[Federal Register Volume 78, Number 167 (Wednesday, August 28, 2013)]
[Notices]
[Pages 53179-53181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20934]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70245; File No. SR-NASDAQ-2013-110]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Chapter VII, Section 6 of the Rules of the NASDAQ Options Market
To Permit the Exchange To Establish Wider Bid/Ask Differentials for
Certain Options With High Premiums or Other Special Characteristics
August 22, 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 August 19, 2013 The NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a 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
NASDAQ is proposing to amend Chapter VII, Section 6 (Market Maker
Quotations) of the rules of the NASDAQ Options Market (``NOM'') to
permit the Exchange to establish wider bid/ask differentials for
certain options with
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high premiums or other special characteristics.
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 those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend Chapter VII,
Section 6 of the rules of NOM to permit the Exchange to establish wider
bid/ask differentials for certain options with high premiums or other
special characteristics.
Currently, the spread on options on equities and index options must
not exceed $5. For in-the-money series where the market for the
underlying security is wider than $5, the bid/ask differential may be
as wide as the quotation for the underlying security on the primary
market.\3\
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\3\ See NOM Rule Chapter VII Section 6(d)(ii).
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In this filing, the Exchange seeks the capability to establish
wider bid/ask differentials for options that have high premiums or
other special characteristics. For high premium options, the current
five dollar range can expose market makers to disproportionate risk in
dealing with those issues thereby discouraging them from quoting in
those instruments. As such, the Exchange proposes to be able to modify
the bid/ask differential for one or more series or classes of options,
as appropriate, in response to high differential prices, market
conditions, or other special factors impacting a particular option,
options series, or class of option.
The Exchange notes that this flexibility is already permitted by
the rules of many other options exchanges.\4\
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\4\ See Phlx Rule 1014(c)(i)(A)(1)(a); CBOE Rule 44.4(e); ISE
Rule 803(b)(4); NYSE MKT Rule 925NY(b)(4)(E).
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2. Statutory Basis
The proposed rule change is consistent with the Act and the rules
and regulations thereunder, including the requirements of Section 6(b)
of the Act.\5\ In particular, the Exchange believes the proposed rule
change is consistent with the Section 6(b)(5) \6\ requirements that the
rules of an exchange be designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, to remove impediments to and
to perfect the mechanism for a free and open market and a national
market system, and, in general, to protect investors and the public
interest. Here, the proposal will allow the Exchange to adjust price
differentials in a manner that encourages quoting and trading activity.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change will enhance
competition because the Exchange will be able adjust bid/ask
differentials in a manner similar to Phlx, CBOE, ISE, and NYSE [sic].
B. Self-Regulatory Organization's Statement on Burden on Competition
This proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. In this regard and as indicated above, the Exchange notes that
the rule proposed here is already in use by other options exchanges.
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
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 \7\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(a)(ii).
\8\ 17 CFR 240.19b-4(f)(6).
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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.
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-2013-110 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-2013-110. 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 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 offices of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from
[[Page 53181]]
submissions. You should submit only information that you wish to make
available publicly.
All submissions should refer to File Number SR-NASDAQ-2013-110, and
should be submitted on or before September 18, 2013.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20934 Filed 8-27-13; 8:45 am]
BILLING CODE 8011-01-P