[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Notices]
[Pages 74703-74705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30269]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68400; File No. SR-NASDAQ-2012-136]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Fees for SOX, OSX and HGX
December 11, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given
that on November 30, 2012. 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
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 Chapter XV, entitled ``Options Pricing,''
at Section 2 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
increase fees for options overlying the PHLX Semiconductor Sector\SM\
(SOX\SM\), PHLX Housing Sector\TM\ (HGX\SM\) and PHLX Oil Service
Sector\SM\ (OSX\SM\).
While changes to the Pricing Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated the proposed
amendment to be operative on December 3, 2012.
The text of the proposed rule change is available on the Exchange's
Web site 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. 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 certain fees in Chapter XV, Section 2.
Specifically, the Exchange proposes to increase the Fees for Adding and
Removing Liquidity in SOX, HGX and OSX. These products are only listed
on NOM and NASDAQ OMX PHLX LLC (``Phlx'').\3\ Phlx recently filed an
immediately effective rule change to amend its fees for Singly Listed
Options, which include SOX, HGX and OSX, effective December 3, 2012.\4\
NASDAQ proposes to make corresponding changes to fees for SOX, HGX and
OSX effective as of December 3, 2012.
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\3\ See Phlx's Pricing Schedule at Section III.
\4\ See SR-Phlx-2012-135 (not yet published).
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The Exchange currently assesses Customers a Fee for Adding
Liquidity and a Fee for Removing Liquidity in SOX, HGX and OSX of $0.35
per contract. This fee will remain unchanged. The Exchange assesses
Professionals, Firms and Non-NOM Market Makers a Fee for Adding
Liquidity and a Fee for Removing Liquidity in SOX, HGX and OSX of $0.45
per contract. The Exchange is proposing to increase these fees to $0.60
per contract. Finally, the Exchange currently assesses NOM Market
Makers a $0.35 per contract Fee for Adding Liquidity and a Fee for
Removing Liquidity in SOX, HGX and OSX. The Exchange proposes to
increase this fee to $0.40 per contract. The Exchange is not proposing
to amend other pricing in Chapter XV, Section 2.
2. Statutory Basis
NASDAQ believes that its proposal to amend its Pricing Schedule is
consistent with Section 6(b) of the Act \5\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members and other persons using its facilities.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that increasing the Fees for Adding and
Removing Liquidity in SOX, HGX and OSX is reasonable because the
Exchange proposes to assess the same fees which were recently increased
by Phlx for SOX, HGX and OSX.\7\ Also, the proposed fees are within the
range of similar fees assessed at other exchanges.\8\ The Exchange has
previously distinguished other index products from the Non-Penny Pilot
Options fees and rebates.\9\ The Exchange
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would continue to assess 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 continue to encourage NOM Participants to
transact these newly listed index options. The Fees for Adding
Liquidity for transactions in SOX, HGX and OSX are higher than the Fees
for Adding Liquidity in Non-Penny Pilot Options, but as previously
noted, the fees correspond to fees assessed by Phlx. 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.\10\
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\7\ Despite the fact that SOX, HGX and OSX are Multiply Listed
(listed on Phlx and NOM), Phlx assesses its market participants the
fees for Singly Listed Options to transact index options in SOX, HGX
and OSX. See Securities Exchange Act Release No. 66668 (March 28,
2012), 77 FR 20090 (April 3, 2012) (SR-Phlx-2012-35). See also
Section III of Phlx's Pricing Schedule. Accordingly, Phlx recently
filed an immediately effective rule change to amend its fees as of
December 3, 2012 to assess the following fees to transact index
options in SOX, HGX and OSX: Customers $0.35 per contract,
Professionals $0.60 per contract, Firms $0.60 per contract, Market
Makers $0.40 per contract, and Broker-Dealers $0.60 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.
\8\ Chicago Board Options Exchange, Incorporated (``CBOE'')
assesses an $0.80 per contract fee to Customers, Broker-Dealers,
Non-Trading Permit Holder Market Makers and Professional and
Voluntary Professional market participants for SPX Range Options
(SRO) transactions, a proprietary index, in addition to a surcharge
fee. SPX refers to options on the Standard & Poor's 500 Index. See
CBOE's Fees Schedule. In addition, NOM assesses Non-Penny Pilot Fees
for Removing Liquidity ranging from $0.82 to $0.89 per contract
depending on the market participant. See Chapter XV, Section 2 of
NOM's Rules. Phlx also assesses a Broker-Dealer an electronic
options transaction charge (non-Penny Pilot) of $0.60 per contract
for transactions in Multiply Listed Options. See Section II of the
Exchange's Pricing Schedule. 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.
\9\ See Securities Exchange Act Release No. 67837 (September 12,
2012), 77 FR 57614, 77 FR 57614 (September 18, 2012) (SR-NASDAQ-
2012-102) (an immediately effective rule change which adopted
rebates and fees relating to options on Facebook, Inc. (``FB''),
Google, Inc. (``GOOG'') and Groupon, Inc. (``GRPN'') separate from
other Non-Penny Pilot fees).
\10\ See Phlx's Pricing Schedule at Section III.
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The Exchange believes that increasing the Fees for Adding and
Removing Liquidity in SOX, HGX and OSX is equitable and not unfairly
discriminatory because the pricing will be comparable among similar
categories of market participants, namely Professionals, Firms and Non-
NOM Market Makers would continue to be assessed the same fee of $0.60
per contract. Customers and NOM Market Makers would be assessed lower
fees as compared to other market participants, as is the case today.
Customer order flow is assessed the lowest fee because incentivizing
members to continue to offer Customer trading opportunities in options
overlying SOX, HGX and OSX benefits all market participants through
increased liquidity. The Exchange notes that NOM Market Makers are
assessed lower fees as compared to other market participants, except
Customers, because they have burdensome quoting obligations \11\ to the
market which do not apply to Customers, Professionals, Firms and Non-
NOM Market Makers. The proposed differentiation as between Customers
and NOM Market Makers as compared to Professionals, Firms and Non-NOM
Market Makers recognizes the differing contributions made to the
liquidity and trading environment on the Exchange by these market
participants.
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\11\ 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 also believes that it is equitable and not unfairly
discriminatory to increase the NOM Market Maker Fees for Adding and
Removing Liquidity in options overlying SOX, HGX and OSX by $0.05 per
contract as compared to the $0.15 per contract increase to
Professionals, Firms and Non-NOM Market Makers because as explained
above NOM Market Makers have certain obligations to the market that do
not apply to other market participants. The Exchange desires to
continue to assess NOM Market Makers and Customers lower fees as
compared to other market participants because these participants
contribute to the marketplace as described above. The Customer Fees for
Adding and Removing Liquidity in options overlying SOX, HGX and OSX
would remain unchanged at $0.35 per contract. The Exchange believes
that it is reasonable to assess Customers and NOM Market Makers lower
fees as compared to other market participants because these market
participants contribute to the market in terms of liquidity and trading
environment as compared to other market participants. Also, the
proposed lower fees are comparable to pricing on NOM and other options
exchanges.\12\
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\12\ The Exchange assesses a lower Penny Pilot Options Fee for
Removing Liquidity for Customers ($0.45 per contract versus $0.47
per contract for other market participants) and assesses no Non-
Penny Pilot Options Fee for Adding Liquidity for Customers as
compared to other market participants. The Exchange assesses a lower
Non-Penny Pilot Options Fee for Adding Liquidity for NOM Market
Makers as compared to other market participants ($0.25 per contract
versus $0.45 per contract for other market participants). Finally,
the Exchange assesses lower Non-Penny Pilot Options Fees for
Removing Liquidity for Customers and NOM Market Makers as compared
to other market participants ($0.82 per contract versus $0.87 per
contract for other market participants). See Chapter XV, Section 2
pricing. Phlx does not assess Customers options transaction charges
for Penny or Non-Penny Pilot options transactions. Also, Specialists
and Market Makers are assessed lower electronic options transaction
charges in Penny and Non-Penny Pilot Options as compared to
Professionals, Broker-Dealers and Firms. See Section II of the
Exchange's Pricing Schedule.
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ 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 believes its fees for SOX, HGX
and OSX remain competitive with fees at other options exchanges.
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.\13\ 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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\13\ 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-2012-136 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-2012-136. 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
[[Page 74705]]
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549-1090, on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the NASDAQ's principal office.
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-
136, and should be submitted on or before January 7, 2013.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30269 Filed 12-14-12; 8:45 am]
BILLING CODE 8011-01-P