[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76513-76515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30833]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63419; File No. SR-NASDAQ-2010-149]
Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees
December 2, 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 November 24, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify 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.
While fee changes pursuant to this proposal are effective upon
filing, the Exchange has designated these changes to be operative on
December 1, 2010.
The text of the proposed rule change is set forth below. Proposed
new text is italicized 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)-(3) No Change.
(4) Fees for routing contracts to markets other than the NASDAQ
Options Market shall be assessed as provided below. The current fees
and a historical record of applicable fees shall
[[Page 76514]]
be posted on the NasdaqTrader.com Web site.
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Exchange Customer Firm MM Professional
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BATS............................................ $0.36 $0.55 $0.55 $0.36
BOX............................................. 0.06 0.55 0.55 0.06
CBOE............................................ 0.06 0.55 0.55 0.26
CBOE orders greater than 99 contracts in NDX, 0.24 0.55 0.55 0.26
MNX ETFs, ETNs & HOLDRs........................
ISE............................................. 0.06 0.55 0.55 0.24
ISE Select Symbols \*\ of 100 or more contracts. 0.26 0.55 0.55 0.31
NYSE Arca Penny Pilot........................... 0.50 0.55 0.55 0.50
NYSE Arca Non Penny Pilot....................... 0.06 0.55 0.55 0.06
NYSE AMEX....................................... 0.06 0.55 0.55 0.26
PHLX (for all options other than PHLX Select 0.06 0.55 0.55 0.26
Symbols).......................................
PHLX Select Symbols \**\........................ 0.30 0.55 0.55 0.46
C2.............................................. 0.21 0.55 0.55 0.46
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\*\ These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and
Removing Liquidity in Select Symbols. See ISE's Schedule of Fees for the complete list of symbols that are
subject to these fees.
\**\ These fees are applicable to orders routed to PHLX that are subject to Rebates and Fees for Adding and
Removing Liquidity in Select Symbols. See PHLX's Fee Schedule for the complete list of symbols that are
subject to these fees.
* * * * *
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 but routed to and executed on away
markets (``routing fees'').
NASDAQ Options Services LLC (``NOS''), a member of the Exchange, is
the Exchange's exclusive order router. Each time NOS routes to away
markets NOS is charged a $0.06 clearing fee and, in the case of certain
exchanges, a transaction fee is also charged in certain symbols, which
are passed through to the Exchange.
The Exchange proposes to assess new fees for routing contracts to
markets other than the NASDAQ Options Market to Rule 7050.
Specifically, the Exchange is proposing to assess a routing fee of
$0.24 per contract in Customer option orders that are routed to the
Chicago Board Options Exchange, Incorporated (``CBOE''). This would
apply to orders greater than 99 contracts in options traded under the
symbol NDX (``NDX'') and options on the one-tenth value of the Nasdaq
100 Index traded under the symbol MNX (``MNX'') as well as exchange-
traded funds (``ETFs''), exchange-traded notes (``ETNs'') and Holding
Company Depositary Receipts (``HOLDRs''). The Exchange is proposing to
caption these proposed fees ``CBOE orders greater than 99 contracts in
NDX, MNX, ETFs, ETNs and HOLDRs.'' The CBOE current routing fee of
$0.55 per contract would apply to Firms and Market Makers for CBOE
orders greater than 99 contracts in NDX, MNX, ETFs, ETNs and HOLDRs.
The Exchange is also proposing to adopt routing fees for a new type
of participant called ``Professional''.\3\ The Exchange proposes to
assess the following Professional routing fees, in addition to the
current categories of Customer, Firm and Market Maker, to its members:
(i) A $0.36 per contract fee for Professional orders routed to BATS
Exchange, Inc. (``BATS'') in all options; (ii) a $0.06 per contract fee
for Professional orders routed to the Boston Options Exchange Group LLC
(``BOX'') in all options; (iii) a $0.26 per contract fee for
Professional orders routed to the Chicago Board of Options Exchange,
Inc. (``CBOE'') in all options \4\; (iv) a $.24 per contract fee for
Professional orders routed to International Securities Exchange, LLC
(``ISE'') in all options, except for Select Symbols of 100 or more
contracts; (v) a $0.31 per contract fee for Professional orders routed
to ISE in its Select Symbols of 100 or more contracts \5\; (vi) a $0.50
per contract fee for Professional orders routed to NYSE Arca, Inc.
(``NYSE Arca'') in Penny Pilot options; (vii) a $0.06 per contract fee
for Professional orders routes to NYSE Arca in Non-Penny Pilot options;
(viii) a $0.26 per contract fee for Professional orders routed to NYSE
Amex LLC (``NYSE Amex'') in all options; (ix) a $0.26 per contract fee
for Professional orders routed to NASDAQ OMX PHLX LLC (``PHLX'') in all
option other than the PHLX Select Symbols; \6\ (x) a $0.46 per contract
fee for Professional orders routed to PHLX in Select Symbols; \7\ and
(xi) a $0.46 per contract fee for Professional orders routed to C2
Options Exchange, Inc. (``C2'') in all options.
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\3\ See Chapter I, Section I (Definitions). The term
``Professional'' means any person or entity that (i) is not a broker
or dealer in securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar month for its
own beneficial account(s). A Participant or a Public Customer may,
without limitation, be a Professional. All Professional orders shall
be appropriately marked by Participants. See Securities Exchange Act
Release Nos. 63028 (October 1, 2010), 75 FR 62443 (October 8, 2010)
(SR-NASDAQ-2010-099); and 63151 (October 21, 2010), 75 FR 66811
(October 29, 2010) (SR-NASDAQ-2010-132).
\4\ A Professional would also be assessed the proposed $0.26 per
contract for a CBOE order greater than 99 contracts in NDX, MNX,
ETFs, ETNs and HOLDRs.
\5\ See ISE's Schedule of Fees for the complete list of Select
Symbols.
\6\ See PHLX's Fee Schedule for the complete list of Select
Symbols.
\7\ See PHLX's Fee Schedule for the complete list of Select
Symbols.
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The Exchange is proposing these fees in order to recoup clearing
and transaction charges incurred by the
[[Page 76515]]
Exchange when certain Customer options orders are routed to CBOE \8\ as
well as when certain Professional options orders are routed to the
various destination markets. Each destination market's transaction
charge varies and there is a standard clearing charge for each
transaction incurred by the Exchange. The Exchange believes that the
routing fees proposed will enable the Exchange to recover the
transaction fees assessed by away markets, where applicable, plus
clearing fees for the execution of Customer, Firm, Market Maker and
Professional orders. As with all fees, the Exchange may adjust these
Routing Fees in response to competitive conditions by filing a new
proposed rule change.
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\8\ See Securities Exchange Act Release No. 62902 (September 14,
2010), 75 FR 57313 (September 20, 2010) (SR-CBOE-2010-081) (a rule
change to assess a transaction fee of $.18 per contract on public
customer orders in options on Standard & Poor's Depositary Receipts,
except for orders of 99 contracts or less).
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While fee changes pursuant to this proposal are effective upon
filing, the Exchange has designated these changes to be operative on
December 1, 2010.
2. Statutory Basis
NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\9\ in general, and with Section
6(b)(4) of the Act,\10\ 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.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fees are reasonable because
they seek to recoup costs that are incurred by the Exchange when
routing Customer orders greater than 99 contracts in NDX, MNX, ETFs,
ETNs and HOLDRs to CBOE and also when routing orders designated as
Professional to the various destination markets listed herein, on
behalf of its members. The Exchange also believes that the proposed
fees are equitable because they will be uniformly applied to all
Customers and Professionals.
NASDAQ is one of nine options markets in the national market system
for standardized options. Joining NASDAQ and electing to trade options
is entirely voluntary. Under these circumstances, NASDAQ's fees must be
competitive and low in order for NASDAQ to attract order flow, execute
orders, and grow as a market. NASDAQ thus believes that its fees are
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 \11\ and paragraph (f)(2) of Rule 19b-4 \12\
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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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 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-2010-149 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-2010-149. 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-
2010-149 and should be submitted on or before December 29, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30833 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P