for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 2, 3, 4, 5 or 6 is equitable and not unfairly discriminatory, because Customer order flow, unlike other order flow, brings unique benefits to the market through increased liquidity which benefits all market participants. Customers will continue to be offered a rebate, unlike other market participants. The Exchange's proposal to offer Participants that send Customer order flow an opportunity to increase the proposed lower Customer Non- Penny Pilot Options Rebate to Add Liquidity from $0.80 to $1.00 per contract, provided the Participant qualifies for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tiers 7 or 8 is reasonable, because the Exchange will increase the $0.80 per contract rebate, thereby encouraging Participants to send more Customer or Professional Penny and/or Non-Penny Pilot Options order flow to the Exchange. This rebate incentive also incentivizes Participants to transact more Customer Non-Penny Pilot Options on NOM. The Exchange's proposal to offer Participants that send Customer order flow an opportunity to increase the proposed lower Customer Non- Penny Pilot Options Rebate to Add Liquidity from $0.80 to $1.00 per contract, provided the Participant qualifies for Customer or Professional Penny Pilot Options Tiers 7 or 8 is equitable and not unfairly discriminatory, because Customer order flow, unlike other order flow, brings unique benefits to the market through increased liquidity which benefits all market participants. Customers will continue to be offered a rebate, unlike other market participants. Note ``c'' and Note ``1'' of Chapter XV, Section 2(1) The Exchange's proposal to amend one of the three criteria in note ``c'' to earn a higher rebate for Participants that qualify for the Tier 8 Customer and [[Page 79379]] Professional Penny Pilot Options Rebate to Add Liquidity is reasonable because the opportunity to earn a higher rebate of $0.51 per contract,\19\ provided the qualifications are met, will continue to incentivize Participants to transact an even greater number of qualifying Customer and/or Professional volume, which liquidity will benefit other market participants by providing them the opportunity to interact with that liquidity. The Exchange's proposal to offer Participants an opportunity to obtain a higher Tier 8 rebate of $0.51 per contract, provided they qualify for the Tier 8 rebate criteria, which includes the addition of options and equity volume, is reasonable because the Exchange is encouraging market participants to send order flow to both the options and equity markets to receive the rebate. Incentivizing Participants to add options liquidity through the payment of an additional rebate is not novel and exists today. The concept of participating in the equities market as a means to qualify for an options rebate also exists today. The Exchange's proposal would amend one of three qualifications that Participants may qualify for in order to obtain an increased Tier 8 rebate. --------------------------------------------------------------------------- \19\ Tier 8 of the Customer and Professional Penny Pilot Options Rebate to Add Liquidity pays a $0.48 per contract rebate and note ``c'' prong 3 pays an additional $0.03 per contract incentive for a total rebate of $0.51 per contract. --------------------------------------------------------------------------- Specifically, the Exchange believes that the proposal to amend the criteria in 3(a) to decrease the percentage of total industry customer equity and ETF option ADV contract per day in a month from 0.85% to 0.75% to achieve the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity is reasonable, because the decrease may offer Participants an opportunity to qualify for this incentive, which would require less volume. The amended incentive has the potential to make the applicable higher rebate available to a wider range of market participants. The Exchange also believes that the proposal to amend the criteria in 3(b) to increase the amount of Consolidated Volume by increasing the percentage from 1.00% to 1.10% or more of Consolidated Volume, in a month, to obtain the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity is reasonable because, despite the increase, the other requirement to obtain the rebate in note 3(a) is being lowered. Both the 3(a) and 3(b) requirements must be met in order to qualify for the additional Tier 8 rebate pursuant to the third prong in note ``c.'' Participants may still qualify for the Tier 8 additional rebate by qualifying pursuant to note ``c'' prongs (1) or (2) as well. The Exchange believes that this incentive will continue to encourage Participants to add even more liquidity on NOM to earn a higher rebate. Finally, this participation benefits the Nasdaq Market Center as well as the NOM market by incentivizing order flow to these markets. Because cash equities and options markets are linked, with liquidity and trading patterns on one market affecting those on the other, the Exchange believes that pricing incentives that encourage market participant activity in NOM also support price discovery and liquidity provision in the Nasdaq Market Center. The Exchange's proposal to amend one of the three criteria in note ``c'' to earn a higher rebate for Participants that qualify for the Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity is equitable and not unfairly discriminatory, because all Participants may qualify for the Tier 8 rebate and the additional incentive. Qualifying Participants will be uniformly paid the rebate provided the requirements are met in a month. The Exchange believes that the proposal to amend the criteria in 3(a) to decrease the percentage of total industry customer equity and ETF option ADV contract per day in a month from 0.85% to 0.75% to achieve the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity is equitable and not unfairly discriminatory, because the qualification will apply uniformly to all Participants. Similarly, the Exchange also believes that the proposal to amend the criteria in 3(b) to increase the amount of Consolidated Volume by increasing the percentage from 1.00% to 1.10% or more of Consolidated Volume, in a month, to obtain the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity is equitable and not unfairly discriminatory, because the qualification will apply uniformly to all Participants. All Participants would continue to be required to qualify for both 3(a) and 3(b) to achieve the additional Tier 8 rebate pursuant to the third prong in note ``c.'' The Exchange's proposal to conform the language in the rule text in note ``1'' of Chapter XV, Section 2(1) by rewording the rule text and also referring to ``a month'' instead of a ``given month'' and the proposal to amend note ``c'' to add the phrase ``in a month'' is reasonable, equitable and not unfairly discriminatory, because these amendments will bring consistency to the rule text. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any inter-market 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. Fees for Removing Liquidity in Non-Penny Pilot Options The Exchange's proposal to increase the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $0.94 to $1.10 per contract does not impose an undue burden on intra-market competition, because all Participants, other than Customers, are being assessed the same Non-Penny Pilot Options Fees for Removing Liquidity. Also, Participants have an opportunity to reduce the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $1.10 to $1.03 per contract. All Participants may qualify for Tiers 7 or 8 of the Customer or Professional Rebates to Add Liquidity in Penny Pilot Options. All Participants benefit from the increased liquidity such rebate tiers will attract to the Exchange. Finally, Customers will continue to be assessed the lowest Non-Penny Pilot Options Fees for Removing Liquidity of $0.85 per contract, as is the case today because Customer order flow, unlike other order flow, brings unique benefits to the market through increased liquidity which benefits all market participants. The Exchange's proposal to offer Participants an opportunity to reduce the Professional, Firm, Non-NOM Market Maker, NOM Market Maker and [[Page 79380]] Broker Dealer Non-Penny Pilot Options Fees for Removing Liquidity from $1.10 to $1.03 per contract does not impose an undue burden on intra- market competition, because all Participants may qualify for the Tier 7 or 8 Customer or Professional Rebates to Add Liquidity in Penny Pilot Options. The Exchange's proposal to offer Participants an opportunity to reduce the NOM Market Maker Non-Penny Pilot Options Fees for Removing Liquidity from $1.10 to $1.08 per contract does not impose an undue burden on intra-market competition, because NOM Market Makers, unlike other market participants, add value through continuous quoting \20\ and the commitment of capital. Also, today Customers are assessed a lower fee of $0.85 per contract because Customer order flow, unlike other order flow, brings unique benefits to the market through increased liquidity which benefits all market participants. --------------------------------------------------------------------------- \20\ See supra note 18. --------------------------------------------------------------------------- Rebate To Add Liquidity in Non-Penny Pilot Options The Exchange's proposal to decrease the Non-Penny Pilot Options Customer Rebate to Add Liquidity from $0.84 to $0.80 per contract does not impose an undue burden on intra-market competition, because the Exchange continues to incentivize market participants by offering rebates to encourage Participants to send Customer order flow to the Exchange. This order flow benefits all market participants because they are afforded an opportunity to interact with the increased order flow. Customer liquidity offers unique benefits to the market which benefits all market participants. The Exchange continues to offer Customers this rebate, which is not offered to other market participants. The Exchange's proposal to offer Participants an opportunity to increase the proposed lower Non-Penny Pilot Options Customer Rebate to Add Liquidity from $0.80 to $0.90 per contract or from $0.80 to $1.00 per contract does not impose an undue burden on intra-market competition, because the Exchange believes that Customers are entitled to higher rebates because Customer order flow brings unique benefits to the market through increased liquidity, which benefits all market participants. Also, the incentive encourages Participants to send additional order flow to NOM. Note ``c'' and Note ``1'' of Chapter XV, Section 2(1) The Exchange's proposal to amend note ``c'' to continue to earn a $0.03 per contract higher rebate for Participants that qualify for the Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity does not impose an undue burden on intra-market competition, because all Participants may qualify for Tier 8 as well as the additional incentive. Also, all qualifying Participants will be uniformly paid the rebate provided the requirements are met in a month. The Exchange believes that the proposal to amend the criteria in 3(a) to decrease the percentage of total industry customer equity and ETF option ADV contract per day in a month from 0.85% to 0.75% and the proposal to amend the criteria in 3(b) to increase the amount of Consolidated Volume by increasing the percentage from 1.00% to 1.10% or more of Consolidated Volume in a month to achieve the additional $0.03 per contract Penny Pilot Options Customer Rebate to Add Liquidity does not impose an undue burden on intra-market competition, because the qualification will apply uniformly to all Participants. All Participants would continue to be required to qualify for both 3(a) and 3(b) to achieve the additional Tier 8 rebate pursuant to the third prong in note ``c.'' The Exchange's proposal to conform the language in the rule text in note ``1'' by rewording the rule text and also referring to ``a month'' instead of a ``given month'' and amending note ``c'' to add the phrase ``in a month'' does not create an undue burden on intra-market competition because the amendments are non-substantive in nature. 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.\21\ --------------------------------------------------------------------------- \21\ 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 Send an email to [email protected]. Please include File Number SR-NASDAQ-2015-148 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-2015-148. 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-2015-148 and should be submitted on or before January 11, 2016. [[Page 79381]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-31934 Filed 12-18-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 244 / Monday, December 21, 2015 / Notices 79375
and Exchange Commission, 100 F Street (‘‘Act’’),1 and Rule 19b–4 thereunder,2 1. Increase fees from $0.94 to $1.10
NE., Washington, DC 20549–1090. notice is hereby given that on December per contract for all Participant categories
All submissions should refer to File 1, 2015, The NASDAQ Stock Market other than Customer, which remains at
Number SR–NYSEArca–2015–113. This LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed $0.85 per contract.
file number should be included on the with the Securities and Exchange 2. Offer Participants that send
subject line if email is used. To help the Commission (‘‘SEC’’ or ‘‘Commission’’) Professional, Firm, Non-NOM Market
Commission process and review your the proposed rule change as described Maker, NOM Market Maker and/or
comments more efficiently, please use in Items I, II, and III, below, which Items Broker-Dealer order flow an opportunity
only one method. The Commission will have been prepared by the Exchange. to lower the Fees for Removing
post all comments on the Commission’s The Commission is publishing this Liquidity in Non-Penny Pilot Options
Internet Web site (http://www.sec.gov/ notice to solicit comments on the from $1.10 to $1.03 per contract
rules/sro.shtml). Copies of the proposed rule change from interested provided they qualify for Customer or
submission, all subsequent persons. Professional Penny Pilot 3 Options
amendments, all written statements I. Self-Regulatory Organization’s Rebates to Add Liquidity Tiers 7 or 8.
with respect to the proposed rule Statement of the Terms of Substance of 3. Offer Participants that send NOM
change that are filed with the the Proposed Rule Change Market Maker order flow an opportunity
Commission, and all written to lower the Fee for Removing Liquidity
The Exchange proposes to amend the in Non-Penny Pilot Options from $1.10
communications relating to the
Exchange’s transaction fees at Chapter to $1.08 per contract provided they
proposed rule change between the XV, Section 2 entitled ‘‘NASDAQ
Commission and any person, other than qualify for Customer or Professional
Options Market—Fees and Rebates,’’
those that may be withheld from the Penny Pilot Options Rebate to Add
which governs pricing for Nasdaq
public in accordance with the Liquidity Tiers 2, 3, 4, 5 or 6.
members using the NASDAQ Options
provisions of 5 U.S.C. 552, will be Market (‘‘NOM’’), Nasdaq’s facility for
available for Web site viewing and executing and routing standardized
3 The Penny Pilot was established in March 2008
printing in the Commission’s Public and has since been expanded and extended through
equity and index options. June 30, 2016. See Securities Exchange Act Release
Reference Room, 100 F Street NE., The text of the proposed rule change Nos. 57579 (March 28, 2008), 73 FR 18587 (April
Washington, DC 20549, on official is available on the Exchange’s Web site 4, 2008) (SR–NASDAQ–2008–026) (notice of filing
business days between the hours of at http://nasdaq.cchwallstreet.com, at and immediate effectiveness establishing Penny
10:00 a.m. and 3:00 p.m. Copies of the Pilot); 60874 (October 23, 2009), 74 FR 56682
the principal office of the Exchange, and (November 2, 2009)(SR–NASDAQ–2009–091)
filing also will be available for at the Commission’s Public Reference (notice of filing and immediate effectiveness
inspection and copying at the principal Room. expanding and extending Penny Pilot); 60965
office of the Exchange. All comments (November 9, 2009), 74 FR 59292 (November 17,
received will be posted without change; II. Self-Regulatory Organization’s 2009)(SR–NASDAQ–2009–097) (notice of filing and
the Commission does not edit personal Statement of the Purpose of, and immediate effectiveness adding seventy-five classes
Statutory Basis for, the Proposed Rule to Penny Pilot); 61455 (February 1, 2010), 75 FR
identifying information from 6239 (February 8, 2010) (SR–NASDAQ–2010–013)
submissions. You should submit only Change (notice of filing and immediate effectiveness adding
information that you wish to make In its filing with the Commission, the seventy-five classes to Penny Pilot); 62029 (May 4,
2010), 75 FR 25895 (May 10, 2010) (SR–NASDAQ–
available publicly. All submissions Exchange included statements 2010–053) (notice of filing and immediate
should refer to File Number SR– concerning the purpose of and basis for effectiveness adding seventy-five classes to Penny
NYSEArca–2015–113 and should be the proposed rule change and discussed Pilot); 65969 (December 15, 2011), 76 FR 79268
submitted on or before January 11, 2016. any comments it received on the (December 21, 2011) (SR–NASDAQ–2011–169)
(notice of filing and immediate effectiveness [sic]
For the Commission, by the Division of proposed rule change. The text of these extension and replacement of Penny Pilot); 67325
Trading and Markets, pursuant to delegated statements may be examined at the (June 29, 2012), 77 FR 40127 (July 6, 2012) (SR–
authority.20 places specified in Item IV below. The NASDAQ–2012–075) (notice of filing and
Exchange has prepared summaries, set immediate effectiveness and extension and
Robert W. Errett, replacement of Penny Pilot through December 31,
Deputy Secretary. forth in sections A, B, and C below, of 2012); 68519 (December 21, 2012), 78 FR 136
[FR Doc. 2015–31933 Filed 12–18–15; 8:45 am]
the most significant aspects of such (January 2, 2013) (SR–NASDAQ–2012–143) (notice
statements. of filing and immediate effectiveness and extension
BILLING CODE 8011–01–P and replacement of Penny Pilot through June 30,
A. Self-Regulatory Organization’s 2013); 69787 (June 18, 2013), 78 FR 37858 (June 24,
Statement of the Purpose of, and 2013) (SR–NASDAQ–2013–082) (notice of filing
SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule and immediate effectiveness and extension and
COMMISSION replacement of Penny Pilot through December 31,
Change 2013); 71105 (December 17, 2013), 78 FR 77530
(December 23, 2013) (SR–NASDAQ–2013–154)
1. Purpose (notice of filing and immediate effectiveness and
[Release No. 34–76647; File No. SR–
NASDAQ–2015–148] The Exchange proposes various extension and replacement of Penny Pilot through
changes to the NOM transaction fees June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR
31151 (May 30, 2014) (SR–NASDAQ–2014–056)
Self-Regulatory Organizations; The and rebates set forth at Chapter XV, (notice of filing and immediate effectiveness and
NASDAQ Stock Market LLC; Notice of Section 2 for executing and routing extension and replacement of Penny Pilot through
Filing and Immediate Effectiveness of standardized equity and index options December 31, 2014); 73686 (November 25, 2014), 79
Proposed Rule Change To Amend under the Non-Penny Pilot Options FR 71477 (December 2, 2014) (SR–NASDAQ–2014–
115) (notice of filing and immediate effectiveness
mstockstill on DSK4VPTVN1PROD with NOTICES
NASDAQ Options Market—Fees and program, as well as other changes. and extension and replacement of Penny Pilot
Rebates The proposed changes are as follows: through June 30, 2015) and 75283 (June 24, 2015),
Fees for Removing Liquidity in Non- 80 FR 37347 (June 30, 2015) (SR–NASDAQ–2015–
December 15, 2015. Penny Pilot Options: The Exchange 063) (notice of filing and immediate effectiveness of
Pursuant to Section 19(b)(1) of the proposes to: a Proposed Rule Change Relating to Extension of
Securities Exchange Act of 1934 the Exchange’s Penny Pilot Program and
Replacement of Penny Pilot Issues That Have Been
1 15 U.S.C. 78s(b)(1). Delisted.) See also NOM Rules, Chapter VI, Section
20 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 5.
VerDate Sep<11>2014 17:38 Dec 18, 2015 Jkt 238001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\21DEN1.SGM 21DEN1](https://thefederalregister.org/doc/80_FR_79619/page/1.svg)
![79376 Federal Register / Vol. 80, No. 244 / Monday, December 21, 2015 / Notices
Rebate to Add Liquidity in Non-Penny Broker Dealer 8 Non-Penny Pilot for Customer or Professional Penny Pilot
Pilot Options: the Exchange proposes to Options Fees for Removing Liquidity Options Rebate to Add Liquidity Tiers
1. Reduce the Customer Rebate to Add from $0.94 to $1.10 per contract.9 While 7 or 8 in a month, but the additional
Liquidity in Non-Penny Pilot Options the Exchange is increasing these fees, it rebate will increase from $0.01 to $0.20
from $0.84 to $0.80 per contract. will also offer Participants an per contract, above the proposed $0.80
2. Offer Participants that send opportunity to lower these fees by per contract rebate, for a total rebate of
Customer order flow an opportunity to adding liquidity to NOM. Participants $1.00 per contract in a month. The
increase the Non-Penny Pilot Options that qualify for the Customer or Exchange believes that, while the Non-
Rebate to Add Liquidity by $0.10 per Professional Penny Pilot Options Rebate Penny Pilot Options Customer Rebate to
contract by qualifying for Customer or to Add Liquidity Tier 7 or 8 in a month Add Liquidity is being decreased, the
Professional Penny Pilot Options Rebate will be assessed a lower Non-Penny opportunity to earn a higher rebate by
to Add Liquidity Tiers 2, 3, 4, 5 or 6 in Pilot Options Fee for Removing adding liquidity will incentivize
a month for a total rebate of $.90 per Liquidity of $1.03 per contract, reduced Participants to select NOM as a venue
contract. from $1.10 per contract, for each and in turn benefit other market
3. Offer Participants that send transaction which removes liquidity in participants with the opportunity to
Customer order flow an opportunity to Non-Penny Pilot Options in a month. interact with such liquidity.
increase the Non-Penny Pilot Options Participants that add NOM Market
Rebate to Add Liquidity by qualifying Note ‘‘c’’ and Note ‘‘1’’ of Chapter XV,
Maker Liquidity may also reduce the
for Customer or Professional Penny Pilot Section 2(1)
Non-Penny Pilot Options Fee for
Options Rebate to Add Liquidity Tiers Removing Liquidity from $1.10 to $1.08 The Exchange proposes to amend
7 or 8 in a month, by increasing the per contract for each transaction which current note ‘‘c’’ which permits
current additional rebate from $0.01 to removes liquidity in Non-Penny Pilot Participants that qualify for the Tier 8
$0.20 per contract, in addition to the Options in a month, if they qualify for Customer and Professional Penny Pilot
proposed $0.80 per contract Customer Customer or Professional Penny Pilot Options Rebate to Add Liquidity 10 to
rebate for a total rebate of $1.00 per Options Rebate to Add Liquidity Tiers achieve a higher rebate. Currently, note
contract. 2, 3, 4, 5 or 6. The Exchange believes ‘‘c’’ states: ‘‘[P]articipants that (1) add
Note ‘‘c’’ and note ‘‘1’’ of Chapter XV, that while the Non-Penny Pilot Options Customer, Professional, Firm, Non-NOM
Section 2(1): Fees for Removing Liquidity are being Market Maker and/or Broker-Dealer
1. Amend note ‘‘c’’ criteria (3)(a) to increased, the opportunity to earn a liquidity in Penny Pilot Options and/or
decrease the percentage of total industry discounted fee by providing liquidity Non- Penny Pilot Options of 1.15% or
customer equity and ETF option ADV will incentivize Participants to select more of total industry customer equity
contract per day in a month from 0.85% NOM as a venue and in turn benefit and ETF option ADV contracts per day
to 0.75%. other market participants with the in a month will receive an additional
2. Amend note ‘‘c’’ criteria 3(b) to opportunity to interact with such $0.02 per contract Penny Pilot Options
increase the amount of Consolidated liquidity. Customer Rebate to Add Liquidity for
Volume by increasing the percentage each transaction which adds liquidity in
from 1.00% to 1.10% or more of Rebate To Add Liquidity in Non-Penny Penny Pilot Options in that month; or
Consolidated Volume in a month. Pilot Options (2) add Customer, Professional, Firm,
3. Conform the language in the rule The Exchange proposes, beginning Non-NOM Market Maker and/or Broker-
text in note ‘‘1’’ and note ‘‘c.’’ December 1, 2015, to decrease the Non- Dealer liquidity in Penny Pilot Options
Each specific change is described in Penny Pilot Options Customer Rebate to and/or Non-Penny Pilot Options of
greater detail below. Add Liquidity from $0.84 to $0.80 per 1.40% or more of total industry
Fees for Removing Liquidity in Non- contract. While the Exchange is customer equity and ETF option ADV
Penny Pilot Options decreasing this Customer rebate, it will contracts per day in a month will
The Exchange proposes, beginning also offer Participants an opportunity to receive an additional $0.05 per contract
December 1, 2015, to increase the obtain a higher rebate by adding Penny Pilot Options Customer Rebate to
Professional,4 Firm,5 Non-NOM Market liquidity to NOM. Participants that send Add Liquidity for each transaction
Maker,6 NOM Market Maker 7 and Customer order flow will have an which adds liquidity in Penny Pilot
opportunity to earn an additional Non- Options in that month; or (3) (a) add
4 The term ‘‘Professional’’ means any person or Penny Pilot Options Rebate to Add Customer, Professional, Firm, Non-NOM
entity that (i) is not a broker or dealer in securities, Liquidity of $0.10 per contract, in Market Maker and/or Broker-Dealer
and (ii) places more than 390 orders in listed addition to the proposed $0.80 per liquidity in Penny Pilot Options and/or
options per day on average during a calendar month contract rebate, for a total rebate of Non-Penny Pilot Options above 0.85%
for its own beneficial account(s) pursuant to
Chapter I, Section 1(a)(48). All Professional orders $0.90 per contract, by qualifying for of total industry customer equity and
shall be appropriately marked by Participants. Customer or Professional Penny Pilot ETF option ADV contracts per day in a
5 The term ‘‘Firm’’ or (‘‘F’’) applies to any Options Rebate to Add Liquidity Tiers
transaction that is identified by a Participant for 2, 3, 4, 5 or 6 in a month. Also 10 Tier 8 of the Customer and Professional Rebate
clearing in the Firm range at OCC. to Add Liquidity Tiers pays a $0.48 per contract
Participants that send Customer order
6 The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is rebate to Participants that add Customer,
a registered market maker on another options flow will continue to be offered an Professional, Firm, Non-NOM Market Maker and/or
exchange that is not a NOM Market Maker. A Non- opportunity to earn an increased Broker-Dealer liquidity in Penny Pilot Options and/
NOM Market Maker must append the proper Non- additional Non-Penny Pilot Options or Non-Penny Pilot Options above 0.75% or more
NOM Market Maker designation to orders routed to of total industry customer equity and ETF option
mstockstill on DSK4VPTVN1PROD with NOTICES
NOM.
Rebate to Add Liquidity by qualifying ADV contracts per day in a month or Participants
7 The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a that add (1) Customer and/or Professional liquidity
8 The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to
Participant that has registered as a Market Maker on in Penny Pilot Options and/or Non-Penny Pilot
NOM pursuant to Chapter VII, Section 2, and must any transaction which is not subject to any of the Options of 30,000 or more contracts per day in a
also remain in good standing pursuant to Chapter other transaction fees applicable within a particular month, (2) the Participant has certified for the
VII, Section 4. In order to receive NOM Market category. Investor Support Program set forth in Rule 7014,
Maker pricing in all securities, the Participant must 9 The Customer Non-Penny Pilot Options Fee for and (3) the Participant qualifies for rebates under
be registered as a NOM Market Maker in at least one Removing Liquidity will remain at $0.85 per the Qualified Market Maker (‘‘QMM’’) Program set
security. contract. forth in Rule 7014.
VerDate Sep<11>2014 17:38 Dec 18, 2015 Jkt 238001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\21DEN1.SGM 21DEN1](https://thefederalregister.org/doc/80_FR_79619/page/2.svg)
![79378 Federal Register / Vol. 80, No. 244 / Monday, December 21, 2015 / Notices
trading opportunities, which attracts providing more trading opportunities, 2, 3, 4, 5 or 6 is reasonable, because the
market makers. which attracts market makers. Exchange will increase the $0.80 per
The Exchange’s proposal to offer contract rebate, thereby encouraging
Participants that send NOM Market Rebate To Add Liquidity in Non-Penny
Participants to send more Customer or
Maker order flow an opportunity to Pilot Options
Professional Penny and/or Non-Penny
reduce the Non-Penny Pilot Options Fee The Exchange’s proposal to decrease Pilot Options order flow to the
for Removing Liquidity from $1.10 to the Non-Penny Pilot Options Customer Exchange. This rebate incentive also
$1.08 per contract is reasonable, because Rebate to Add Liquidity from $0.84 to incentivizes Participants to transact
the Exchange seeks to encourage $0.80 per contract is reasonable, because more Customer Non-Penny Pilot
Participants to send more Penny and/or although the rebate is being decreased Options on NOM.
Non-Penny Pilot Options order flow to by $0.04 per contract, the Exchange is The Exchange’s proposal to offer
NOM to obtain the discount. Offering to also offering Participants an opportunity Participants that send Customer order
reduce NOM Market Maker fees for to earn a higher rebate by sending flow an opportunity to increase the
Participants that qualify for the lower Customer or Professional order flow to proposed lower Customer Non-Penny
Customer or Professional Penny Pilot NOM. The Exchange proposes to offer Pilot Options Rebate to Add Liquidity
Options Tiers 2, 3, 4, 5 or 6, as well as Participants the opportunity to increase from $0.80 to $0.90 per contract,
the higher Tiers 7 and 8,17 should the Non-Penny Pilot Options Customer provided the Participant qualifies for
encourage Participants to send Rebate to Add Liquidity to either $0.90 Customer or Professional Penny Pilot
additional order flow to NOM to obtain or $1.00 per contract, depending on the Options Rebate to Add Liquidity Tiers
a lower fee. Participant’s qualifications for Customer 2, 3, 4, 5 or 6 is equitable and not
The Exchange’s proposal to offer or Professional Rebates to Add Liquidity unfairly discriminatory, because
Participants that send NOM Market in Penny Pilot Options. Today, only Customer order flow, unlike other order
Maker order flow an opportunity to Customers are entitled to receive a Non- flow, brings unique benefits to the
reduce the Non-Penny Pilot Options Fee Penny Pilot Options Customer Rebate to market through increased liquidity
for Removing Liquidity from $1.10 to Add Liquidity of $0.84 per contract. The which benefits all market participants.
$1.08 per contract is equitable and not Exchange will continue to offer Customers will continue to be offered a
unfairly discriminatory, because NOM Participants the opportunity to receive a rebate, unlike other market participants.
Market Makers, unlike other market rebate for Customer orders, albeit a The Exchange’s proposal to offer
participants, add value through reduced rebate. Also, by offering an Participants that send Customer order
continuous quoting 18 and the opportunity to earn a higher Customer flow an opportunity to increase the
commitment of capital. Further, rebate through the addition of certain proposed lower Customer Non-Penny
encouraging NOM Market Makers to add order flow to NOM, the Exchange seeks Pilot Options Rebate to Add Liquidity
greater liquidity benefits all Participants to encourage Participants to send more from $0.80 to $1.00 per contract,
in the quality of order interaction. The Customer or Professional Order flow, provided the Participant qualifies for
Exchange believes that it is equitable which benefits all market participants Customer or Professional Penny Pilot
and not unfairly discriminatory to only because they are afforded an Options Rebate to Add Liquidity Tiers
offer NOM Market Makers the opportunity to interact with the 7 or 8 is reasonable, because the
opportunity to earn a discounted fee for increased order flow. Customer liquidity Exchange will increase the $0.80 per
qualifying for the lower Customer or offers unique benefits to the market contract rebate, thereby encouraging
Professional Penny Pilot Options Tiers which benefits all market participants. Participants to send more Customer or
2, 3, 4, 5 or 6 because of the obligations Also, the Exchange believes that Professional Penny and/or Non-Penny
borne by these market participants. encouraging Participants to add Pilot Options order flow to the
Also, today Customers pay a lower fee Professional liquidity creates Exchange. This rebate incentive also
of $0.85 per contract, as compared to competition among options exchanges, incentivizes Participants to transact
NOM Market Makers. The Exchange because the Exchange believes that the more Customer Non-Penny Pilot
believes it is equitable and not unfairly rebates may cause market participants to Options on NOM.
discriminatory to assess Customers a select NOM as a venue to send The Exchange’s proposal to offer
lower fee, because Customer order flow Professional order flow. Participants that send Customer order
enhances liquidity on the Exchange for The Exchange’s proposal to decrease flow an opportunity to increase the
the benefit of all market participants the Non-Penny Pilot Options Customer proposed lower Customer Non-Penny
and benefits all market participants by Rebate to Add Liquidity from $0.84 to Pilot Options Rebate to Add Liquidity
$0.80 per contract is equitable and not from $0.80 to $1.00 per contract,
17 Participants may qualify for the reduction of unfairly discriminatory, because, today, provided the Participant qualifies for
the Non-Penny Pilot Options Fee for Removing only Customers are entitled to such a Customer or Professional Penny Pilot
Liquidity from $1.10 to $1.03 per contract for all
non-Customer order flow, provided the Participant
rebate, because Customer order flow Options Tiers 7 or 8 is equitable and not
qualifies for Tiers 2, 3, 4, 5 or 6 [sic] of the brings unique benefits to the market unfairly discriminatory, because
Customer or Professional Penny Pilot Option Rebate through increased liquidity which Customer order flow, unlike other order
to Add Liquidity. benefits all market participants.
18 Pursuant to Chapter VII (Market Participants),
flow, brings unique benefits to the
Section 5 (Obligations of Market Makers), in
Customers will continue to be offered a market through increased liquidity
registering as a market maker, an Options rebate, unlike other market participants. which benefits all market participants.
Participant commits himself to various obligations. The Exchange’s proposal to offer Customers will continue to be offered a
mstockstill on DSK4VPTVN1PROD with NOTICES
Transactions of a Market Maker in its market Participants that send Customer order rebate, unlike other market participants.
making capacity must constitute a course of flow an opportunity to increase the
dealings reasonably calculated to contribute to the Note ‘‘c’’ and Note ‘‘1’’ of Chapter XV,
maintenance of a fair and orderly market, and proposed lower Customer Non-Penny
Market Makers should not make bids or offers or Pilot Options Rebate to Add Liquidity Section 2(1)
enter into transactions that are inconsistent with from $0.80 to $0.90 per contract, The Exchange’s proposal to amend
such course of dealings. Further, all Market Makers
are designated as specialists on NOM for all
provided the Participant qualifies for one of the three criteria in note ‘‘c’’ to
purposes under the Act or rules thereunder. See Customer or Professional Penny Pilot earn a higher rebate for Participants that
Chapter VII, Section 5. Options Rebate to Add Liquidity Tiers qualify for the Tier 8 Customer and
VerDate Sep<11>2014 17:38 Dec 18, 2015 Jkt 238001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 E:\FR\FM\21DEN1.SGM 21DEN1](https://thefederalregister.org/doc/80_FR_79619/page/4.svg)
![Federal Register / Vol. 80, No. 244 / Monday, December 21, 2015 / Notices 79381
For the Commission, by the Division of proposed rule change. The text of these to reflect the Parent’s recent name
Trading and Markets, pursuant to delegated statements may be examined at the change to Nasdaq, Inc. The Exchange
authority.22 places specified in Item IV below. The believes that the changes will protect
Robert W. Errett, Exchange has prepared summaries, set investors and the public interest by
Deputy Secretary. forth in sections A, B, and C below, of eliminating confusion that may exist
[FR Doc. 2015–31934 Filed 12–18–15; 8:45 am] the most significant aspects of such because of differences between its
BILLING CODE 8011–01–P statements. corporate name and the current global
A. Self-Regulatory Organization’s branding of the Parent and its affiliated
Statement of the Purpose of, and entities, including the Exchange.
SECURITIES AND EXCHANGE
Statutory Basis for, the Proposed Rule B. Self-Regulatory Organization’s
COMMISSION
Change Statement on Burden on Competition
[Release No. 34–76656; File No. SR–BX–
2015–080]
1. Purpose Because the proposed rule change
As part of an ongoing global relates to the governance and not to the
Self-Regulatory Organizations; rebranding initiative, the Exchange’s operations of the Exchange, the
NASDAQ OMX BX, Inc.; Notice of Filing parent company and sole stockholder Exchange does not believe that the
and Immediate Effectiveness of (the ‘‘Parent’’) recently changed its legal proposed rule change will impose any
Proposed Rule Change To Amend the name from The NASDAQ OMX Group, burden on competition not necessary or
Exchange’s Certificate of Incorporation Inc. to Nasdaq, Inc.3 For purposes of appropriate in furtherance of the
and By-Laws consistency, the Parent also has decided purposes of the Act.
to change the legal names of certain of C. Self-Regulatory Organization’s
December 15, 2015.
its subsidiaries to eliminate references Statement on Comments on the
Pursuant to Section 19(b)(1) of the to OMX. The Exchange therefore
Securities Exchange Act of 1934 Proposed Rule Change Received From
proposes to amend its Charter and By- Members, Participants, or Others
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Laws to change its legal name from
notice is hereby given that on December NASDAQ OMX BX, Inc. to NASDAQ No written comments were either
9, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ BX, Inc. solicited or received.
or ‘‘Exchange’’) filed with the Securities Specifically, the Exchange proposes to
and Exchange Commission (‘‘SEC’’ or file a Certificate of Amendment to its III. Date of Effectiveness of the
‘‘Commission’’) the proposed rule Charter with the Secretary of State of the Proposed Rule Change and Timing for
change as described in Items I, II, and State of Delaware to amend Article First Commission Action
III, below, which Items have been of the Charter to reflect the new name.4 Because the foregoing proposed rule
prepared by the Exchange. The In addition, the Exchange proposes to change does not: (i) Significantly affect
Commission is publishing this notice to amend the title and Article I(l) of the the protection of investors or the public
solicit comments on the proposed rule By-Laws to reflect the new name. The interest; (ii) impose any significant
change from interested persons. Exchange also proposes to amend burden on competition; and (iii) become
I. Self-Regulatory Organization’s Section 9.4(c) of the By-Laws to reflect operative for 30 days from the date on
Statement of the Terms of the Substance the Parent’s name change, which which it was filed, or such shorter time
of the Proposed Rule Change became effective on September 8, 2015. as the Commission may designate, it has
2. Statutory Basis become effective pursuant to Section
The Exchange is filing this proposed
19(b)(3)(A)(iii) of the Act 7 and
rule change with respect to amendments The Exchange believes that its subparagraph (f)(6) of Rule 19b–4
of its Certificate of Incorporation (the proposal is consistent with Section 6(b) thereunder.8
‘‘Charter’’) and By-Laws (the ‘‘By- of the Act,5 in general, and furthers the
Laws’’) to change its name to NASDAQ At any time within 60 days of the
objectives of Section 6(b)(5) of the Act,6 filing of the proposed rule change, the
BX, Inc. The proposed amendments will in particular, in that it is designed to
be implemented on a date designated by Commission summarily may
promote just and equitable principles of temporarily suspend such rule change if
the Exchange, which shall be at least 30 trade, to remove impediments to and
days from the date of this filing. The it appears to the Commission that such
perfect the mechanism of a free and action is: (i) Necessary or appropriate in
text of the proposed rule change is open market and a national market
available on the Exchange’s Web site at the public interest; (ii) for the protection
system, and, in general to protect of investors; or (iii) otherwise in
http://nasdaqomxbx.cchwallstreet.com, investors and the public interest. The
at the principal office of the Exchange, furtherance of the purposes of the Act.
Exchange is proposing amendments to If the Commission takes such action, the
and at the Commission’s Public its Charter and By-Laws to effectuate its
Reference Room. Commission shall institute proceedings
name change to NASDAQ BX, Inc. and to determine whether the proposed rule
II. Self-Regulatory Organization’s 3 See Securities Exchange Act Release No. 75421
should be approved or disapproved.
Statement of the Purpose of, and (July 10, 2015), 80 FR 42136 (July 16, 2015) (SR–
Statutory Basis for, the Proposed Rule IV. Solicitation of Comments
BSECC–2015–001, SR–BX–2015–030, SR–
Change NASDAQ–2015–058, SR–Phlx–2015–46, SR–SCCP– Interested persons are invited to
2015–01). submit written data, views, and
In its filing with the Commission, the 4 On the Exchange’s Web site (http://
mstockstill on DSK4VPTVN1PROD with NOTICES
Exchange included statements nasdaqomxbx.cchwallstreet.com), the Certificate of
arguments concerning the foregoing,
concerning the purpose of and basis for Amendment and Certificate of Incorporation will including whether the proposed rule
the proposed rule change and discussed appear as two separate documents (in addition to change is consistent with the Act.
the prior Certificate of Amendment, dated Comments may be submitted by any of
any comments it received on the December 30, 2008), which is consistent with how
they will appear in the records of the Secretary of
the following methods:
22 17 CFR 200.30–3(a)(12). State of the State of Delaware.
1 15 U.S.C. 78s(b)(1). 5 15 U.S.C. 78f(b). 7 15 U.S.C. 78s(b)(3)(A)(iii).
2 17 CFR 240.19b–4. 6 15 U.S.C. 78f(b)(5). 8 17 CFR 240.19b–4(f)(6).
VerDate Sep<11>2014 17:38 Dec 18, 2015 Jkt 238001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 E:\FR\FM\21DEN1.SGM 21DEN1](https://thefederalregister.org/doc/80_FR_79619/page/7.svg)
Document Created: 2015-12-19 02:57:08
Document Modified: 2015-12-19 02:57:08
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 79375 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR