[Federal Register Volume 80, Number 217 (Tuesday, November 10, 2015)]
[Notices]
[Pages 69755-69760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28508]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76344; File No. SR-NASDAQ-2015-115]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Chapter XV, Entitled ``Options Pricing,'' at Section 2 Governing
Pricing for NASDAQ Members
November 4, 2015.
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 October 22, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange
[[Page 69756]]
Commission (``SEC'' or ``Commission'') the 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
The Exchange proposes to amend Chapter XV, entitled ``Options
Pricing,'' at Section 2, which governs pricing for NASDAQ members using
the NASDAQ Options Market (``NOM''), NASDAQ's facility for executing
and routing standardized equity and index options, to amend the
Customer \3\ and Professional \4\ Penny Pilot \5\ Options Rebates to
Add Liquidity. The proposed amendments apply to volume from October 22,
2015 through October 30, 2015.
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\3\ The term ``Customer'' applies to any transaction that is
identified by a Participant for clearing in the Customer range at
The Options Clearing Corporation (``OCC'') which is not for the
account of broker or dealer or for the account of a ``Professional''
(as that term is defined in Chapter I, Section 1(a)(48)).
\4\ The term ``Professional'' means any person or entity that
(i) is not a broker or dealer in securities, and (ii) places more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s) pursuant to Chapter
I, Section 1(a)(48). All Professional orders shall be appropriately
marked by Participants.
\5\ See Securities Exchange Act Release Nos. 57579 (March 28,
2008), 73 FR 18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of
filing and immediate effectiveness establishing Penny Pilot); 60874
(October 23, 2009), 74 FR 56682 (November 2, 2009)(SR-NASDAQ-2009-
091) (notice of filing and immediate effectiveness expanding and
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292
(November 17, 2009)(SR-NASDAQ-2009-097) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding
seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and
immediate effectiveness adding seventy-five classes to Penny Pilot);
65969 (December 15, 2011), 76 FR 79268 (December 21, 2011) (SR-
NASDAQ-2011-169) (notice of filing and immediate effectiveness
extension and replacement of Penny Pilot); 67325 (June 29, 2012), 77
FR 40127 (July 6, 2012) (SR-NASDAQ-2012-075) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through December 31, 2012); 68519 (December 21, 2012), 78 FR 136
(January 2, 2013) (SR-NASDAQ-2012-143) (notice of filing and
immediate effectiveness and extension and replacement of Penny Pilot
through June 30, 2013); 69787 (June 18, 2013), 78 FR 37858 (June 24,
2013) (SR-NASDAQ-2013-082) (notice of filing and immediate
effectiveness and extension and replacement of Penny Pilot through
December 31, 2013); 71105 (December 17, 2013), 78 FR 77530 (December
23, 2013) (SR-NASDAQ-2013-154) (notice of filing and immediate
effectiveness and extension and replacement of Penny Pilot through
June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR 31151 (May 30,
2014) (SR-NASDAQ-2014-056) (notice of filing and immediate
effectiveness and extension and replacement of Penny Pilot through
December 31, 2014); 73686 (December 2, 2014), 79 FR 71477 (November
25, 2014) (SR-NASDAQ-2014-115) (notice of filing and immediate
effectiveness and extension and replacement of Penny Pilot through
June 30, 2015) and 75283 (June 24, 2015), 80 FR 37347 (June 30,
2015) (SR-NASDAQ-2015-063) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change Relating to Extension of the
Exchange's Penny Pilot Program and Replacement of Penny Pilot Issues
That Have Been Delisted.) See also NOM Rules, Chapter VI, Section 5.
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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 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. 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 Exchange proposes to amend Chapter XV, Section 2, entitled
``NASDAQ Options Market--Fees and Rebates'' to amend the Customer and
Professional Penny Pilot Options Rebates to Add Liquidity. Each of the
proposed rule changes will be detailed below.
Customer and Professional Penny Pilot Options Rebates To Add Liquidity
Today, the Exchange offers tiered Penny Pilot Options Rebates to
Add Liquidity to Customers and Professionals based on various criteria
with rebates ranging from $0.20 to $0.48 per contract. Participants may
qualify for Customer and Professional Penny Pilot Options Rebates to
Add Liquidity by adding a certain amount of liquidity as specified by
each tier.\6\
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\6\ Tiers 6 and 7 are calculated based on Total Volume. Total
Volume is defined as Customer, Professional, Firm, Broker-Dealer,
Non-NOM Market Maker and NOM Market Maker volume in Penny Pilot
Options and/or Non-Penny Pilot Options which either adds or removes
liquidity on NOM. See note ``b'' in Section 2(1) of Chapter XV. The
Exchange utilizes data from OCC to determine the total industry
customer equity and ETF options ADV figure. OCC classifies equity
and ETF options volume under the equity options category. Also, both
customer and professional orders that are transacted on options
exchanges clear in the customer range at OCC and therefore both
customer and professional volume would be included in the total
industry figure to calculate rebate tiers.
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Note ``e'' of Chapter XV, Section 2(1)
The Exchange proposes to amend current note ``e'' to permit
Participants that qualify for the Tier 8 Customer and Professional
Penny Pilot Options Rebate to Add Liquidity \7\ to achieve a higher
rebate. Currently, note ``e'' states: ``[P]articipants that add
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of
1.15% or more of total industry customer equity and ETF option ADV
contracts per day in a month will receive an additional $0.02 per
contract Penny Pilot Options Customer Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Pilot Options in that month.
Participants that add Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 1.40% or more of total industry customer equity
and ETF option ADV contracts per day in a month will receive an
additional $0.05 per contract Penny Pilot Options Customer Rebate to
Add Liquidity for each transaction which adds liquidity in Penny Pilot
Options in that month.'' The Exchange is amending note ``e'' to clearly
denote that there will now be three ways to earn an additional rebate
for Participants that qualify for the Tier 8 Customer and Professional
Penny Pilot Options Rebate to Add Liquidity. The first two additional
rebates currently apply today, and will be demarcated as ``1'' and
``2.'' The Exchange proposes to pay a new additional $0.05 per contract
rebate to Participants that qualify for the Tier 8 rebate of $0.48 per
contract, from October 22, 2015 through October 30, 2015, for a total
of $0.53 per contract,
[[Page 69757]]
provide the Participant meets the requisite criteria. The new incentive
would require the Participant to: (a) Add Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.85% of total industry
customer equity and ETF option ADV contracts per day from October 22,
2015 through October 30, 2015 in a month and (b) add liquidity in all
securities through one or more of its Nasdaq Market Center MPIDs \8\
that represent 1.00% or more of Consolidated Volume from October 22,
2015 through October 30, 2015. Consolidated Volume shall mean the total
consolidated volume reported to all consolidated transaction reporting
plans by all exchanges and trade reporting facilities during a month
\9\ in equity securities, excluding executed orders with a size of less
than one round lot. For purposes of calculating Consolidated Volume and
the extent of an equity member's trading activity, expressed as a
percentage of or ratio to Consolidated Volume, the date of the annual
reconstitution of the Russell Investments Indexes shall be excluded
from both total Consolidated Volume and the member's trading activity.
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\7\ Tier 8 of the Customer and Professional Rebate to Add
Liquidity Tiers pays a $0.48 per contract rebate to Participants
that add Customer, Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options above 0.75% or more of total industry customer equity
and ETF option ADV contracts per day in a month or Participant adds
(1) Customer and/or Professional liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options of 30,000 or more contracts per day
in a month, (2) the Participant has certified for the Investor
Support Program set forth in Rule 7014, and/or (3) the Participant
qualifies for rebates under the Qualified Market Maker Program set
forth in Rule 7014.
\8\ MPIDS are four character alpha code market participant
identifiers used to report trades.
\9\ For purposes of this filing, the Consolidated Volume shall
only apply to volume from October 22, 2015 through October 30, 2015.
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The Exchange believes that this new added incentive will encourage
Participants to add even more liquidity on NOM to earn a higher rebate.
Also, the Exchange is not only providing Participants another manner in
which to earn a higher options rebate by participating in the options
market, but is also permitting equities volume to qualify for the
options rebate, thereby benefitting the Nasdaq Market Center as well as
the NOM market, by incentivizing order flow to these markets.
Note ``d'' of Chapter XV, Section 2(1)
Currently, note ``d'' of Chapter XV, Section 2(1) states that
Participants that qualify for Customer or Professional Rebate to Add
Liquidity Tiers 7 \10\ or 8 in a given month will be assessed a
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options of $0.50 per
contract. Currently, the Professional, Firm, Non-NOM Market Maker, NOM
Market Maker or Broker-Dealer Fee for Removing Liquidity in Penny Pilot
Options is $0.54 per contract for these Participants.\11\
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\10\ Customer and Professional Rebate to Add Liquidity Tier 7
pays a $0.47 per contract rebate to Participants that have Total
Volume of 150,000 or more contracts per day in a month, of which
50,000 or more contracts per day in a month must be Customer and/or
Professional liquidity in Penny Pilot Options. ``Total Volume'' is
defined as Customer, Professional, Firm, Broker-Dealer, Non-NOM
Market Maker and NOM Market Maker volume in Penny Pilot Options and/
or Non-Penny Pilot Options which either adds or removes liquidity on
NOM.
\11\ SPY transactions are assessed a $0.50 per contract Fee for
Removing Liquidity in Penny Pilot Options for all Participants
except Customer.
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The Exchange proposes to remove the incentive to obtain a lower
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options for
Participants that qualify for Tier 7 of the Customer and Professional
Penny Pilot Options Rebate to Add Liquidity as of October 22, 2015.
This incentive will remain for Participants that qualify for Tier 8, as
is the case today. The Exchange desires to incentivize market
participants to add liquidity in the highest tier in order to obtain
the lower Professional, Firm, Non-NOM Market Maker, NOM Market Maker or
Broker-Dealer Fee for Removing Liquidity in Penny Pilot Options. Note
``d'' will be amended to remove Tier 7. Additionally, from October 1,
2015 through the date of this filing, no member has qualified for the
lower Professional, Firm, Non-NOM Market Maker, NOM Market Maker or
Broker-Dealer Fee for Removing Liquidity in Penny Pilot Options of
$0.50 per contract with Tier 7.
Typographical Correction
The Exchange proposes to remove the period at the end of Customer
and Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 to
conform the rule text.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\12\ in general, and with
Section 6(b)(4) and 6(b)(5) of the Act,\13\ 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, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. Customer volume is important because it continues
to attract liquidity to the Exchange, which benefits all market
participants. Further, with respect to Professional liquidity, the
Exchange initially established Professional pricing in order to ``. . .
bring additional revenue to the Exchange.'' \14\ The Exchange noted in
the Professional Filing that it believes ``. . . that the increased
revenue from the proposal would assist the Exchange to recoup fixed
costs.'' \15\ Further, the Exchange noted in that filing that it
believes that establishing separate pricing for a Professional, which
ranges between that of a Customer and market maker, accomplishes this
objective.\16\
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(4) and (5).
\14\ See Securities Exchange Act Release No. 64494 (May 13,
2011), 76 FR 29014 (May 19, 2011) (SR-NASDAQ-2011-066)
(``Professional Filing''). In this filing, the Exchange addressed
the perceived favorable pricing of Professionals who were assessed
fees and paid rebates like a Customer prior to the filing. The
Exchange noted in that filing that a Professional, unlike a retail
Customer, has access to sophisticated trading systems that contain
functionality not available to retail Customers.
\15\ See Professional Filing.
\16\ See Professional Filing. The Exchange also in the
Professional Filing that it believes the role of the retail Customer
in the marketplace is distinct from that of the Professional and the
Exchange's fee proposal at that time accounted for this distinction
by pricing each market participant according to their roles and
obligations.
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Customer and Professional Penny Pilot Options Rebates to Add Liquidity
Note ``e'' of Chapter XV, Section 2(1)
The Exchange's proposal to amend note ``e'' to provide for an
additional means to earn a higher rebate for Participants that qualify
for the Tier 8 Customer and Professional Penny Pilot Options Rebate to
Add Liquidity is reasonable because the opportunity to earn a higher
rebate of $0.53 \17\ per contract, provided the qualifications are met,
will incentivize Participants to transact an even greater number of
qualifying Customer and/or Professional volume, which liquidity will
benefit other market participants by providing them the opportunity to
interact with that liquidity. The Exchange's proposal to permit
Participants to obtain a higher rebate of $0.53 per contract, provided
they qualify for the Tier 8 rebate and the new criteria \18\ by adding
volume from October 22, 2015 through October 30,
[[Page 69758]]
2015,\19\ which criteria includes the addition of options and equity
volume, is reasonable because the Exchange is encouraging market
participants to send order flow to both the options and equity markets
to receive the rebate. Incentivizing Participants to add options
liquidity through the payment of an additional rebate is not novel and
exists today.\20\ Today, the Customer and Professional Penny Pilot
Options Rebate to Add Liquidity Tier 8 includes, as part of the
qualifying criteria, a certification for the Investor Support Program
\21\ as set forth in Rule 7014 and qualification in the QMM
Program.\22\ These two programs are equity programs which require
participation in the form of adding liquidity. The concept of
participating in the equities market as a means to qualify for an
options rebate exists today. The Exchange's proposal would require
Participants to add liquidity in all securities through one or more of
its Nasdaq Market Center MPIDS that represent 1.00% or more of
Consolidated Volume during the month.\23\ Consolidated Volume shall
mean the total consolidated volume reported to all consolidated
transaction reporting plans by all exchanges and trade reporting
facilities during a month \24\ in equity securities, excluding executed
orders with a size of less than one round lot. For purposes of
calculating Consolidated Volume and the extent of an equity member's
trading activity, expressed as a percentage of or ratio to Consolidated
Volume, the date of the annual reconstitution of the Russell
Investments Indexes shall be excluded from both total Consolidated
Volume and the member's trading activity.
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\17\ Tier 8 pays a rebate of $0.48 per contract and the
additional rebate proposed for note ``e'' would be a $0.05 per
contract rebate for a total of $0.53 per contract.
\18\ New note ``e'' requires Participants to (a) add Customer,
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options
above 0.85% of total industry customer equity and ETF option ADV
contracts per day from October 22, 2015 through October 30, 2015 and
(b) add liquidity in all securities through one or more of its
Nasdaq Market Center MPIDs that represent 1.00% or more of
Consolidated Volume from October 22, 2015 through October 30, 2015
in order to receive an additional $0.05 per contract Penny Pilot
Options Customer Rebate to Add Liquidity.
\19\ Monthly volume prior to October 22, 2015 will not count
toward the calculation of this rebate incentive.
\20\ Today, note ``e'' provides two opportunities to earn a
higher rebate. Participants that add Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non- Penny Pilot Options of 1.15% or more of total
industry customer equity and ETF option ADV contracts per day in a
month receive an additional $0.02 per contract Penny Pilot Options
Customer Rebate to Add Liquidity for each transaction which adds
liquidity in Penny Pilot Options in that month; or Participants may
add Customer, Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options of 1.40% or more of total industry customer equity and
ETF option ADV contracts per day in a month to receive an additional
$0.05 per contract Penny Pilot Options Customer Rebate to Add
Liquidity for each transaction which adds liquidity in Penny Pilot
Options in that month.
\21\ For a detailed description of the Investor Support Program
or ISP, 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).
\22\ A QMM is a NASDAQ member that makes a significant
contribution to market quality by providing liquidity at the
national best bid and offer (``NBBO'') in a large number of stocks
for a significant portion of the day. In addition, the NASDAQ equity
member must avoid imposing the burdens on NASDAQ and its market
participants that may be associated with excessive rates of entry of
orders away from the inside and/or order cancellation. The
designation ``QMM'' reflects the QMM's commitment to provide
meaningful and consistent support to market quality and price
discovery by extensive quoting at the NBBO in a large number of
securities. In return for its contributions, certain financial
benefits are provided to a QMM with respect to a particular MPID (a
``QMM MPID''), as described under Rule 7014(e).
\23\ For purposes of this filing, the Consolidated Volume shall
only apply to volume from October 22, 2015 through October 30, 2015.
\24\ Id.
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The Exchange is not only providing Participants with a manner in
which to earn an additional options rebate, but also expanding the
qualifications to permit participation in the equities market to
qualify for the additional rebate. This participation benefits the
Nasdaq Market Center as well as the NOM market by incentivizing order
flow to these markets. As with existing tiers that require
participation in both the Nasdaq Market Center and NOM, this additional
rebate recognizes the prevalence of trading in which members
simultaneously trade different asset classes within the same strategy.
Because cash equities and options markets are linked, with liquidity
and trading patterns on one market affecting those on the other, the
Exchange believes that pricing incentives that encourage market
participant activity in NOM also support price discovery and liquidity
provision in the Nasdaq Market Center. Further, because the proposed
incentive which is being added in note ``e'' require significant levels
of liquidity provision, which benefits all market participants, and
because activity in NOM also supports price discovery and liquidity
provision in the Nasdaq Market Center due to the increasing propensity
of market participants to be active in both markets and the influence
of each market on the pricing of securities in the other, this proposal
is reasonable. Moreover, the incentive has the potential to make the
applicable higher rebate available to a wider range of market
participants by introducing an additional means of qualification.
Finally, other options exchanges today pay rebates to participants that
add order both options and equity order flow.\25\
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\25\ BATS Exchange Inc. (``BATS'') and NYSE Arca, Inc. (NYSE
Arca'') offer Cross-Asset Step-Up Tiers on its equity market. See
BATS BZX Exchange Fee Schedule. See also NYSE Arca Equities Schedule
of Fees and Charges for Exchange Services and NYSE Arca Options Fees
and Charges.
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The Exchange's proposal to amend note ``e'' to provide for an
additional means to earn a higher rebate for Participants that qualify
for the Tier 8 Customer and Professional Penny Pilot Options Rebate to
Add Liquidity is equitable and not unfairly discriminatory because all
Participants may qualify for Tier 8 and the additional incentive.
Qualifying Participants will be uniformly paid the rebate provided the
requirements are met for the time period from October 22, 2015 through
October 30, 2015. The Exchange's proposal to permit Participants to
receive an additional $0.05 per contract rebate in addition to the Tier
8 rebate of $0.48 per contract, provided they qualify for Tier 8 and
add options and equity volume as specified in the new note ``e''
criteria,\26\ is equitable and not unfairly discriminatory because
market participants today may qualify for a comparable or a higher
rebate through alternative means that does not require participation in
NOM.
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\26\ See note 20.
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Note ``d'' of Chapter XV, Section 2(1)
The Exchange's proposal to remove the incentive in note ``d'' for
Participants that qualify for Tier 7 and continue to apply the
incentive for Participants that qualify for Tier 8 is reasonable
because the Exchange desires to incentivize market participants to add
liquidity in the highest tier in order to obtain the lower
Professional, Firm, Non-NOM Market Maker, NOM Market Maker or Broker-
Dealer Fee for Removing Liquidity in Penny Pilot Options.\27\ This
proposal will shift the applicability of note ``d'' to the highest
rebate tier only.
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\27\ Currently, the Professional, Firm, Non-NOM Market Maker,
NOM Market Maker or Broker-Dealer Fee for Removing Liquidity in
Penny Pilot Options is $0.54 per contract for these Participants,
except in SPY where it is $0.50 per contract for these Participants.
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The Exchange's proposal to remove the incentive in note ``d'' for
Participants that qualify for Tier 7 and continue to apply the
incentive for Participants that qualify for Tier 8 is equitable and not
unfairly discriminatory because the Exchange will uniformly apply the
incentive to all Participants that qualify for Tier 8.\28\ No
[[Page 69759]]
Participant will receive the incentive in note ``d'' for qualification
in Tier 7 as of October 22, 2015 and all Participants that have met the
Customer and Professional Penny Pilot Options Rebate to Add Liquidity
in Tier 8 would continue to receive the note ``d'' incentive.
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\28\ To date for the month of October 2015, no member has
qualified for the lower Professional, Firm, Non-NOM Market Maker,
NOM Market Maker or Broker-Dealer Fee for Removing Liquidity in
Penny Pilot Options of $0.50 per contract with Tier 7.
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Typographical Correction
The Exchange's proposal to remove the period at the end of Customer
and Professional Penny Pilot Options Rebate to Add Liquidity Tier 8 for
consistency is reasonable, equitable and not unfairly discriminatory.
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.
Customer and Professional Penny Pilot Options Rebates to Add Liquidity
New Note ``e'' of Chapter XV, Section 2(1)
The Exchange's proposal to adopt a new note ``e'' incentive does
not impose an undue burden on intra-market competition because all
Participants are eligible to qualify for the Tier 8 Customer or
Professional Rebate to Add Liquidity Tier, provided they meet the
qualifications for that tier, and additionally all Participants may
qualify for the additional requirements in new note ``e''.\29\ Further,
this new additional note ``e'' rebate will be uniformly paid to those
Participants that are eligible for the rebate.
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\29\ See note 20.
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Furthermore, incentivizing Participants to add not only options,
but equities volume does not impose an undue burden on intra-market
competition because cash equities and options markets are linked, with
liquidity and trading patterns on one market affecting those on the
other, the Exchange believes that pricing incentives that encourage
market participant activity in NOM also support price discovery and
liquidity provision in the Nasdaq Market Center. Further, the pricing
incentives require significant levels of liquidity provision, which
benefits all market participants on NOM and the Nasdaq Market Center.
Moreover, the changes have the potential to make the applicable
incentives available to a wider range of market participants by
introducing an additional means of qualification.
Note ``d'' of Chapter XV, Section 2(1)
The Exchange's proposal to remove the incentive in note ``d'' from
Participants that qualify for Customer and Professional Penny Pilot
Options Rebate to Add Liquidity Tier 7 and continue to apply the
incentive to Participants that qualify for Customer and Professional
Penny Pilot Options Rebate to Add Liquidity Tier 8 does not impose an
undue burden on intra-market competition because the Exchange will
uniformly apply the incentive to all Participants. No Participant will
receive the incentive in note ``d'' for Tier 7 qualification as of
October 22, 2015 and all Participants that have met the criteria for
Customer and Professional rebate Tier 8 would continue to receive the
note ``d'' incentive. Further, there are no Participants that qualified
for the Tier 7 incentive from October 1, 2015 through the date of this
filing.
The Exchange's proposal addressed herein does not impose an inter-
market burden on competition because the Exchange operates in a highly
competitive market in which many sophisticated and knowledgeable market
participants can readily and do send order flow to competing exchanges
if they deem fee levels or rebate incentives at a particular exchange
to be excessive or inadequate. These market forces support the Exchange
belief that the proposed rebate structure and tiers proposed herein are
competitive with rebates and tiers in place on other exchanges. The
Exchange believes that this competitive marketplace continues to impact
the rebates present on the Exchange today and substantially influences
the proposals set forth above. Other options markets offer similar
rebates to incentive market participants to direct order flow to their
markets. The Exchange believes that continuing to offer rebates and
increasing those rebates and providing opportunities to earn higher
rebates will benefit the marketplace by continuing to reward liquidity
providers and thereby offering other market participants an opportunity
to interact with this order flow.
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.\30\
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\30\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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: (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.
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-2015-115 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-115. 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.,
[[Page 69760]]
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 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-2015-115, and should
be submitted on or before December 1, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-28508 Filed 11-9-15; 8:45 am]
BILLING CODE 8011-01-P