[Federal Register Volume 76, Number 180 (Friday, September 16, 2011)]
[Notices]
[Pages 57776-57778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23722]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65318; File No. SR-NASDAQ-2011-124]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Fees for Members Using the NASDAQ Options Market
September 12, 2011.
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 September 6, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' or the
``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 NASDAQ. 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 the
Substance of the Proposed Rule Change
NASDAQ proposes to modify pricing for NASDAQ members using the
NASDAQ Market Center. NASDAQ will implement the proposed change on
September 6, 2011. The text of the proposed rule change is available at
http://nasdaq.cchwallstreet.com/, at NASDAQ's principal office, 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, NASDAQ 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. NASDAQ 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 rebates and
fees
[[Page 57777]]
assessed for option orders entered into NOM. Specifically, NASDAQ is
proposing to modify pricing for the Customer Rebate to Add Liquidity in
Penny Options by adding an additional volume achievement to earn an
enhanced rebate. The Exchange currently pays a Customer Rebate to Add
Liquidity in Penny Options based on six volume tiers as follows:
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Rebate to add
Monthly volume liquidity
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Tier 1........................................ Participant adds Customer liquidity of up to $0.26
24,999 contracts per day in a month.
Tier 2........................................ Participant adds Customer liquidity of 25,000-- $0.34
59,999 contracts per day in a month.
Tier 3........................................ Participant adds Customer liquidity of 60,000- $0.38
124,999 contracts per day in a month.
Tier 4........................................ Participant adds Customer liquidity of 125,000 $0.40
or more contracts per day in a month.
Tier 5........................................ Participant adds (1) Customer liquidity of $0.40
60,000 or more contracts per day in a month,
and (2) NOM Market Maker liquidity of 60,000
or more contracts per day in a month.
Tier 6........................................ Participant adds Customer liquidity of 25,000 $0.35
or more contracts per day in a month, and (2)
the Participant simultaneously qualifies for
credit under the Investor Support Program set
forth in Rule 7014.
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To further encourage firms that route Customer orders to increase
Customer order flow to the Exchange, the Exchange is proposing to
modify the Customer Rebates to Add Liquidity in Penny Pilot by adding a
monthly volume target for NOM Participants that qualify for Tiers 2 and
6. Specifically, firms that qualify for Tier 2 by adding Customer
Liquidity in Penny Options of 25,000 to 59,999 contracts per day for
the month, can receive an additional $0.02 rebate by contributing
750,000 contracts of Customer Liquidity in Penny Options between
September 6 and September 30, 2011. Also, firms that qualify for Tier 6
by adding Customer Liquidity in Penny Options of 25,000 or more
contracts per day for the month and also qualifying for a credit under
NASDAQ's Investor Support Program (set forth in Rule 7014),\3\ can
receive an additional $0.02 rebate by contributing 750,000 contracts of
Customer Liquidity in Penny Options between September 6 and September
30, 2011. NOM Participants that qualify for these two new tiers will
receive an additional $0.02 rebate only for executions occurring
between September 6 and September 30, 2011; volume executed on
September 1, 2011 and September 2, 2011 will not be eligible.
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\3\ For a detailed description of the Investor Support Program,
see Securities Exchange Act Release No. 63270 (November 8, 2010), 75
FR 69489 (November 12, 2010) (NASDAQ-2010-141) (notice of filing and
immediate effectiveness) (the ``ISP Filing''). See also Securities
Exchange Act Release Nos. 63414 (December 2, 2010), 75 FR 76505
(December 8, 2010) (NASDAQ-2010-153) (notice of filing and immediate
effectiveness); and 63628 (January 3, 2011), 76 FR 1201 (January 7,
2011) (NASDAQ-2010-154) (notice of filing and immediate
effectiveness).
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2. Statutory Basis
NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\4\ in general, and with Section
6(b)(4) of the Act,\5\ 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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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed new pricing tiers are
equitable, reasonable and not unfairly discriminatory because they
continue an existing program to encourage broker-dealers acting as
agent for Customer orders to select the Exchange as a venue to post
Customer orders. The Exchange believes that its success at attracting
Customer order flow benefits all market participants by improving the
quality of order interaction and executions at the Exchange.
The Exchange further believes that limiting the new tiers to firms
already qualifying for Tiers 2 and 6 (and not those that qualify for
Tier 3, 4 and 5) is equitable and not unfairly discriminatory because
NOM Participants in Tiers 3, 4, and 5 already earn a higher rebate. For
example, a NOM Participant that qualify [sic] for the new tiers will
receive a rebate of either $0.36 or $0.37 per contract, whereas NOM
Participants that qualify for Tiers 3, 4 and 5 receive a $0.38 per
contract rebate.
The Exchange believes that the proposed new pricing tiers for
Customer Rebates to Add Liquidity in Penny Options is equitable and not
unfairly discriminatory because the Exchange will uniformly pay a
Rebate to Add Liquidity to Customers executing Penny Options based on
the 750,000 volume target and monthly tiers proposed and discussed
herein.
The Exchange operates in a highly competitive market comprised of
nine U.S. options exchanges in which sophisticated and knowledgeable
market participants can and do send order flow to competing exchanges
if they deem fee levels at a particular exchange to be excessive or
rebate opportunities to be inadequate. The Exchange believes that the
proposed rebate scheme is competitive and similar to other rebates and
tiers opportunities in place on other exchanges. The Exchange believes
that this competitive marketplace materially impacts the rebates
present on the Exchange today and substantially influenced the proposal
set forth above.
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. Because the market
for order execution is extremely competitive, members may readily opt
to disfavor NASDAQ's execution services if they believe that
alternatives offer them better value. For this reason and the reasons
discussed in connection with the statutory basis for the proposed rule
change, the Exchange does not believe that the proposed changes will
impair the ability of members or competing order execution venues to
maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor 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.\6\ At any time
[[Page 57778]]
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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\6\ 15 U.S.C. 78s(b)(3)(a)(ii).
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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-2011-124 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-2011-124. 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-
2011-124 and should be submitted on or before October 7, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23722 Filed 9-15-11; 8:45 am]
BILLING CODE 8011-01-P