Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Adjustments to Nasdaq's Options Regulatory Fee, 48475-48477 [2016-17447]

Download as PDF Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / 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 No. SR–FINRA–2016–027. 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 FINRA. 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 No. SR–FINRA– 2016–027, and should be submitted on or before August 15, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.76 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–17446 Filed 7–22–16; 8:45 am] mstockstill on DSK3G9T082PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78360; File No. SR– NASDAQ–2016–096] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Adjustments to Nasdaq’s Options Regulatory Fee July 19, 2016. 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 6, 2016, 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 make adjustments to its Options Regulatory Fee (‘‘ORF’’) by amending NASDAQ Options Market LLC (‘‘NOM’’) Rules at Chapter XV, Section 5. While the changes proposed herein are effective upon filing, the Exchange has designated the amendments become operative on August 1, 2016. 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 the most significant aspects of such statements. 1 15 76 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:27 Jul 22, 2016 2 17 Jkt 238001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00101 Fmt 4703 Sfmt 4703 48475 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to increase the ORF from $0.0019 to $0.0021 as of August 1, 2016 to account for a reduction in market volume the Exchange has experienced. The Exchange’s proposed change to the ORF should balance the Exchange’s regulatory revenue against the anticipated revenue [sic]. Background The ORF is assessed to each member for all options transactions executed or cleared by the member that are cleared at The Options Clearing Corporation (‘‘OCC’’) in the Customer range (i.e., that clear in the Customer account of the member’s clearing firm at OCC). The Exchange monitors the amount of revenue collected from the ORF to ensure that it, in combination with other regulatory fees and fines, does not exceed regulatory costs. The ORF is imposed upon all transactions executed by a member, even if such transactions do not take place on the Exchange.3 The ORF also includes options transactions that are not executed by an Exchange member but are ultimately cleared by an Exchange member.4 The ORF is not charged for member proprietary options transactions because members incur the costs of owning memberships and through their memberships are charged transaction fees, dues and other fees that are not applicable to non-members. The dues and fees paid by members go into the general funds of the Exchange, a portion of which is used to help pay the costs of regulation. The ORF is collected indirectly from members through their clearing firms by OCC on behalf of the Exchange. The ORF is designed to recover a portion of the costs to the Exchange of the supervision and regulation of its 3 The ORF applies to all ‘‘C’’ account origin code orders executed by a member on the Exchange. Exchange Rules require each member to record the appropriate account origin code on all orders at the time of entry in order to allow the Exchange to properly prioritize and route orders and assess transaction fees pursuant to the Rules of the Exchange and report resulting transactions to OCC. 4 In the case where one member both executes a transaction and clears the transaction, the ORF is assessed to the member only once on the execution. In the case where one member executes a transaction and a different member clears the transaction, the ORF is assessed only to the member who executes the transaction and is not assessed to the member who clears the transaction. In the case where a non-member executes a transaction and a member clears the transaction, the ORF is assessed to the member who clears the transaction. E:\FR\FM\25JYN1.SGM 25JYN1 48476 Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / Notices members, including performing routine surveillances, investigations, examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. The Exchange believes that revenue generated from the ORF, when combined with all of the Exchange’s other regulatory fees, will cover a material portion, but not all, of the Exchange’s regulatory costs. The Exchange will continue to monitor the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed regulatory costs. If the Exchange determines regulatory revenues exceed regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. mstockstill on DSK3G9T082PROD with NOTICES ORF Adjustments The Exchange is proposing to increase the ORF from $0.0019 to $0.0021 as of August 1, 2016. In light of recent market volumes, the Exchange is proposing to change the amount of ORF that will be collected by the Exchange. The Exchange regularly reviews its ORF to ensure that the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs. The Exchange believes this adjustment will permit the Exchange to cover a material portion of its regulatory costs, while not exceeding regulatory costs. The Exchange notified members of this ORF adjustment thirty (30) calendar days prior to the proposed operative date.5 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Sections 6(b)(4) and 6(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 the Exchange operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that increasing the ORF from $0.0019 to $0.0021 as of August 1, 2016 is reasonable because the Exchange’s collection of ORF needs to be balanced against the amount of regulatory revenue collected by the Exchange. The Exchange believes that the proposed adjustments noted herein will serve to balance the Exchange’s regulatory revenue against the 5 See Options Trader Alert #2016–16. U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4) and (5). 6 15 VerDate Sep<11>2014 18:27 Jul 22, 2016 Jkt 238001 anticipated regulatory costs. While these adjustments result in an increase, the increase is modest and within the range of ORFs assessed by other options exchanges. The Exchange believes that amending the ORF from $0.0019 to $0.0021 as of August 1, 2016 is equitable and not unfairly discriminatory because this adjustment would be applicable to all members on all of their transactions that clear as Customer at OCC. In addition, the ORF seeks to recover the costs of supervising and regulating members, including performing routine surveillances, investigations, examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. The ORF is not charged for member proprietary options transactions because members incur the costs of owning memberships and through their memberships are charged transaction fees, dues and other fees that are not applicable to non-members. Moreover, the Exchange believes the ORF ensures fairness by assessing higher fees to those members that require more Exchange regulatory services based on the amount of Customer options business they conduct. Regulating Customer trading activity is more labor intensive and requires greater expenditure of human and technical resources than regulating nonCustomer trading activity. Surveillance, regulation and examination of nonCustomer trading activity generally tends to be more automated and less labor intensive. As a result, the costs associated with administering the Customer component of the Exchange’s overall regulatory program are anticipated to be higher than the costs associated with administering the nonCustomer component of its regulatory program. The Exchange proposes assessing higher fees to those members that will require more Exchange regulatory services based on the amount of Customer options business they conduct.8 Additionally, the dues and fees paid by members go into the general funds of the Exchange, a portion of which is used to help pay the costs of regulation. The Exchange believes that the proposed ORF is a small cost for Customer executions. The Exchange has in place a regulatory structure to surveil for, examine and monitor the ORF is not charged for orders that clear in categories other than the Customer range at OCC (e.g., NOM Market Maker orders) because members incur the costs of memberships and through their memberships are charged transaction fees, dues and other fees that go into the general funds of the Exchange, a portion of which is used to help pay the costs of regulation. PO 00000 8 The Frm 00102 Fmt 4703 Sfmt 4703 marketplace for violations of Exchange Rules. The ORF assists the Exchange to fund the cost of this regulation of the marketplace. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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 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. [sic] In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. The Exchange does not believe that increasing its ORF creates an undue burden on intra-market competition because the adjustment will apply to all members on all of their transactions that clear as Customer at OCC. The Exchange is obligated to ensure that the amount of regulatory revenue collected from the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs. Additionally, the dues and fees paid by members go into the general funds of the Exchange, a portion of which is used to help pay the costs of regulation. The Exchange’s members are subject to ORF on other options markets.9 9 The following options exchanges assess an ORF, Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), C2 Options Exchange, Inc. (‘‘C2’’), the International Securities Exchange, LLC (‘‘ISE’’), NYSE Arca, Inc. (‘‘NYSEArca’’) and NYSE AMEX LLC (‘‘NYSEAmex’’), BATS Exchange, Inc. (‘‘BATS’’) and The NASDAQ Options Market LLC (‘‘NOM’’). E:\FR\FM\25JYN1.SGM 25JYN1 Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.10 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: mstockstill on DSK3G9T082PROD with NOTICES 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–2016–096 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–2016–096. 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 10 15 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–2016–096, and should be submitted on or before August 15, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–17447 Filed 7–22–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78357; File No. SR– NYSEArca–2016–94] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Equities Rule 1.1 To Establish an Official Closing Price for ExchangeListed Securities if the Exchange Is Unable To Conduct a Closing Auction July 19, 2016. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on July 6, 2016, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 18:27 Jul 22, 2016 Jkt 238001 PO 00000 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 Frm 00103 Fmt 4703 Sfmt 4703 48477 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Equities Rule 1.1(ggP) to establish an Official Closing Price for Exchange-listed securities if the Exchange is unable to conduct a Closing Auction. The proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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 parts 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 is proposing to amend its rules to specify back-up procedures for determining an Official Closing Price for Exchange-listed securities if it is unable to conduct a Closing Auction in one or more securities due to a systems or technical issue.4 Specifically, the Exchange proposes to amend NYSE Arca Equities Rule 1.1(ggP) (‘‘Rule 1.1(ggP)’’) to establish an Official Closing Price for Exchange-listed securities if the Exchange is impaired. The proposed changes are based on approved rules of the New York Stock Exchange, LLC (‘‘NYSE’’) and NYSE MKT LLC (‘‘NYSE MKT’’).5 Those markets, together with the Exchange and the NASDAQ Stock Market LLC (‘‘Nasdaq’’), developed the back-up procedures after taking into consideration feedback from discussions with industry participants, including 4 See New York Stock Exchange press release dated July 22, 2015, available here: https:// ir.theice.com/press-and-publications/pressreleases/all-categories/2015/07-22-2015.aspx. 5 See Securities Exchange Act Release No. 78015 (June 8, 2016), 81 FR 38747 (June 14, 2016) (SR– NYSE–2016–18) and (SR–NYSEMKT–2016–31) (‘‘OCP Approval Order’’). E:\FR\FM\25JYN1.SGM 25JYN1

Agencies

[Federal Register Volume 81, Number 142 (Monday, July 25, 2016)]
[Notices]
[Pages 48475-48477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17447]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78360; File No. SR-NASDAQ-2016-096]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Make Adjustments to Nasdaq's Options Regulatory Fee

July 19, 2016.
    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 6, 2016, 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 make adjustments to its Options Regulatory 
Fee (``ORF'') by amending NASDAQ Options Market LLC (``NOM'') Rules at 
Chapter XV, Section 5.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on August 1, 
2016.
    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 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
    The Exchange proposes to increase the ORF from $0.0019 to $0.0021 
as of August 1, 2016 to account for a reduction in market volume the 
Exchange has experienced. The Exchange's proposed change to the ORF 
should balance the Exchange's regulatory revenue against the 
anticipated revenue [sic].
Background
    The ORF is assessed to each member for all options transactions 
executed or cleared by the member that are cleared at The Options 
Clearing Corporation (``OCC'') in the Customer range (i.e., that clear 
in the Customer account of the member's clearing firm at OCC). The 
Exchange monitors the amount of revenue collected from the ORF to 
ensure that it, in combination with other regulatory fees and fines, 
does not exceed regulatory costs. The ORF is imposed upon all 
transactions executed by a member, even if such transactions do not 
take place on the Exchange.\3\ The ORF also includes options 
transactions that are not executed by an Exchange member but are 
ultimately cleared by an Exchange member.\4\ The ORF is not charged for 
member proprietary options transactions because members incur the costs 
of owning memberships and through their memberships are charged 
transaction fees, dues and other fees that are not applicable to non-
members. The dues and fees paid by members go into the general funds of 
the Exchange, a portion of which is used to help pay the costs of 
regulation. The ORF is collected indirectly from members through their 
clearing firms by OCC on behalf of the Exchange.
---------------------------------------------------------------------------

    \3\ The ORF applies to all ``C'' account origin code orders 
executed by a member on the Exchange. Exchange Rules require each 
member to record the appropriate account origin code on all orders 
at the time of entry in order to allow the Exchange to properly 
prioritize and route orders and assess transaction fees pursuant to 
the Rules of the Exchange and report resulting transactions to OCC.
    \4\ In the case where one member both executes a transaction and 
clears the transaction, the ORF is assessed to the member only once 
on the execution. In the case where one member executes a 
transaction and a different member clears the transaction, the ORF 
is assessed only to the member who executes the transaction and is 
not assessed to the member who clears the transaction. In the case 
where a non-member executes a transaction and a member clears the 
transaction, the ORF is assessed to the member who clears the 
transaction.
---------------------------------------------------------------------------

    The ORF is designed to recover a portion of the costs to the 
Exchange of the supervision and regulation of its

[[Page 48476]]

members, including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities. The Exchange believes that 
revenue generated from the ORF, when combined with all of the 
Exchange's other regulatory fees, will cover a material portion, but 
not all, of the Exchange's regulatory costs. The Exchange will continue 
to monitor the amount of revenue collected from the ORF to ensure that 
it, in combination with its other regulatory fees and fines, does not 
exceed regulatory costs. If the Exchange determines regulatory revenues 
exceed regulatory costs, the Exchange will adjust the ORF by submitting 
a fee change filing to the Commission.
ORF Adjustments
    The Exchange is proposing to increase the ORF from $0.0019 to 
$0.0021 as of August 1, 2016. In light of recent market volumes, the 
Exchange is proposing to change the amount of ORF that will be 
collected by the Exchange. The Exchange regularly reviews its ORF to 
ensure that the ORF, in combination with its other regulatory fees and 
fines, does not exceed regulatory costs. The Exchange believes this 
adjustment will permit the Exchange to cover a material portion of its 
regulatory costs, while not exceeding regulatory costs.
    The Exchange notified members of this ORF adjustment thirty (30) 
calendar days prior to the proposed operative date.\5\
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    \5\ See Options Trader Alert #2016-16.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(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 the Exchange 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) and (5).
---------------------------------------------------------------------------

    The Exchange believes that increasing the ORF from $0.0019 to 
$0.0021 as of August 1, 2016 is reasonable because the Exchange's 
collection of ORF needs to be balanced against the amount of regulatory 
revenue collected by the Exchange. The Exchange believes that the 
proposed adjustments noted herein will serve to balance the Exchange's 
regulatory revenue against the anticipated regulatory costs. While 
these adjustments result in an increase, the increase is modest and 
within the range of ORFs assessed by other options exchanges.
    The Exchange believes that amending the ORF from $0.0019 to $0.0021 
as of August 1, 2016 is equitable and not unfairly discriminatory 
because this adjustment would be applicable to all members on all of 
their transactions that clear as Customer at OCC. In addition, the ORF 
seeks to recover the costs of supervising and regulating members, 
including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities.
    The ORF is not charged for member proprietary options transactions 
because members incur the costs of owning memberships and through their 
memberships are charged transaction fees, dues and other fees that are 
not applicable to non-members. Moreover, the Exchange believes the ORF 
ensures fairness by assessing higher fees to those members that require 
more Exchange regulatory services based on the amount of Customer 
options business they conduct.
    Regulating Customer trading activity is more labor intensive and 
requires greater expenditure of human and technical resources than 
regulating non-Customer trading activity. Surveillance, regulation and 
examination of non-Customer trading activity generally tends to be more 
automated and less labor intensive. As a result, the costs associated 
with administering the Customer component of the Exchange's overall 
regulatory program are anticipated to be higher than the costs 
associated with administering the non-Customer component of its 
regulatory program. The Exchange proposes assessing higher fees to 
those members that will require more Exchange regulatory services based 
on the amount of Customer options business they conduct.\8\ 
Additionally, the dues and fees paid by members go into the general 
funds of the Exchange, a portion of which is used to help pay the costs 
of regulation. The Exchange believes that the proposed ORF is a small 
cost for Customer executions. The Exchange has in place a regulatory 
structure to surveil for, examine and monitor the marketplace for 
violations of Exchange Rules. The ORF assists the Exchange to fund the 
cost of this regulation of the marketplace.
---------------------------------------------------------------------------

    \8\ The ORF is not charged for orders that clear in categories 
other than the Customer range at OCC (e.g., NOM Market Maker orders) 
because members incur the costs of memberships and through their 
memberships are charged transaction fees, dues and other fees that 
go into the general funds of the Exchange, a portion of which is 
used to help pay the costs of regulation.
---------------------------------------------------------------------------

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

    The Exchange 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 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. 
[sic] In terms of inter-market competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges and with alternative trading systems that have been exempted 
from compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which fee changes 
in this market may impose any burden on competition is extremely 
limited.
    The Exchange does not believe that increasing its ORF creates an 
undue burden on intra-market competition because the adjustment will 
apply to all members on all of their transactions that clear as 
Customer at OCC. The Exchange is obligated to ensure that the amount of 
regulatory revenue collected from the ORF, in combination with its 
other regulatory fees and fines, does not exceed regulatory costs. 
Additionally, the dues and fees paid by members go into the general 
funds of the Exchange, a portion of which is used to help pay the costs 
of regulation. The Exchange's members are subject to ORF on other 
options markets.\9\
---------------------------------------------------------------------------

    \9\ The following options exchanges assess an ORF, Chicago Board 
Options Exchange, Incorporated (``CBOE''), C2 Options Exchange, Inc. 
(``C2''), the International Securities Exchange, LLC (``ISE''), NYSE 
Arca, Inc. (``NYSEArca'') and NYSE AMEX LLC (``NYSEAmex''), BATS 
Exchange, Inc. (``BATS'') and The NASDAQ Options Market LLC 
(``NOM'').

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[[Page 48477]]

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.\10\
---------------------------------------------------------------------------

    \10\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2016-096 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-2016-096. 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-2016-096, and should 
be submitted on or before August 15, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-17447 Filed 7-22-16; 8:45 am]
 BILLING CODE 8011-01-P
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