Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NOM Penny and Non-Penny Pilot Options, 75949-75952 [2013-29740]

Download as PDF Federal Register / Vol. 78, No. 240 / Friday, December 13, 2013 / Notices I. Background Background: Section 3304(a)(9)(B), of the Internal Revenue Code (IRC) of 1986, requires states to participate in an arrangement for combining employment and wages covered under the different state laws for the purpose of determining unemployed workers’ entitlement to unemployment compensation. The Interstate Arrangement for Combining Employment and Wages for combined wage claims (CWC), promulgated at 20 CFR 616, requires the prompt transfer of all relevant and available employment and wage data between states upon request. The Benefit Payment Promptness Standard, 20 CFR 640, requires the prompt payment of unemployment compensation including benefits paid under the CWC arrangement. The ETA 586 report provides the ETA/Office of Unemployment Insurance with information necessary to measure the scope and effect of the CWC program and to monitor the performance of each state in responding to wage transfer data requests and the payment of benefits. II. Review Focus The Department is particularly interested in comments which: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; • enhance the quality, utility, and clarity of the information to be collected; and • minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. ehiers on DSK2VPTVN1PROD with NOTICES III. Current Actions This information is necessary in order for ETA to analyze program performance, know when corrective action plans are needed, and to target technical assistance resources. Without this report, it would be impossible for the ETA to identify claims and benefit activity under the CWC program and carry out the Secretary’s responsibility for program oversight. VerDate Mar<15>2010 13:32 Dec 12, 2013 Jkt 232001 Type of Review: Extension Without Revisions. Title: Interstate Arrangement for Combining Employment and Wages. OMB Number: 1205–0029. Affected Public: State Workforce Agencies. Estimated Total Annual Respondents: 53. Estimated Total Annual Responses: 212. Estimated Total Annual Burden Hours: 848. Total Estimated Annual Other Costs Burden: $0. Comments submitted in response to this comment request will be summarized and/or included in the request for OMB approval of the ICR; they will also become a matter of public record. Signed in Washington, DC, this 5th day of December, 2013. Eric M. Seleznow, Acting Assistant Secretary for Employment and Training, Labor. [FR Doc. 2013–29743 Filed 12–12–13; 8:45 am] 75949 Options Market (‘‘NOM’’), NASDAQ’s facility for executing and routing standardized equity and index options. Specifically, NOM proposes to amend the NOM Market Maker 3 Non-Penny Pilot Options 4 Fee for Removing Liquidity and the NOM Market Maker Rebate to Add Liquidity in Penny Pilot Options.5 While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments 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 BILLING CODE 4510–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71028; File No. SR– NASDAQ–2013–149] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NOM Penny and Non-Penny Pilot Options December 9, 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 29, 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, entitled ‘‘Options Pricing,’’ at Section 2 governing pricing for NASDAQ members using the NASDAQ 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00040 Fmt 4703 Sfmt 4703 3 The term ‘‘NOM Market Maker’’ means 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. 4 This would include options on Nasdaq-100 Index (‘‘NDX’’). For transactions in NDX, a surcharge of $0.10 per contract will be added to the Fee for Adding Liquidity and the Fee for Removing Liquidity in Non-Penny Pilot Options, except for a Customer who will not be assessed a surcharge. 5 The Penny Pilot was established in March 2008 and in October 2009 was expanded and extended through December 31, 2013. 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 seventyfive 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); and 69787 (June 18, 2013), 78 FR 37858 (June 24, 2013) (SR–NASDAQ–2013–082). See also NOM Rules, Chapter VI, Section 5. E:\FR\FM\13DEN1.SGM 13DEN1 75950 Federal Register / Vol. 78, No. 240 / Friday, December 13, 2013 / Notices these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose NASDAQ proposes to modify Chapter XV, entitled ‘‘Options Pricing,’’ at Section 2(1) governing the rebates and fees assessed for option orders entered into NOM. The Exchange proposes to increase the NOM Market Maker Fee for Removing Liquidity in Non-Penny Pilot Monthly volume Tier 1 ................ Tier 2 ................ Tier 3 ................ ehiers on DSK2VPTVN1PROD with NOTICES Tier 4 ................ Rebate to add liquidity Participant adds NOM Market Maker liquidity in Penny Pilot Options of up to 29,999 contracts per day in a month. Participant adds NOM Market Maker liquidity in Penny Pilot Options of 30,000 to 59,999 contracts per day in a month. Participant adds NOM Market Maker liquidity in Penny Pilot Options of 60,000 to 79,999 contracts per day in a month. Participant adds NOM Market Maker liquidity in Penny Pilot Options of 80,000 or more contracts per day in a month. The Exchange is proposing to amend the qualification for NOM Market Maker Penny Pilot rebate Tiers 1 through 4 to provide that Participants may qualify for each tier by adding NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options. The Exchange would continue to pay the rebates for each volume tier on transactions in Penny Pilot Options. This amendment would only impact a Participant’s ability to qualify for a certain rebate tier. The Exchange anticipates that this amendment would provide an opportunity for Participants to qualify for higher rebate tiers for their NOM Market Maker liquidity. The Exchange is also proposing to add a new Tier 5 rebate to the Penny Pilot Rebates to Add Liquidity. The Exchange proposes to pay $0.40 per contract to a Participant that adds NOM Market Maker liquidity of 40,000 or more contracts per day in a month in Penny Pilot Options and/or Non-Penny Pilot Options and also qualifies for Tier 7 or 8 of the Customer and/or Professional Rebate to Add Liquidity in Penny Pilot Options. The Exchange believes the opportunity to earn a higher rebate will encourage Participants to direct a greater amount of NOM Market Maker liquidity to NOM. The Exchange also proposes to relocate certain text in the fee schedule. The Exchange proposes to relocate the following text: ‘‘# The NOM Market Maker Rebate to Add Liquidity in Penny Pilot Options will be paid as noted below.’’ The Exchange would place the text above the NOM Market Maker tiers in the fee schedule for ease of reference. VerDate Mar<15>2010 Options from $0.85 to $0.86 per contract. The Exchange believes that despite the increase to the Fee for Removing Liquidity the Exchange continues to offer competitive rates to NOM Market Makers. The Exchange proposes to amend the NOM Market Maker Penny Pilot Options Rebate to Add Liquidity tiers. Today, the Exchange offers a four-tiered Rebate to Add Liquidity in Penny Pilot Options to NOM Market Makers as follows: 13:32 Dec 12, 2013 Jkt 232001 $0.25. $0.30. $0.32. $0.32 or $0.38 in the following symbols BAC, GLD, IWM, QQQ and VXX or $0.40 in SPY. 2. Statutory Basis NASDAQ believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(4) and (b)(5) of the Act 7 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 increase the NOM Market Maker Fee for Removing Liquidity from $0.85 to $0.86 per contract is reasonable because the rate remains competitive with other Non-Penny Pilot Fees for Removing Liquidity. The increase also permits the Exchange to support providing liquidity rebates to Participants executing NOM Market Maker orders. The Exchange’s proposal to increase the NOM Market Maker Fee for Removing Liquidity from $0.85 to $0.86 per contract is equitable and not unfairly discriminatory because the rate remains competitive with other NonPenny Pilot Fees for Removing Liquidity. NOM Market Makers would continue to be assessed a lower fee as compared to other non-Customer Participants.8 NOM Market Makers have obligations to the market and regulatory 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(4), (5). 8 All other non-Customer market participants (Professionals, Firms, Non-NOM Market Makers and Broker-Dealers) would continue to be assessed $0.89 per contract. 7 15 PO 00000 Frm 00041 Fmt 4703 Sfmt 4703 requirements,9 which normally do not apply to other market participants. A NOM Market Maker has an obligation to make continuous markets, engage in course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and not make bids or offers or enter into transactions that are inconsistent with a course of dealings. Customers would continue to be assessed the lowest fee of $0.82 per contract. Customer order flow brings unique benefits to the market which benefits all market participants through increased liquidity. The Exchange’s proposal to amend the qualifications for the NOM Market Maker Rebates to Add Liquidity in Penny Pilot Options is reasonable because by providing Participants the opportunity to add NOM Market Maker Penny and/or Non-Penny Pilot Option liquidity to qualify for a rebate tier provides a greater opportunity to qualify for higher rebate tiers. The Exchange would continue to only pay rebates on Penny Pilot volume. By incentivizing Participants to select the Exchange as a venue to post NOM Market Maker liquidity will benefit market 9 Pursuant to Chapter VII (Market Participants), Section 5 (Obligations of Market Makers), in registering as a market maker, an Options Participant commits himself to various obligations. Transactions of a Market Maker in its market making capacity must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings. Further, all Market Makers are designated as specialists on NOM for all purposes under the Act or rules thereunder. See Chapter VII, Section 5. E:\FR\FM\13DEN1.SGM 13DEN1 Federal Register / Vol. 78, No. 240 / Friday, December 13, 2013 / Notices participants through increased order interaction. The Exchange’s proposal to amend the qualifications for the NOM Market Maker Rebates to Add Liquidity in Penny Pilot Options is equitable and not unfairly discriminatory because this amendment will be applied to all Participants in a uniform manner. In addition, Participants should continue to qualify for the rebates that they currently receive and may earn increased rebates by qualifying for a higher volume tier as a result of combing Penny and Non-Penny Pilot NOM Market Maker liquidity to qualify for the rebate. The proposal does not misalign the current rebate structure. NOM Market Makers are valuable market participants that provide liquidity in the marketplace and incur costs unlike other market participants. The Exchange believes that NOM Market Makers should be offered the opportunity to earn higher rebates as compared to Non-NOM Market Makers, Firms and Broker Dealers because NOM Market Makers add value through continuous quoting 10 and the commitment of capital. The Exchange believes that encouraging NOM Market Makers to be more aggressive when posting liquidity benefits all market participants through increased liquidity. The Exchange also believes that including Non-Penny volume in calculating on the various NOM Market Maker rebate tiers is equitable and not unfairly discriminatory because NOM Market Makers will continue to earn higher rebates as compared to Firms, Non-NOM Market Makers and BrokerDealers and will earn the same or lower rebates as compared to Customers and Professionals.11 The Exchange believes that continuing to offer NOM Market Makers the opportunity to receive higher rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers is equitable and not unfairly discriminatory because all Participants may qualify for the NOM Market Maker 10 See note 9. Tier 1 NOM Market Maker Rebate to Add Liquidity in Penny Pilot Options is the same rebate as the Tier 1 Customer and Professional rebate in Penny Pilot Options. The Exchange pays the highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of $0.25 per contract to Customers, Professionals and NOM Market Makers for transacting one qualifying contract as compared to other market participants. Firms, Non-NOM Market Makers and Broker-Dealers receive a $0.10 per contract Penny Pilot Option Rebate to Add Liquidity. In addition, Participant that adds Firm, Non-NOM Market Maker or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 15,000 contracts per day or more in a given month will receive a Rebate to Add Liquidity in Penny Pilot Options of $0.20 per contract. ehiers on DSK2VPTVN1PROD with NOTICES 11 The VerDate Mar<15>2010 13:32 Dec 12, 2013 Jkt 232001 rebate tiers and every Participant is entitled to a rebate solely by adding one contract of NOM Market Maker liquidity on NOM. Also, as mentioned, the NOM Market Maker would receive the same rebate in Tier 1 as compared to Customers and Professionals and a higher rebate in all other tiers as compared to a Firm, Non-NOM Market Maker or Broker-Dealer because of the obligations 12 borne by NOM Market Makers as compared to other market participants. Encouraging NOM Market Makers to add greater liquidity benefits all Participants in the quality of order interaction. The Exchange’s proposal to offer a new Tier 5 NOM Market Maker Penny Pilot Options Rebate to Add Liquidity is reasonable because the new rebate should incentivize Participants to select the Exchange as a venue to post NOM Market Maker liquidity. This added liquidity will benefit market participants through increased order interaction. The Exchange’s proposal to offer a new Tier 5 NOM Market Maker Penny Pilot Options Rebate to Add Liquidity is equitable and not unfairly discriminatory because this amendment will be applied to all Participants in a uniform manner. 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 incentivizing NOM Market Makers to post liquidity on NOM benefits market participants through increased order interaction. Also, NOM Market Makers have obligations 13 to the market which are not borne by other market participants and therefore the Exchange believes that NOM Market Makers are entitled to such higher rebates. Permitting Participants to add either Penny or Non-Penny Pilot Market Maker liquidity should further encourage NOM Market Makers to post liquidity on NOM. The proposed amendments do not misalign the current rebate structure because NOM Market Makers will continue to earn higher rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers and will earn the same or lower rebates as compared to Customers and Professionals. The Exchange believes the differing outcomes, rebates and fees created by the Exchange’s proposed 12 See 13 See PO 00000 note 9. note 9. Frm 00042 Fmt 4703 Sfmt 4703 75951 pricing incentives contributes to the overall health of the market place for the benefit of all Participants that willing choose to transact options on NOM. In addition, NOM Market Makers will have the opportunity to earn even higher rebates. For the reasons specified herein, the Exchange does not believe this proposal creates an undue burden on competition. Additionally, NOM Market Maker would continue to be assessed a lower Non-Penny Pilot Fee for Removing Liquidity as compared to other nonCustomer Participants.14 Customers would continue to be assessed the lowest Non-Penny Pilot Fee for Removing Liquidity fee because of the benefits that Customer order flow brings to other market participants through increased liquidity. The Exchange operates in a highly competitive market comprised of twelve U.S. options exchanges in which many sophisticated and knowledgeable market participants can readily and do send order flow to competing exchanges if they deem fee levels or rebate incentives at a particular exchange to be excessive or inadequate. These market forces support the Exchange belief that the proposed rebate structure and tiers proposed herein are competitive with rebates and tiers in place on other exchanges. The Exchange believes that this competitive marketplace continues to impact the rebates present on the Exchange today and substantially influences the proposals set forth above. 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 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 14 All other non-Customer market participants (Professionals, Firms, Non-NOM Market Makers and Broker-Dealers) would continue to be assessed $0.89 per contract. 15 15 U.S.C. 78s(b)(3)(A)(ii). E:\FR\FM\13DEN1.SGM 13DEN1 75952 Federal Register / Vol. 78, No. 240 / Friday, December 13, 2013 / Notices 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: • 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–2013–149 on the subject line. Paper Comments ehiers on DSK2VPTVN1PROD with NOTICES • 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–2013–149. 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–2013–149, and should be submitted on or before January 3, 2014. 13:32 Dec 12, 2013 [FR Doc. 2013–29740 Filed 12–12–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71029; File No. SR–NYSE– 2013–67] Electronic Comments VerDate Mar<15>2010 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. Jkt 232001 Self-Regulatory Organizations; New York Stock Exchange LLC; Order Granting Approval to Proposed Rule Change to Amend the Quantitative Continued Listing Standards Applicable to Companies Listed Under Sections 102.01C and 103.01B of the Listed Company Manual December 9, 2013. I. Introduction On October 8, 2013, the New York Stock Exchange, LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend the quantitative continued listing standards applicable to companies listed under one of the financial standards of Sections 102.01C and 103.01B of the Exchange’s Listed Company Manual (‘‘Manual’’). The proposed rule change was published for comment in the Federal Register on October 25, 2013.3 The Commission received no comments on the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposes to amend the continued listing standards in Section 802.01B of the Manual. Under current Exchange initial listing rules, companies applying to list equity securities on the NYSE must meet one of the specific financial standards,4 in addition to the other listing requirements set out in Section 102.00 for domestic companies and Section 103.00 for non-U.S. companies. Once listed, companies have to meet the Exchanges continued listing criteria set out in Section 802.01 of the 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 70728 (October 25, 2013), 78 FR 64043. 4 See Section 102.01C of the Manual (for domestic issuers) and Section 103.01B (for non-U.S. issuers). See also note 7, infra. 1 15 PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 Manual. In addition to the other minimum continued listing requirements that apply to capital or common stock,5 companies with such securities listed on the Exchange must also meet certain quantitative financial continued listing standards which correspond to the standard under which the securities were initially listed.6 There are currently four different financial continued listing standards which apply to the capital or common stock of a listed company, depending under which standard it was originally listed under.7 A company that qualified to list under the Earnings Test or Assets and Equity Test, would be considered to be below compliance if over a consecutive 30 trading-day period, the average global market capitalization of its securities is less than $50,000,000 and the total stockholders’ equity is less than $50,000,000.8 A company qualifying to list under the Valuation/Revenue with Cash Flow Test, would be considered to be below compliance if (A) over a consecutive 30 trading-day period, the average global market capitalization of its securities is less than $250,000,000 and the total revenues are less than $20,000,000 over the last 12 months (unless the listed company qualifies as an original listing under one of the other original listing standards) or (B) the average global market capitalization over a consecutive 30 trading-day period is less than $75,000,000. A company that qualified to list under the Pure Valuation/Revenue Test would be considered to be below compliance if (A) over a consecutive 30 trading-day period, the average global market capitalization of the company’s securities is less than $375,000,000 and 5 See Section 802.01A of the Manual (distribution criteria for capital or common stock); Section 802.01C of the Manual (maintaining a stock price on a 30-day average basis of $1.00 per share); and Section 802.01B (stating that ‘‘the Exchange will promptly initiate suspension and delisting procedures with respect to a company that is listed under any financial standard set out in Sections 102.01C or 103.01B if a company is determined to have average global market capitalization over a consecutive 30 trading-day period of less than $15,000,000, regardless of the original standard under which it listed’’). See also Section 802.01D of the Manual (listing other additional criteria for continued listing). The Commission notes that the Exchange has represented that the continued listing standards would apply to American Depositary Receipts. 6 See Section 802.01B of the Manual. 7 See Sections 802.01B(I), (II), (III) and (IV) of the Manual. The filing states that these continued listing standards apply to operating companies, however, the Commission notes that the Manual does not specifically refer to the term operating companies. 8 See Section 802.01B(I) of the Manual. E:\FR\FM\13DEN1.SGM 13DEN1

Agencies

[Federal Register Volume 78, Number 240 (Friday, December 13, 2013)]
[Notices]
[Pages 75949-75952]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29740]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71028; File No. SR-NASDAQ-2013-149]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to NOM Penny and Non-Penny Pilot Options

December 9, 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 29, 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.
---------------------------------------------------------------------------

    \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, entitled ``Options Pricing,'' 
at Section 2 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 
amend the NOM Market Maker \3\ Non-Penny Pilot Options \4\ Fee for 
Removing Liquidity and the NOM Market Maker Rebate to Add Liquidity in 
Penny Pilot Options.\5\
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    \3\ The term ``NOM Market Maker'' means 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.
    \4\ This would include options on Nasdaq-100 Index (``NDX''). 
For transactions in NDX, a surcharge of $0.10 per contract will be 
added to the Fee for Adding Liquidity and the Fee for Removing 
Liquidity in Non-Penny Pilot Options, except for a Customer who will 
not be assessed a surcharge.
    \5\ The Penny Pilot was established in March 2008 and in October 
2009 was expanded and extended through December 31, 2013. 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); and 69787 (June 18, 2013), 78 FR 37858 (June 
24, 2013) (SR-NASDAQ-2013-082). See also NOM Rules, Chapter VI, 
Section 5.
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    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments 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

[[Page 75950]]

these statements may be examined at the places specified in Item IV 
below. The Exchange has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

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

1. Purpose
    NASDAQ proposes to modify Chapter XV, entitled ``Options Pricing,'' 
at Section 2(1) governing the rebates and fees assessed for option 
orders entered into NOM.
    The Exchange proposes to increase the NOM Market Maker Fee for 
Removing Liquidity in Non-Penny Pilot Options from $0.85 to $0.86 per 
contract. The Exchange believes that despite the increase to the Fee 
for Removing Liquidity the Exchange continues to offer competitive 
rates to NOM Market Makers.
    The Exchange proposes to amend the NOM Market Maker Penny Pilot 
Options Rebate to Add Liquidity tiers. Today, the Exchange offers a 
four-tiered Rebate to Add Liquidity in Penny Pilot Options to NOM 
Market Makers as follows:

------------------------------------------------------------------------
                                                        Rebate to add
       Monthly volume                                     liquidity
------------------------------------------------------------------------
Tier 1......................  Participant adds NOM  $0.25.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of up
                               to 29,999 contracts
                               per day in a month.
Tier 2......................  Participant adds NOM  $0.30.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of
                               30,000 to 59,999
                               contracts per day
                               in a month.
Tier 3......................  Participant adds NOM  $0.32.
                               Market Maker
                               liquidity in Penny
                               Pilot Options of
                               60,000 to 79,999
                               contracts per day
                               in a month.
Tier 4......................  Participant adds NOM  $0.32 or $0.38 in
                               Market Maker          the following
                               liquidity in Penny    symbols BAC, GLD,
                               Pilot Options of      IWM, QQQ and VXX or
                               80,000 or more        $0.40 in SPY.
                               contracts per day
                               in a month.
------------------------------------------------------------------------

    The Exchange is proposing to amend the qualification for NOM Market 
Maker Penny Pilot rebate Tiers 1 through 4 to provide that Participants 
may qualify for each tier by adding NOM Market Maker liquidity in Penny 
Pilot Options and/or Non-Penny Pilot Options. The Exchange would 
continue to pay the rebates for each volume tier on transactions in 
Penny Pilot Options. This amendment would only impact a Participant's 
ability to qualify for a certain rebate tier. The Exchange anticipates 
that this amendment would provide an opportunity for Participants to 
qualify for higher rebate tiers for their NOM Market Maker liquidity.
    The Exchange is also proposing to add a new Tier 5 rebate to the 
Penny Pilot Rebates to Add Liquidity. The Exchange proposes to pay 
$0.40 per contract to a Participant that adds NOM Market Maker 
liquidity of 40,000 or more contracts per day in a month in Penny Pilot 
Options and/or Non-Penny Pilot Options and also qualifies for Tier 7 or 
8 of the Customer and/or Professional Rebate to Add Liquidity in Penny 
Pilot Options. The Exchange believes the opportunity to earn a higher 
rebate will encourage Participants to direct a greater amount of NOM 
Market Maker liquidity to NOM.
    The Exchange also proposes to relocate certain text in the fee 
schedule. The Exchange proposes to relocate the following text: 
`` The NOM Market Maker Rebate to Add Liquidity in Penny Pilot 
Options will be paid as noted below.'' The Exchange would place the 
text above the NOM Market Maker tiers in the fee schedule for ease of 
reference.
2. Statutory Basis
    NASDAQ believes that its proposal to amend its Pricing Schedule is 
consistent with Section 6(b) of the Act \6\ in general, and furthers 
the objectives of Section 6(b)(4) and (b)(5) of the Act \7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

    The Exchange's proposal to increase the NOM Market Maker Fee for 
Removing Liquidity from $0.85 to $0.86 per contract is reasonable 
because the rate remains competitive with other Non-Penny Pilot Fees 
for Removing Liquidity. The increase also permits the Exchange to 
support providing liquidity rebates to Participants executing NOM 
Market Maker orders.
    The Exchange's proposal to increase the NOM Market Maker Fee for 
Removing Liquidity from $0.85 to $0.86 per contract is equitable and 
not unfairly discriminatory because the rate remains competitive with 
other Non-Penny Pilot Fees for Removing Liquidity. NOM Market Makers 
would continue to be assessed a lower fee as compared to other non-
Customer Participants.\8\ NOM Market Makers have obligations to the 
market and regulatory requirements,\9\ which normally do not apply to 
other market participants. A NOM Market Maker has an obligation to make 
continuous markets, engage in course of dealings reasonably calculated 
to contribute to the maintenance of a fair and orderly market, and not 
make bids or offers or enter into transactions that are inconsistent 
with a course of dealings. Customers would continue to be assessed the 
lowest fee of $0.82 per contract. Customer order flow brings unique 
benefits to the market which benefits all market participants through 
increased liquidity.
---------------------------------------------------------------------------

    \8\ All other non-Customer market participants (Professionals, 
Firms, Non-NOM Market Makers and Broker-Dealers) would continue to 
be assessed $0.89 per contract.
    \9\ Pursuant to Chapter VII (Market Participants), Section 5 
(Obligations of Market Makers), in registering as a market maker, an 
Options Participant commits himself to various obligations. 
Transactions of a Market Maker in its market making capacity must 
constitute a course of dealings reasonably calculated to contribute 
to the maintenance of a fair and orderly market, and Market Makers 
should not make bids or offers or enter into transactions that are 
inconsistent with such course of dealings. Further, all Market 
Makers are designated as specialists on NOM for all purposes under 
the Act or rules thereunder. See Chapter VII, Section 5.
---------------------------------------------------------------------------

    The Exchange's proposal to amend the qualifications for the NOM 
Market Maker Rebates to Add Liquidity in Penny Pilot Options is 
reasonable because by providing Participants the opportunity to add NOM 
Market Maker Penny and/or Non-Penny Pilot Option liquidity to qualify 
for a rebate tier provides a greater opportunity to qualify for higher 
rebate tiers. The Exchange would continue to only pay rebates on Penny 
Pilot volume. By incentivizing Participants to select the Exchange as a 
venue to post NOM Market Maker liquidity will benefit market

[[Page 75951]]

participants through increased order interaction.
    The Exchange's proposal to amend the qualifications for the NOM 
Market Maker Rebates to Add Liquidity in Penny Pilot Options is 
equitable and not unfairly discriminatory because this amendment will 
be applied to all Participants in a uniform manner. In addition, 
Participants should continue to qualify for the rebates that they 
currently receive and may earn increased rebates by qualifying for a 
higher volume tier as a result of combing Penny and Non-Penny Pilot NOM 
Market Maker liquidity to qualify for the rebate. The proposal does not 
misalign the current rebate structure. NOM Market Makers are valuable 
market participants that provide liquidity in the marketplace and incur 
costs unlike other market participants. The Exchange believes that NOM 
Market Makers should be offered the opportunity to earn higher rebates 
as compared to Non-NOM Market Makers, Firms and Broker Dealers because 
NOM Market Makers add value through continuous quoting \10\ and the 
commitment of capital. The Exchange believes that encouraging NOM 
Market Makers to be more aggressive when posting liquidity benefits all 
market participants through increased liquidity. The Exchange also 
believes that including Non-Penny volume in calculating on the various 
NOM Market Maker rebate tiers is equitable and not unfairly 
discriminatory because NOM Market Makers will continue to earn higher 
rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers 
and will earn the same or lower rebates as compared to Customers and 
Professionals.\11\
---------------------------------------------------------------------------

    \10\ See note 9.
    \11\ The Tier 1 NOM Market Maker Rebate to Add Liquidity in 
Penny Pilot Options is the same rebate as the Tier 1 Customer and 
Professional rebate in Penny Pilot Options. The Exchange pays the 
highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of 
$0.25 per contract to Customers, Professionals and NOM Market Makers 
for transacting one qualifying contract as compared to other market 
participants. Firms, Non-NOM Market Makers and Broker-Dealers 
receive a $0.10 per contract Penny Pilot Option Rebate to Add 
Liquidity. In addition, Participant that adds Firm, Non-NOM Market 
Maker or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of 15,000 contracts per day or more in a given 
month will receive a Rebate to Add Liquidity in Penny Pilot Options 
of $0.20 per contract.
---------------------------------------------------------------------------

    The Exchange believes that continuing to offer NOM Market Makers 
the opportunity to receive higher rebates as compared to Firms, Non-NOM 
Market Makers and Broker-Dealers is equitable and not unfairly 
discriminatory because all Participants may qualify for the NOM Market 
Maker rebate tiers and every Participant is entitled to a rebate solely 
by adding one contract of NOM Market Maker liquidity on NOM. Also, as 
mentioned, the NOM Market Maker would receive the same rebate in Tier 1 
as compared to Customers and Professionals and a higher rebate in all 
other tiers as compared to a Firm, Non-NOM Market Maker or Broker-
Dealer because of the obligations \12\ borne by NOM Market Makers as 
compared to other market participants. Encouraging NOM Market Makers to 
add greater liquidity benefits all Participants in the quality of order 
interaction.
---------------------------------------------------------------------------

    \12\ See note 9.
---------------------------------------------------------------------------

    The Exchange's proposal to offer a new Tier 5 NOM Market Maker 
Penny Pilot Options Rebate to Add Liquidity is reasonable because the 
new rebate should incentivize Participants to select the Exchange as a 
venue to post NOM Market Maker liquidity. This added liquidity will 
benefit market participants through increased order interaction.
    The Exchange's proposal to offer a new Tier 5 NOM Market Maker 
Penny Pilot Options Rebate to Add Liquidity is equitable and not 
unfairly discriminatory because this amendment will be applied to all 
Participants in a uniform manner.

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 incentivizing 
NOM Market Makers to post liquidity on NOM benefits market participants 
through increased order interaction. Also, NOM Market Makers have 
obligations \13\ to the market which are not borne by other market 
participants and therefore the Exchange believes that NOM Market Makers 
are entitled to such higher rebates. Permitting Participants to add 
either Penny or Non-Penny Pilot Market Maker liquidity should further 
encourage NOM Market Makers to post liquidity on NOM.
---------------------------------------------------------------------------

    \13\ See note 9.
---------------------------------------------------------------------------

    The proposed amendments do not misalign the current rebate 
structure because NOM Market Makers will continue to earn higher 
rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers 
and will earn the same or lower rebates as compared to Customers and 
Professionals. The Exchange believes the differing outcomes, rebates 
and fees created by the Exchange's proposed pricing incentives 
contributes to the overall health of the market place for the benefit 
of all Participants that willing choose to transact options on NOM. In 
addition, NOM Market Makers will have the opportunity to earn even 
higher rebates. For the reasons specified herein, the Exchange does not 
believe this proposal creates an undue burden on competition.
    Additionally, NOM Market Maker would continue to be assessed a 
lower Non-Penny Pilot Fee for Removing Liquidity as compared to other 
non-Customer Participants.\14\ Customers would continue to be assessed 
the lowest Non-Penny Pilot Fee for Removing Liquidity fee because of 
the benefits that Customer order flow brings to other market 
participants through increased liquidity.
---------------------------------------------------------------------------

    \14\ All other non-Customer market participants (Professionals, 
Firms, Non-NOM Market Makers and Broker-Dealers) would continue to 
be assessed $0.89 per contract.
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market comprised of 
twelve U.S. options exchanges in which many sophisticated and 
knowledgeable market participants can readily and do send order flow to 
competing exchanges if they deem fee levels or rebate incentives at a 
particular exchange to be excessive or inadequate. These market forces 
support the Exchange belief that the proposed rebate structure and 
tiers proposed herein are competitive with rebates and tiers in place 
on other exchanges. The Exchange believes that this competitive 
marketplace continues to impact the rebates present on the Exchange 
today and substantially influences the proposals set forth above.

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 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

[[Page 75952]]

whether the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2013-149 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-2013-149. 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-2013-149, and should 
be submitted on or before January 3, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29740 Filed 12-12-13; 8:45 am]
BILLING CODE 8011-01-P