81 FR 50029 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify NASDAQ Options Market LLC Pricing at Chapter XV
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 146 (July 29, 2016)
Federal Register Volume 81, Issue 146 (July 29, 2016)
| Page Range | 50029-50034 | |
| FR Document | 2016-17909 |
[Federal Register Volume 81, Number 146 (Friday, July 29, 2016)] [Notices] [Pages 50029-50034] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-17909] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78406; File No. SR-NASDAQ-2016-100] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify NASDAQ Options Market LLC Pricing at Chapter XV July 25, 2016 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 July 12, 2016, 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 modify the NASDAQ Options Market LLC's (``NOM'') pricing at Chapter XV, Sections 2(1) and 2(6) to: (i) Amend [[Page 50030]] Customer \3\ and Professional \4\ Penny Pilot Options \5\ Rebate to Add Liquidity tiers; (ii) amend the Customer and Professional Penny Pilot Options Fee for Removing Liquidity; and (iii) amend the Market Access and Routing Subsidy or ``MARS.'' --------------------------------------------------------------------------- \3\ The term ``Customer'' or (``C'') applies to any transaction that is identified by a Participant for clearing in the Customer range at The Options Clearing Corporation which is not for the account of broker or dealer or for the account of a ``Professional.'' See Chapter XV. \4\ The term ``Professional'' or (``P'') 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 Penny Pilot was established in March 2008 and was last extended in 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); and 78037 (June 10, 2016), 81 FR 39299 (June 16, 2016) (SR- NASDAQ-2016-052) (notice of filing and immediate effectiveness extending the Penny Pilot through December 31, 2016). All Penny Pilot Options listed on the Exchange can be found at http://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2016-15. --------------------------------------------------------------------------- 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 three NOM pricing amendments at Chapter XV as described below in greater detail. Pricing Change Number 1: Chapter XV, Section 2(1)--Customer and Professional Penny Pilot Options Rebate To Add Liquidity The Exchange proposes to amend the Customer and Professional Penny Pilot Options Rebate to Add Liquidity tiers. Specifically, the Exchange proposes to amend the current qualifications related to the Tier 8 Customer and Professional Penny Pilot Options rebate. The proposed new Tier 8 qualifications should continue to attract Customer and Professional order flow to NOM. This order flow benefits other market participants through order interaction. Today, the Exchange pays Customer and Professional Penny Pilot Options Rebates to Add Liquidity as follows: ------------------------------------------------------------------------ Rebate to add Monthly volume liquidity ($) ------------------------------------------------------------------------ Tier 1......................... Participant adds 0.20 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and ETF option average daily volume (``ADV'') contracts per day in a month. Tier 2......................... Participant adds 0.25 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month. Tier 3......................... Participant adds 0.42 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month. Tier 4......................... Participant adds 0.43 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month. Tier 5......................... Participant adds 0.45 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.40% to 0.75% of total industry customer equity and ETF option ADV contracts per day in a month. Tier 6 b....................... Participant has Total 0.45 Volume of 100,000 or more contracts per day in a month, of which 25,000 or more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options. Tier 7 b....................... Participant has Total 0.47 Volume of 150,000 or more contracts per day in a month, of which 50,000 or more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options. Tier 8......................... Participant adds c 0.48 Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer and/ or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 30,000 or more contracts per day in a month, and (2) 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 or qualifies for MARS (defined below). ------------------------------------------------------------------------ Today, the Exchange pays a $0.48 per contract rebate \6\ to Participants that add [[Page 50031]] Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 30,000 or more contracts per day in a month, and (2) 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 or qualifies for MARS.\7\ The Exchange is proposing to continue to pay a $0.48 per contract rebate provided, NOM Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker- Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 0.25% or more of total industry customer equity and ETF option ADV contracts per day in a month,\8\ and (2) 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 or qualifies for MARS. --------------------------------------------------------------------------- \6\ Note ``c,'' which is applicable to the Tier 8 rebate, provides additional rebates to Participants that execute certain volume on NOM. Participants 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 receive an additional $0.02 per contract Penny Pilot Options Customer and/or Professional 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 1.30% or more of total industry customer equity and ETF option ADV contracts per day in a month receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional 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 0.80% of total industry customer equity and ETF option ADV contracts per day in a month, (b) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Non- Penny Pilot Options above 0.15% of total industry customer equity and ETF option ADV contracts per day in a month, and (c) execute greater than 0.04% of Consolidated Volume (``CV'') via Market-on- Close/Limit-on-Close (``MOC/LOC'') volume within the NASDAQ Stock Market Closing Cross within a month receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in a month. 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. This note ``c'' is not being amended with this proposal. \7\ NOM Participants that have System Eligibility and have executed the requisite number of Eligible Contracts in a month are paid MARS rebates based on average daily volume in a month. See Chapter XV, Section 2(6). \8\ For reference, in May 2016, 0.25% of total industry customer equity and ETF option ADV equated to approximately 28,000 contracts. --------------------------------------------------------------------------- The Exchange's proposal to amend the current qualification from 30,000 or more contracts per day in a month to 0.25% or more of total industry customer equity and ETF option ADV contracts provides Participants the ability to qualify for this tier in lower industry ADV months because the percentage would be tied to the industry volume and not represent a fixed number. If the industry volume were to increase in a given month, the Participant will have greater opportunity to execute a higher number of contracts because the entire industry has more volume available to execute. For example in May 2016, 0.25% of total industry customer equity and ETF option ADV contracts represented approximately 28,000 contracts as compared to the requisite 30,000 contracts which Tier 8 currently requires. Because volume was lower in the month of May 2016, market participants would have been better able to continue to meet the Tier 8 requirement with a percentage tied to volume as compared to a fixed number of contracts. The Exchange also proposes to amend note ``d,'' which applies to the Customer and Professional Penny Pilot Options Rebate to Add Liquidity tiers. Currently, note ``d'' provides that NOM Participants that qualify for MARS Payment Tiers \9\ 1, 2 or 3 will receive an additional $0.05 per contract in addition to any Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity Tiers they may qualify for in that month, unless the Participant qualifies for a higher note ``c'' rebate,\10\ in which case the Participants would receive the appropriate note ``c'' rebate they qualified for in that month. --------------------------------------------------------------------------- \9\ MARS Payments are currently based on a 3 tier rebate based on average daily volume (``ADV''). The Exchange pays a MARS Payment of $0.07 for ADV of 2,500 Eligible Contracts. The Exchange pays a MARS Payment of $0.09 for ADV of 5,000 Eligible Contracts. Finally, the Exchange pays a MARS Payment of $0.11 for AVD of 10,000 Eligible Contracts. The MARS Payment is paid on all executed Eligible Contracts that add liquidity, which are routed to NOM through a participating NOM Participant's System and meet the requisite Eligible Contracts ADV. See Chapter XV, Section 2(6). \10\ The note ``c'' incentive in Chapter XV, Section 2 provides that Participants 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 and/or Professional 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 1.30% 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 and/or Professional 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 0.80% of total industry customer equity and ETF option ADV contracts per day in a month, (b) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Non- Penny Pilot Options above 0.15% of total industry customer equity and ETF option ADV contracts per day in a month, and (c) execute greater than 0.04% of Consolidated Volume (``CV'') via Market-on- Close/Limit-on-Close (``MOC/LOC'') volume within the NASDAQ Stock Market Closing Cross within a month will receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in a month. Consolidated Volume shall mean 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. NOM Participants that qualify for a note ``c'' incentive receive the greater of the note ``c'' or note ``d'' incentive. --------------------------------------------------------------------------- The Exchange proposes to amend note ``d'' of Chapter XV, Section 2(1) to lower the additional rebate on Penny Pilot Options Customer and/or Professional Rebates to Add Liquidity from $0.05 to $0.03 per contract. The Exchange believes that despite lowering the additional incentive from $0.05 to $0.03 per contract, the note ``d'' incentive will continue to incentivize NOM Participants to participate in MARS and send qualifying order flow to the Exchange. The $0.03 per contract incentive would continue to attract Penny Pilot Option liquidity to NOM. All market participants benefit from the increased order interaction when more order flow is available on NOM. Pricing Change Number 2: Chapter XV, Section 2(6)--MARS Pricing The Exchange currently offers a Market Access and Routing Subsidy or ``MARS'' to qualifying NOM Participants in Chapter XV, Section 2(6). NOM Participants that have System Eligibility \11\ and have executed the [[Page 50032]] requisite number of Eligible Contracts in a month are paid rebates based on average daily volume (``ADV'') in a month. Today, MARS Payments are currently based on a 3 tier rebate based on ADV. The Exchange pays a MARS Payment of $0.07 for ADV of 2,500 Eligible Contracts. The Exchange pays a MARS Payment of $0.09 for ADV of 5,000 Eligible Contracts. Finally, the Exchange pays a MARS Payment of $0.11 for ADV of 10,000 Eligible Contracts. The MARS Payment is paid on all executed Eligible Contracts that add liquidity, which are routed to NOM through a participating NOM Participant's System and meet the requisite Eligible Contracts ADV. --------------------------------------------------------------------------- \11\ To qualify for MARS, the Participant's routing system (``System'') would be required to: (1) Enable the electronic routing of orders to all of the U.S. options exchanges, including NOM; (2) provide current consolidated market data from the U.S. options exchanges; and (3) be capable of interfacing with NOM's API to access current NOM match engine functionality. Further, the Participant's System would also need to cause NOM to be the one of the top three default destination exchanges for individually executed marketable orders if NOM is at the national best bid or offer (``NBBO''), regardless of size or time, but allow any user to manually override NOM as a default destination on an order-by-order basis. Any NOM Participant would be permitted to avail itself of this arrangement, provided that its order routing functionality incorporates the features described above and satisfies NOM that it appears to be robust and reliable. The Participant remains solely responsible for implementing and operating its System. See Chapter XV, Section 2(6). --------------------------------------------------------------------------- The Exchange proposes to provide an additional incentive to the MARS Payment in Chapter XV, Section 2(6) by offering NOM Participants that qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 \12\ an additional $0.09 per contract rebate applicable to MARS Payment tiers. This $0.09 rebate would be in addition to any MARS Payment Tier \13\ on MARS Eligible Contracts that the NOM Participant qualifies for in a given month. This incentive is intended to encourage NOM Participants to continue to send more order flow to the Exchange in either Penny Pilot or Non-Penny Pilot Options to qualify for the Customer and Professional Penny Pilot Options Tier 8 rebate to earn the additional MARS Payment. All market participants benefit from the increased order interaction when more order flow is available on NOM. --------------------------------------------------------------------------- \12\ With the proposal herein, to be eligible for Tier 8, a Participant is required to 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 Participant adds: (1) Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 0.25% or more of total industry customer equity and ETF option ADV contracts per day in a month, and (2) 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 or qualifies for MARS. \13\ See note 9 above. --------------------------------------------------------------------------- Pricing Change Number 3: Chapter XV, Section 2(1)--Penny Pilot Options Fee for Removing Liquidity The Exchange is proposing to amend note ``4,'' which is currently reserved, to lower the Customer and Professional Penny Pilot Options Fees for Removing Liquidity from $0.50 \14\ to $0.48 per contract, excluding SPY,\15\ for NOM Participants that qualify for MARS Payment Tiers 1, 2 or 3. --------------------------------------------------------------------------- \14\ Currently, the Customer and Professional Penny Pilot Options Fees for Removing Liquidity are $0.50 per contract. \15\ Note ``3'' of the Pricing Schedule offers Customers and Professionals that remove liquidity in SPY Options a lower Customer and Professional Penny Pilot Options Fees for Removing Liquidity of $0.47 per contract. --------------------------------------------------------------------------- The Exchange believes that offering NOM Participants the opportunity to lower the Customer and Professional Penny Pilot Options Fees for Removing Liquidity by qualifying for MARS Payment Tiers 1, 2 or 3 and transacting MARS Eligible Contracts,\16\ will incentivize NOM Participants to send more MARS Eligible Contracts to NOM. All market participants benefit from the increased order interaction when more order flow is available on NOM. --------------------------------------------------------------------------- \16\ MARS Eligible Contracts include electronic Firm, Non-NOM Market Maker, Broker-Dealer or Joint Back Office orders that add liquidity, excluding Mini Options. See Chapter XV, Section 2(6). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\17\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\18\ 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b). \18\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \19\ --------------------------------------------------------------------------- \19\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting Release''). --------------------------------------------------------------------------- Likewise, in NetCoalition v. Securities and Exchange Commission \20\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\21\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \22\ --------------------------------------------------------------------------- \20\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \21\ See NetCoalition, at 534-535. \22\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .'' \23\ Although the court and the SEC were discussing the cash equities markets, the Exchange believes that these views apply with equal force to the options markets. --------------------------------------------------------------------------- \23\ Id. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)). --------------------------------------------------------------------------- Pricing Change Number 1: Chapter XV, Section 2(1)--Customer and Professional Penny Pilot Options Rebate to Add Liquidity The Exchange's proposal to amend the current qualifications related to the Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity is reasonable because the rebate should continue to attract Customer and Professional order flow to NOM. The additional Customer and Professional order flow to NOM benefits other market participants by providing additional liquidity with which to interact. Amending the current qualification from 30,000 or more contracts per day in a month to 0.25% or more of total industry customer equity and ETF option ADV contracts provides Participants the ability to qualify for this tier in months with lower industry ADV because the required number of contracts would be directly correlated to industry volume. With this proposal, members that consistently send order flow to the Exchange may continue to qualify for [[Page 50033]] Tier 8 rebates. The Exchange's proposal to amend the current qualification from 30,000 or more contracts per day in a month to 0.25% or more of total industry customer equity and ETF option ADV contracts provides Participants the ability to qualify for this tier in lower industry ADV months because the percentage would be tied to the industry volume and not represent a fixed number. If the industry volume were to increase in a given month the Participant will have greater opportunity to execute a higher number of contracts because the entire industry has more volume available to execute. The Exchange notes that utilizing a percentage as compared to a fixed number is not novel. Today, NOM Customer and Professional Penny Pilot Options Tiers 1 through 5 utilize a percentage of total industry customer equity and ETF option ADV contracts per day in a month.\24\ --------------------------------------------------------------------------- \24\ See Chapter XV, Section 2(1). --------------------------------------------------------------------------- The Exchange's proposal to amend the current qualifications related to the Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity is equitable and not unfairly discriminatory because all Participants are eligible to earn rebates. These rebates would be uniformly paid to all qualifying Participants. The Exchange's proposal to amend note ``d,'' which applies to any Customer and Professional Penny Pilot Options Rebates to Add Liquidity tier, to lower the per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity incentive from $0.05 to $0.03 per contract is reasonable as discussed hereafter. Despite lowering the incentive, the reduced rebate would continue to attract Penny Pilot Options liquidity to NOM and also would continue to incentivize market participants to participate in MARS. All market participants benefit from the increased order interaction when more order flow is available on NOM. The Exchange's proposal to amend note ``d,'' which applies to the additional Customer and Professional Penny Pilot Options Rebate to Add Liquidity tiers, to lower the additional per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity incentive from $0.05 to $0.03 per contract, is equitable and not unfairly discriminatory because all Participants are eligible to earn rebates and the rebates would be uniformly paid to all qualifying Participants. In addition, any Participant may qualify for MARS provided they have the requisite System Eligibility. Pricing Change Number 2: Chapter XV, Section 2(6)--MARS Pricing The Exchange's proposal to amend the MARS Payment to offer NOM Participants that qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 an additional $0.09 per contract rebate in addition to any MARS Payment tier on MARS Eligible Contracts the NOM Participant qualifies for in a given month is reasonable because it will encourage NOM Participants to continue to send more order flow to the Exchange in either Penny Pilot or Non-Penny Pilot Options to qualify for the higher MARS Payment. All market participants benefit from the increased order interaction when more order flow is available on NOM. The Exchange's proposal to amend the MARS Payment to offer NOM Participants that qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 an additional $0.09 per contract rebate in addition to any MARS Payment tier on MARS Eligible Contracts the NOM Participant qualifies for in a given month is equitable and not unfairly discriminatory because any Participant may qualify for MARS provided they have the requisite System Eligibility. The Exchange will also uniformly pay MARS rebates to qualifying Participants on all MARS Eligible Contracts. Pricing Change Number 3: Chapter XV, Section 2(1)--Penny Pilot Options Fee for Removing Liquidity The Exchange's proposal to amend note ``4'' to lower the Customer and Professional Penny Pilot Options Fees for Removing Liquidity from $0.50 to $0.48 per contract, excluding SPY, provided NOM Participants qualify for MARS Payment Tiers 1, 2 or 3 is reasonable for the reasons which follow. NOM Participants will be encouraged to send additional electronic MARS Eligible Contracts \25\ to NOM to obtain the fee reduction. This should in turn incentivize NOM Participants to send more order flow to NOM. All market participants benefit from the increased order interaction when more order flow is available on NOM. Excluding SPY from the note ``4'' discount is reasonable because SPY options are among the most highly liquid options. Today, the Exchange prices SPY differently from other Multiply-Listed Options.\26\ Other options exchanges price differently by options symbol.\27\ --------------------------------------------------------------------------- \25\ See note 16 above. \26\ See current note ``3'' at Chapter XV, Section 2(1). \27\ See NASDAQ PHLX LLC's (``Phlx'') Pricing Schedule at Section I which contains pricing for options overlying SPY that is different from other Multiply Listed Options pricing in Section II of that Pricing Schedule. --------------------------------------------------------------------------- The Exchange's proposal to amend note ``4'' to lower the Customer and Professional Penny Pilot Options Fees for Removing Liquidity from $0.50 to $0.48 per contract, excluding SPY, provided NOM Participants qualify for MARS Payment Tiers 1, 2 or 3 is equitable and not unfairly discriminatory because all Participants may qualify for MARS provided they have the requisite System Eligibility. The Exchange will also uniformly assess the discounted Customer and Professional Penny Pilot Options Fees for Removing Liquidity to qualifying Participants. Excluding SPY from the note ``4'' discount is equitable and not unfairly discriminatory because the Exchange pays discounts today for SPY options transactions. Today, note ``3'' of Chapter XV, Section 2(1) assesses Customers and Professionals that remove liquidity in SPY Options a $0.47 per contract discounted Customer and Professional Penny Pilot Options Fees for Removing Liquidity. Both notes ``3'' and ``4'' of Chapter XV, Section 2(1) are paid uniformly to all qualifying Participants. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. The proposed fee changes are competitive and do not impose a burden [[Page 50034]] on inter-market competition. Today, other venues offer rebate programs, discounted fees and incentives for maintain routing systems.\28\ In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. --------------------------------------------------------------------------- \28\ See Phlx's Pricing Schedule at Section B (Customer Rebate Program) and Section IV, Part E (MARS). Also, the International Securities Exchange LLC (``ISE'') offers a lower Market Maker Taker Fee for Select Symbols of $0.44 per contract for Market Makers with total affiliated Priority Customer Complex ADV of 150,000 or more contracts. See ISE's Fee Schedule. --------------------------------------------------------------------------- Pricing Change Number 1: Chapter XV, Section 2(1)--Customer and Professional Penny Pilot Options Rebate To Add Liquidity The Exchange's proposal to amend the current qualifications related to 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 are eligible to earn rebates and these rebates would be uniformly paid to all qualifying Participants. The Exchange's proposal to amend note ``d,'' which applies to the Customer and Professional Penny Pilot Options Rebate to Add Liquidity tiers, to lower the additional amount of the per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity from $0.05 to $0.03 per contract does not impose an undue burden on intra-market competition because all Participants are eligible to earn rebates and these rebates would be uniformly paid to all qualifying Participants. In addition, any Participant may qualify for MARS provided they have the requisite System Eligibility. Pricing Change Number 2: Chapter XV, Section 2(6)--MARS Pricing The Exchange's proposal to amend the MARS Payment to offer NOM Participants that qualify for Customer or Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 an additional $0.09 per contract rebate, in addition to any MARS Payment tier on MARS Eligible Contracts the NOM Participant qualifies for in a given month, does not impose an undue burden on intra-market competition because any Participant may qualify for MARS provided they have the requisite System Eligibility. The Exchange will also uniformly pay MARS Payments to qualifying Participants on all Eligible Contracts. Pricing Change Number 3: Chapter XV, Section 2(1)--Penny Pilot Options Fee for Removing Liquidity The Exchange's proposal to amend note ``4'' to lower the Customer and Professional Penny Pilot Options Fees for Removing Liquidity from $0.50 to $0.48 per contract, excluding SPY, provided NOM Participants qualify for MARS Payment Tiers 1, 2 or 3 does not impose an undue burden on intra-market competition because all Participants may qualify for MARS provided they have the requisite System Eligibility. The Exchange will also uniformly assess the discounted Customer and Professional Penny Pilot Options Fees for Removing Liquidity to qualifying Participants. Excluding SPY does not impose an undue burden on intra-market competition because today, the Exchange offers a discount for SPY options, which discounts are uniformly paid to all Participants. Today, other options exchanges price differently by options symbol.\29\ --------------------------------------------------------------------------- \29\ See note 27. --------------------------------------------------------------------------- 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.\30\ --------------------------------------------------------------------------- \30\ 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-2016-100 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-2016-100. 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 referto File Number SR-NASDAQ-2016-100, and should be submitted on or before August 19, 2016. --------------------------------------------------------------------------- \31\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\31\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-17909 Filed 7-28-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 146 / Friday, July 29, 2016 / Notices 50029
objectives of Section 6(b)(5) of the Act 10 it has become effective pursuant to provisions of 5 U.S.C. 552, will be
in particular, in that it is designed to Section 19(b)(3)(A) 11 of the Exchange available for Web site viewing and
promote just and equitable principles of Act and Rule 19b–4(f)(6) thereunder.12 printing in the Commission’s Public
trade, to foster cooperation and At any time within 60 days of the Reference Room, 100 F Street NE.,
coordination with persons engaged in filing of the proposed rule change, the Washington, DC 20549 on official
facilitating transactions in securities, to Commission summarily may business days between the hours of
remove impediments to and perfect the temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of such
mechanism of a free and open market it appears to the Commission that such filing also will be available for
and a national market system and, in action is: (i) Necessary or appropriate in inspection and copying at the principal
general, to protect investors and the the public interest; (ii) for the protection office of the Exchange. All comments
public interest. of investors; or (iii) otherwise in received will be posted without change;
The Exchange believes that its furtherance of the purposes of the Act. the Commission does not edit personal
proposal to update Exchange Rule If the Commission takes such action, the identifying information from
11.25(a) to include IEX will ensure that Commission shall institute proceedings submissions. You should submit only
the rule correctly identifies and publicly to determine whether the proposed rule information that you wish to make
states on a market-by-market basis the should be approved or disapproved. available publicly. All submissions
specific network processor data feeds IV. Solicitation of Comments should refer to File Number SR–NSX–
that the Exchange utilizes for the 2016–06, and should be submitted on or
Interested persons are invited to before August 19, 2016.
handling, routing, and execution of submit written data, views, and
orders, and for performing the arguments concerning the foregoing, For the Commission, by the Division of
regulatory compliance checks related to including whether the proposed rule Trading and Markets, pursuant to delegated
each of those functions. The proposed authority.13
change is consistent with the Act.
rule change also removes impediments Comments may be submitted by any of Robert W. Errett,
to and perfects the mechanism of a free the following methods: Deputy Secretary.
and open market and protects investors [FR Doc. 2016–17906 Filed 7–28–16; 8:45 am]
and the public interest because it Electronic Comments
BILLING CODE 8011–01–P
provides additional specificity, clarity • Use the Commission’s Internet
and transparency. comment form (http://www.sec.gov/
B. Self-Regulatory Organization’s rules/sro.shtml); or SECURITIES AND EXCHANGE
• Send an email to rule- COMMISSION
Statement on Burden on Competition
comments@sec.gov. Please include File
The Exchange does not believe that Number SR–NSX–2016–06 on the [Release No. 34–78406; File No. SR–
the proposed rule change will result in subject line. NASDAQ–2016–100]
any burden on competition that is not Paper Comments
necessary or appropriate in furtherance Self-Regulatory Organizations; The
of the purposes of the Act. To the • Send paper comments in triplicate NASDAQ Stock Market LLC; Notice of
contrary, the Exchange believes the to Secretary, Securities and Exchange Filing and Immediate Effectiveness of
proposal would enhance competition Commission, 100 F Street NE., Proposed Rule Change To Modify
because including all of the exchanges Washington, DC 20549–1090. NASDAQ Options Market LLC Pricing
enhances transparency and enables All submissions should refer to File at Chapter XV
investors to better assess the quality of Number SR–NSX–2016–06. This file
number should be included on the July 25, 2016
the Exchange’s execution and routing
services. subject line if email is used. To help the Pursuant to Section 19(b)(1) of the
Commission process and review your Securities Exchange Act of 1934
C. Self-Regulatory Organization’s comments more efficiently, please use (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Statement on Comments on the only one method. The Commission will notice is hereby given that, on July 12,
Proposed Rule Change Received From post all comments on the Commission’s 2016, The NASDAQ Stock Market LLC
Members, Participants, or Others Internet Web site (http://www.sec.gov/ (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
The Exchange has neither solicited rules/sro.shtml). Copies of the Securities and Exchange Commission
nor received comments on the proposed submission, all subsequent (‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change. amendments, all written statements rule change as described in Items I, II,
with respect to the proposed rule and III below, which Items have been
III. Date of Effectiveness of the change that are filed with the prepared by the Exchange. The
Proposed Rule Change and Timing for Commission, and all written Commission is publishing this notice to
Commission Action communications relating to the solicit comments on the proposed rule
proposed rule change between the change from interested persons.
Because the foregoing proposed rule
Commission and any person, other than
change does not: I. Self-Regulatory Organization’s
those that may be withheld from the
A. Significantly affect the protection public in accordance with the Statement of the Terms of Substance of
of investors or the public interest; the Proposed Rule Change
B. impose any significant burden on 11 15
U.S.C. 78s(b)(3)(A).
The Exchange proposes to modify the
ebenthall on DSK5MVXVN1PROD with NOTICES
competition; and 12 17
CFR 240.19b–4(f)(6). In addition, Rule 19b–
NASDAQ Options Market LLC’s
4(f)(6) requires a self-regulatory organization to give
C. become operative for 30 days from the Commission written notice of its intent to file (‘‘NOM’’) pricing at Chapter XV,
the date on which it was filed, or such the proposed rule change, along with a brief Sections 2(1) and 2(6) to: (i) Amend
shorter time as the Commission may description and the text of the proposed rule
designate, change, at least five business days prior to the date
13 17 CFR 200.30–3(a)(12).
of filing of the proposed rule change, or such
1 15 U.S.C. 78s(b)(1).
shorter time as designated by the Commission. The
10 15 U.S.C. 78f(b)(5). Exchange has satisfied this requirement. 2 17 CFR 240.19b–4.
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![50032 Federal Register / Vol. 81, No. 146 / Friday, July 29, 2016 / Notices
requisite number of Eligible Contracts in Pricing Change Number 3: Chapter XV, Likewise, in NetCoalition v. Securities
a month are paid rebates based on Section 2(1)—Penny Pilot Options Fee and Exchange Commission 20
average daily volume (‘‘ADV’’) in a for Removing Liquidity (‘‘NetCoalition’’) the D.C. Circuit upheld
month. Today, MARS Payments are The Exchange is proposing to amend the Commission’s use of a market-based
currently based on a 3 tier rebate based note ‘‘4,’’ which is currently reserved, to approach in evaluating the fairness of
on ADV. The Exchange pays a MARS lower the Customer and Professional market data fees against a challenge
Payment of $0.07 for ADV of 2,500 Penny Pilot Options Fees for Removing claiming that Congress mandated a cost-
Eligible Contracts. The Exchange pays a Liquidity from $0.50 14 to $0.48 per based approach.21 As the court
MARS Payment of $0.09 for ADV of contract, excluding SPY,15 for NOM emphasized, the Commission ‘‘intended
Participants that qualify for MARS in Regulation NMS that ‘market forces,
5,000 Eligible Contracts. Finally, the
Payment Tiers 1, 2 or 3. rather than regulatory requirements’
Exchange pays a MARS Payment of
The Exchange believes that offering play a role in determining the market
$0.11 for ADV of 10,000 Eligible data . . . to be made available to
Contracts. The MARS Payment is paid NOM Participants the opportunity to
lower the Customer and Professional investors and at what cost.’’ 22
on all executed Eligible Contracts that Further, ‘‘[n]o one disputes that
add liquidity, which are routed to NOM Penny Pilot Options Fees for Removing
Liquidity by qualifying for MARS competition for order flow is ‘fierce.’
through a participating NOM . . . As the SEC explained, ‘[i]n the U.S.
Payment Tiers 1, 2 or 3 and transacting
Participant’s System and meet the MARS Eligible Contracts,16 will national market system, buyers and
requisite Eligible Contracts ADV. incentivize NOM Participants to send sellers of securities, and the broker-
The Exchange proposes to provide an more MARS Eligible Contracts to NOM. dealers that act as their order-routing
additional incentive to the MARS All market participants benefit from the agents, have a wide range of choices of
Payment in Chapter XV, Section 2(6) by increased order interaction when more where to route orders for execution’;
offering NOM Participants that qualify order flow is available on NOM. [and] ‘no exchange can afford to take its
market share percentages for granted’
for Customer or Professional Penny Pilot 2. Statutory Basis because ‘no exchange possesses a
Options Rebate to Add Liquidity Tier
The Exchange believes that its monopoly, regulatory or otherwise, in
8 12 an additional $0.09 per contract the execution of order flow from broker
rebate applicable to MARS Payment proposal is consistent with Section 6(b)
of the Act,17 in general, and furthers the dealers’. . . .’’ 23 Although the court
tiers. This $0.09 rebate would be in and the SEC were discussing the cash
objectives of Sections 6(b)(4) and 6(b)(5)
addition to any MARS Payment Tier 13 equities markets, the Exchange believes
of the Act,18 in particular, in that it
on MARS Eligible Contracts that the that these views apply with equal force
provides for the equitable allocation of
NOM Participant qualifies for in a given reasonable dues, fees and other charges to the options markets.
month. This incentive is intended to among members and issuers and other
encourage NOM Participants to Pricing Change Number 1: Chapter XV,
persons using any facility, and is not Section 2(1)—Customer and
continue to send more order flow to the designed to permit unfair
Exchange in either Penny Pilot or Non- Professional Penny Pilot Options Rebate
discrimination between customers, to Add Liquidity
Penny Pilot Options to qualify for the issuers, brokers, or dealers.
Customer and Professional Penny Pilot The Commission and the courts have The Exchange’s proposal to amend
Options Tier 8 rebate to earn the repeatedly expressed their preference the current qualifications related to the
additional MARS Payment. All market for competition over regulatory Tier 8 Customer and Professional Penny
participants benefit from the increased intervention in determining prices, Pilot Options Rebate to Add Liquidity is
order interaction when more order flow products, and services in the securities reasonable because the rebate should
is available on NOM. markets. In Regulation NMS, while continue to attract Customer and
adopting a series of steps to improve the Professional order flow to NOM. The
one of the top three default destination exchanges current market model, the Commission additional Customer and Professional
for individually executed marketable orders if NOM highlighted the importance of market order flow to NOM benefits other
is at the national best bid or offer (‘‘NBBO’’), forces in determining prices and SRO market participants by providing
regardless of size or time, but allow any user to additional liquidity with which to
manually override NOM as a default destination on
revenues and, also, recognized that
an order-by-order basis. Any NOM Participant current regulation of the market system interact. Amending the current
would be permitted to avail itself of this ‘‘has been remarkably successful in qualification from 30,000 or more
arrangement, provided that its order routing promoting market competition in its contracts per day in a month to 0.25%
functionality incorporates the features described broader forms that are most important to or more of total industry customer
above and satisfies NOM that it appears to be robust
and reliable. The Participant remains solely investors and listed companies.’’ 19 equity and ETF option ADV contracts
responsible for implementing and operating its provides Participants the ability to
System. See Chapter XV, Section 2(6). 14 Currently, the Customer and Professional qualify for this tier in months with
12 With the proposal herein, to be eligible for Tier Penny Pilot Options Fees for Removing Liquidity lower industry ADV because the
8, a Participant is required to add Customer, are $0.50 per contract.
15 Note ‘‘3’’ of the Pricing Schedule offers
required number of contracts would be
Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot Options and/ Customers and Professionals that remove liquidity directly correlated to industry volume.
or Non-Penny Pilot Options above 0.75% or more in SPY Options a lower Customer and Professional With this proposal, members that
of total industry customer equity and ETF option Penny Pilot Options Fees for Removing Liquidity of consistently send order flow to the
ADV contracts per day in a month, or Participant $0.47 per contract.
16 MARS Eligible Contracts include electronic
Exchange may continue to qualify for
adds: (1) Customer and/or Professional liquidity in
ebenthall on DSK5MVXVN1PROD with NOTICES
Penny Pilot Options and/or Non-Penny Pilot Firm, Non-NOM Market Maker, Broker-Dealer or
20 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
Options of 0.25% or more of total industry Joint Back Office orders that add liquidity,
customer equity and ETF option ADV contracts per excluding Mini Options. See Chapter XV, Section 2010).
day in a month, and (2) has added liquidity in all 2(6). 21 See NetCoalition, at 534–535.
securities through one or more of its Nasdaq Market 17 15 U.S.C. 78f(b). 22 Id. at 537.
Center MPIDs that represent 1.00% or more of 18 15 U.S.C. 78f(b)(4) and (5). 23 Id. at 539 (quoting Securities Exchange Act
Consolidated Volume in a month or qualifies for 19 Securities Exchange Act Release No. 51808 Release No. 59039 (December 2, 2008), 73 FR
MARS. (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 74770, 74782–83 (December 9, 2008) (SR–
13 See note 9 above. (‘‘Regulation NMS Adopting Release’’). NYSEArca–2006–21)).
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![50034 Federal Register / Vol. 81, No. 146 / Friday, July 29, 2016 / Notices
on inter-market competition. Today, Eligibility. The Exchange will also Comments may be submitted by any of
other venues offer rebate programs, uniformly pay MARS Payments to the following methods:
discounted fees and incentives for qualifying Participants on all Eligible
maintain routing systems.28 In sum, if Contracts. Electronic Comments
the changes proposed herein are • Use the Commission’s Internet
Pricing Change Number 3: Chapter XV,
unattractive to market participants, it is comment form (http://www.sec.gov/
Section 2(1)—Penny Pilot Options Fee
likely that the Exchange will lose rules/sro.shtml); or
for Removing Liquidity
market share as a result. Accordingly,
the Exchange does not believe that the The Exchange’s proposal to amend • Send an email to rule-
proposed changes will impair the ability note ‘‘4’’ to lower the Customer and comments@sec.gov. Please include File
of members or competing order Professional Penny Pilot Options Fees Number SR–NASDAQ–2016–100 on the
execution venues to maintain their for Removing Liquidity from $0.50 to subject line.
competitive standing in the financial $0.48 per contract, excluding SPY, Paper Comments
markets. provided NOM Participants qualify for
MARS Payment Tiers 1, 2 or 3 does not • Send paper comments in triplicate
Pricing Change Number 1: Chapter XV,
impose an undue burden on intra- to Brent J. Fields, Secretary, Securities
Section 2(1)—Customer and
market competition because all and Exchange Commission, 100 F Street
Professional Penny Pilot Options Rebate
Participants may qualify for MARS NE., Washington, DC 20549–1090.
To Add Liquidity
provided they have the requisite System
The Exchange’s proposal to amend Eligibility. The Exchange will also All submissions should refer to File
the current qualifications related to the uniformly assess the discounted Number SR–NASDAQ–2016–100. This
Tier 8 Customer and Professional Penny Customer and Professional Penny Pilot file number should be included on the
Pilot Options Rebate to Add Liquidity Options Fees for Removing Liquidity to subject line if email is used. To help the
does not impose an undue burden on qualifying Participants. Excluding SPY Commission process and review your
intra-market competition because all does not impose an undue burden on comments more efficiently, please use
Participants are eligible to earn rebates intra-market competition because today, only one method. The Commission will
and these rebates would be uniformly the Exchange offers a discount for SPY post all comments on the Commission’s
paid to all qualifying Participants. options, which discounts are uniformly Internet Web site (http://www.sec.gov/
The Exchange’s proposal to amend paid to all Participants. Today, other rules/sro.shtml). Copies of the
note ‘‘d,’’ which applies to the Customer options exchanges price differently by submission, all subsequent
and Professional Penny Pilot Options options symbol.29 amendments, all written statements
Rebate to Add Liquidity tiers, to lower with respect to the proposed rule
the additional amount of the per C. Self-Regulatory Organization’s change that are filed with the
contract Penny Pilot Options Customer Statement on Comments on the Commission, and all written
and/or Professional Rebate to Add Proposed Rule Change Received From communications relating to the
Liquidity from $0.05 to $0.03 per Members, Participants, or Others proposed rule change between the
contract does not impose an undue No written comments were either Commission and any person, other than
burden on intra-market competition solicited or received. those that may be withheld from the
because all Participants are eligible to public in accordance with the
earn rebates and these rebates would be III. Date of Effectiveness of the provisions of 5 U.S.C. 552, will be
uniformly paid to all qualifying Proposed Rule Change and Timing for available for Web site viewing and
Participants. In addition, any Commission Action printing in the Commission’s Public
Participant may qualify for MARS The foregoing rule change has become Reference Room, 100 F Street NE.,
provided they have the requisite System effective pursuant to Section Washington, DC 20549 on official
Eligibility. 19(b)(3)(A)(ii) of the Act.30 business days between the hours of
Pricing Change Number 2: Chapter XV, At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such
Section 2(6)—MARS Pricing filing of the proposed rule change, the filing also will be available for
Commission summarily may inspection and copying at the principal
The Exchange’s proposal to amend office of the Exchange. All comments
temporarily suspend such rule change if
the MARS Payment to offer NOM received will be posted without change;
it appears to the Commission that such
Participants that qualify for Customer or the Commission does not edit personal
action is: (i) Necessary or appropriate in
Professional Penny Pilot Options Rebate identifying information from
the public interest; (ii) for the protection
to Add Liquidity Tier 8 an additional submissions. You should submit only
of investors; or (iii) otherwise in
$0.09 per contract rebate, in addition to information that you wish to make
furtherance of the purposes of the Act.
any MARS Payment tier on MARS available publicly. All submissions
If the Commission takes such action, the
Eligible Contracts the NOM Participant should referto File Number SR–
Commission shall institute proceedings
qualifies for in a given month, does not
to determine whether the proposed rule NASDAQ–2016–100, and should be
impose an undue burden on intra-
should be approved or disapproved. submitted on or before August 19, 2016.
market competition because any
Participant may qualify for MARS IV. Solicitation of Comments For the Commission, by the Division of
provided they have the requisite System Trading and Markets, pursuant to delegated
Interested persons are invited to
ebenthall on DSK5MVXVN1PROD with NOTICES
authority.31
28 SeePhlx’s Pricing Schedule at Section B
submit written data, views, and Robert W. Errett,
(Customer Rebate Program) and Section IV, Part E arguments concerning the foregoing,
(MARS). Also, the International Securities including whether the proposed rule Deputy Secretary.
Exchange LLC (‘‘ISE’’) offers a lower Market Maker change is consistent with the Act. [FR Doc. 2016–17909 Filed 7–28–16; 8:45 am]
Taker Fee for Select Symbols of $0.44 per contract BILLING CODE 8011–01–P
for Market Makers with total affiliated Priority
29 See note 27.
Customer Complex ADV of 150,000 or more
contracts. See ISE’s Fee Schedule. 30 15 U.S.C. 78s(b)(3)(A)(ii). 31 17 CFR 200.30–3(a)(12).
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Document Created: 2018-02-08 07:51:40
Document Modified: 2018-02-08 07:51:40
| 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 | 81 FR 50029 |
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