[Federal Register Volume 77, Number 68 (Monday, April 9, 2012)]
[Notices]
[Pages 21132-21134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-8431]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66729; File No. SR-NASDAQ-2012-037]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Fees for Newly Listed Indexes
April 3, 2012.
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 March 28, 2012, 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 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 Substance
of the Proposed Rule Change
NASDAQ proposes to modify pricing for NASDAQ members using the
NASDAQ Options Market (``NOM''), NASDAQ's facility for executing and
routing standardized equity and index options. Specifically, NASDAQ
proposes to adopt fees for newly listed indexes and make other minor
amendments to Chapter XV at Section 2 entitled ``NASDAQ Options
Market--Fees.''
While changes proposed herein are effective upon filing, the
Exchange has designated these changes to be operative on April 2, 2012.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.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. 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 proposes to amend Chapter XV, Section 2 to adopt fees for
the following newly listed index options: PHLX Semiconductor Sector\SM\
(SOX\SM\), PHLX Housing Sector\TM\ (HGX\SM\) and PHLX Oil Service
Sector\SM\ (OSX\SM\).\3\
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\3\ The Exchange plans on listing these index options on April
2, 2012.
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Specifically, the Exchange proposes to assess the following Fees
for Adding Liquidity and Fees for Removing Liquidity for transactions
in SOX, HGX and OSX:
[[Page 21133]]
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Non-NOM market NOM market
Customer Professional Firm maker maker
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SOX, HGX and OSX:
Fee for Adding Liquidity........ $0.35 $0.45 $0.45 $0.45 $0.35
Fee for Removing Liquidity...... $0.35 $0.45 $0.45 $0.45 $0.35
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Other Amendments
The Exchange also proposes to amend the title of Chapter XV,
currently entitled ``Options Fees,'' to ``Options Pricing'' to more
specifically describe this Rule. The Exchange also proposes to amend
the title of ``All Other Options'' in Section 2(1) to ``Non-Penny Pilot
Options'' to more specifically describe those fees. Finally, the
Exchange proposes to reorder the Fees and Rebates in Section 2(1) to
move the current ``All Other Options'' after the ``Penny Pilot
Options'' fees and rebates.
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 they provide 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 its proposal to adopt Fees for Adding
Liquidity and Fees for Removing Liquidity for transactions in SOX, HGX
and OSX is reasonable because the Exchange proposes to assess the same
fees that are currently assessed by NASDAQ OMX PHLX LLC (``Phlx'') for
these proprietary products.\6\ The Exchange has previously
distinguished other index products from the Non-Penny Pilot Options
fees and rebates.\7\ The Exchange assesses lower Fees for Removing
Liquidity in SOX, HGX and OSX as compared to the Fees for Removing
Liquidity in Non-Penny Pilot Options, which should encourage NOM
Participants to transact these newly listed index options. The Fees for
Adding Liquidity for transactions in SOX, HGX and OSX are the same or
higher than the Fees for Adding Liquidity in Non-Penny Pilot Options.
The Exchange believes that these fees are reasonable because these fees
correspond to comparable fees in place at Phlx for executions in SOX,
HGX, and OSX.\8\
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\6\ Despite the fact that SOX, HGX and OSX will be Multiply
Listed, Phlx will continue to assess market participants the fees
for Singly Listed Options to transact index options in SOX, HGX and
OSX. See SR-Phlx-2012-35. See also Section III of Phlx's Pricing
Schedule. Accordingly, Phlx would continue to assess the following
fees to transact index options in SOX, HGX and OSX as of April 2,
2012: Customers $0.35 per contract, Professionals $0.45 per
contract, Firms $0.45 per contract, Market Makers $0.35 per
contract, and Broker-Dealers $0.45 per contract. Non-NOM Market
Makers are registered market makers on another options market that
append the market maker designation to orders routed to NOM. This is
the equivalent of a Broker-Dealer on Phlx. While Phlx does not
assess both a Fee for Adding Liquidity and Fee for Removing
Liquidity, it assesses each side of the transaction the Options
Transaction Charge.
\7\ See Chapter XV, Section 2(1) fees.
\8\ See Phlx's Pricing Schedule at Section III.
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The Exchange believes that its proposal to adopt Fees for Removing
Liquidity for transactions in SOX, HGX and OSX is equitable and not
unfairly discriminatory in that Customers and NOM Market Makers are
assessed lower Fees for Removing Liquidity, $0.35 per contract, as
compared to other market participants because Customer liquidity
benefits all market participants and NOM Market Makers have certain
obligations to the market and regulatory requirements, which normally
do not apply to other market participants.\9\ The Exchange's proposal
to assess all other market participants, Professionals, Firms and Non-
NOM Market Makers, a $0.45 per contract Fee for Removing Liquidity for
transactions in SOX, HGX and OSX is equitable and not unfairly
discriminatory because these participants are uniformly assessed the
same fee.
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\9\ See Exchange Rules Section VII, Market Participants,
Sections 5, Obligations of Market Makers, and Section 6, Market
Maker Quotations.
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The Exchange believes that its proposal to adopt Fees for Adding
Liquidity for transactions in SOX, HGX and OSX is equitable and not
unfairly discriminatory because the Customer Fee for Adding Liquidity
for transacting SOX, HGX and OSX of $0.35 per contract is lower than
fees assessed other market participants for transacting SOX, HGX and
OSX, except NOM Market Makers. This is because, as previously stated,
the Exchange desires to attract Customer order flow to the market,
which liquidity benefits all market participants. The NOM Market Maker
Fee for Adding Liquidity for transactions in SOX, HGX and OSX of $0.35
per contract is also lower than other market participants, except
Customers, because NOM Market Makers have certain obligations to the
market and regulatory requirements which are not borne by Customers,
Professionals, Non-NOM Market Makers and Firms. The Exchange uniformly
assesses Professionals, Firms and Non-NOM Market Makers a Fee for
Adding Liquidity for transactions in SOX, HGX and OSX of $0.45 per
contract.
The Exchange also believes its proposal to amend the title of
Chapter XV to ``Options Pricing'' is reasonable, equitable and not
unfairly discriminatory because the Exchange believes that the proposed
title more specifically describes the fees, rebates and other charges
reflected in the Chapter. The Exchange also believes that amending the
title of Section 2(1) from ``All Other Options'' to ``Non-Penny Pilot
Options'' conforms the description of these fees to that of other
options exchanges.\10\ Finally, the Exchange believes that reordering
the fees in Section 2(1) is reasonable, equitable and not unfairly
discriminatory because the Exchange is grouping the fees for indexes
for ease of reference.
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\10\ Phlx utilizes the term non-Penny Pilot in Section II of its
Fee Schedule. See Phlx's Pricing Schedule.
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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. The
Exchange believes that the proposed fee scheme is competitive and
similar to other fees in place on other exchanges. The Exchange
believes that this competitive marketplace materially impacts the fees
present on the Exchange today and substantially influences the proposal
set forth above.
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.
[[Page 21134]]
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\ 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).
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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 email to [email protected]. Please include
File Number SR-NASDAQ-2012-037 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-2012-037. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 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; 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 Number SR-NASDAQ-2012-037 and should
be submitted on or before April 30, 2012.
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).
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-8431 Filed 4-6-12; 8:45 am]
BILLING CODE 8011-01-P