[Federal Register Volume 75, Number 166 (Friday, August 27, 2010)]
[Notices]
[Pages 52790-52792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21307]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62754; File No. SR-NASDAQ-2010-105]
Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
NASDAQ Options Market Fees and Rebates
August 20, 2010.
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 August 18, 2010, NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 52791]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify Exchange Rule 7050 governing
pricing for NASDAQ members using the NASDAQ Options Market (``NOM''),
NASDAQ's facility for executing and routing standardized equity and
index options. Specifically, NOM proposes to: modify pricing for both
Penny Pilot \3\ Options and All Other Options with respect to the fees
for removing liquidity.\4\
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\3\ The Penny Pilot was established in March 2008 and in October
2009 was expanded and extended through December 31, 2010. See
Securities Exchange Act Release Nos. 57579 (March 28, 2008), 73 FR
18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of filing and
immediate effectiveness establishing Penny Pilot); 60874 (October
23, 2009), 74 FR 56682 (November 2, 2009) (SR-NASDAQ-2009-091)
(notice of filing and immediate effectiveness expanding and
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292
(November 17, 2009) (SR-NASDAQ-2009-097) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); and 62029 (May 4, 2010), 75 FR
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot).
See also Exchange Rule Chapter VI, Section 5.
\4\ An order that removes liquidity is one that is entered into
NOM and that executes against an order resting on the NOM book.
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While changes pursuant to this proposal are effective upon filing,
the Exchange has designated these changes to be operative for
transactions on September 1, 2010.
The text of the proposed rule change is set forth below. Proposed
new text is in italics and deleted text is in brackets.
* * * * *
7050. NASDAQ Options Market
The following charges shall apply to the use of the order execution
and routing services of the NASDAQ Options Market for all securities.
(1) Fees for Execution of Contracts on the NASDAQ Options Market
Fees and Rebates
[Per executed contract]
----------------------------------------------------------------------------------------------------------------
Non-NOM market NOM market
Customer Firm maker maker
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Penny Pilot Options:
Rebate to Add Liquidity..................... $0.32 $0.10 $0.25 $0.30
Fee for Removing Liquidity.................. 0.4[0]3 0.45 0.45 0.45
NDX and MNX:
Rebate to Add Liquidity..................... 0.10 0.10 0.10 0.20
Fee for Removing Liquidity.................. 0.50 0.50 0.50 0.40
All Other Options:
Fee for Adding Liquidity.................... 0.00 0.45 0.45 0.30
Fee for Removing Liquidity.................. 0.4[0]3 0.45 0.45 0.45
Rebate to Add Liquidity..................... 0.20 0.00 0.00 0.00
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* * * * *
The text of the proposed rule change is available on the Exchange's
Web site at http://www.nasdaqomx.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
NASDAQ is proposing to modify Rule 7050 governing the fees assessed
for options orders entered into NOM. Specifically, NASDAQ is proposing
to modify pricing for both Penny Pilot Options and All Other Options
with respect to the fees for removing liquidity. Currently, NASDAQ
distinguishes between options that are included in the Penny Pilot and
those that are not.
Penny Options--Removing Liquidity
The Exchange assesses a fee to members removing liquidity through
NOM in options included in the Penny Pilot and charges a fee of $0.40
per executed contract to Customers for removing such liquidity and a
fee of $0.45 per executed contract to members in the capacity of firm,
NOM Market Maker and Non-NOM Market Maker for removing liquidity. The
Exchange proposes to amend these fees for removing liquidity and assess
a Customer $.43 per contract instead of $0.40 per contract.\5\
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\5\ A Firm, NOM Market Maker and Non-NOM Market Maker would
continue to be assessed $0.45 per contract for removing liquidity.
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Non-Penny Options--Removing Liquidity
The Exchange assesses fees to members removing liquidity through
NOM in non-Penny Options (All Other Options) and charges a fee of $0.40
per executed contract to members removing liquidity in the capacity of
Customer and a fee of $0.45 per executed contract to members removing
liquidity in the capacity of Firm, NOM Market Maker and Non-NOM Market
Maker. The Exchange proposes to amend these fees for removing liquidity
and assess a Customer $.43 per contract instead of $0.40.\6\
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\6\ A Firm NOM Market Makers and Non-NOM Market Makers would
continue to be assessed $.045 per contract for removing liquidity.
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While changes pursuant to this proposal are effective upon filing,
the Exchange has designated these changes to be operative for
transactions on September 1, 2010.
[[Page 52792]]
2. Statutory Basis
NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\7\ in general, and with Section
6(b)(4) of the Act,\8\ in particular, in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
members and issuers and other persons using any facility or system
which NASDAQ operates or controls. The Exchange believes the proposed
amendments to the fees for removing liquidity are equitable and
reasonable because they are within the range of fees assessed by other
exchanges employing similar pricing schemes. Specifically, NYSE Arca,
Inc. (``NYSE Arca'') assesses a customer electronic fee for taking
liquidity of $0.45 for electronic executions in penny pilot issues and
foreign currency options.\9\
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
\9\ See NYSE Arca's Fee Schedule.
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NASDAQ is one of eight options market [sic] in the national market
system for standardized options. It is a mature, robust market that is
highly competitive with highly sophisticated and knowledge [sic]
participants. Joining NASDAQ and electing to trade options is entirely
voluntary. Under these circumstances, NASDAQ's fees must be
competitive, fair and just in order for NASDAQ to attract order flow,
execute orders, and grow as a market. NASDAQ thus believes that its
fees are equitable, fair and reasonable and consistent with the
Exchange Act.
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.
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 \10\ and paragraph (f)(2) of Rule 19b-4 \11\
thereunder. 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 necessary or
appropriate in the public interest, for the protection of investors, or
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.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to [email protected]. Please include
File Number SR-NASDAQ-2010-105 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2010-105. This
file number should be included on the subject line if e-mail 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 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File No. SR-NASDAQ-
2010-105 and should be submitted on or before September 17, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-21307 Filed 8-26-10; 8:45 am]
BILLING CODE 8010-01-P