[Federal Register Volume 78, Number 45 (Thursday, March 7, 2013)]
[Notices]
[Pages 14872-14874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05247]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69006 ; File No. SR-NASDAQ-2013-034]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to a Pricing Clarification
February 28, 2013.
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 February 21, 2013, 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 NASDAQ.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4 .
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDAQ proposes to clarify the billing of port fees in Chapter XV,
entitled ``Options Pricing,'' which governs pricing for NASDAQ members
using the NASDAQ Options Market (``NOM''), NASDAQ's facility for
executing and routing standardized equity and index options.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to clarify the manner in which the
Exchange assesses certain port fees which are noted in Chapter XV,
Section 3 entitled ``NASDAQ Options Market--Access Services.''
Specifically, the Exchange assesses a fee of $550 per port, per month
for the following port fees: Order Entry Ports,\3\ CTI Ports,\4\ OTTO
Ports,\5\ ITTO Ports,\6\ BONO Ports,\7\ Order Entry
[[Page 14873]]
DROP Ports,\8\ OTTO Drop Ports \9\ and SQF Ports.\10\ Each NOM
Participant is assigned a Market Participant Identifier or ``mnemonic''
\11\ and in some cases, certain Participants request multiple mnemonics
for purposes of accounting for trading activity. The Exchange bills per
port and in the case of Participants that hold multiple mnemonics the
Exchange bills for each port assigned to that Participant, taking into
account the total number of ports by mnemonic. For example, if a
Participant, ABC, with two mnemonics, EFGH and IJKL, requested 3 ports
under the EFGH mnemonic and four ports under the IJKL mnemonic, the
Participant would be billed for a total of 7 ports per month. All
billing is captured at the Participant level.
---------------------------------------------------------------------------
\3\ The Order Entry Port Fee is a connectivity fee in connection
with routing orders to the Exchange via an external order entry
port. NOM Participants access the Exchange's network through order
entry ports. A NOM Participant may have more than one order entry
port.
\4\ CTI offers real-time clearing trade updates. A real-time
clearing trade update is a message that is sent to a member after an
execution has occurred and contains trade details. The message
containing the trade details is also simultaneously sent to The
Options Clearing Corporation. The trade messages are routed to a
member's connection containing certain information. The
administrative and market event messages include, but are not
limited to: system event messages to communicate operational-related
events; options directory messages to relay basic option symbol and
contract information for options traded on the Exchange; complex
strategy messages to relay information for those strategies traded
on the Exchange; trading action messages to inform market
participants when a specific option or strategy is halted or
released for trading on the Exchange; and an indicator which
distinguishes electronic and non-electronically delivered orders.
\5\ OTTO provides a method for subscribers to send orders and
receive status updates on those orders. OTTO accepts limit orders
from system subscribers, and if there is a matching order, the
orders will execute. Non-matching orders are added to the limit
order book, a database of available limit orders, where they are
matched in price-time priority.
\6\ ITTO is a data feed that provides quotation information for
individual orders on the NOM book, last sale information for trades
executed on NOM, and Order Imbalance Information as set forth in NOM
Rules Chapter VI, Section 8. ITTO is the options equivalent of the
NASDAQ TotalView/ITCH data feed that NASDAQ offers under NASDAQ Rule
7023 with respect to equities traded on NASDAQ. As with TotalView,
members use ITTO to ``build'' their view of the NOM book by adding
individual orders that appear on the feed, and subtracting
individual orders that are executed. See Chapter VI, Section 1 at
subsection (a)(3)(A).
\7\ BONO\SM\ is a data feed that provides the NOM Best Bid and
Offer (``NOM NBBO'') and last sale information for trades executed
on NOM. The NOM NBBO and last sale information are identical to the
information that NOM sends to the Options Price Regulatory Authority
(``OPRA'') and which OPRA disseminates via the consolidated data
feed for options. BONO is the options equivalent of the NASDAQ Basic
data feed offered for equities under NASDAQ Rule 7047. See Chapter
VI, Section 1 at subsection (a)(3)(B).
\8\ The DROP interface provides real time information regarding
orders sent to NOM and executions that occurred on NOM. The DROP
interface is not a trading interface and does not accept order
messages.
\9\ The OTTO DROP data feed provides real-time information
regarding orders entered through OTTO and the execution of those
orders. The OTTO DROP data feed is not a trading interface and does
not accept order messages.
\10\ SQF ports are ports that receive inbound quotes at any time
within that month. The SQF Port allows a NOM Participant to access
information such as execution reports and other relevant data
through a single feed. For example, this data would show which
symbols are trading on NOM and the current state of an options
symbol (i.e., open for trading, trading, halted or closed). Auction
notifications and execution reports are also available.
\11\ A mnemonic is a unique identifier consisting of a four
character alpha code.
---------------------------------------------------------------------------
The Exchange has consistently billed ports in this manner. For
purposes of clarity, the Exchange proposes to add the words ``per
mnemonic'' to Chapter XV, Section 3(b). Participants may choose to have
multiple mnemonics for the convenience of conducting their business,
however only one mnemonic is required to conduct business on NOM.
Participants that desire to have multiple mnemonics and utilize various
ports under multiple mnemonics are and will continue to be billed for
each port that is assigned to that Participant. Each Participant may
select the manner in which they choose to designate their ports for
billing by mnemonic. The ports are differentiated by the mnemonic and
port number.
The Exchange does not believe that there is confusion among market
participants regarding port billing. The Exchange proposes this
clarification to make clear that the term ``per port'' includes
multiple mnemonics for each Participant.
2. Statutory Basis
NASDAQ believes that its proposal to amend Chapter XV of the Rules
to specify that each mnemonic's ports will be billed is consistent with
Section 6(b) of the Act \12\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \13\ in particular. The Exchange's proposal
to clarify its pricing is intended to provide greater clarity to market
participants with respect to the application of port fees in Chapter
XV, Section 3. The Exchange believes the addition of the reference to
mnemonics will provide additional transparency to Chapter XV, Section
3(b) of the Exchange's Rules.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange does not believe that there is confusion among market
participants with respect to port billing, but rather that the addition
of the words ``per mnemonic'' to Chapter XV, Section 3(b) would serve
to provide transparency and guidance to the benefit of all market
participants. The Exchange believes that the proposal is consistent
with Section 6(b)(5) in that it is designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general to protect investors and the public interest, by clarifying
the manner in which ports are billed.
The Exchange is not amending the manner in which it applies pricing
for ports today. This proposal merely codifies the manner in which the
Exchange assesses ports today.
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 is merely clarifying its port
billing to specify that ``per port'' includes all ports assigned to a
particular Participant regardless of whether they are broken down by
mnemonic. The Exchange believes that this clarification will provide
greater transparency to market participants. The Exchange does not
believe that this amendment creates intramarket competition among
Participants as it is applied uniformly to all Participants. The
Exchange believes that clarifying port billing provides market
participants clear guidance.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \14\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(a)(ii).
\15\ 17 CFR 240.19b-4 (f)(6).
---------------------------------------------------------------------------
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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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. The Exchange has
provided the Commission written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing of the proposed rule change.
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-2013-034 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-2013-034. 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
[[Page 14874]]
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 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of NASDAQ. 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-2013-034, and should be submitted
on or before March 28, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-05247 Filed 3-6-13; 8:45 am]
BILLING CODE 8011-01-P