83_FR_40962 83 FR 40803 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing at Chapter XV, Section 2 Entitled “Nasdaq Options Market-Fees and Rebates”

83 FR 40803 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing at Chapter XV, Section 2 Entitled “Nasdaq Options Market-Fees and Rebates”

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 159 (August 16, 2018)

Page Range40803-40805
FR Document2018-17635

Federal Register, Volume 83 Issue 159 (Thursday, August 16, 2018)
[Federal Register Volume 83, Number 159 (Thursday, August 16, 2018)]
[Notices]
[Pages 40803-40805]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-17635]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83824; File No. SR-NASDAQ-2018-063]


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

August 10, 2018.
    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 31, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III, below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's pricing at Chapter 
XV, Section 2 entitled ``Nasdaq Options Market--Fees and Rebates,'' 
which governs pricing for Nasdaq Participants using The Nasdaq Options 
Market LLC (``NOM''), Nasdaq's facility for executing and routing 
standardized equity and index options. The Exchange proposes to amend 
an incentive offered today related to its subsidy program, the Market 
Access and Routing Subsidy or ``MARS.''
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on August 1, 
2018.
    The text of the proposed rule change is available on the Exchange's 
website 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
    NOM proposes to amend the Exchange's pricing at Chapter XV, Section 
2 entitled ``Nasdaq Options Market--Fees and Rebates.'' Specifically, 
the Exchange proposes to amend an incentive in note ``d'' offered to 
NOM Participants that qualify for any MARS Payment Tier in Chapter XV, 
Section 2(6) related to the MARS subsidy program. MARS pays a subsidy 
to NOM Participants that provide certain order routing functionalities 
to other NOM Participants and/or use such functionalities 
themselves.\3\
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    \3\ Generally, under MARS, the Exchange pays participating NOM 
Participants to subsidize their costs of providing routing services 
to route orders to NOM. The Exchange believes that the proposed 
amendment to MARS will continue to attract higher volumes of 
electronic equity and ETF options volume to the Exchange from non-
NOM Participants as well as NOM Participants. The order routing 
functionalities permit NOM Participants to provide access and 
connectivity to other Participants as well as utilize such access 
for themselves. The Exchange notes that one NOM Participant is 
eligible for payments under MARS, while another NOM Participant 
might potentially be liable for transaction charges associated with 
the execution of the order, because those orders were delivered to 
the Exchange through a NOM Participant's connection to the Exchange 
and that Participant qualified for the MARS Payment.
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Background on MARS
    Today, to qualify for MARS, a NOM Participant's routing system 
(hereinafter ``System'') is required to meet certain criteria.\4\
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    \4\ Specifically the Participant's System is 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. The Participant's System would also need to cause NOM 
to be one of the top three default destination exchanges for (a) 
individually executed marketable orders if NOM is at the national 
best bid or offer (``NBBO''), regardless of size or time, or (b) 
orders that establish a new NBBO on NOM's Order Book, but allow any 
user to manually override NOM as a default destination on an order-
by-order basis. Any NOM Participant is permitted to avail itself of 
this arrangement, provided that its order routing functionality 
incorporates the features described herein and the Participant 
satisfies NOM that it appears to be robust and reliable. 
Participants remain solely responsible for implementing and 
operating its System.
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    MARS Payments are made to NOM Participants that have System 
Eligibility and have routed the requisite number of Eligible Contracts 
daily in a month (``Average Daily Volume''), which were executed on 
NOM.\5\ Today, NOM Participants that have System Eligibility and have 
executed the requisite number of Eligible Contracts in a month will be 
paid the following rebates: \6\
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    \5\ For the purpose of qualifying for the MARS Payment, Eligible 
Contracts may include Firm, Non-NOM Market Maker, Broker-Dealer, or 
Joint Back Office or ``JBO'' equity option orders that add liquidity 
and are electronically delivered and executed. Eligible Contracts do 
not include Mini Option orders.
    \6\ The specified MARS Payments are 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. No payments are made with respect 
to orders that are routed to NOM, but not executed. Also, a 
Participant is not entitled to receive any other revenue from the 
Exchange for the use of its System specifically with respect to 
orders routed to NOM.

----------------------------------------------------------------------------------------------------------------
                                                                   Average Daily
                              Tiers                                   Volume       MARS  payment   MARS  payment
                                                                     (``ADV'')        (penny)       (non-penny)
----------------------------------------------------------------------------------------------------------------
1...............................................................           2,000           $0.07           $0.15
2...............................................................           5,000            0.09            0.20
3...............................................................          10,000            0.11            0.30
4...............................................................          20,000            0.15            0.50
5...............................................................          45,000            0.17            0.60
----------------------------------------------------------------------------------------------------------------


[[Page 40804]]

    NOM Participants that qualify for Customer \7\ and Professional \8\ 
Penny Pilot Options Rebate to Add Liquidity Tier 6 will receive an 
extra $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.
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    \7\ 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.
    \8\ 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. See Chapter XV.
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Incentive
    Today, the Exchange pays certain Customer and Professional Penny 
Pilot Options Rebates to Add Liquidity. These rebates are structured as 
a 6 tier rebate program ranging from $0.20 to $0.48 per contract, with 
increasing volume requirements for each tier. In addition to the 
Customer and Professional Penny Pilot Options Rebates to Add Liquidity, 
the NOM Participant may also qualify for an additional rebate provided 
the NOM Participant qualifies for any MARS Payment Tier for each 
transaction which adds liquidity in Penny Pilot Options in that month. 
Further, the Exchange pays an additional $0.04 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, 
in addition to qualifying Penny Pilot Options Customer and/or 
Professional Rebate to Add Liquidity Tiers 1-6.\9\ Also, today, NOM 
Participants that qualify for a note ``c'' incentive receive the 
greater of the note ``c'' or note ``d'' incentive.\10\
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    \9\ See Chapter XV, Section 2(1), note ``d.''
    \10\ The note ``c'' incentive can be found at Chapter XV, 
Section 2(1) and provides additional incentives to NOM Participants 
that qualify for the Penny Pilot Options Customer and/or 
Professional Rebate to Add Liquidity Tier 6 in addition to meeting 
certain criteria specified in note ``c''.
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    The Exchange now proposes to amend note ``d'' to increase the 
additional $0.04 per contract Penny Pilot Options Customer and/or 
Professional Rebate to Add Liquidity currently offered to NOM 
Participants that qualify for any MARS Payment Tier in addition to 
qualifying for Customer and/or Professional Rebate to Add Liquidity 
Tier 1 to $0.05 per contract for each transaction which adds liquidity 
in Penny Pilot Options in that month. For those NOM Participants that 
qualify for Customer and/or Professional Rebate to Add Liquidity Tiers 
2-6, the Exchange will continue to provide the additional $0.04 per 
contract rebate for each transaction that adds liquidity in Penny Pilot 
Options in that month, provided the NOM Participant also qualifies for 
any MARS Payment Tier.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among Participants and issuers and other persons using 
any facility or system which the Exchange operates or controls, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes it is reasonable to amend note ``d'' in 
Chapter XV, Section 2(1) to increase the additional $0.04 per contract 
rebate for NOM Participants qualifying for Penny Pilot Options Customer 
and/or Professional Rebate to Add Liquidity Tier 1 in addition to 
qualifying for any MARS Payment tier to $0.05 per contract for each 
transaction that adds liquidity in Penny Pilot Options for that month. 
The proposed amendment should continue to encourage NOM Participants to 
qualify for the Penny Pilot Options Customer and/or Professional Rebate 
to Add Liquidity Tier 1 in addition to any MARS Payment tier, thereby 
executing a greater amount of order flow on NOM to the benefit of all 
market participants who may interact with the order flow. Furthermore, 
the proposed changes will allow the Exchange to remain competitive with 
other options exchanges that offer similar incentives.\13\
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    \13\ See MIAX PEARL Fee Schedule, Section 1(a). MIAX PEARL 
offers priority customers and non-priority customers a $0.25 per 
contract maker rebate in tier 1 for adding liquidity in penny 
classes. See Cboe BZX Options Exchange (``BZX'') Fee Schedule. BZX 
offers customers and professionals a base rebate of $0.25 per 
contract for adding liquidity in penny pilot options. Under NOM's 
proposal, NOM Participants would similarly have the opportunity to 
earn up a $0.25 per contract Penny Pilot Options Customer and/or 
Professional Rebate to Add Liquidity in Tier 1 (i.e., the $0.20 per 
contract Tier 1 rebate plus the additional $0.05 note ``d'' 
incentive), provided they meet the requisite qualifications.
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    Further, the Exchange's proposal to amend the note ``d'' incentive 
as described above is equitable and not unfairly discriminatory. All 
NOM Participants are eligible to qualify for a MARS Payment, provided 
they have System Eligibility, and all NOM Participants may be eligible 
for the Penny Pilot Options Customer and/or Professional Rebate to Add 
Liquidity Tier 1 provided they execute qualifying volume. All NOM 
Participants are eligible to qualify for the note ``d'' incentive 
provided the requisite requirements are met. The Exchange would 
uniformly pay the additional note ``d'' incentive to all qualifying NOM 
Participants.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange's proposal to 
amend the note ``d'' incentive as described above does not impose an 
undue burden on competition. All NOM Participants are eligible to 
qualify for a MARS Payment, provided they have System Eligibility, and 
all NOM Participants may be eligible for a Penny Pilot Options Customer 
and/or Professional Rebate to Add Liquidity provided they execute 
qualifying volume. All NOM Participants are eligible to qualify for the 
note ``d'' incentive provided the requisite requirements are met. The 
Exchange would uniformly pay the additional note ``d'' incentive to all 
qualifying NOM Participants. Furthermore, 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. The Exchange's proposal reflects 
this competitive environment as it will allow the Exchange remain 
competitive with other options exchanges that offer similar incentives, 
as discussed above.\14\
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    \14\ See note 13 above.
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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.\15\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may

[[Page 40805]]

temporarily suspend such rule change if it appears to the Commission 
that such action is: (i) Necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) otherwise in 
furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2018-063 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2018-063. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2018-063, and should be submitted 
on or before September 6, 2018.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-17635 Filed 8-15-18; 8:45 am]
BILLING CODE 8011-01-P



                                                                                         Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices                                                                                     40803

                                                  For the Commission, by the Division of                                       I. Self-Regulatory Organization’s                                            forth in sections A, B, and C below, of
                                                Trading and Markets, pursuant to delegated                                     Statement of the Terms of Substance of                                       the most significant aspects of such
                                                authority.18                                                                   the Proposed Rule Change                                                     statements.
                                                Brent J. Fields,                                                                  The Exchange proposes to amend the                                        A. Self-Regulatory Organization’s
                                                Secretary.                                                                     Exchange’s pricing at Chapter XV,                                            Statement of the Purpose of, and
                                                [FR Doc. 2018–17628 Filed 8–15–18; 8:45 am]                                    Section 2 entitled ‘‘Nasdaq Options                                          Statutory Basis for, the Proposed Rule
                                                BILLING CODE 8011–01–P                                                         Market—Fees and Rebates,’’ which                                             Change
                                                                                                                               governs pricing for Nasdaq Participants
                                                                                                                               using The Nasdaq Options Market LLC                                          1. Purpose
                                                SECURITIES AND EXCHANGE                                                        (‘‘NOM’’), Nasdaq’s facility for                                               NOM proposes to amend the
                                                COMMISSION                                                                     executing and routing standardized                                           Exchange’s pricing at Chapter XV,
                                                                                                                               equity and index options. The Exchange                                       Section 2 entitled ‘‘Nasdaq Options
                                                                                                                               proposes to amend an incentive offered                                       Market—Fees and Rebates.’’
                                                [Release No. 34–83824; File No. SR–
                                                                                                                               today related to its subsidy program, the                                    Specifically, the Exchange proposes to
                                                NASDAQ–2018–063]
                                                                                                                               Market Access and Routing Subsidy or                                         amend an incentive in note ‘‘d’’ offered
                                                Self-Regulatory Organizations; The                                             ‘‘MARS.’’                                                                    to NOM Participants that qualify for any
                                                                                                                                  While the changes proposed herein                                         MARS Payment Tier in Chapter XV,
                                                Nasdaq Stock Market LLC; Notice of
                                                                                                                               are effective upon filing, the Exchange                                      Section 2(6) related to the MARS
                                                Filing and Immediate Effectiveness of
                                                                                                                               has designated the amendments become                                         subsidy program. MARS pays a subsidy
                                                Proposed Rule Change To Amend the                                              operative on August 1, 2018.
                                                Exchange’s Pricing at Chapter XV,                                                                                                                           to NOM Participants that provide
                                                                                                                                  The text of the proposed rule change
                                                Section 2 Entitled ‘‘Nasdaq Options                                                                                                                         certain order routing functionalities to
                                                                                                                               is available on the Exchange’s website at
                                                Market—Fees and Rebates’’                                                                                                                                   other NOM Participants and/or use such
                                                                                                                               http://nasdaq.cchwallstreet.com/, at the
                                                                                                                               principal office of the Exchange, and at                                     functionalities themselves.3
                                                August 10, 2018.
                                                                                                                               the Commission’s Public Reference                                            Background on MARS
                                                   Pursuant to Section 19(b)(1) of the                                         Room.
                                                Securities Exchange Act of 1934                                                                                                                                Today, to qualify for MARS, a NOM
                                                                                                                               II. Self-Regulatory Organization’s                                           Participant’s routing system (hereinafter
                                                (‘‘Act’’),1 and Rule 19b–4 thereunder,2                                        Statement of the Purpose of, and                                             ‘‘System’’) is required to meet certain
                                                notice is hereby given that on July 31,                                        Statutory Basis for, the Proposed Rule                                       criteria.4
                                                2018, The Nasdaq Stock Market LLC                                              Change                                                                          MARS Payments are made to NOM
                                                (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
                                                                                                                                  In its filing with the Commission, the                                    Participants that have System Eligibility
                                                Securities and Exchange Commission
                                                                                                                               Exchange included statements                                                 and have routed the requisite number of
                                                (‘‘Commission’’) the proposed rule
                                                                                                                               concerning the purpose of and basis for                                      Eligible Contracts daily in a month
                                                change as described in Items I, II, and                                                                                                                     (‘‘Average Daily Volume’’), which were
                                                                                                                               the proposed rule change and discussed
                                                III, below, which Items have been                                              any comments it received on the                                              executed on NOM.5 Today, NOM
                                                prepared by the Exchange. The                                                  proposed rule change. The text of these                                      Participants that have System Eligibility
                                                Commission is publishing this notice to                                        statements may be examined at the                                            and have executed the requisite number
                                                solicit comments on the proposed rule                                          places specified in Item IV below. The                                       of Eligible Contracts in a month will be
                                                change from interested persons.                                                Exchange has prepared summaries, set                                         paid the following rebates: 6

                                                                                                                                                                                                          Average Daily          MARS               MARS
                                                                                                                       Tiers                                                                                Volume              payment            payment
                                                                                                                                                                                                            (‘‘ADV’’)           (penny)          (non-penny)

                                                1   ...................................................................................................................................................            2,000               $0.07              $0.15
                                                2   ...................................................................................................................................................            5,000                0.09               0.20
                                                3   ...................................................................................................................................................           10,000                0.11               0.30
                                                4   ...................................................................................................................................................           20,000                0.15               0.50
                                                5   ...................................................................................................................................................           45,000                0.17               0.60



                                                    18 17
                                                        CFR 200.30–3(a)(12).                                                   Participant’s connection to the Exchange and that                            appears to be robust and reliable. Participants
                                                    1 15
                                                       U.S.C. 78s(b)(1).                                                       Participant qualified for the MARS Payment.                                  remain solely responsible for implementing and
                                                  2 17 CFR 240.19b–4.                                                             4 Specifically the Participant’s System is required                       operating its System.
                                                  3 Generally, under MARS, the Exchange pays                                   to: (1) Enable the electronic routing of orders to all                          5 For the purpose of qualifying for the MARS

                                                participating NOM Participants to subsidize their                              of the U.S. options exchanges, including NOM; (2)                            Payment, Eligible Contracts may include Firm, Non-
                                                                                                                               provide current consolidated market data from the                            NOM Market Maker, Broker-Dealer, or Joint Back
                                                costs of providing routing services to route orders
                                                                                                                               U.S. options exchanges; and (3) be capable of                                Office or ‘‘JBO’’ equity option orders that add
                                                to NOM. The Exchange believes that the proposed
                                                                                                                               interfacing with NOM’s API to access current NOM                             liquidity and are electronically delivered and
                                                amendment to MARS will continue to attract higher                              match engine functionality. The Participant’s
                                                volumes of electronic equity and ETF options                                                                                                                executed. Eligible Contracts do not include Mini
                                                                                                                               System would also need to cause NOM to be one
                                                volume to the Exchange from non-NOM                                                                                                                         Option orders.
                                                                                                                               of the top three default destination exchanges for                              6 The specified MARS Payments are paid on all
                                                Participants as well as NOM Participants. The order
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                                               (a) individually executed marketable orders if NOM
                                                routing functionalities permit NOM Participants to                             is at the national best bid or offer (‘‘NBBO’’),                             executed Eligible Contracts that add liquidity,
                                                provide access and connectivity to other                                       regardless of size or time, or (b) orders that establish                     which are routed to NOM through a participating
                                                Participants as well as utilize such access for                                a new NBBO on NOM’s Order Book, but allow any                                NOM Participant’s System and meet the requisite
                                                themselves. The Exchange notes that one NOM                                    user to manually override NOM as a default                                   Eligible Contracts ADV. No payments are made
                                                Participant is eligible for payments under MARS,                               destination on an order-by-order basis. Any NOM                              with respect to orders that are routed to NOM, but
                                                while another NOM Participant might potentially                                Participant is permitted to avail itself of this                             not executed. Also, a Participant is not entitled to
                                                be liable for transaction charges associated with the                          arrangement, provided that its order routing                                 receive any other revenue from the Exchange for the
                                                execution of the order, because those orders were                              functionality incorporates the features described                            use of its System specifically with respect to orders
                                                delivered to the Exchange through a NOM                                        herein and the Participant satisfies NOM that it                             routed to NOM.



                                           VerDate Sep<11>2014           17:15 Aug 15, 2018          Jkt 244001        PO 00000        Frm 00060        Fmt 4703        Sfmt 4703       E:\FR\FM\16AUN1.SGM         16AUN1


                                                40804                        Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices

                                                  NOM Participants that qualify for                      Rebate to Add Liquidity Tiers 2–6, the                   Participants may be eligible for the
                                                Customer 7 and Professional 8 Penny                      Exchange will continue to provide the                    Penny Pilot Options Customer and/or
                                                Pilot Options Rebate to Add Liquidity                    additional $0.04 per contract rebate for                 Professional Rebate to Add Liquidity
                                                Tier 6 will receive an extra $0.09 per                   each transaction that adds liquidity in                  Tier 1 provided they execute qualifying
                                                contract rebate in addition to any MARS                  Penny Pilot Options in that month,                       volume. All NOM Participants are
                                                Payment tier on MARS Eligible                            provided the NOM Participant also                        eligible to qualify for the note ‘‘d’’
                                                Contracts the NOM Participant qualifies                  qualifies for any MARS Payment Tier.                     incentive provided the requisite
                                                for in a given month.                                                                                             requirements are met. The Exchange
                                                                                                         2. Statutory Basis
                                                Incentive                                                                                                         would uniformly pay the additional
                                                                                                            The Exchange believes that its                        note ‘‘d’’ incentive to all qualifying
                                                   Today, the Exchange pays certain                      proposal is consistent with Section 6(b)                 NOM Participants.
                                                Customer and Professional Penny Pilot                    of the Act,11 in general, and furthers the
                                                Options Rebates to Add Liquidity.                        objectives of Sections 6(b)(4) and 6(b)(5)               B. Self-Regulatory Organization’s
                                                These rebates are structured as a 6 tier                 of the Act,12 in particular, in that it                  Statement on Burden on Competition
                                                rebate program ranging from $0.20 to                     provides for the equitable allocation of                    The Exchange does not believe that
                                                $0.48 per contract, with increasing                      reasonable dues, fees and other charges                  the proposed rule change will impose
                                                volume requirements for each tier. In                    among Participants and issuers and                       any burden on competition not
                                                addition to the Customer and                             other persons using any facility or                      necessary or appropriate in furtherance
                                                Professional Penny Pilot Options                         system which the Exchange operates or                    of the purposes of the Act. The
                                                Rebates to Add Liquidity, the NOM                        controls, and is not designed to permit                  Exchange’s proposal to amend the note
                                                Participant may also qualify for an                      unfair discrimination between                            ‘‘d’’ incentive as described above does
                                                additional rebate provided the NOM                       customers, issuers, brokers, or dealers.                 not impose an undue burden on
                                                Participant qualifies for any MARS                          The Exchange believes it is reasonable                competition. All NOM Participants are
                                                Payment Tier for each transaction which                  to amend note ‘‘d’’ in Chapter XV,                       eligible to qualify for a MARS Payment,
                                                adds liquidity in Penny Pilot Options in                 Section 2(1) to increase the additional                  provided they have System Eligibility,
                                                that month. Further, the Exchange pays                   $0.04 per contract rebate for NOM                        and all NOM Participants may be
                                                an additional $0.04 per contract Penny                   Participants qualifying for Penny Pilot                  eligible for a Penny Pilot Options
                                                Pilot Options Customer and/or                            Options Customer and/or Professional                     Customer and/or Professional Rebate to
                                                Professional Rebate to Add Liquidity for                 Rebate to Add Liquidity Tier 1 in                        Add Liquidity provided they execute
                                                each transaction which adds liquidity in                 addition to qualifying for any MARS                      qualifying volume. All NOM
                                                Penny Pilot Options in that month, in                    Payment tier to $0.05 per contract for                   Participants are eligible to qualify for
                                                addition to qualifying Penny Pilot                       each transaction that adds liquidity in                  the note ‘‘d’’ incentive provided the
                                                Options Customer and/or Professional                     Penny Pilot Options for that month. The                  requisite requirements are met. The
                                                Rebate to Add Liquidity Tiers 1–6.9                      proposed amendment should continue                       Exchange would uniformly pay the
                                                Also, today, NOM Participants that                       to encourage NOM Participants to                         additional note ‘‘d’’ incentive to all
                                                qualify for a note ‘‘c’’ incentive receive               qualify for the Penny Pilot Options                      qualifying NOM Participants.
                                                the greater of the note ‘‘c’’ or note ‘‘d’’              Customer and/or Professional Rebate to                   Furthermore, the Exchange notes that it
                                                incentive.10                                             Add Liquidity Tier 1 in addition to any                  operates in a highly competitive market
                                                   The Exchange now proposes to amend                    MARS Payment tier, thereby executing                     in which market participants can
                                                note ‘‘d’’ to increase the additional                    a greater amount of order flow on NOM                    readily favor competing venues if they
                                                $0.04 per contract Penny Pilot Options                   to the benefit of all market participants                deem fee levels at a particular venue to
                                                Customer and/or Professional Rebate to                   who may interact with the order flow.
                                                                                                                                                                  be excessive, or rebate opportunities
                                                Add Liquidity currently offered to NOM                   Furthermore, the proposed changes will
                                                                                                                                                                  available at other venues to be more
                                                Participants that qualify for any MARS                   allow the Exchange to remain
                                                                                                                                                                  favorable. The Exchange’s proposal
                                                Payment Tier in addition to qualifying                   competitive with other options
                                                                                                                                                                  reflects this competitive environment as
                                                for Customer and/or Professional Rebate                  exchanges that offer similar
                                                                                                                                                                  it will allow the Exchange remain
                                                to Add Liquidity Tier 1 to $0.05 per                     incentives.13
                                                                                                            Further, the Exchange’s proposal to                   competitive with other options
                                                contract for each transaction which adds
                                                                                                         amend the note ‘‘d’’ incentive as                        exchanges that offer similar incentives,
                                                liquidity in Penny Pilot Options in that
                                                                                                         described above is equitable and not                     as discussed above.14
                                                month. For those NOM Participants that
                                                qualify for Customer and/or Professional                 unfairly discriminatory. All NOM                         C. Self-Regulatory Organization’s
                                                                                                         Participants are eligible to qualify for a               Statement on Comments on the
                                                   7 The term ‘‘Customer’’ or (‘‘C’’) applies to any
                                                                                                         MARS Payment, provided they have                         Proposed Rule Change Received From
                                                transaction that is identified by a Participant for      System Eligibility, and all NOM                          Members, Participants, or Others
                                                clearing in the Customer range at The Options
                                                Clearing Corporation which is not for the account
                                                                                                           11 15
                                                                                                                                                                    No written comments were either
                                                of broker or dealer or for the account of a                       U.S.C. 78f(b).
                                                                                                           12 15
                                                                                                                                                                  solicited or received.
                                                ‘‘Professional.’’ See Chapter XV.                                 U.S.C. 78f(b)(4) and (5).
                                                   8 The term ‘‘Professional’’ or (‘‘P’’) means any         13 See MIAX PEARL Fee Schedule, Section 1(a).
                                                                                                                                                                  III. Date of Effectiveness of the
                                                person or entity that (i) is not a broker or dealer in   MIAX PEARL offers priority customers and non-
                                                securities, and (ii) places more than 390 orders in
                                                                                                                                                                  Proposed Rule Change and Timing for
                                                                                                         priority customers a $0.25 per contract maker rebate
                                                listed options per day on average during a calendar      in tier 1 for adding liquidity in penny classes. See     Commission Action
                                                month for its own beneficial account(s) pursuant to      Cboe BZX Options Exchange (‘‘BZX’’) Fee                     The foregoing rule change has become
                                                Chapter I, Section 1(a)(48). All Professional orders     Schedule. BZX offers customers and professionals
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                                                shall be appropriately marked by Participants. See       a base rebate of $0.25 per contract for adding
                                                                                                                                                                  effective pursuant to Section
                                                Chapter XV.                                              liquidity in penny pilot options. Under NOM’s            19(b)(3)(A)(ii) of the Act.15
                                                   9 See Chapter XV, Section 2(1), note ‘‘d.’’           proposal, NOM Participants would similarly have             At any time within 60 days of the
                                                   10 The note ‘‘c’’ incentive can be found at Chapter   the opportunity to earn up a $0.25 per contract          filing of the proposed rule change, the
                                                XV, Section 2(1) and provides additional incentives      Penny Pilot Options Customer and/or Professional
                                                                                                         Rebate to Add Liquidity in Tier 1 (i.e., the $0.20 per
                                                                                                                                                                  Commission summarily may
                                                to NOM Participants that qualify for the Penny Pilot
                                                Options Customer and/or Professional Rebate to           contract Tier 1 rebate plus the additional $0.05 note
                                                                                                                                                                   14 See   note 13 above.
                                                Add Liquidity Tier 6 in addition to meeting certain      ‘‘d’’ incentive), provided they meet the requisite
                                                criteria specified in note ‘‘c’’.                        qualifications.                                           15 15   U.S.C. 78s(b)(3)(A)(ii).



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                                                                            Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices                                                      40805

                                                temporarily suspend such rule change if                 to make available publicly. All                           II. Self-Regulatory Organization’s
                                                it appears to the Commission that such                  submissions should refer to File                          Statement of the Purpose of, and
                                                action is: (i) Necessary or appropriate in              Number SR–NASDAQ–2018–063, and                            Statutory Basis for, the Proposed Rule
                                                the public interest; (ii) for the protection            should be submitted on or before                          Change
                                                of investors; or (iii) otherwise in                     September 6, 2018.                                           In its filing with the Commission, the
                                                furtherance of the purposes of the Act.                                                                           Exchange included statements
                                                                                                          For the Commission, by the Division of
                                                If the Commission takes such action, the                                                                          concerning the purpose of and basis for
                                                                                                        Trading and Markets, pursuant to delegated
                                                Commission shall institute proceedings                                                                            the proposed rule change and discussed
                                                                                                        authority.16
                                                to determine whether the proposed rule                                                                            any comments it received on the
                                                should be approved or disapproved.                      Robert W. Errett,
                                                                                                                                                                  proposed rule change. The text of these
                                                                                                        Deputy Secretary.
                                                IV. Solicitation of Comments                                                                                      statements may be examined at the
                                                                                                        [FR Doc. 2018–17635 Filed 8–15–18; 8:45 am]               places specified in Item IV below. The
                                                  Interested persons are invited to                     BILLING CODE 8011–01–P                                    Exchange has prepared summaries, set
                                                submit written data, views, and
                                                                                                                                                                  forth in sections A, B, and C below, of
                                                arguments concerning the foregoing,
                                                                                                                                                                  the most significant aspects of such
                                                including whether the proposed rule                     SECURITIES AND EXCHANGE                                   statements.
                                                change is consistent with the Act.                      COMMISSION
                                                Comments may be submitted by any of                                                                               A. Self-Regulatory Organization’s
                                                the following methods:                                                                                            Statement of the Purpose of, and
                                                                                                        [Release No. 34–83823; File No. SR–
                                                                                                                                                                  Statutory Basis for, the Proposed Rule
                                                Electronic Comments                                     NASDAQ–2018–064]
                                                                                                                                                                  Change
                                                  • Use the Commission’s internet
                                                comment form (http://www.sec.gov/                       Self-Regulatory Organizations; The                        1. Purpose
                                                rules/sro.shtml); or                                    Nasdaq Stock Market LLC; Notice of                           The purpose of the proposed rule
                                                  • Send an email to rule-comments@                     Filing and Immediate Effectiveness of                     change is to amend the Exchange’s fees
                                                sec.gov. Please include File Number SR–                 Proposed Rule Change To Amend                             at Rule 7014(e), concerning Qualified
                                                NASDAQ–2018–063 on the subject line.                    Fees Under Rules 7014(e) and 7018(a)                      Market Makers (‘‘QMMs’’),5 to apply
                                                Paper Comments                                          August 10, 2018
                                                                                                                                                                  additional criteria required to qualify for
                                                                                                                                                                  a fee of $0.0029 per share executed, and
                                                   • Send paper comments in triplicate                     Pursuant to Section 19(b)(1) of the                    to amend Rule 7018(a), concerning the
                                                to Secretary, Securities and Exchange                   Securities Exchange Act of 1934                           fees and credits provided for the use of
                                                Commission, 100 F Street NE,                            (‘‘Act’’),1 and Rule 19b–4 thereunder,2                   the order execution and routing services
                                                Washington, DC 20549–1090.                              notice is hereby given that, on August                    of the Nasdaq Market Center by
                                                All submissions should refer to File                    1, 2018, The Nasdaq Stock Market LLC                      members for all securities priced at $1
                                                Number SR–NASDAQ–2018–063. This                         (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the               or more that it trades, to assess no fees
                                                file number should be included on the                   Securities and Exchange Commission                        for Midpoint Extended Life Orders in
                                                subject line if email is used. To help the              (‘‘SEC’’ or ‘‘Commission’’) the proposed                  securities of all three Tapes. Rule
                                                Commission process and review your                      rule change as described in Items I, II,                  7014(e) provides the fees and rebates
                                                comments more efficiently, please use                   and III below, which Items have been                      applicable to QMMs. Rule 7018(a)(1)
                                                only one method. The Commission will                    prepared by the Exchange. The                             sets forth the fees and credits for the
                                                post all comments on the Commission’s                   Commission is publishing this notice to                   execution and routing of orders in
                                                internet website (http://www.sec.gov/                   solicit comments on the proposed rule                     Nasdaq-listed securities (Tape C); Rule
                                                rules/sro.shtml). Copies of the                         change from interested persons.                           7018(a)(2) sets forth the fees and credits
                                                submission, all subsequent                                                                                        for the execution and routing of
                                                amendments, all written statements                      I. Self-Regulatory Organization’s                         securities listed on the New York Stock
                                                with respect to the proposed rule                       Statement of the Terms of Substance of                    Exchange LLC (Tape A); and Rule
                                                change that are filed with the                          the Proposed Rule Change                                  7018(a)(3) sets forth the fees and credits
                                                Commission, and all written                                                                                       for the execution and routing of
                                                                                                           The Exchange proposes to amend the
                                                communications relating to the                                                                                    securities listed on exchanges other than
                                                                                                        Exchange’s fees at Rule 7014(e) to apply
                                                proposed rule change between the                                                                                  Nasdaq and NYSE (Tape B). The
                                                                                                        additional criteria required to qualify for
                                                Commission and any person, other than                                                                             Exchange is proposing to assess no fee
                                                                                                        a fee of $0.0029 per share executed, and
                                                those that may be withheld from the                                                                               for all Midpoint Extended Life Orders.
                                                                                                        to amend Rule 7018(a) to assess no fees
                                                public in accordance with the                                                                                     First Change
                                                                                                        for Midpoint Extended Life Orders 3 in
                                                provisions of 5 U.S.C. 552, will be
                                                                                                        securities of all three Tapes.4                             Under Rule 7014(e), the Exchange
                                                available for website viewing and
                                                printing in the Commission’s Public                        The text of the proposed rule change                   charges a QMM $0.0030 per share
                                                Reference Room, 100 F Street NE,                        is available on the Exchange’s website at                 executed for removing liquidity in
                                                Washington, DC 20549 on official                        http://nasdaq.cchwallstreet.com/, at the                  Nasdaq-listed securities priced at $1 or
                                                business days between the hours of                      principal office of the Exchange, and at                  more, and $0.00295 per share executed
                                                10:00 a.m. and 3:00 p.m. Copies of the                  the Commission’s Public Reference                         for removing liquidity in securities
                                                filing also will be available for                       Room.                                                     priced at $1 or more per share listed on
                                                inspection and copying at the principal
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                                                                                                                                                                    5 To be designated a QMM, a member must meet
                                                office of the Exchange. All comments                      16 17  CFR 200.30–3(a)(12).
                                                                                                                                                                  the following criteria: (1) The member is not
                                                received will be posted without change.                   1 15  U.S.C. 78s(b)(1).                                 assessed any ‘‘Excess Order Fee’’ under Rule 7018
                                                                                                           2 17 CFR 240.19b–4.
                                                Persons submitting comments are                                                                                   during the month; (2) the member quotes at the
                                                                                                           3 See Rule 4702(b)(14).
                                                cautioned that we do not redact or edit                                                                           NBBO at least 25% of the time during regular
                                                                                                           4 Tape C securities are those that are listed on the   market hours in an average of at least 1,000
                                                personal identifying information from                   Exchange, Tape A securities are those that are listed     securities per day during the month; and (3) the
                                                comment submissions. You should                         on NYSE, and Tape B securities are those that are         member is a registered Nasdaq market maker. See
                                                submit only information that you wish                   listed on exchanges other than Nasdaq or NYSE.            Rule 7014(d).



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Document Created: 2018-08-16 01:02:32
Document Modified: 2018-08-16 01:02:32
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 40803 

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