Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter XV, Section 2 Entitled “NASDAQ Options Market-Fees and Rebates”, 48612-48615 [2015-19875]

Download as PDF 48612 Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices mechanism of a free and open market and protects investors and the public interest because it provides additional specificity, clarity and transparency. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. To the contrary, the Exchange believes the proposal would enhance competition because including all of the exchanges enhances transparency and enables investors to better assess the quality of the Exchange’s execution and routing services. tkelley on DSK3SPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 5 of the Act and Rule 19b4(f)(6) thereunder.6 The Exchange believes that this proposed rule change is properly designated as noncontroversial because it enhances clarity and operational transparency without modifying members’ rights or obligations. The Exchange provided notice of the proposed rule change on July 27, 2015. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BX–2015–048 on the subject line. Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter XV, Section 2 Entitled ‘‘NASDAQ Options Market—Fees and Rebates’’ Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BX–2015–048. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (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–BX–2015–048 and should be submitted on or before September 3, 2015. August 7, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–19879 Filed 8–12–15; 8:45 am] [Release No. 34–75647; File No. SR– NASDAQ–2015–090] Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 31, 2015, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s transaction fees at Chapter XV, Section 2 entitled ‘‘NASDAQ Options Market—Fees and Rebates,’’ which governs pricing for NASDAQ members using the NASDAQ Options Market (‘‘NOM’’), NASDAQ’s facility for executing and routing standardized equity and index options. While the changes proposed herein are effective upon filing, the Exchange has designated such changes to become operative on August 3, 3015. The text of the proposed rule change is available on the Exchange’s Web site at http://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of BILLING CODE 8011–01–P 5 15 U.S.C. 78s(b)(3)(A). 6 17 CFR 240.19b–4(f)(6). VerDate Sep<11>2014 16:56 Aug 12, 2015 1 15 7 17 Jkt 235001 PO 00000 CFR 200.30–3(a)(12). Frm 00137 Fmt 4703 2 17 Sfmt 4703 E:\FR\FM\13AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b-4. 13AUN1 Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices the most significant aspects of such statements. The Exchange proposes to expand eligibility for one of the incentives under the Penny Pilot Options Rebates to Add Liquidity. The Penny Pilot was established in March 2008 and has since been expanded and extended through June 30, 2016.3 Today, the Exchange pays Customers 4 and Professionals 5 a A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose 48613 Penny Pilot Options Rebate to Add Liquidity based on the following tiered rebate structure: Rebate to add liquidity Monthly volume Tier 1—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and ETF option average daily volume (‘‘ADV’’) contracts per day in a month ..................................................................................................................................... Tier 2—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month ................................................................................................................................................................. Tier 3—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month ................................................................................................................................................................. Tier 4—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month ................................................................................................................................................................. Tier 5—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.40% to 0.75% of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds (1) Customer and/or Professional liquidity in Penny Pilot Options and/or NonPenny Pilot Options of 25,000 or more contracts per day in a month, (2) the Participant has certified for the Investor Support Program set forth in Rule 7014, and (3) the Participant executed at least one order on NASDAQ’s equity market .................... Tier 6—Participant has Total Volume of 100,000 or more contracts per day in a month, of which 25,000 or more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options ............................................................... Tier 7—Participant has Total Volume of 150,000 or more contracts per day in a month, of which 50,000 or more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options ............................................................... Tier 8—Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month or Participant adds (1) Customer and/or Professional liquidity in Penny Pilot Options and/or NonPenny Pilot Options of 30,000 or more contracts per day in a month, (2) the Participant has certified for the Investor Support Program set forth in Rule 7014, and (3) the Participant qualifies for rebates under the Qualified Market Maker (‘‘QMM’’) Program set forth in Rule 7014. ............................................................................................................................................................ $0.20 0.25 0.42 0.43 0.45 0.45 0.47 0.48 tkelley on DSK3SPTVN1PROD with NOTICES The Exchange is proposing to expand eligibility for one of the incentives applicable to Tier 8 Customer Penny Pilot Options Rebate to Add Liquidity. The Tier 8 Customer and Professional Penny Pilot Options Rebate to Add Liquidity is currently $0.48 per contract if Participants add Customer, Professional, Firm,6 Non-NOM Market Maker 7 and/or Broker-Dealer 8 liquidity in Penny Pilot Options and/or NonPenny Pilot Options above 0.75% of total industry customer equity and ETF option ADV of contracts traded in a month. This rebate also applies if (1) the Participant adds Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 30,000 or more contracts per day in a month, (2) the Participant has certified for the Investor Support 3 See Securities Exchange Act Release Nos. 57579 (March 28, 2008), 73 FR 18587 (April 4, 2008) (SR– NASDAQ–2008–026) (notice of filing and immediate effectiveness establishing Penny Pilot); 60874 (October 23, 2009), 74 FR 56682 (November 2, 2009) (SR–NASDAQ–2009–091) (notice of filing and immediate effectiveness expanding and extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292 (November 17, 2009) (SR–NASDAQ– 2009–097) (notice of filing and immediate effectiveness adding seventy-five classes to Penny Pilot); 61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR–NASDAQ–2010–013) (notice of filing and immediate effectiveness adding seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR 25895 (May 10, 2010) (SR–NASDAQ– 2010–053) (notice of filing and immediate effectiveness adding seventy-five classes to Penny Pilot); 65969 (December 15, 2011), 76 FR 79268 (December 21, 2011) (SR–NASDAQ–2011–169) (notice of filing and immediate effectiveness extension and replacement of Penny Pilot); 67325 (June 29, 2012), 77 FR 40127 (July 6, 2012) (SR– NASDAQ–2012–075) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through December 31, 2012); 68519 (December 21, 2012), 78 FR 136 (January 2, 2013) (SR–NASDAQ–2012–143) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through June 30, 2013); 69787 (June 18, 2013), 78 FR 37858 (June 24, 2013) (SR–NASDAQ–2013–082) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through December 31, 2013); 71105 (December 17, 2013), 78 FR 77530 (December 23, 2013) (SR–NASDAQ–2013–154) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR 31151 (May 30, 2014) (SR–NASDAQ–2014–056) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through December 31, 2014); 73686 (December 2, 2014), 79 FR 71477 (November 25, 2014) (SR–NASDAQ– 2014–115) (notice of filing and immediate effectiveness and extension and replacement of Penny Pilot through June 30, 2015) and 75283 (June 24, 2015), 80 FR 37347 (June 30, 2015) (SR– NASDAQ–2015–063) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Extension of the Exchange’s Penny Pilot Program and Replacement of Penny Pilot Issues That Have Been Delisted.) See also NOM Rules, Chapter VI, Section 5. 4 The term ‘‘Customer’’ refers to a customer in a transaction that is marked by a Participant in the Customer range for clearing purposes at The Options Clearing Corporation (‘‘OCC’’). Such a transaction is not for the account of a broker, dealer or ‘‘Professional’’ (see next footnote). 5 The term ‘‘Professional’’ means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s), See Chapter I, Section 1(a)(48). All Professional orders must be appropriately marked by Participants. 6 The term ‘‘Firm’’ refers to a firm participating in a transaction marked by a Participant in the Firm range for clearing purposes at OCC. 7 The term ‘‘NOM Market Maker’’ is a Participant that has registered as a Market Maker on NOM pursuant to Chapter VII, Section 2, and must also remain in good standing pursuant to Chapter VII, Section 4. In order to receive NOM Market Maker pricing in all securities, the Participant must be registered as a NOM Market Maker in at least one security. 8 The term ‘‘Broker-Dealer’’ refers to a broker or dealer participating in a transaction when such transaction is not subject to transaction fees applicable to specific categories of transaction participants (other than brokers and dealers). VerDate Sep<11>2014 19:43 Aug 12, 2015 Jkt 235001 PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 E:\FR\FM\13AUN1.SGM 13AUN1 48614 Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices tkelley on DSK3SPTVN1PROD with NOTICES Program 9 set forth in Rule 7014, and (3) the Participant qualifies for rebates under the Qualified Market Maker (‘‘QMM’’) Program 10 set forth in Rule 7014. Participants that qualify for the Tier 8 rebate and add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 1.25% or more of total industry customer equity and ETF option ADV of contracts traded in a month today also receive an additional $0.02 per contract Penny Pilot Options Customer 11 Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month.12 The Exchange is proposing to expand eligibility for this additional incentive under the Tier 8 Customer rebate by amending the qualification as follows: ‘‘Participants that add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 1.15% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.02 per contract Penny Pilot Options Customer Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month.’’ By lowering the percentage of total industry customer equity and ETF options ADV of contracts in a month required to be reached in order to qualify for the additional $0.02 per contract rebate, the Exchange expects that a greater number 9 For a detailed description of the ISP, see Securities Exchange Act Release No. 63270 (November 8, 2010), 75 FR 69489 (November 12, 2010) (NASDAQ–2010–141) (notice of filing and immediate effectiveness) (the ‘‘ISP Filing’’). See also Securities Exchange Act Release Nos. 63414 (December 2, 2010), 75 FR 76505 (December 8, 2010) (NASDAQ–2010–153) (notice of filing and immediate effectiveness); and 63628 (January 3, 2011), 76 FR 1201 (January 7, 2011) (NASDAQ– 2010–154) (notice of filing and immediate effectiveness). 10 A QMM is a NASDAQ member that makes a significant contribution to market quality by providing liquidity at the national best bid and offer (‘‘NBBO’’) in a large number of stocks for a significant portion of the day. In addition, the NASDAQ equity member must avoid imposing the burdens on NASDAQ and its market participants that may be associated with excessive rates of entry of orders away from the inside and/or order cancellation. The designation ‘‘QMM’’ reflects the QMM’s commitment to provide meaningful and consistent support to market quality and price discovery by extensive quoting at the NBBO in a large number of securities. In return for its contributions, certain financial benefits are provided to a QMM with respect to a particular MPID (a ‘‘QMM MPID’’), as described under Rule 7014(e). 11 This $0.02 per contract incentive applies only to the Tier 8 Customer rebate, and not the Professional rebate. 12 See note ‘‘e’’ in Chapter XV, Section 2(1). VerDate Sep<11>2014 16:56 Aug 12, 2015 Jkt 235001 of Participants qualifying for the Tier 8 rebate will also receive the added incentive. The Exchange expects that expanded eligibility for this incentive will encourage Participants to add greater liquidity to NOM. While the changes proposed herein are effective upon filing, the Exchange has designated such changes to become operative on August 3, 3015. 2. Statutory Basis NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,13 in general, and with Section 6(b)(4) and 6(b)(5) of the Act,14 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which NASDAQ operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange’s proposal to expand incentive eligibility is reasonable because it will incentivize Participants to add liquidity in Penny Pilot Options and/or Non-Penny Pilot Options. Participants that qualify for the Tier 8 rebate may choose to add greater liquidity to NOM because of the lower percentage qualifier (1.25% to 1.15%) to obtain the additional $0.02 per contract Customer rebate. The Exchange’s proposal to expand incentive eligibility is equitable and not unfairly discriminatory because all eligible Participants may qualify for the Tier 8 Customer Penny Pilot Options Rebate to Add Liquidity, provided they have the requisite volume. The added $0.0.2 per contract incentive will be uniformly paid in addition to the Tier 8 rebate. Customer liquidity is critically important to the market and all market participants. Greater customer liquidity benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity by market makers in turn facilitates tighter spreads and further order flow. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change will not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed expanded incentive will incentivize market participants to add greater liquidity on NOM to obtain the added $0.02 per contract Customer 13 15 14 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(4) and (5). Frm 00139 Fmt 4703 Sfmt 4703 rebate. Customer liquidity is critically important to the market and benefits all market participants. Greater customer liquidity benefits all market participants by providing more trading opportunities and attracting greater participation by specialists and market makers. An increase in the activity of these market participants in turn facilitates tighter spreads. All Participants are eligible for the rebates if they transact the requisite volume. The Exchange operates in a highly competitive market in which many sophisticated and knowledgeable market participants can readily and do send order flow to competing exchanges if they deem fee levels or rebate incentives at a particular exchange to be excessive or inadequate. These market forces ensure that the Exchange’s fees and rebates remain competitive with the fee structures at other trading platforms. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.15 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2015–090 on the subject line. 15 15 E:\FR\FM\13AUN1.SGM U.S.C. 78s(b)(3)(A)(ii). 13AUN1 Federal Register / Vol. 80, No. 156 / Thursday, August 13, 2015 / Notices Paper comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2015–090. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (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–2015–090 and should be submitted on or before September 3, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–19875 Filed 8–12–15; 8:45 am] tkelley on DSK3SPTVN1PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION and C below, of the most significant aspects of such statements. [Release No. 34–75639; File No. SR–FINRA– 2015–028] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Tier Size Pilot of FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) August 7, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 28, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) to extend the Tier Size Pilot, which currently is scheduled to expire on August 14, 2015, until December 11, 2015. The text of the proposed rule change is available on FINRA’s Web site at http://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 2 17 16 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:56 Aug 12, 2015 Jkt 235001 48615 PO 00000 Frm 00140 Fmt 4703 Sfmt 4703 1. Purpose FINRA proposes to amend FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) (the ‘‘Rule’’) to extend, until December 11, 2015, the amendments set forth in File No. SR–FINRA–2011–058 (‘‘Tier Size Pilot’’ or ‘‘Pilot’’), which currently are scheduled to expire on August 14, 2015.4 The Tier Size Pilot was filed with the SEC on October 6, 2011,5 to amend the minimum quotation sizes (or ‘‘tier sizes’’) for OTC Equity Securities.6 The goals of the Pilot were to simplify the tier structure, facilitate the display of customer limit orders, and expand the scope of the Rule to apply to additional quoting participants. During the course of the pilot, FINRA collected and provided to the SEC specified data with which to assess the impact of the Pilot tiers on market quality and limit order display.7 On September 13, 2013, FINRA provided to the Commission an assessment on the operation of the Tier Size Pilot utilizing data covering the period from November 12, 2012 through June 30, 2013.8 As noted in the 2013 Assessment, FINRA believed that the analysis of the data generally showed that the Tier Size Pilot had a neutral to positive impact on OTC market quality for the majority of OTC Equity Securities and tiers; and that there was an overall increase of 13% in the number of customer limit orders that met the minimum quotation sizes to be eligible for display under the Pilot tiers. In the 2013 Assessment, FINRA recommended adopting the tiers as 4 See Securities Exchange Act Release No. 74927 (May 12, 2015), 80 FR 28327 (May 18, 2015) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2015–010); see also Securities Exchange Act Release No. 67208 (June 15, 2012), 77 FR 37458 (June 21, 2012) (Order Approving File No. SR– FINRA–2011–058, as amended). 5 See Securities Exchange Act Release No. 65568 (October 14, 2011), 76 FR 65307 (October 20, 2011) (Notice of Filing of File No. SR–FINRA–2011–058). 6 ‘‘OTC Equity Security’’ means any equity security that is not an ‘‘NMS stock’’ as that term is defined in Rule 600(b)(47) of SEC Regulation NMS; provided, however, that the term OTC Equity Security shall not include any Restricted Equity Security. See FINRA Rule 6420. 7 FINRA ceased collecting Pilot data for submission to the Commission on February 13, 2015. 8 The assessment is part of the SEC’s comment file for SR–FINRA–2011–058 and also is available on FINRA’s Web site at: http://www.finra.org/Industry/ Regulation/RuleFilings/2011/P124615 (‘‘Pilot Assessment’’). E:\FR\FM\13AUN1.SGM 13AUN1

Agencies

[Federal Register Volume 80, Number 156 (Thursday, August 13, 2015)]
[Notices]
[Pages 48612-48615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19875]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75647; File No. SR-NASDAQ-2015-090]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Chapter XV, Section 2 Entitled ``NASDAQ Options Market--Fees and 
Rebates''

August 7, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 31, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's transaction fees at 
Chapter XV, Section 2 entitled ``NASDAQ Options Market--Fees and 
Rebates,'' which governs pricing for NASDAQ members using the NASDAQ 
Options Market (``NOM''), NASDAQ's facility for executing and routing 
standardized equity and index options.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated such changes to become operative on August 3, 
3015.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

[[Page 48613]]

the most significant aspects of such statements.

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

1. Purpose

    The Exchange proposes to expand eligibility for one of the 
incentives under the Penny Pilot Options Rebates to Add Liquidity. The 
Penny Pilot was established in March 2008 and has since been expanded 
and extended through June 30, 2016.\3\ Today, the Exchange pays 
Customers \4\ and Professionals \5\ a Penny Pilot Options Rebate to Add 
Liquidity based on the following tiered rebate structure:
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release Nos. 57579 (March 28, 
2008), 73 FR 18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of 
filing and immediate effectiveness establishing Penny Pilot); 60874 
(October 23, 2009), 74 FR 56682 (November 2, 2009) (SR-NASDAQ-2009-
091) (notice of filing and immediate effectiveness expanding and 
extending Penny Pilot); 60965 (November 9, 2009), 74 FR 59292 
(November 17, 2009) (SR-NASDAQ-2009-097) (notice of filing and 
immediate effectiveness adding seventy-five classes to Penny Pilot); 
61455 (February 1, 2010), 75 FR 6239 (February 8, 2010) (SR-NASDAQ-
2010-013) (notice of filing and immediate effectiveness adding 
seventy-five classes to Penny Pilot); 62029 (May 4, 2010), 75 FR 
25895 (May 10, 2010) (SR-NASDAQ-2010-053) (notice of filing and 
immediate effectiveness adding seventy-five classes to Penny Pilot); 
65969 (December 15, 2011), 76 FR 79268 (December 21, 2011) (SR-
NASDAQ-2011-169) (notice of filing and immediate effectiveness 
extension and replacement of Penny Pilot); 67325 (June 29, 2012), 77 
FR 40127 (July 6, 2012) (SR-NASDAQ-2012-075) (notice of filing and 
immediate effectiveness and extension and replacement of Penny Pilot 
through December 31, 2012); 68519 (December 21, 2012), 78 FR 136 
(January 2, 2013) (SR-NASDAQ-2012-143) (notice of filing and 
immediate effectiveness and extension and replacement of Penny Pilot 
through June 30, 2013); 69787 (June 18, 2013), 78 FR 37858 (June 24, 
2013) (SR-NASDAQ-2013-082) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2013); 71105 (December 17, 2013), 78 FR 77530 (December 
23, 2013) (SR-NASDAQ-2013-154) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
June 30, 2014); 79 FR 31151 (May 23, 2014), 79 FR 31151 (May 30, 
2014) (SR-NASDAQ-2014-056) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
December 31, 2014); 73686 (December 2, 2014), 79 FR 71477 (November 
25, 2014) (SR-NASDAQ-2014-115) (notice of filing and immediate 
effectiveness and extension and replacement of Penny Pilot through 
June 30, 2015) and 75283 (June 24, 2015), 80 FR 37347 (June 30, 
2015) (SR-NASDAQ-2015-063) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change Relating to Extension of the 
Exchange's Penny Pilot Program and Replacement of Penny Pilot Issues 
That Have Been Delisted.) See also NOM Rules, Chapter VI, Section 5.
    \4\ The term ``Customer'' refers to a customer in a transaction 
that is marked by a Participant in the Customer range for clearing 
purposes at The Options Clearing Corporation (``OCC''). Such a 
transaction is not for the account of a broker, dealer or 
``Professional'' (see next footnote).
    \5\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s), See Chapter I, 
Section 1(a)(48). All Professional orders must be appropriately 
marked by Participants.

------------------------------------------------------------------------
                                                           Rebate to add
                     Monthly volume                          liquidity
------------------------------------------------------------------------
Tier 1--Participant adds Customer, Professional, Firm,             $0.20
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options of
 up to 0.10% of total industry customer equity and ETF
 option average daily volume (``ADV'') contracts per day
 in a month.............................................
Tier 2--Participant adds Customer, Professional, Firm,              0.25
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options
 above 0.10% to 0.20% of total industry customer equity
 and ETF option ADV contracts per day in a month........
Tier 3--Participant adds Customer, Professional, Firm,              0.42
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options
 above 0.20% to 0.30% of total industry customer equity
 and ETF option ADV contracts per day in a month........
Tier 4--Participant adds Customer, Professional, Firm,              0.43
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options
 above 0.30% to 0.40% of total industry customer equity
 and ETF option ADV contracts per day in a month........
Tier 5--Participant adds Customer, Professional, Firm,              0.45
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options
 above 0.40% to 0.75% of total industry customer equity
 and ETF option ADV contracts per day in a month, or
 Participant adds (1) Customer and/or Professional
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options of 25,000 or more contracts per day in a month,
 (2) the Participant has certified for the Investor
 Support Program set forth in Rule 7014, and (3) the
 Participant executed at least one order on NASDAQ's
 equity market..........................................
Tier 6--Participant has Total Volume of 100,000 or more             0.45
 contracts per day in a month, of which 25,000 or more
 contracts per day in a month must be Customer and/or
 Professional liquidity in Penny Pilot Options..........
Tier 7--Participant has Total Volume of 150,000 or more             0.47
 contracts per day in a month, of which 50,000 or more
 contracts per day in a month must be Customer and/or
 Professional liquidity in Penny Pilot Options..........
Tier 8--Participant adds Customer, Professional, Firm,              0.48
 Non-NOM Market Maker and/or Broker-Dealer liquidity in
 Penny Pilot Options and/or Non-Penny Pilot Options
 above 0.75% or more of total industry customer equity
 and ETF option ADV contracts per day in a month or
 Participant adds (1) Customer and/or Professional
 liquidity in Penny Pilot Options and/or Non-Penny Pilot
 Options of 30,000 or more contracts per day in a month,
 (2) the Participant has certified for the Investor
 Support Program set forth in Rule 7014, and (3) the
 Participant qualifies for rebates under the Qualified
 Market Maker (``QMM'') Program set forth in Rule 7014..
------------------------------------------------------------------------

    The Exchange is proposing to expand eligibility for one of the 
incentives applicable to Tier 8 Customer Penny Pilot Options Rebate to 
Add Liquidity. The Tier 8 Customer and Professional Penny Pilot Options 
Rebate to Add Liquidity is currently $0.48 per contract if Participants 
add Customer, Professional, Firm,\6\ Non-NOM Market Maker \7\ and/or 
Broker-Dealer \8\ liquidity in Penny Pilot Options and/or Non-Penny 
Pilot Options above 0.75% of total industry customer equity and ETF 
option ADV of contracts traded in a month. This rebate also applies if 
(1) the Participant adds Customer and/or Professional liquidity in 
Penny Pilot Options and/or Non-Penny Pilot Options of 30,000 or more 
contracts per day in a month, (2) the Participant has certified for the 
Investor Support

[[Page 48614]]

Program \9\ set forth in Rule 7014, and (3) the Participant qualifies 
for rebates under the Qualified Market Maker (``QMM'') Program \10\ set 
forth in Rule 7014.
---------------------------------------------------------------------------

    \6\ The term ``Firm'' refers to a firm participating in a 
transaction marked by a Participant in the Firm range for clearing 
purposes at OCC.
    \7\ The term ``NOM Market Maker'' is a Participant that has 
registered as a Market Maker on NOM pursuant to Chapter VII, Section 
2, and must also remain in good standing pursuant to Chapter VII, 
Section 4. In order to receive NOM Market Maker pricing in all 
securities, the Participant must be registered as a NOM Market Maker 
in at least one security.
    \8\ The term ``Broker-Dealer'' refers to a broker or dealer 
participating in a transaction when such transaction is not subject 
to transaction fees applicable to specific categories of transaction 
participants (other than brokers and dealers).
    \9\ For a detailed description of the ISP, see Securities 
Exchange Act Release No. 63270 (November 8, 2010), 75 FR 69489 
(November 12, 2010) (NASDAQ-2010-141) (notice of filing and 
immediate effectiveness) (the ``ISP Filing''). See also Securities 
Exchange Act Release Nos. 63414 (December 2, 2010), 75 FR 76505 
(December 8, 2010) (NASDAQ-2010-153) (notice of filing and immediate 
effectiveness); and 63628 (January 3, 2011), 76 FR 1201 (January 7, 
2011) (NASDAQ-2010-154) (notice of filing and immediate 
effectiveness).
    \10\ A QMM is a NASDAQ member that makes a significant 
contribution to market quality by providing liquidity at the 
national best bid and offer (``NBBO'') in a large number of stocks 
for a significant portion of the day. In addition, the NASDAQ equity 
member must avoid imposing the burdens on NASDAQ and its market 
participants that may be associated with excessive rates of entry of 
orders away from the inside and/or order cancellation. The 
designation ``QMM'' reflects the QMM's commitment to provide 
meaningful and consistent support to market quality and price 
discovery by extensive quoting at the NBBO in a large number of 
securities. In return for its contributions, certain financial 
benefits are provided to a QMM with respect to a particular MPID (a 
``QMM MPID''), as described under Rule 7014(e).
---------------------------------------------------------------------------

    Participants that qualify for the Tier 8 rebate and add Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Pilot Options and/or Non- Penny Pilot Options of 1.25% or more 
of total industry customer equity and ETF option ADV of contracts 
traded in a month today also receive an additional $0.02 per contract 
Penny Pilot Options Customer \11\ Rebate to Add Liquidity for each 
transaction which adds liquidity in Penny Pilot Options in that 
month.\12\
---------------------------------------------------------------------------

    \11\ This $0.02 per contract incentive applies only to the Tier 
8 Customer rebate, and not the Professional rebate.
    \12\ See note ``e'' in Chapter XV, Section 2(1).
---------------------------------------------------------------------------

    The Exchange is proposing to expand eligibility for this additional 
incentive under the Tier 8 Customer rebate by amending the 
qualification as follows: ``Participants that add Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Pilot Options and/or Non- Penny Pilot Options of 1.15% or more 
of total industry customer equity and ETF option ADV contracts per day 
in a month will receive an additional $0.02 per contract Penny Pilot 
Options Customer Rebate to Add Liquidity for each transaction which 
adds liquidity in Penny Pilot Options in that month.'' By lowering the 
percentage of total industry customer equity and ETF options ADV of 
contracts in a month required to be reached in order to qualify for the 
additional $0.02 per contract rebate, the Exchange expects that a 
greater number of Participants qualifying for the Tier 8 rebate will 
also receive the added incentive.
    The Exchange expects that expanded eligibility for this incentive 
will encourage Participants to add greater liquidity to NOM. While the 
changes proposed herein are effective upon filing, the Exchange has 
designated such changes to become operative on August 3, 3015.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\13\ in general, and with 
Section 6(b)(4) and 6(b)(5) of the Act,\14\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which NASDAQ operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange's proposal to expand incentive eligibility is 
reasonable because it will incentivize Participants to add liquidity in 
Penny Pilot Options and/or Non-Penny Pilot Options. Participants that 
qualify for the Tier 8 rebate may choose to add greater liquidity to 
NOM because of the lower percentage qualifier (1.25% to 1.15%) to 
obtain the additional $0.02 per contract Customer rebate.
    The Exchange's proposal to expand incentive eligibility is 
equitable and not unfairly discriminatory because all eligible 
Participants may qualify for the Tier 8 Customer Penny Pilot Options 
Rebate to Add Liquidity, provided they have the requisite volume. The 
added $0.0.2 per contract incentive will be uniformly paid in addition 
to the Tier 8 rebate. Customer liquidity is critically important to the 
market and all market participants. Greater customer liquidity benefits 
all market participants by providing more trading opportunities, which 
attracts market makers. An increase in the activity by market makers in 
turn facilitates tighter spreads and further order flow.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will not impose any burden on competition 
not necessary or appropriate in furtherance of the purposes of the Act. 
The proposed expanded incentive will incentivize market participants to 
add greater liquidity on NOM to obtain the added $0.02 per contract 
Customer rebate. Customer liquidity is critically important to the 
market and benefits all market participants. Greater customer liquidity 
benefits all market participants by providing more trading 
opportunities and attracting greater participation by specialists and 
market makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads. All Participants are eligible for 
the rebates if they transact the requisite volume.
    The Exchange operates in a highly competitive market in which many 
sophisticated and knowledgeable market participants can readily and do 
send order flow to competing exchanges if they deem fee levels or 
rebate incentives at a particular exchange to be excessive or 
inadequate. These market forces ensure that the Exchange's fees and 
rebates remain competitive with the fee structures at other trading 
platforms.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\15\
---------------------------------------------------------------------------

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

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2015-090 on the subject line.

[[Page 48615]]

Paper comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-090. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (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-2015-090 and should 
be submitted on or before September 3, 2015.

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

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

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-19875 Filed 8-12-15; 8:45 am]
BILLING CODE 8011-01-P