Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Pricing for Option Orders Routed to Away Markets and Execution Pricing for Certain Options, 27031-27033 [2010-11400]
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<![CDATA[
27031
Federal Register / Vol. 75, No. 92 / Thursday, May 13, 2010 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62056; File No. SR–
NASDAQ–2010–056]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Pricing for Option Orders Routed to
Away Markets and Execution Pricing
for Certain Options
May 6, 2010.
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 April 30,
2010, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III, below, which Items
have been prepared by NASDAQ.
Pursuant to Section 19(b)(3)(A)(ii) of the
Act 3 and Rule 19b–4(f)(2) thereunder,4
NASDAQ has designated this proposal
as establishing or changing a due, fee, or
other charge, which renders the
proposed rule change effective upon
filing. 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
NASDAQ proposes to modify Rule
7050 governing pricing for NASDAQ
members using the NASDAQ Options
Market (‘‘NOM’’), NASDAQ’s facility for
executing and routing standardized
equity and index options. Specifically,
NOM proposes to expand the list of
options that will be assessed routing
fees of $0.30 per contract for customer
orders and $0.55 per contract for Firm
and Market Maker orders that are routed
from NOM to NASDAQ OMX PHLX,
Inc. (‘‘Phlx’’), as well as update
execution pricing for certain options
and increase the Firm fee for removing
liquidity in non-Penny Pilot options.
NASDAQ will make the proposed rule
changes effective for transactions on or
after May 3, 2010.
The text of the proposed rule change
is set forth below. Italics indicate new
text.
*
*
*
*
*
7050. NASDAQ Options Market
The following charges shall apply to
the use of the order execution and
routing services of the NASDAQ
Options Market by members for all
securities.
(1) Fees for Execution of Contracts on
the NASDAQ Options Market
FEES AND REBATES
[per executed contract]
Customer
Penny Pilot Options:
Rebate to Add Liquidity ............................................................................................................
Fee for Removing Liquidity ......................................................................................................
IWM, QQQQ, SPY
Rebate to Add Liquidity ............................................................................................................
Fee for Removing Liquidity ......................................................................................................
NDX and MNX
Rebate to Add Liquidity ............................................................................................................
Fee for Removing Liquidity ......................................................................................................
All Other Options:
Fee for Adding Liquidity ...........................................................................................................
Fee for Removing Liquidity ......................................................................................................
Rebate for Removing Liquidity * ...............................................................................................
Firm
Non-NOM
Market
maker
NOM
Market
maker
$0.25
$0.35
$0.25
$0.45
$0.25
$0.45
$0.25
$0.45
$0.30
$0.35
$0.30
$0.45
$0.30
$0.45
$0.30
$0.45
$0.10
$0.50
$0.10
$0.50
$0.10
$0.50
$0.20
$0.40
Free
—
$0.30
$0.40
[$0.20]
—
$0.30
$0.45
$0.30
$0.45
—
—
$0.20
Transactions in which the same participant is the buyer and the seller shall be charged a net fee of $0.10 per executed contract.
* No rebate will be paid when a customer order executes against another customer order.
For a pilot period ending July 31, 2010, the charge for members or non-members entering order via the Options Intermarket Linkage that executes in the Nasdaq Options Market shall be $0.45 per executed contract.
(2)–(3) No Change.
(4) Fees for routing contracts to
markets other than the NASDAQ
Options Market shall be assessed as
provided below. The current fees and a
historical record of applicable fees
related to orders routed to other
exchanges shall be posted on the
NasdaqTrader.com Web site.
sroberts on DSKD5P82C1PROD with NOTICES
Exchange
Customer
BATS ....................................................................................................................................................................
BOX .....................................................................................................................................................................
CBOE ...................................................................................................................................................................
ISE .......................................................................................................................................................................
NYSE Arca Penny Pilot .......................................................................................................................................
NYSE Arca Non Penny Pilot ...............................................................................................................................
NYSE AMEX ........................................................................................................................................................
PHLX (for all options other than the below listed options) .................................................................................
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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15:56 May 12, 2010
3 15
4 17
Jkt 220001
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
Frm 00114
Fmt 4703
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E:\FR\FM\13MYN1.SGM
13MYN1
$0.36
0.06
0.06
0.06
0.50
0.06
0.06
0.06
Firm
$0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
MM
$0.55
0.55
0.55
0.55
0.55
0.55
0.55
0.55
27032
Federal Register / Vol. 75, No. 92 / Thursday, May 13, 2010 / Notices
Exchange
Customer
PHLX (for the following options only): AA, AAPL. AIG, ALL, AMD, AMR, AMZN, BAC, BRCD, C, CAT,
CSCO, DELL, DIA, DRYS, EK, F, FAS, FAZ, GDX, GE, GLD, GS, IBM, INTC, IWM, JPM, LVS, MGM,
MSFT, MU, NEM, NOK, PALM, PFE, POT, QCOM, QQQQ, RIMM, SBUX, SIRI, SKF, SLV, SMH, SNDK,
SPY, T, TZA, UAUA, UNG, USO, UYG, VZ, WYNN, X, XLF .........................................................................
*
*
*
*
*
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 these
statements may be examined at the
places specified in Item IV below.
NASDAQ has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
sroberts on DSKD5P82C1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NASDAQ is proposing to modify Rule
7050 governing the fees assessed for
options orders entered into NOM but
routed to and executed on Phlx.
Specifically, NASDAQ is proposing to
expand the number of options to which
certain routing fees apply to reflect the
expansion of the fee schedule for adding
and removing liquidity on the Phlx.5
NASDAQ is also proposing to modify
Rule 7050 governing the fees for
execution of contracts on NOM by
updating execution pricing for IWM,
QQQQ and SPY options, as well as raise
the Firm fee for removing liquidity in
non-Penny Pilot options.
NASDAQ currently assesses a $0.30
per contract routing fee for customer
orders, and a $0.55 per contract routing
fee for Firm and Market Maker orders
routed from NOM to Phlx for options
that are subject to fees and rebates for
adding and removing liquidity as
described in the Phlx fee schedule. To
reflect the additions Phlx is making to
its fee schedule, NASDAQ proposes to
add the following options to the table
set forth in Rule 7050(4): Brocade
Communications Systems, Inc.
(‘‘BRCD’’); International Business
Machines Corp. (‘‘IBM’’); Nokia Corp.
5 See SR–Phlx–2010–64 (April 26, 2010). For a
description of the Phlx’s current fee schedule for
adding and removing liquidity, See Securities
Exchange Act Release No. 61684 (March 10, 2010),
75 FR 13189 (March 18, 2010) (SR–Phlx–2010–33).
VerDate Mar<15>2010
15:56 May 12, 2010
Jkt 220001
(‘‘NOK’’); Sirius XM Radio, Inc. (‘‘SIRI’’);
and Direxion Daily Small Cap Bear 3X
Shares (‘‘TZA’’).
The Exchange is proposing these fees
to recoup the majority of transaction
and clearing costs associated with
routing orders to Phlx. As with all fees,
the Exchange may adjust these routing
fees by filing a new proposed rule
change.
NASDAQ currently offers a Penny
Pilot option rebate of $0.25. NASDAQ is
proposing to increase the rebate to all
participants for providing liquidity in
IWM, QQQQ and SPY options to $0.30
per executed contract.6 The fee to
remove liquidity in these options will
continue to be the standard Penny Pilot
remove fee of $0.35 for Customers and
$0.45 for Firms and Market Makers. The
Exchange also proposes to increase the
Firm fee for removing liquidity in nonPenny Pilot options from $0.20 to $0.40
per executed contract.7
The changes are part of the
Exchange’s continued effort to attract
and enhance participation on NOM. The
Exchange believes these proposed fee
changes are reasonable and equitable in
that they apply uniformly to all
similarly situated participants on NOM.
The Exchange has designated this
proposal to be operative for trades on or
after May 3, 2010.
2. Statutory Basis
NASDAQ believes that the proposed
rule changes are consistent with the
provisions of Section 6 of the Act,8 in
general, and with Section 6(b)(4) of the
Act,9 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.
NASDAQ further believes that the
proposed rule changes are consistent
6 The rebate increase is consistent to a similar
increase made by NYSEArca. See Securities
Exchange Act Release No. 61894 (April 13, 2010),
75 FR 20413 (April 19, 2010) (SR–NYSEArca–2010–
24).
7 This fee increase is similar to rates assessed by
NYSEArca and NASDAQ OMX PHLX, Inc. for Firm
electronic executions. Id.; See Securities Exchange
Act Release No. 61971 (April 23, 2010), pending
publication in the Federal Register (SR–Phlx–2010–
62).
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(4).
PO 00000
Frm 00115
Fmt 4703
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$0.30
Firm
$0.55
MM
$0.55
with Section 6(b)(5) of the Act 10 in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers,
or to regulate by virtue of any authority
conferred by the Act matters not related
to the purposes of the Act or the
administration of the Exchange.
NASDAQ is one of eight options
market in the national market system for
standardized options. Joining NASDAQ
and electing to trade options is entirely
voluntary. Under these circumstances,
NASDAQ’s fees must be competitive
and low in order for NASDAQ to attract
order flow, execute orders, and grow as
a market. NASDAQ thus believes that its
fees are fair and reasonable and
consistent with the Exchange Act.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
To the contrary, NASDAQ has designed
its fees to compete effectively for the
execution and routing of options
contracts and to reduce the overall cost
to investors of options trading.
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 11 and
10 15
11 15
E:\FR\FM\13MYN1.SGM
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A)(ii).
13MYN1
Federal Register / Vol. 75, No. 92 / Thursday, May 13, 2010 / Notices
paragraph (f)(2) of Rule 19b–4 12
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission may summarily
abrogate 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.
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:
identifying information from
submissions. You should submit only
information that you wish to make
publicly available. All submissions
should refer to File Number SR–
NASDAQ–2010–056 and should be
submitted on or before June 3, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11400 Filed 5–12–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
sroberts on DSKD5P82C1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2010–056 on the
subject line.
[Release No. 34–62053; File No. SR–ISE–
2010–35]
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–2010–056. This
file number should be included on the
subject line if e-mail 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
a.m. and 3 p.m. Copies of such 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
May 6, 2010.
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Adopt a Fee Waiver for Its
PrecISE Terminals
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 26,
2010, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
organization. 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 ISE is proposing to amend its
Schedule of Fees by adopting a fee
waiver. The text of the proposed rule
change is available on the Exchange’s
Web site (https://www.ise.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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
12 17
CFR 240.19b–4(f)(2).
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15:56 May 12, 2010
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Frm 00116
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27033
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 self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to adopt a limited fee waiver
for PrecISE Trade® (‘‘PrecISE’’), the
Exchange’s proprietary front-end order
routing terminal used by Electronic
Access Members (‘‘EAM’’) and
sponsored customers 3 of an EAM to
send order flow to ISE. The Exchange
currently charges $350 per user per
month for the first 10 users of an EAM
and $100 per user per month for all
subsequent users. The Exchange also
has a PrecISE sponsored customer fee of
$350 per sponsored customer per month
for the first 10 users and $100 per
sponsored customer per month for all
subsequent users.
In order to give new users time to
become familiar and fully acclimated
with all of the functionality that PrecISE
offers, we proposes [sic] to adopt a fee
waiver applicable to all new users of
PrecISE. Specifically, we propose to
waive our PrecISE fees for the first two
months for all new EAM and sponsored
customer users. The proposed fee
waivers are based on ISE’s billing
period, which begins on the 16th of
each month and ends on the 15th of the
following month. So if a new user
begins using a PrecISE Trade terminal
on May 16th, that user’s PrecISE fees
would be waived from May 16–July 15,
i.e., two billing periods. And if a new
user begins using a PrecISE Trade
terminal on May 18th, that user’s
PrecISE fees would similarly be waived
from May 18–July 15.4
These proposed fee changes will be
operative on May 3, 2010.
2. Statutory Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Exchange
Act’’) for this proposed rule change is
the requirement under Section 6(b)(4)
that an exchange have an equitable
3 A ‘‘Sponsored Customer’’ is a non-Member of the
Exchange that trades under a sponsoring Member’s
execution and clearing identity, pursuant to ISE
Rule 706, Supplementary Material .01.
4 See e-mail from Samir Patel, Assistant General
Counsel, ISE, to Richard Holley III, Senior Special
Counsel, Division of Trading and Markets,
Commission, dated May 3, 2010.
E:\FR\FM\13MYN1.SGM
13MYN1
]]>Agencies
[Federal Register Volume 75, Number 92 (Thursday, May 13, 2010)]
[Notices]
[Pages 27031-27033]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11400]
[[Page 27031]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62056; File No. SR-NASDAQ-2010-056]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Pricing for Option Orders Routed to Away Markets and
Execution Pricing for Certain Options
May 6, 2010.
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 April 30, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by NASDAQ.
Pursuant to Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ NASDAQ has designated this proposal as establishing or
changing a due, fee, or other charge, which renders the proposed rule
change effective upon filing. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDAQ proposes to modify Rule 7050 governing pricing for NASDAQ
members using the NASDAQ Options Market (``NOM''), NASDAQ's facility
for executing and routing standardized equity and index options.
Specifically, NOM proposes to expand the list of options that will be
assessed routing fees of $0.30 per contract for customer orders and
$0.55 per contract for Firm and Market Maker orders that are routed
from NOM to NASDAQ OMX PHLX, Inc. (``Phlx''), as well as update
execution pricing for certain options and increase the Firm fee for
removing liquidity in non-Penny Pilot options. NASDAQ will make the
proposed rule changes effective for transactions on or after May 3,
2010.
The text of the proposed rule change is set forth below. Italics
indicate new text.
* * * * *
7050. NASDAQ Options Market
The following charges shall apply to the use of the order execution
and routing services of the NASDAQ Options Market by members for all
securities.
(1) Fees for Execution of Contracts on the NASDAQ Options Market
Fees and Rebates
[per executed contract]
------------------------------------------------------------------------
Non-NOM NOM
Customer Firm Market Market
maker maker
------------------------------------------------------------------------
Penny Pilot Options:
Rebate to Add Liquidity. $0.25 $0.25 $0.25 $0.25
Fee for Removing $0.35 $0.45 $0.45 $0.45
Liquidity..............
IWM, QQQQ, SPY
Rebate to Add Liquidity. $0.30 $0.30 $0.30 $0.30
Fee for Removing $0.35 $0.45 $0.45 $0.45
Liquidity..............
NDX and MNX
Rebate to Add Liquidity. $0.10 $0.10 $0.10 $0.20
Fee for Removing $0.50 $0.50 $0.50 $0.40
Liquidity..............
All Other Options:
Fee for Adding Liquidity Free $0.30 $0.30 $0.30
Fee for Removing -- $0.40 $0.45 $0.45
Liquidity.............. [$0.20]
Rebate for Removing $0.20 -- -- --
Liquidity *............
------------------------------------------------------------------------
Transactions in which the same participant is the buyer and the seller
shall be charged a net fee of $0.10 per executed contract.
* No rebate will be paid when a customer order executes against another
customer order.
For a pilot period ending July 31, 2010, the charge for members or non-
members entering order via the Options Intermarket Linkage that
executes in the Nasdaq Options Market shall be $0.45 per executed
contract.
(2)-(3) No Change.
(4) Fees for routing contracts to markets other than the NASDAQ
Options Market shall be assessed as provided below. The current fees
and a historical record of applicable fees related to orders routed to
other exchanges shall be posted on the NasdaqTrader.com Web site.
------------------------------------------------------------------------
Exchange Customer Firm MM
------------------------------------------------------------------------
BATS................................... $0.36 $0.55 $0.55
BOX.................................... 0.06 0.55 0.55
CBOE................................... 0.06 0.55 0.55
ISE.................................... 0.06 0.55 0.55
NYSE Arca Penny Pilot.................. 0.50 0.55 0.55
NYSE Arca Non Penny Pilot.............. 0.06 0.55 0.55
NYSE AMEX.............................. 0.06 0.55 0.55
PHLX (for all options other than the 0.06 0.55 0.55
below listed options).................
[[Page 27032]]
PHLX (for the following options only): $0.30 $0.55 $0.55
AA, AAPL. AIG, ALL, AMD, AMR, AMZN,
BAC, BRCD, C, CAT, CSCO, DELL, DIA,
DRYS, EK, F, FAS, FAZ, GDX, GE, GLD,
GS, IBM, INTC, IWM, JPM, LVS, MGM,
MSFT, MU, NEM, NOK, PALM, PFE, POT,
QCOM, QQQQ, RIMM, SBUX, SIRI, SKF,
SLV, SMH, SNDK, SPY, T, TZA, UAUA,
UNG, USO, UYG, VZ, WYNN, X, XLF.......
------------------------------------------------------------------------
* * * * *
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 these statements may be examined at the places specified in
Item IV below. NASDAQ has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ is proposing to modify Rule 7050 governing the fees assessed
for options orders entered into NOM but routed to and executed on Phlx.
Specifically, NASDAQ is proposing to expand the number of options to
which certain routing fees apply to reflect the expansion of the fee
schedule for adding and removing liquidity on the Phlx.\5\ NASDAQ is
also proposing to modify Rule 7050 governing the fees for execution of
contracts on NOM by updating execution pricing for IWM, QQQQ and SPY
options, as well as raise the Firm fee for removing liquidity in non-
Penny Pilot options.
---------------------------------------------------------------------------
\5\ See SR-Phlx-2010-64 (April 26, 2010). For a description of
the Phlx's current fee schedule for adding and removing liquidity,
See Securities Exchange Act Release No. 61684 (March 10, 2010), 75
FR 13189 (March 18, 2010) (SR-Phlx-2010-33).
---------------------------------------------------------------------------
NASDAQ currently assesses a $0.30 per contract routing fee for
customer orders, and a $0.55 per contract routing fee for Firm and
Market Maker orders routed from NOM to Phlx for options that are
subject to fees and rebates for adding and removing liquidity as
described in the Phlx fee schedule. To reflect the additions Phlx is
making to its fee schedule, NASDAQ proposes to add the following
options to the table set forth in Rule 7050(4): Brocade Communications
Systems, Inc. (``BRCD''); International Business Machines Corp.
(``IBM''); Nokia Corp. (``NOK''); Sirius XM Radio, Inc. (``SIRI''); and
Direxion Daily Small Cap Bear 3X Shares (``TZA'').
The Exchange is proposing these fees to recoup the majority of
transaction and clearing costs associated with routing orders to Phlx.
As with all fees, the Exchange may adjust these routing fees by filing
a new proposed rule change.
NASDAQ currently offers a Penny Pilot option rebate of $0.25.
NASDAQ is proposing to increase the rebate to all participants for
providing liquidity in IWM, QQQQ and SPY options to $0.30 per executed
contract.\6\ The fee to remove liquidity in these options will continue
to be the standard Penny Pilot remove fee of $0.35 for Customers and
$0.45 for Firms and Market Makers. The Exchange also proposes to
increase the Firm fee for removing liquidity in non-Penny Pilot options
from $0.20 to $0.40 per executed contract.\7\
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\6\ The rebate increase is consistent to a similar increase made
by NYSEArca. See Securities Exchange Act Release No. 61894 (April
13, 2010), 75 FR 20413 (April 19, 2010) (SR-NYSEArca-2010-24).
\7\ This fee increase is similar to rates assessed by NYSEArca
and NASDAQ OMX PHLX, Inc. for Firm electronic executions. Id.; See
Securities Exchange Act Release No. 61971 (April 23, 2010), pending
publication in the Federal Register (SR-Phlx-2010-62).
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The changes are part of the Exchange's continued effort to attract
and enhance participation on NOM. The Exchange believes these proposed
fee changes are reasonable and equitable in that they apply uniformly
to all similarly situated participants on NOM.
The Exchange has designated this proposal to be operative for
trades on or after May 3, 2010.
2. Statutory Basis
NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\8\ in general, and with Section
6(b)(4) of the Act,\9\ 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.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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NASDAQ further believes that the proposed rule changes are
consistent with Section 6(b)(5) of the Act \10\ in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers, or to regulate by virtue of any authority conferred by the Act
matters not related to the purposes of the Act or the administration of
the Exchange.
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\10\ 15 U.S.C. 78f(b)(5).
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NASDAQ is one of eight options market in the national market system
for standardized options. Joining NASDAQ and electing to trade options
is entirely voluntary. Under these circumstances, NASDAQ's fees must be
competitive and low in order for NASDAQ to attract order flow, execute
orders, and grow as a market. NASDAQ thus believes that its fees are
fair and reasonable and consistent with the Exchange Act.
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 that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. To the contrary,
NASDAQ has designed its fees to compete effectively for the execution
and routing of options contracts and to reduce the overall cost to
investors of options trading.
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 \11\ and
[[Page 27033]]
paragraph (f)(2) of Rule 19b-4 \12\ thereunder. At any time within 60
days of the filing of the proposed rule change, the Commission may
summarily abrogate 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.
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\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
\12\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2010-056 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-2010-056. This
file number should be included on the subject line if e-mail 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 a.m. and 3 p.m. Copies of such 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
publicly available. All submissions should refer to File Number SR-
NASDAQ-2010-056 and should be submitted on or before June 3, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-11400 Filed 5-12-10; 8:45 am]
BILLING CODE 8010-01-P
