Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter XV, Section 2 Entitled “NASDAQ Options Market-Fees and Rebates”, 48612-48615 [2015-19875]
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48612
Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices
mechanism of a free and open market
and protects investors and the public
interest because it provides additional
specificity, clarity and transparency.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
To the contrary, the Exchange believes
the proposal would enhance
competition because including all of the
exchanges enhances transparency and
enables investors to better assess the
quality of the Exchange’s execution and
routing services.
tkelley on DSK3SPTVN1PROD with NOTICES
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) 5 of the Act and Rule 19b4(f)(6) thereunder.6 The Exchange
believes that this proposed rule change
is properly designated as noncontroversial because it enhances clarity
and operational transparency without
modifying members’ rights or
obligations. The Exchange provided
notice of the proposed rule change on
July 27, 2015.
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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2015–048 on the subject line.
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Chapter XV, Section 2 Entitled
‘‘NASDAQ Options Market—Fees and
Rebates’’
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2015–048. 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 (https://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 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–BX–2015–048 and should
be submitted on or before September 3,
2015.
August 7, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–19879 Filed 8–12–15; 8:45 am]
[Release No. 34–75647; File No. SR–
NASDAQ–2015–090]
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 July 31,
2015, 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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s transaction fees at Chapter
XV, Section 2 entitled ‘‘NASDAQ
Options Market—Fees and Rebates,’’
which governs pricing for NASDAQ
members using the NASDAQ Options
Market (‘‘NOM’’), NASDAQ’s facility for
executing and routing standardized
equity and index options.
While the changes proposed herein
are effective upon filing, the Exchange
has designated such changes to become
operative on August 3, 3015.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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
BILLING CODE 8011–01–P
5 15
U.S.C. 78s(b)(3)(A).
6 17 CFR 240.19b–4(f)(6).
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U.S.C. 78s(b)(1).
CFR 240.19b-4.
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the most significant aspects of such
statements.
The Exchange proposes to expand
eligibility for one of the incentives
under the Penny Pilot Options Rebates
to Add Liquidity. The Penny Pilot was
established in March 2008 and has since
been expanded and extended through
June 30, 2016.3 Today, the Exchange
pays Customers 4 and Professionals 5 a
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
48613
Penny Pilot Options Rebate to Add
Liquidity based on the following tiered
rebate structure:
Rebate to add
liquidity
Monthly volume
Tier 1—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and ETF option average daily volume (‘‘ADV’’) contracts per day in a month .....................................................................................................................................
Tier 2—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month .................................................................................................................................................................
Tier 3—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month .................................................................................................................................................................
Tier 4—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month .................................................................................................................................................................
Tier 5—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.40% to 0.75% 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 NonPenny Pilot Options of 25,000 or more contracts per day in a month, (2) the Participant has certified for the Investor Support
Program set forth in Rule 7014, and (3) the Participant executed at least one order on NASDAQ’s equity market ....................
Tier 6—Participant has Total Volume of 100,000 or more contracts per day in a month, of which 25,000 or more contracts per
day in a month must be Customer and/or Professional liquidity in Penny Pilot Options ...............................................................
Tier 7—Participant has 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 ...............................................................
Tier 8—Participant adds 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 NonPenny 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 (3) the Participant qualifies for rebates under the Qualified Market Maker (‘‘QMM’’) Program set forth in Rule 7014. ............................................................................................................................................................
$0.20
0.25
0.42
0.43
0.45
0.45
0.47
0.48
tkelley on DSK3SPTVN1PROD with NOTICES
The Exchange is proposing to expand
eligibility for one of the incentives
applicable to Tier 8 Customer Penny
Pilot Options Rebate to Add Liquidity.
The Tier 8 Customer and Professional
Penny Pilot Options Rebate to Add
Liquidity is currently $0.48 per contract
if Participants add Customer,
Professional, Firm,6 Non-NOM Market
Maker 7 and/or Broker-Dealer 8 liquidity
in Penny Pilot Options and/or NonPenny Pilot Options above 0.75% of
total industry customer equity and ETF
option ADV of contracts traded in a
month. This rebate also applies if (1) the
Participant adds 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
3 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.
4 The term ‘‘Customer’’ refers to a customer in a
transaction that is marked by a Participant in the
Customer range for clearing purposes at The
Options Clearing Corporation (‘‘OCC’’). Such a
transaction is not for the account of a broker, dealer
or ‘‘Professional’’ (see next footnote).
5 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), See Chapter I,
Section 1(a)(48). All Professional orders must be
appropriately marked by Participants.
6 The term ‘‘Firm’’ refers to a firm participating
in a transaction marked by a Participant in the Firm
range for clearing purposes at OCC.
7 The term ‘‘NOM Market Maker’’ is a Participant
that has registered as a Market Maker on NOM
pursuant to Chapter VII, Section 2, and must also
remain in good standing pursuant to Chapter VII,
Section 4. In order to receive NOM Market Maker
pricing in all securities, the Participant must be
registered as a NOM Market Maker in at least one
security.
8 The term ‘‘Broker-Dealer’’ refers to a broker or
dealer participating in a transaction when such
transaction is not subject to transaction fees
applicable to specific categories of transaction
participants (other than brokers and dealers).
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48614
Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
Program 9 set forth in Rule 7014, and (3)
the Participant qualifies for rebates
under the Qualified Market Maker
(‘‘QMM’’) Program 10 set forth in Rule
7014.
Participants that qualify for the Tier 8
rebate and add Customer, Professional,
Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot
Options and/or Non- Penny Pilot
Options of 1.25% or more of total
industry customer equity and ETF
option ADV of contracts traded in a
month today also receive an additional
$0.02 per contract Penny Pilot Options
Customer 11 Rebate to Add Liquidity for
each transaction which adds liquidity in
Penny Pilot Options in that month.12
The Exchange is proposing to expand
eligibility for this additional incentive
under the Tier 8 Customer rebate by
amending the qualification as follows:
‘‘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 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.’’ By
lowering the percentage of total industry
customer equity and ETF options ADV
of contracts in a month required to be
reached in order to qualify for the
additional $0.02 per contract rebate, the
Exchange expects that a greater number
9 For a detailed description of the 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).
10 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).
11 This $0.02 per contract incentive applies only
to the Tier 8 Customer rebate, and not the
Professional rebate.
12 See note ‘‘e’’ in Chapter XV, Section 2(1).
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of Participants qualifying for the Tier 8
rebate will also receive the added
incentive.
The Exchange expects that expanded
eligibility for this incentive will
encourage Participants to add greater
liquidity to NOM. While the changes
proposed herein are effective upon
filing, the Exchange has designated such
changes to become operative on August
3, 3015.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,13 in
general, and with Section 6(b)(4) and
6(b)(5) of the Act,14 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.
The Exchange’s proposal to expand
incentive eligibility is reasonable
because it will incentivize Participants
to add liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options.
Participants that qualify for the Tier 8
rebate may choose to add greater
liquidity to NOM because of the lower
percentage qualifier (1.25% to 1.15%) to
obtain the additional $0.02 per contract
Customer rebate.
The Exchange’s proposal to expand
incentive eligibility is equitable and not
unfairly discriminatory because all
eligible Participants may qualify for the
Tier 8 Customer Penny Pilot Options
Rebate to Add Liquidity, provided they
have the requisite volume. The added
$0.0.2 per contract incentive will be
uniformly paid in addition to the Tier
8 rebate. Customer liquidity is critically
important to the market and all market
participants. Greater customer liquidity
benefits all market participants by
providing more trading opportunities,
which attracts market makers. An
increase in the activity by market
makers in turn facilitates tighter spreads
and further order flow.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change will not
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed expanded incentive will
incentivize market participants to add
greater liquidity on NOM to obtain the
added $0.02 per contract Customer
13 15
14 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(4) and (5).
Frm 00139
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rebate. Customer liquidity is critically
important to the market and benefits all
market participants. Greater customer
liquidity benefits all market participants
by providing more trading opportunities
and attracting greater participation by
specialists and market makers. An
increase in the activity of these market
participants in turn facilitates tighter
spreads. All Participants are eligible for
the rebates if they transact the requisite
volume.
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 ensure that the Exchange’s fees
and rebates remain competitive with the
fee structures at other trading platforms.
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.15
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2015–090 on the subject line.
15 15
E:\FR\FM\13AUN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
13AUN1
Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices
Paper comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2015–090. 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 (https://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 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–2015–090 and should be
submitted on or before September 3,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–19875 Filed 8–12–15; 8:45 am]
tkelley on DSK3SPTVN1PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
and C below, of the most significant
aspects of such statements.
[Release No. 34–75639; File No. SR–FINRA–
2015–028]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Tier Size
Pilot of FINRA Rule 6433 (Minimum
Quotation Size Requirements for OTC
Equity Securities)
August 7, 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 July 28,
2015, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA
Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity
Securities) to extend the Tier Size Pilot,
which currently is scheduled to expire
on August 14, 2015, until December 11,
2015.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
16 17
CFR 200.30–3(a)(12).
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1. Purpose
FINRA proposes to amend FINRA
Rule 6433 (Minimum Quotation Size
Requirements for OTC Equity
Securities) (the ‘‘Rule’’) to extend, until
December 11, 2015, the amendments set
forth in File No. SR–FINRA–2011–058
(‘‘Tier Size Pilot’’ or ‘‘Pilot’’), which
currently are scheduled to expire on
August 14, 2015.4
The Tier Size Pilot was filed with the
SEC on October 6, 2011,5 to amend the
minimum quotation sizes (or ‘‘tier
sizes’’) for OTC Equity Securities.6 The
goals of the Pilot were to simplify the
tier structure, facilitate the display of
customer limit orders, and expand the
scope of the Rule to apply to additional
quoting participants. During the course
of the pilot, FINRA collected and
provided to the SEC specified data with
which to assess the impact of the Pilot
tiers on market quality and limit order
display.7 On September 13, 2013,
FINRA provided to the Commission an
assessment on the operation of the Tier
Size Pilot utilizing data covering the
period from November 12, 2012 through
June 30, 2013.8 As noted in the 2013
Assessment, FINRA believed that the
analysis of the data generally showed
that the Tier Size Pilot had a neutral to
positive impact on OTC market quality
for the majority of OTC Equity
Securities and tiers; and that there was
an overall increase of 13% in the
number of customer limit orders that
met the minimum quotation sizes to be
eligible for display under the Pilot tiers.
In the 2013 Assessment, FINRA
recommended adopting the tiers as
4 See Securities Exchange Act Release No. 74927
(May 12, 2015), 80 FR 28327 (May 18, 2015) (Notice
of Filing and Immediate Effectiveness of File No.
SR–FINRA–2015–010); see also Securities Exchange
Act Release No. 67208 (June 15, 2012), 77 FR 37458
(June 21, 2012) (Order Approving File No. SR–
FINRA–2011–058, as amended).
5 See Securities Exchange Act Release No. 65568
(October 14, 2011), 76 FR 65307 (October 20, 2011)
(Notice of Filing of File No. SR–FINRA–2011–058).
6 ‘‘OTC Equity Security’’ means any equity
security that is not an ‘‘NMS stock’’ as that term is
defined in Rule 600(b)(47) of SEC Regulation NMS;
provided, however, that the term OTC Equity
Security shall not include any Restricted Equity
Security. See FINRA Rule 6420.
7 FINRA ceased collecting Pilot data for
submission to the Commission on February 13,
2015.
8 The assessment is part of the SEC’s comment file
for SR–FINRA–2011–058 and also is available on
FINRA’s Web site at: https://www.finra.org/Industry/
Regulation/RuleFilings/2011/P124615 (‘‘Pilot
Assessment’’).
E:\FR\FM\13AUN1.SGM
13AUN1
]]>Agencies
[Federal Register Volume 80, Number 156 (Thursday, August 13, 2015)]
[Notices]
[Pages 48612-48615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19875]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75647; File No. SR-NASDAQ-2015-090]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Chapter XV, Section 2 Entitled ``NASDAQ Options Market--Fees and
Rebates''
August 7, 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 July 31, 2015, 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
Exchange. 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.
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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 the Exchange's transaction fees at
Chapter XV, Section 2 entitled ``NASDAQ Options Market--Fees and
Rebates,'' which governs pricing for NASDAQ members using the NASDAQ
Options Market (``NOM''), NASDAQ's facility for executing and routing
standardized equity and index options.
While the changes proposed herein are effective upon filing, the
Exchange has designated such changes to become operative on August 3,
3015.
The text of the proposed rule change is available on the Exchange's
Web site at https://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
[[Page 48613]]
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
The Exchange proposes to expand eligibility for one of the
incentives under the Penny Pilot Options Rebates to Add Liquidity. The
Penny Pilot was established in March 2008 and has since been expanded
and extended through June 30, 2016.\3\ Today, the Exchange pays
Customers \4\ and Professionals \5\ a Penny Pilot Options Rebate to Add
Liquidity based on the following tiered rebate structure:
---------------------------------------------------------------------------
\3\ 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.
\4\ The term ``Customer'' refers to a customer in a transaction
that is marked by a Participant in the Customer range for clearing
purposes at The Options Clearing Corporation (``OCC''). Such a
transaction is not for the account of a broker, dealer or
``Professional'' (see next footnote).
\5\ 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), See Chapter I,
Section 1(a)(48). All Professional orders must be appropriately
marked by Participants.
------------------------------------------------------------------------
Rebate to add
Monthly volume liquidity
------------------------------------------------------------------------
Tier 1--Participant adds Customer, Professional, Firm, $0.20
Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options of
up to 0.10% of total industry customer equity and ETF
option average daily volume (``ADV'') contracts per day
in a month.............................................
Tier 2--Participant adds Customer, Professional, Firm, 0.25
Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options
above 0.10% to 0.20% of total industry customer equity
and ETF option ADV contracts per day in a month........
Tier 3--Participant adds Customer, Professional, Firm, 0.42
Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options
above 0.20% to 0.30% of total industry customer equity
and ETF option ADV contracts per day in a month........
Tier 4--Participant adds Customer, Professional, Firm, 0.43
Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options
above 0.30% to 0.40% of total industry customer equity
and ETF option ADV contracts per day in a month........
Tier 5--Participant adds Customer, Professional, Firm, 0.45
Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options
above 0.40% to 0.75% 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 25,000 or more contracts per day in a month,
(2) the Participant has certified for the Investor
Support Program set forth in Rule 7014, and (3) the
Participant executed at least one order on NASDAQ's
equity market..........................................
Tier 6--Participant has Total Volume of 100,000 or more 0.45
contracts per day in a month, of which 25,000 or more
contracts per day in a month must be Customer and/or
Professional liquidity in Penny Pilot Options..........
Tier 7--Participant has Total Volume of 150,000 or more 0.47
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..........
Tier 8--Participant adds Customer, Professional, Firm, 0.48
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 (3) the
Participant qualifies for rebates under the Qualified
Market Maker (``QMM'') Program set forth in Rule 7014..
------------------------------------------------------------------------
The Exchange is proposing to expand eligibility for one of the
incentives applicable to Tier 8 Customer Penny Pilot Options Rebate to
Add Liquidity. The Tier 8 Customer and Professional Penny Pilot Options
Rebate to Add Liquidity is currently $0.48 per contract if Participants
add Customer, Professional, Firm,\6\ Non-NOM Market Maker \7\ and/or
Broker-Dealer \8\ liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options above 0.75% of total industry customer equity and ETF
option ADV of contracts traded in a month. This rebate also applies if
(1) the Participant adds 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
[[Page 48614]]
Program \9\ set forth in Rule 7014, and (3) the Participant qualifies
for rebates under the Qualified Market Maker (``QMM'') Program \10\ set
forth in Rule 7014.
---------------------------------------------------------------------------
\6\ The term ``Firm'' refers to a firm participating in a
transaction marked by a Participant in the Firm range for clearing
purposes at OCC.
\7\ The term ``NOM Market Maker'' is a Participant that has
registered as a Market Maker on NOM pursuant to Chapter VII, Section
2, and must also remain in good standing pursuant to Chapter VII,
Section 4. In order to receive NOM Market Maker pricing in all
securities, the Participant must be registered as a NOM Market Maker
in at least one security.
\8\ The term ``Broker-Dealer'' refers to a broker or dealer
participating in a transaction when such transaction is not subject
to transaction fees applicable to specific categories of transaction
participants (other than brokers and dealers).
\9\ For a detailed description of the 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).
\10\ 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).
---------------------------------------------------------------------------
Participants that qualify for the Tier 8 rebate and add Customer,
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non- Penny Pilot Options of 1.25% or more
of total industry customer equity and ETF option ADV of contracts
traded in a month today also receive an additional $0.02 per contract
Penny Pilot Options Customer \11\ Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Pilot Options in that
month.\12\
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\11\ This $0.02 per contract incentive applies only to the Tier
8 Customer rebate, and not the Professional rebate.
\12\ See note ``e'' in Chapter XV, Section 2(1).
---------------------------------------------------------------------------
The Exchange is proposing to expand eligibility for this additional
incentive under the Tier 8 Customer rebate by amending the
qualification as follows: ``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 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.'' By lowering the
percentage of total industry customer equity and ETF options ADV of
contracts in a month required to be reached in order to qualify for the
additional $0.02 per contract rebate, the Exchange expects that a
greater number of Participants qualifying for the Tier 8 rebate will
also receive the added incentive.
The Exchange expects that expanded eligibility for this incentive
will encourage Participants to add greater liquidity to NOM. While the
changes proposed herein are effective upon filing, the Exchange has
designated such changes to become operative on August 3, 3015.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\13\ in general, and with
Section 6(b)(4) and 6(b)(5) of the Act,\14\ 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposal to expand incentive eligibility is
reasonable because it will incentivize Participants to add liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options. Participants that
qualify for the Tier 8 rebate may choose to add greater liquidity to
NOM because of the lower percentage qualifier (1.25% to 1.15%) to
obtain the additional $0.02 per contract Customer rebate.
The Exchange's proposal to expand incentive eligibility is
equitable and not unfairly discriminatory because all eligible
Participants may qualify for the Tier 8 Customer Penny Pilot Options
Rebate to Add Liquidity, provided they have the requisite volume. The
added $0.0.2 per contract incentive will be uniformly paid in addition
to the Tier 8 rebate. Customer liquidity is critically important to the
market and all market participants. Greater customer liquidity benefits
all market participants by providing more trading opportunities, which
attracts market makers. An increase in the activity by market makers in
turn facilitates tighter spreads and further order flow.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change will not impose any burden on competition
not necessary or appropriate in furtherance of the purposes of the Act.
The proposed expanded incentive will incentivize market participants to
add greater liquidity on NOM to obtain the added $0.02 per contract
Customer rebate. Customer liquidity is critically important to the
market and benefits all market participants. Greater customer liquidity
benefits all market participants by providing more trading
opportunities and attracting greater participation by specialists and
market makers. An increase in the activity of these market participants
in turn facilitates tighter spreads. All Participants are eligible for
the rebates if they transact the requisite volume.
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 ensure that the Exchange's fees and
rebates remain competitive with the fee structures at other trading
platforms.
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.\15\
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2015-090 on the subject line.
[[Page 48615]]
Paper comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-090. 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 (https://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 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-2015-090 and should
be submitted on or before September 3, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-19875 Filed 8-12-15; 8:45 am]
BILLING CODE 8011-01-P
