Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Chapter XV, Entitled “Options Pricing,” at Section 2 Governing Pricing for NASDAQ Members, 63261-63263 [2015-26425]
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Federal Register / Vol. 80, No. 201 / Monday, October 19, 2015 / Notices
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
under Section 19(b)(2)(B) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BATS–
2015–85, and should be submitted on or
before November 9, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26426 Filed 10–16–15; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
BATS–2015–85 on the subject line.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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:
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify
Chapter XV, Entitled ‘‘Options
Pricing,’’ at Section 2 Governing
Pricing for NASDAQ Members
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 No.
SR–BATS–2015–85. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
October 13, 2015.
20 15
U.S.C. 78s(b)(2)(B).
VerDate Sep<11>2014
17:52 Oct 16, 2015
Jkt 238001
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76131; File No. SR–
NASDAQ–2015–113]
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
September 29, 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 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
certain Penny Pilot Options 3 rebates
21 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 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
1 15
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
63261
currently applicable to NOM Market
Makers.4
While the changes proposed herein
are effective upon filing, the Exchange
has designated that the amendments be
operative on October 1, 2015.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
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 ‘‘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.
E:\FR\FM\19OCN1.SGM
19OCN1
63262
Federal Register / Vol. 80, No. 201 / Monday, October 19, 2015 / Notices
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
amend the NOM Market Maker Penny
Pilot Options Rebates to Add Liquidity
to add the iShares Russell 2000 ETF
‘‘IWM’’ to Tiers 3 and 4 of the NOM
Market Maker Penny Pilot Options
Rebates to Add Liquidity. The Exchange
believes that additional rebate
opportunities offered by the addition of
IWM to Tiers 3 and 4 of the NOM
Market Maker Penny Pilot Options
Rebates to Add Liquidity will attract
additional order flow to NOM to the
benefit of all market participants.
NOM Market Maker Rebates To Add
Liquidity
Today, the Exchange pays NOM
Market Maker Penny Pilot Options
Rebates to Add Liquidity based on
various criteria in six tiers with rebates
which range from $0.20 to $0.42 per
contract as noted below.
Monthly volume
Tier 1 .......................
.
Tier 2 .......................
Tier 3 .......................
Tier 4 .......................
Tier 5 .......................
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Tier 6 .......................
Rebate to add liquidity
Participant adds NOM Market Maker 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.
$0.20.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options above 0.10% to 0.25% of total industry customer
equity and ETF option ADV contracts per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options above 0.25% to 0.60% of total industry customer
equity and ETF option ADV contracts per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of above 0.60% to 0.90% of total industry customer
equity and ETF option ADV contracts per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of above 0.30% of total industry customer equity
and ETF option ADV contracts per day in a month and qualifies for the Tier 7
or Tier 8 Customer and/or Professional Rebate to Add Liquidity in Penny
Pilot Options.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options above 0.80% of total industry customer equity and
ETF option ADV contracts per day in a month and qualifies for the Tier 7 or
Tier 8 Customer and/or Professional Rebate to Add Liquidity in Penny Pilot
Options or Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.90% of total industry customer
equity and ETF option ADV contracts per day in a month or Participants that
add Customer, Professional, Firm, Non-NOM Market Maker, and/or BrokerDealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of
1.40% or more of total industry customer equity and ETF option ADV contracts per day in a month.
$0.25.
Today, the Tier 3 NOM Market Maker
Penny Pilot Options Rebate to Add
Liquidity pays a $0.30 per contract
rebate, except in options overlying
Apple, Inc. (‘‘AAPL’’), PowerShares
QQQ (‘‘QQQ’’), VIX ST Futures ETN
(‘‘VXX’’) and SPDR S&P 500 (‘‘SPY’’),
which pay a $0.40 per contract rebate to
Participants that add NOM Market
Maker liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options above
0.25% to 0.60% of total industry
customer equity and ETF option ADV
contracts per day in a month. The
Exchange proposes to add IWM to the
list of symbols that are eligible for the
Tier 3 rebate of $0.40 per contract.
Today, the Exchange pays a Tier 3 NOM
Market Maker Penny Pilot Options
Rebate to Add Liquidity of $0.30 per
contract in IWM.
Today, the Tier 4 NOM Market Maker
Penny Pilot Options Rebate to Add
Liquidity pays a $0.32 per contract
rebate, except in AAPL, QQQ, VXX and
VerDate Sep<11>2014
17:52 Oct 16, 2015
Jkt 238001
SPY, which pay a $0.40 per contract
rebate to Participants that add NOM
Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot
Options of above 0.60% to 0.90% of
total industry customer equity and ETF
option ADV contracts per day in a
month. The Exchange proposes to add
IWM to the list of symbols that are
eligible for the Tier 4 rebate of $0.40 per
contract. Today, the Exchange pays a
Tier 4 NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity of
$0.32 per contract in IWM.
The Exchange believes that paying a
higher rebate for IWM transactions will
encourage a greater number of
transactions in IWM.
2. Statutory Basis
NASDAQ believes that the proposed
rule changes are consistent with the
provisions of Section 6 of the Act,5 in
5 15
PO 00000
U.S.C. 78f.
Frm 00070
Fmt 4703
$0.32 or $0.40 in the following symbols
AAPL, QQQ,VXX and SPY.
$0.40.
$0.42.
general, and with Section 6(b)(4) of the
Act,6 in particular, in that they provide
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 as
described in detail below.
NOM Market Maker Penny Pilot
Options Rebates To Add Liquidity
The Exchange’s proposal to amend
the NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity Tiers
3 and 4 to increase the IWM rebate from
$0.30 to $0.40 per contract in Tier 3 and
from $0.32 to $0.40 per contract in Tier
4 is reasonable because the proposal
seeks to encourage Participants to
transact a greater amount of IWM
liquidity in order to receive the higher
rebate of $0.40 per contract, provided
Participants qualify for the Tier 3 or 4
6 15
Sfmt 4703
$0.30 or $0.40 in the following symbols
AAPL, QQQ, SPY and VXX.
E:\FR\FM\19OCN1.SGM
U.S.C. 78f(b)(4).
19OCN1
Federal Register / Vol. 80, No. 201 / Monday, October 19, 2015 / Notices
rebate. The Exchange believes that
offering NOM Market Makers the ability
to obtain higher rebates is reasonable
because it will encourage additional
order interaction.
The Exchange’s proposal to amend
the NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity Tiers
3 and 4 to increase the IWM rebate from
$0.30 to $0.40 per contract in Tier 3 and
from $0.32 to $0.40 per contract in Tier
4 is equitable and not unfairly
discriminatory because all NOM Market
Makers may qualify for the Tier 3 and
Tier 4 NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity.
The Exchange believes that it is
reasonable, equitable, and not unfairly
discriminatory to adopt different pricing
for IWM, as compared to other options,
because pricing by symbol is a common
practice on many U.S. options
exchanges as a means to incentivize
order flow to be sent to an exchange for
execution in the most actively traded
options classes, in this case actively
traded Penny Pilot Options.7 The
Exchange notes that IWM is one of the
most actively traded options in the U.S.
The Exchange believes that this pricing
will incentivize members to transact
options on IWM on NOM in order to
obtain the higher $0.40 per contract
rebate.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASDAQ does not believe that the
proposed rule changes will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
The Exchange’s proposal to amend
the Tier 3 and 4 NOM Market Maker
Penny Pilot Options Rebates to Add
Liquidity to pay a higher rebate for IWM
of $0.40 per contract, similar to AAPL,
QQQ, SPY and VXX, does not create an
undue burden on intra-market
competition because all NOM Market
Makers may qualify for the Tier 3 or 4
NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity.
The Exchange’s proposal addressed
herein does not impose an inter-market
burden on competition because 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
7 See NASDAQ OMX PHLX LLC’s Pricing
Schedule. See also the International Securities
Exchange LLC’s Fee Schedule. Both of these
markets segment pricing by symbol.
VerDate Sep<11>2014
17:52 Oct 16, 2015
Jkt 238001
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.
Other options markets offer similar
rebates to incentivize market
participants to direct order flow to their
markets. The Exchange believes that
continuing to offer rebates and
increasing those rebates and providing
opportunities to earn higher rebates will
benefit the marketplace by continuing to
reward liquidity providers and thereby
offering other market participants an
opportunity to interact with this order
flow.
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)
of the Act 8 and paragraph (f) of Rule
19b–4 9 thereunder. 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 will institute proceedings
to determine whether the proposed rule
change 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:
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2015–113. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2015–113, and should be
submitted on or before November 9,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26425 Filed 10–16–15; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2015–113 on the subject line.
8 15
9 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00071
Fmt 4703
10 17
Sfmt 9990
63263
E:\FR\FM\19OCN1.SGM
CFR 200.30–3(a)(12).
19OCN1
]]>Agencies
[Federal Register Volume 80, Number 201 (Monday, October 19, 2015)]
[Notices]
[Pages 63261-63263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26425]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76131; File No. SR-NASDAQ-2015-113]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Chapter XV, Entitled ``Options Pricing,'' at Section 2 Governing
Pricing for NASDAQ Members
October 13, 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 September 29, 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 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 certain Penny Pilot Options \3\ rebates currently
applicable to NOM Market Makers.\4\
---------------------------------------------------------------------------
\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 ``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.
---------------------------------------------------------------------------
While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on October 1,
2015.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of
[[Page 63262]]
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 amend the NOM Market
Maker Penny Pilot Options Rebates to Add Liquidity to add the iShares
Russell 2000 ETF ``IWM'' to Tiers 3 and 4 of the NOM Market Maker Penny
Pilot Options Rebates to Add Liquidity. The Exchange believes that
additional rebate opportunities offered by the addition of IWM to Tiers
3 and 4 of the NOM Market Maker Penny Pilot Options Rebates to Add
Liquidity will attract additional order flow to NOM to the benefit of
all market participants.
NOM Market Maker Rebates To Add Liquidity
Today, the Exchange pays NOM Market Maker Penny Pilot Options
Rebates to Add Liquidity based on various criteria in six tiers with
rebates which range from $0.20 to $0.42 per contract as noted below.
------------------------------------------------------------------------
Rebate to add
Monthly volume liquidity
------------------------------------------------------------------------
Tier 1........................ Participant adds NOM $0.20.
Market Maker
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 NOM $0.25.
Market Maker
liquidity in Penny
Pilot Options and/or
Non-Penny Pilot
Options above 0.10%
to 0.25% of total
industry customer
equity and ETF option
ADV contracts per day
in a month.
Tier 3........................ Participant adds NOM $0.30 or $0.40
Market Maker in the
liquidity in Penny following
Pilot Options and/or symbols AAPL,
Non-Penny Pilot QQQ, SPY and
Options above 0.25% VXX.
to 0.60% of total
industry customer
equity and ETF option
ADV contracts per day
in a month.
Tier 4........................ Participant adds NOM $0.32 or $0.40
Market Maker in the
liquidity in Penny following
Pilot Options and/or symbols AAPL,
Non-Penny Pilot QQQ,VXX and
Options of above SPY.
0.60% to 0.90% of
total industry
customer equity and
ETF option ADV
contracts per day in
a month.
Tier 5........................ Participant adds NOM $0.40.
Market Maker
liquidity in Penny
Pilot Options and/or
Non-Penny Pilot
Options of above
0.30% of total
industry customer
equity and ETF option
ADV contracts per day
in a month and
qualifies for the
Tier 7 or Tier 8
Customer and/or
Professional Rebate
to Add Liquidity in
Penny Pilot Options.
Tier 6........................ Participant adds NOM $0.42.
Market Maker
liquidity in Penny
Pilot Options and/or
Non-Penny Pilot
Options above 0.80%
of total industry
customer equity and
ETF option ADV
contracts per day in
a month and qualifies
for the Tier 7 or
Tier 8 Customer and/
or Professional
Rebate to Add
Liquidity in Penny
Pilot Options or
Participant adds NOM
Market Maker
liquidity in Penny
Pilot Options and/or
Non-Penny Pilot
Options above 0.90%
of total industry
customer equity and
ETF option ADV
contracts per day in
a month or
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 1.40% or
more of total
industry customer
equity and ETF option
ADV contracts per day
in a month.
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Today, the Tier 3 NOM Market Maker Penny Pilot Options Rebate to
Add Liquidity pays a $0.30 per contract rebate, except in options
overlying Apple, Inc. (``AAPL''), PowerShares QQQ (``QQQ''), VIX ST
Futures ETN (``VXX'') and SPDR S&P 500 (``SPY''), which pay a $0.40 per
contract rebate to Participants that add NOM Market Maker liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.25% to 0.60%
of total industry customer equity and ETF option ADV contracts per day
in a month. The Exchange proposes to add IWM to the list of symbols
that are eligible for the Tier 3 rebate of $0.40 per contract. Today,
the Exchange pays a Tier 3 NOM Market Maker Penny Pilot Options Rebate
to Add Liquidity of $0.30 per contract in IWM.
Today, the Tier 4 NOM Market Maker Penny Pilot Options Rebate to
Add Liquidity pays a $0.32 per contract rebate, except in AAPL, QQQ,
VXX and SPY, which pay a $0.40 per contract rebate to Participants that
add NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options of above 0.60% to 0.90% of total industry customer equity
and ETF option ADV contracts per day in a month. The Exchange proposes
to add IWM to the list of symbols that are eligible for the Tier 4
rebate of $0.40 per contract. Today, the Exchange pays a Tier 4 NOM
Market Maker Penny Pilot Options Rebate to Add Liquidity of $0.32 per
contract in IWM.
The Exchange believes that paying a higher rebate for IWM
transactions will encourage a greater number of transactions in IWM.
2. Statutory Basis
NASDAQ believes that the proposed rule changes are consistent with
the provisions of Section 6 of the Act,\5\ in general, and with Section
6(b)(4) of the Act,\6\ in particular, in that they provide 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 as described in detail below.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
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NOM Market Maker Penny Pilot Options Rebates To Add Liquidity
The Exchange's proposal to amend the NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity Tiers 3 and 4 to increase the IWM
rebate from $0.30 to $0.40 per contract in Tier 3 and from $0.32 to
$0.40 per contract in Tier 4 is reasonable because the proposal seeks
to encourage Participants to transact a greater amount of IWM liquidity
in order to receive the higher rebate of $0.40 per contract, provided
Participants qualify for the Tier 3 or 4
[[Page 63263]]
rebate. The Exchange believes that offering NOM Market Makers the
ability to obtain higher rebates is reasonable because it will
encourage additional order interaction.
The Exchange's proposal to amend the NOM Market Maker Penny Pilot
Options Rebate to Add Liquidity Tiers 3 and 4 to increase the IWM
rebate from $0.30 to $0.40 per contract in Tier 3 and from $0.32 to
$0.40 per contract in Tier 4 is equitable and not unfairly
discriminatory because all NOM Market Makers may qualify for the Tier 3
and Tier 4 NOM Market Maker Penny Pilot Options Rebate to Add
Liquidity.
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to adopt different pricing for IWM, as compared
to other options, because pricing by symbol is a common practice on
many U.S. options exchanges as a means to incentivize order flow to be
sent to an exchange for execution in the most actively traded options
classes, in this case actively traded Penny Pilot Options.\7\ The
Exchange notes that IWM is one of the most actively traded options in
the U.S. The Exchange believes that this pricing will incentivize
members to transact options on IWM on NOM in order to obtain the higher
$0.40 per contract rebate.
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\7\ See NASDAQ OMX PHLX LLC's Pricing Schedule. See also the
International Securities Exchange LLC's Fee Schedule. Both of these
markets segment pricing by symbol.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule changes will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
The Exchange's proposal to amend the Tier 3 and 4 NOM Market Maker
Penny Pilot Options Rebates to Add Liquidity to pay a higher rebate for
IWM of $0.40 per contract, similar to AAPL, QQQ, SPY and VXX, does not
create an undue burden on intra-market competition because all NOM
Market Makers may qualify for the Tier 3 or 4 NOM Market Maker Penny
Pilot Options Rebate to Add Liquidity.
The Exchange's proposal addressed herein does not impose an inter-
market burden on competition because 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 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. Other options markets offer similar
rebates to incentivize market participants to direct order flow to
their markets. The Exchange believes that continuing to offer rebates
and increasing those rebates and providing opportunities to earn higher
rebates will benefit the marketplace by continuing to reward liquidity
providers and thereby offering other market participants an opportunity
to interact with this order flow.
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) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\
thereunder. 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2015-113 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-113. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2015-113, and should
be submitted on or before November 9, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26425 Filed 10-16-15; 8:45 am]
BILLING CODE 8011-01-P
