Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees, 75657-75659 [2013-29607]

Download as PDF Federal Register / Vol. 78, No. 239 / Thursday, December 12, 2013 / Notices Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2013–136 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. maindgalligan on DSK5TPTVN1PROD with NOTICES All submissions should refer to File Number SR–NYSEArca–2013–136. 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., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of 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– NYSEArca–2013–136, and should be submitted on or before January 2, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–29615 Filed 12–11–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71008; File No. SR– NASDAQ–2013–146] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees December 6, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 27, 2013, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASDAQ. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASDAQ proposes to modify 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, to amend Routing Fees. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on December 2, 2013. The text of the proposed rule change is available on the Exchange’s Web site at http:// www.nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 15 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 16:45 Dec 11, 2013 2 17 Jkt 232001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00115 Fmt 4703 Sfmt 4703 75657 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to amend the Routing Fees in Section 2(3) of Chapter XV in order to recoup costs the Exchange incurs for routing and executing certain orders in equity options to away markets. Today, the Exchange assesses a Non-Customer a $0.95 per contract Routing Fee to any options exchange. The Customer Routing Fee for option orders routed to NASDAQ OMX PHLX LLC (‘‘PHLX’’) is a $0.05 per contract Fixed Fee in addition to the actual transaction fee assessed. The Customer Routing Fee for option orders routed to NASDAQ OMX BX, Inc. (‘‘BX Options’’) is $0.00 per contract. The Customer Routing Fee for option orders routed to all other options exchanges 3 (excluding PHLX and BX Options) is a fixed fee of $0.15 per contract (‘‘Fixed Fee’’) in addition to the actual transaction fee assessed. If the away market pays a rebate, the Routing Fee is $0.00 per contract.4 The Exchange proposes to increase the Customer Routing Fixed Fee of $0.15 per contract when an option order is routed to all other exchanges to $0.20 per contract. With respect to the fixed costs, the Exchange incurs a fee when it utilizes Nasdaq Options Services LLC (‘‘NOS’’), a member of the Exchange and the Exchange’s exclusive order router.5 Each time NOS routes an order to an away market, NOS is charged a clearing fee 6 and, in the case of certain exchanges, a transaction fee is also charged in certain symbols, which fees are passed through to the Exchange. The Exchange currently recoups clearing and transaction charges incurred by the Exchange as well as certain other costs incurred by the Exchange when routing to away markets, such as administrative and technical costs associated with operating NOS, membership fees at 3 Including BATS Exchange, Inc. (‘‘BATS’’), BOX Options Exchange LLC (‘‘BOX’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), C2 Options Exchange, Incorporated (‘‘C2’’), International Securities Exchange, LLC (‘‘ISE’’), the Miami International Securities Exchange, LLC (‘‘MIAX’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE MKT LLC (‘‘NYSE Amex’’) and Topaz Exchange, LLC (‘‘Gemini’’). 4 For all Routing Fees, the transaction fee will continue to be based on the away market’s actual transaction fee or rebate for particular market participants and in the case that there is no transaction fee or rebate assessed by the away market, the fixed fee. 5 See NASDAQ Rules at Chapter VI, Section 11(e) (Order Routing). 6 The Options Clearing Corporation (‘‘OCC’’) assesses $0.01 per contract side. E:\FR\FM\12DEN1.SGM 12DEN1 75658 Federal Register / Vol. 78, No. 239 / Thursday, December 12, 2013 / Notices 2. Statutory Basis NASDAQ believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) and (b)(5) 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that the proposed Routing Fees are reasonable because they seek to recoup costs that are incurred by the Exchange when routing Customer, Firm, Market Maker and Professional orders to away markets on behalf of members. Each destination market’s transaction charge varies and there is a cost incurred by the Exchange when routing orders to away markets. The costs to the Exchange include clearing costs, administrative and technical costs associated with operating NOS, membership fees at away markets, ORFs and technical costs associated with routing options. The Exchange believes that the proposed Routing Fees would enable the Exchange to recover the costs it incurs to route orders to away markets in addition to transaction fees assessed to market participants for the execution of Customer, Firm, Market Maker and Professional orders by the away market. Specifically, new entrants have added costs associated with routing.10 The Exchange believes that it is reasonable to recoup these costs borne by the Exchange on each transaction. The $0.20 per contract Customer Routing Fixed Fee, which is assessed when an option order is routed to all other exchanges, represents the overall cost to the Exchange for technical, administrative, clearing, regulatory, compliance and other costs, in addition to the transaction fee assessed by the away market. In addition, the Exchange believes that it is equitable and not unfairly discriminatory to assess a $0.20 per contract Customer Routing Fixed Fee when an option order is routed to all other exchanges because this fee would be assessed uniformly on all market participants in addition to the actual transaction fees on all orders routed to non-NASDAQ OMX markets. The Exchange believes that it is equitable and not unfairly discriminatory to assess a fixed cost of $0.05 per contract to route orders to PHLX and no cost to route to BX Options because the cost, in terms of actual cash outlays, to the Exchange to route to those markets is lower. For example, costs related to routing to PHLX and BX Options are lower as compared to other away markets because NOS is utilized by all three exchanges to route orders.11 NOS and the three NASDAQ OMX options (PHLX, BX Options and NOM) markets have a common data center and staff that are responsible for the day-to-day operations of NOS. Because the three exchanges are in a common data center, Routing Fees are reduced because costly expenses related to, for example, telecommunication lines to obtain connectivity are avoided when routing orders in this instance. The costs related to connectivity to route orders to other NASDAQ OMX exchanges are de minimis. When routing orders to nonNASDAQ OMX exchanges, the Exchange incurs costly connectivity charges related to telecommunication lines and other related costs. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to pass along savings realized by leveraging NASDAQ OMX’s infrastructure and scale to market participants when those orders are routed to PHLX and BX Options. Orders are routed to away markets in accordance with Exchange rules based on price.12 Market participants may submit orders to the Exchange as ineligible for routing or ‘‘DNR’’ to avoid incurring the Routing Fees proposed herein.13 7 Gemini adopted an ORF of $0.0010 per contract. See Securities Exchange Act Release No. 70200 (August 14, 2013), 78 FR 51242 (August 20, 2013) (SR–Topaz–2013–01). 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4), (5). 10 See note 8 [sic]. 11 See Chapter VI, Section 11 of the NASDAQ and BX Options Rules and PHLX Rule 1080(m)(iii)(A). 12 See NASDAQ Rules at Chapter XII (Options Order Protection and Locked and Crossed Market Rules). 13 See NASDAQ Rules at Chapter VI, Section 11(e) (Order Routing). maindgalligan on DSK5TPTVN1PROD with NOTICES away markets, Options Regulatory Fees (‘‘ORFs’’) and technical costs associated with routing options. The Exchange assesses the actual away market fee at the time that the order was entered into the Exchange’s trading system. This transaction fee would be calculated on an order-by-order basis since different away markets charge different amounts. A new market entrant recently adopted an ORF.7 The Exchange proposes to increase its Fixed Fee from $0.15 to $0.20 per contract to recoup costs associated with increased costs. VerDate Mar<15>2010 16:45 Dec 11, 2013 Jkt 232001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the rule change would allow the Exchange to recoup its costs when routing orders designated as available for routing by the market participant. NOM Participants may choose to mark the order as ineligible for routing to avoid incurring these fees.14 Today, other options exchanges also assess similar fees to recoup costs incurred when routing orders to away markets. With respect to continuing to route orders to PHLX and BX Options at a lower cost as compared to other away markets, the Exchange does not believe that the proposed amendments to increase those fees, while maintaining the same fee differential imposes a burden because all market participants would be assessed the same fees depending on the away market. Also, the Exchange is proposing to recoup costs incurred only when members request the Exchange route their orders to an away market. The Exchange is passing along savings realized by leveraging NASDAQ OMX’s infrastructure and scale to market participants when those orders are routed to Phlx and BX Options and is providing those saving to all market participants. Finally, the Exchange routes orders to away markets where the Exchange’s disseminated bid or offer is inferior to the national best bid (best offer) price and based on price first.15 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.16 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 14 See NASDAQ Rules at Chapter VI, Section 11(e) (Order Routing). 15 See NASDAQ Rules at Chapter XII (Options Order Protection and Locked and Crossed Market Rules). 16 15 U.S.C. 78s(b)(3)(A)(ii). E:\FR\FM\12DEN1.SGM 12DEN1 Federal Register / Vol. 78, No. 239 / Thursday, December 12, 2013 / Notices necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: maindgalligan on DSK5TPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2013–146 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2013–146. 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., 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– VerDate Mar<15>2010 16:45 Dec 11, 2013 Jkt 232001 NASDAQ–2013–146 and should be submitted on or before January 2, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–29607 Filed 12–11–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71022; File No. SR–OCC– 2013–17] Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Concerning Charters for the Board of Directors, the Membership/Risk Committee, the Audit Committee and the Performance Committee December 6, 2013. I. Introduction On October 17, 2013, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule change SR–OCC–2013–17 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 The proposed rule change was published for comment in the Federal Register on October 30, 2013.3 The Commission received no comments concerning the proposed rule change. For the reasons set forth below, the Commission is approving the proposed rule change. II. Description The proposed rule change concerns the charter of OCC’s Board of Directors (‘‘Board’’), as well as the charters of the Board’s Membership/Risk Committee (‘‘MRC’’), Audit Committee (‘‘AC’’), and Performance Committee (‘‘PC’’) (collectively, ‘‘Committee Charters’’).4 Board of Directors Charter The Board’s new charter (‘‘Board Charter’’) does not impose any new responsibilities on the Board, but rather reflects the existing powers and duties of the Board under OCC’s By-Laws and 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 70753 (October 24, 2013), 78 FR 65027 (October 30, 2013) (SR–OCC–2013–17). 4 OCC’s Board adopted its charter on March 7, 2013. Although OCC has had charters for its MRC, AC, and PC in place for a number of years, it has not previously submitted those as proposed rule changes pursuant to Section 19(b) of the Act. 1 15 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 75659 Rules, as well as the underlying practices that have been developed to aid the Board in meeting its obligations. According to OCC, the Board adopted a charter in an effort to provide outside parties with greater transparency into the Board’s oversight activities, to promote accountability, and to align OCC with current best practices in corporate governance. The Board Charter addresses the organization, composition, authority, functions, and responsibilities of the Board. With respect to membership, the Board Charter sets forth the size and composition of the Board, the qualifications for Board membership, and the term, tenure, and age limits applicable to each category of Board member. The Board Charter also addresses Board meetings, specifying that the Board will meet at least five times annually, that the Chairman of the Board will establish the agenda for each meeting in consultation with the President and Secretary, and that individual Directors must prepare for and attend each Board meeting. Additionally, the Board Charter incorporates many provisions of OCC’s existing By-Laws, including those governing the election, resignation, and disqualification of Directors,5 the establishment of Board committees and subcommittees, and the existence of a quorum. The Board Charter also defines the scope of the Board’s authority, providing, among other things, that the Board may make any inquiries it deems appropriate in executing its duties, and that the Board may confer with OCC management or employees as needed.6 The Board Charter reiterates the Board’s authority under the By-Laws to elect certain corporate officers annually, to form such committees and subcommittees as it deems appropriate, and to delegate authority to committee members. The Board Charter describes the Board’s cardinal duty as overseeing OCC to ensure that it is managed and operates in a manner that is consistent with OCC’s regulatory responsibilities. The Board is also tasked with 5 The Board Charter currently reflects that the Board has one Management Director, who is both the Chairman of the Board and Chief Executive Officer of OCC. OCC intends to split the office of the Chairman into two offices, Executive Chairman and President, both of whom will be elected as Management Directors. See Securities Exchange Act Release No. 70076 (July 30, 2013), 78 FR 47449 (August 5, 2013) (SR–OCC–2013–09). 6 The Chairman is permitted to ask OCC management or others to attend meetings and provide pertinent information. The Board may also hire specialists or rely on outside advisors or specialists. E:\FR\FM\12DEN1.SGM 12DEN1

Agencies

[Federal Register Volume 78, Number 239 (Thursday, December 12, 2013)]
[Notices]
[Pages 75657-75659]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29607]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71008; File No. SR-NASDAQ-2013-146]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Routing Fees

December 6, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 27, 2013, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by NASDAQ. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ proposes to modify 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, to 
amend Routing Fees.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on December 2, 2013.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaq.cchwallstreet.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend the Routing Fees in Section 
2(3) of Chapter XV in order to recoup costs the Exchange incurs for 
routing and executing certain orders in equity options to away markets. 
Today, the Exchange assesses a Non-Customer a $0.95 per contract 
Routing Fee to any options exchange. The Customer Routing Fee for 
option orders routed to NASDAQ OMX PHLX LLC (``PHLX'') is a $0.05 per 
contract Fixed Fee in addition to the actual transaction fee assessed. 
The Customer Routing Fee for option orders routed to NASDAQ OMX BX, 
Inc. (``BX Options'') is $0.00 per contract. The Customer Routing Fee 
for option orders routed to all other options exchanges \3\ (excluding 
PHLX and BX Options) is a fixed fee of $0.15 per contract (``Fixed 
Fee'') in addition to the actual transaction fee assessed. If the away 
market pays a rebate, the Routing Fee is $0.00 per contract.\4\
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    \3\ Including BATS Exchange, Inc. (``BATS''), BOX Options 
Exchange LLC (``BOX''), the Chicago Board Options Exchange, 
Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''), 
International Securities Exchange, LLC (``ISE''), the Miami 
International Securities Exchange, LLC (``MIAX''), NYSE Arca, Inc. 
(``NYSE Arca''), NYSE MKT LLC (``NYSE Amex'') and Topaz Exchange, 
LLC (``Gemini'').
    \4\ For all Routing Fees, the transaction fee will continue to 
be based on the away market's actual transaction fee or rebate for 
particular market participants and in the case that there is no 
transaction fee or rebate assessed by the away market, the fixed 
fee.
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    The Exchange proposes to increase the Customer Routing Fixed Fee of 
$0.15 per contract when an option order is routed to all other 
exchanges to $0.20 per contract. With respect to the fixed costs, the 
Exchange incurs a fee when it utilizes Nasdaq Options Services LLC 
(``NOS''), a member of the Exchange and the Exchange's exclusive order 
router.\5\ Each time NOS routes an order to an away market, NOS is 
charged a clearing fee \6\ and, in the case of certain exchanges, a 
transaction fee is also charged in certain symbols, which fees are 
passed through to the Exchange. The Exchange currently recoups clearing 
and transaction charges incurred by the Exchange as well as certain 
other costs incurred by the Exchange when routing to away markets, such 
as administrative and technical costs associated with operating NOS, 
membership fees at

[[Page 75658]]

away markets, Options Regulatory Fees (``ORFs'') and technical costs 
associated with routing options. The Exchange assesses the actual away 
market fee at the time that the order was entered into the Exchange's 
trading system. This transaction fee would be calculated on an order-
by-order basis since different away markets charge different amounts.
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    \5\ See NASDAQ Rules at Chapter VI, Section 11(e) (Order 
Routing).
    \6\ The Options Clearing Corporation (``OCC'') assesses $0.01 
per contract side.
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    A new market entrant recently adopted an ORF.\7\ The Exchange 
proposes to increase its Fixed Fee from $0.15 to $0.20 per contract to 
recoup costs associated with increased costs.
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    \7\ Gemini adopted an ORF of $0.0010 per contract. See 
Securities Exchange Act Release No. 70200 (August 14, 2013), 78 FR 
51242 (August 20, 2013) (SR-Topaz-2013-01).
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2. Statutory Basis
    NASDAQ believes that its proposal to amend its Pricing Schedule is 
consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(4) and (b)(5) 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the proposed Routing Fees are reasonable 
because they seek to recoup costs that are incurred by the Exchange 
when routing Customer, Firm, Market Maker and Professional orders to 
away markets on behalf of members. Each destination market's 
transaction charge varies and there is a cost incurred by the Exchange 
when routing orders to away markets. The costs to the Exchange include 
clearing costs, administrative and technical costs associated with 
operating NOS, membership fees at away markets, ORFs and technical 
costs associated with routing options. The Exchange believes that the 
proposed Routing Fees would enable the Exchange to recover the costs it 
incurs to route orders to away markets in addition to transaction fees 
assessed to market participants for the execution of Customer, Firm, 
Market Maker and Professional orders by the away market. Specifically, 
new entrants have added costs associated with routing.\10\ The Exchange 
believes that it is reasonable to recoup these costs borne by the 
Exchange on each transaction. The $0.20 per contract Customer Routing 
Fixed Fee, which is assessed when an option order is routed to all 
other exchanges, represents the overall cost to the Exchange for 
technical, administrative, clearing, regulatory, compliance and other 
costs, in addition to the transaction fee assessed by the away market.
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    \10\ See note 8 [sic].
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    In addition, the Exchange believes that it is equitable and not 
unfairly discriminatory to assess a $0.20 per contract Customer Routing 
Fixed Fee when an option order is routed to all other exchanges because 
this fee would be assessed uniformly on all market participants in 
addition to the actual transaction fees on all orders routed to non-
NASDAQ OMX markets.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess a fixed cost of $0.05 per contract to route 
orders to PHLX and no cost to route to BX Options because the cost, in 
terms of actual cash outlays, to the Exchange to route to those markets 
is lower. For example, costs related to routing to PHLX and BX Options 
are lower as compared to other away markets because NOS is utilized by 
all three exchanges to route orders.\11\ NOS and the three NASDAQ OMX 
options (PHLX, BX Options and NOM) markets have a common data center 
and staff that are responsible for the day-to-day operations of NOS. 
Because the three exchanges are in a common data center, Routing Fees 
are reduced because costly expenses related to, for example, 
telecommunication lines to obtain connectivity are avoided when routing 
orders in this instance. The costs related to connectivity to route 
orders to other NASDAQ OMX exchanges are de minimis. When routing 
orders to non-NASDAQ OMX exchanges, the Exchange incurs costly 
connectivity charges related to telecommunication lines and other 
related costs. The Exchange believes it is reasonable, equitable and 
not unfairly discriminatory to pass along savings realized by 
leveraging NASDAQ OMX's infrastructure and scale to market participants 
when those orders are routed to PHLX and BX Options. Orders are routed 
to away markets in accordance with Exchange rules based on price.\12\ 
Market participants may submit orders to the Exchange as ineligible for 
routing or ``DNR'' to avoid incurring the Routing Fees proposed 
herein.\13\
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    \11\ See Chapter VI, Section 11 of the NASDAQ and BX Options 
Rules and PHLX Rule 1080(m)(iii)(A).
    \12\ See NASDAQ Rules at Chapter XII (Options Order Protection 
and Locked and Crossed Market Rules).
    \13\ See NASDAQ Rules at Chapter VI, Section 11(e) (Order 
Routing).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange believes that the rule change 
would allow the Exchange to recoup its costs when routing orders 
designated as available for routing by the market participant. NOM 
Participants may choose to mark the order as ineligible for routing to 
avoid incurring these fees.\14\ Today, other options exchanges also 
assess similar fees to recoup costs incurred when routing orders to 
away markets.
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    \14\ See NASDAQ Rules at Chapter VI, Section 11(e) (Order 
Routing).
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    With respect to continuing to route orders to PHLX and BX Options 
at a lower cost as compared to other away markets, the Exchange does 
not believe that the proposed amendments to increase those fees, while 
maintaining the same fee differential imposes a burden because all 
market participants would be assessed the same fees depending on the 
away market. Also, the Exchange is proposing to recoup costs incurred 
only when members request the Exchange route their orders to an away 
market. The Exchange is passing along savings realized by leveraging 
NASDAQ OMX's infrastructure and scale to market participants when those 
orders are routed to Phlx and BX Options and is providing those saving 
to all market participants. Finally, the Exchange routes orders to away 
markets where the Exchange's disseminated bid or offer is inferior to 
the national best bid (best offer) price and based on price first.\15\
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    \15\ See NASDAQ Rules at Chapter XII (Options Order Protection 
and Locked and Crossed Market Rules).
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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.\16\ 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

[[Page 75659]]

necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act. If 
the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2013-146 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2013-146. 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., 
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-2013-146 and should 
be submitted on or before January 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29607 Filed 12-11-13; 8:45 am]
BILLING CODE 8011-01-P