Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Transaction Fees To Implement New Incentive, 8230-8235 [2017-01464]

Download as PDF 8230 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices Agency name Organization name Position title Request No. Office of the Assistant Secretary (Public Affairs). Office of the Secretary and Deputy ... Senior Digital Strategy Specialist ...... Spokesperson .................................... Special Advisor and White House Liaison. Chief Design Officer ........................... DY160124 ...... DY160125 ...... DV160079 ...... 09/14/2016 09/14/2016 09/20/2016 DV160080 ...... 09/20/2016 Organization name Position title Request No. DEPARTMENT OF AGRICULTURE. OFFICE OF THE SECRETARY OF DEFENSE. Rural Housing Service ....................... State Director—Virginia ..................... DA140054 ...... 09/02/2016 Office of the Under Secretary of Defense (Policy). DD150002 ...... 09/03/2016 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. NATIONAL ENDOWMENT FOR THE ARTS. SMALL BUSINESS ADMINISTRATION. DEPARTMENT OF VETERANS AFFAIRS. Office of the Secretary ....................... Special Assistant to the Deputy Assistant Secretary of Defense for Middle East. Deputy White House Liaison ............. DU150031 ...... 09/17/2016 DEPARTMENT OF THE TREASURY. DEPARTMENT OF VETERANS AFFAIRS. Office of Planning and Evaluation ..... Effective date The following Schedule C appointing authorities were revoked during September 2016. Agency name Office of the Chairman ....................... Office of Communications and Public Liaison. Office of Public Affairs ....................... Date vacated Senior Advisor to the Chairman and Director of Strategic Partnerships. Deputy Press Secretary ..................... NA110005 ...... 09/09/2016 SB150046 ...... 09/03/2016 Special Advisor .................................. DV160033 ...... 09/20/2016 Authority: 5 U.S.C. 3301 and 3302; E.O. 10577, 3 CFR, 1954–1958 Comp., p. 218. www.prc.gov, Docket Nos. MC2017–79, CP2017–106. solicit comments on the proposed rule change from interested persons. U.S. Office of Personnel Management. Beth F. Cobert, Acting Director. Stanley F. Mires, Attorney, Federal Compliance. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change [FR Doc. 2017–01557 Filed 1–23–17; 8:45 am] [FR Doc. 2017–01470 Filed 1–23–17; 8:45 am] BILLING CODE 7710–12–P BILLING CODE 6325–39–P SECURITIES AND EXCHANGE COMMISSION POSTAL SERVICE Product Change—Priority Mail Negotiated Service Agreement AGENCY: ACTION: [Release No. 34–79809; File No. SR– NASDAQ–2017–001] Postal ServiceTM. Notice. The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule’s Competitive Products List. SUMMARY: DATES: Effective date: January 24, 2017. FOR FURTHER INFORMATION CONTACT: Elizabeth A. Reed, 202–268–3179. The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on January 18, 2017, it filed with the Postal Regulatory Commission a Request of the United States Postal Service to Add Priority Mail Contract 288 to Competitive Product List. Documents are available at sradovich on DSK3GMQ082PROD with NOTICES SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Transaction Fees To Implement New Incentive January 17, 2017. 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 January 3, 2017, 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 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00057 Fmt 4703 Sfmt 4703 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. Nasdaq proposes to implement a new incentive for NOM Participants that add liquidity for Customer and Professional orders in Penny and Non-Penny Pilot Options as described further below. 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 E:\FR\FM\24JAN1.SGM 24JAN1 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose The Exchange proposes to create an alternative method for earning a rebate for adding liquidity for both Customers 3 and Professionals 4 in Penny Pilot 5 and Non-Penny Pilot Options. For Customers and Professionals transacting in Penny Pilot Options, the Exchange currently pays a volume-based tiered rebate to add liquidity. That rebate consists of 8 tiers, ranging from $0.20 per contract to $0.48 per contract, with the volume requirements increasing with each tier. Thus, a NOM Participant would qualify for a rebate of $0.20 per contract in Tier 1 for Customers and Professionals if it added 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. In comparison, a Participant would qualify for a rebate of $0.48 in Tier 8 for Customers and Professionals if it 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 if the Participant adds: (1) Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 0.25% or more of total industry customer equity 3 The term ‘‘Customer’’ or (‘‘C’’) applies to any transaction that is identified by a Participant for clearing in the Customer range at The Options Clearing Corporation (‘‘OCC’’) which is not for the account of broker or dealer or for the account of a ‘‘Professional’’ (as that term is defined in Chapter I, Section 1(a)(48)). 4 The term ‘‘Professional’’ or (‘‘P’’) 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) pursuant to Chapter I, Section 1(a)(48). All Professional orders shall be appropriately marked by Participants. 5 The Penny Pilot was established in March 2008. See Securities Exchange Act Release No. 57579 (March 28, 2008), 73 FR 18587 (April 4, 2008) (SR– NASDAQ–2008–026) (notice of filing and immediate effectiveness establishing Penny Pilot). Since that date, the Penny Pilot has been expanded and is currently extended through December 31, 2016 or the date of permanent approval, if earlier. See Securities Exchange Act Release No. 78037 (June 10, 2016), 81 FR 39299 (June 16, 2016) (SR– NASDAQ–2016–052). VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 and ETF option ADV contracts per day in a month, and (2) has added liquidity in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1.00% or more of Consolidated Volume in a month or qualifies for MARS.6 Currently, Customers and Professionals transacting in Non-Penny Pilot Options on NOM receive a $0.80 per contract Rebate to Add Liquidity. In addition, a Participant that qualifies for a Customer or Professional Penny Pilot Options Rebate to Add Liquidity in Tiers 2, 3, 4, 5 or 6 in a month will receive an additional $0.10 per contract Non-Penny Pilot Options Rebate to Add Liquidity for each transaction which adds liquidity in Non-Penny Pilot Options in that month. A Participant that qualifies for a Customer or Professional Penny Pilot Options Rebate to Add Liquidity in Tiers 7 or 8 in a month will receive an additional $0.20 per contract Non-Penny Pilot Options Rebate to Add Liquidity for each transaction which adds liquidity in Non-Penny Pilot Options in that month. Furthermore, a Participant that may receive a $0.53 per contract Rebate to Add Liquidity in Penny Pilot Options as a Customer or Professional, and $1.00 per contract Rebate to Add Liquidity in Non-Penny Pilot Options as a Customer or Professional, if that NOM Participant transacts on the NASDAQ Stock Market through one or more of its Nasdaq Market Center MPIDs in the same month, and such transactions in all securities on the NASDAQ Stock Market that month through all of its Nasdaq Market Center MPIDs represent 3.00% or more of Consolidated Volume.7 Participants that qualify for this rebate would not be eligible for any other rebates in Tiers 1 through 8 or other rebate incentives on NOM for Customer and Professional order flow in Chapter XV, Section 2(1) of NOM Rules.8 The Exchange proposes an additional incentive to a Participant that adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or 6 MARS refers to the Market Access and Routing Subsidy, which is set forth in Chapter XV, Section 6 [sic]. The MARS payment comprises four volumebased tiers, and is paid to NOM Participants that route eligible contracts to NOM through a participating NOM Participant’s System. The MARS Payment will be paid on all executed Eligible Contracts that add liquidity. See NOM Rules at Chapter XV, Section 6 [sic]. 7 Consolidated Volume would be determined as set forth in Nasdaq Rule 7018(a). 8 In calculating total volume, the Exchange will add the NOM Participant’s total volume transacted on the NASDAQ Stock Market in a given month across its Nasdaq Market Center MPIDs, and will divide this number by the total industry Consolidated Volume. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 8231 Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, (b) executes greater than 0.04% of Consolidated Volume (‘‘CV’’) 9 via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) 10 volume within the NASDAQ Stock Market Closing Cross within a month, and (c) adds greater than 1.5 million shares per day of nondisplayed volume within the NASDAQ Stock Market within a month. The Participant would receive a $0.55 per contract rebate to add liquidity in Penny Pilot Options as Customer or Professional and $1.05 per contract rebate to add liquidity in Non-Penny Pilot Options as Customer or Professional. Participants that qualify for this rebate would not be eligible for any other rebates in Tiers 1–8 or other rebate incentives on NOM for Customer and Professional order flow in Chapter XV, Section 2(1). The Exchange believes that the new incentives will attract a greater amount of order flow on NOM by offering a discounted rate. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,12 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its 9 See note 7 above. as set forth in NASDAQ Rule 4754, represents the volume in the NASDAQ Stock Market Closing Cross that allows market participants to contribute order flow that will result in executions at the official closing price for the day in the NASDAQ listed security. A ‘‘MOC Order’’ is an order type entered without a price that may be executed only during the NASDAQ Closing Cross, which refers to the equity closing cross. A ‘‘LOC Order’’ is an order type entered with a price that may be executed only in the NASDAQ Closing Cross. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4) and (5). 10 MOC/LOC, E:\FR\FM\24JAN1.SGM 24JAN1 8232 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES broader forms that are most important to investors and listed companies.’’ 13 Likewise, in NetCoalition v. Securities and Exchange Commission 14 (‘‘NetCoalition’’) the D.C. Circuit upheld the Commission’s use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a costbased approach.15 As the court emphasized, the Commission ‘‘intended in Regulation NMS that ‘market forces, rather than regulatory requirements’ play a role in determining the market data . . . to be made available to investors and at what cost.’’ 16 Further, ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’ . . . . ’’ 17 Although the court and the SEC were discussing the cash equities markets, the Exchange believes that these views apply with equal force to the options markets. The Exchange notes that the purpose of the proposed rebates is to incentivize NOM Participants to transact greater volume on NOM and the NASDAQ Stock Market in order to qualify for a higher rebate on NOM. The Exchange believes that the amount of the rebate ($0.55 per contract for Penny Pilot Options and $1.05 per contract for NonPenny Pilot Options) along with the various criteria for qualifying for the rebate ((a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, (b) execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month, and (c) add greater than 13 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 14 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). 15 See NetCoalition, at 534–535. 16 Id. at 537. 17 Id. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR– NYSEArca–2006–21)). VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 1.5 million shares per day of nondisplayed within the NASDAQ Stock Market within a month) are reasonable. With respect to the rebate for Penny Pilot Options, the Exchange notes that the proposed $0.55 per contract rebate is higher than the currently highest rebate available ($0.53 per contract) to Customers and Professionals for adding liquidity in Penny Pilot Options.18 The Exchange believes the proposed rebate of $0.55 per contract is reasonable because the proposed rebate requires three components ((a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, (b) execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via 18 As noted above, a NOM Participant will receive a rebate of $0.48 per contract for adding liquidity as a Customer or Professional in Penny Pilot Options if it qualifies for Tier 8. In addition, as noted in footnote c of Chapter XV, Section 2, a NOM Participant may receive an additional rebate of up to $0.05 per contract in Penny Pilot Options, for a total rebate of $0.53 per contract. Specifically, Participants that: (1) Add Customer, Professional, Firm, Non-NOM Market Maker and/or BrokerDealer liquidity in Penny Pilot Options and/or NonPenny 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 and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month; or (2) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.30% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month; or (3) (a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 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, (b) add Customer, Professional, Firm, NonNOM Market Maker and/or Broker-Dealer liquidity in Non-Penny Pilot Options above 0.15% of total industry customer equity and ETF option ADV contracts per day in a month, and (c) execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month will receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in a month. Consolidated Volume shall mean the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of an equity member’s trading activity, expressed as a percentage of or ratio to Consolidated Volume, the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member’s trading activity. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month, and (c) add greater than 1.5 million shares per day of nondisplayed volume within the NASDAQ Stock Market within a month) to be met by NOM Participants in order to qualify for that rebate. These requirements require more volume to be submitted on NOM than the current highest rebate requires today. Similarly, the Exchange believes the proposed $1.05 rebate per contract for Non-Penny Pilot Options is reasonable for similar reasons. The requirements to obtain this rebate require more volume to be submitted on NOM. The Exchange believes that the requirement that a NOM Participant add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month, and add greater than 1.5 million shares per day of nondisplayed volume within the NASDAQ Stock Market within a month is reasonable because the Exchange is offering to pay a rebate of $0.55 per contract, the highest rebate. These more stringent volume-based requirements bring a greater amount of volume to both NOM and the NASDAQ Stock Market. The first volume requirement, which requires volume to be added to NOM, is reasonable because it is similar to that required to qualify for certain NOM Market Maker discounted remove fees.19 The second volume requirement 19 See note ‘‘2’’ of Chapter XV, Section 2 of NOM Rules. The note ‘‘2 ‘‘rebate is offered to Non-NOM Market Makers and NOM Market Makers that add 1.30% of Customer, Professional, Firm, BrokerDealer or Non-NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of total industry customer equity and ETF option ADV contracts per day in a month will be subject to the following pricing applicable to executions: A $0.48 per contract Penny Pilot Options Fee for Removing Liquidity when the Participant is (i) both the buyer and the seller or (ii) the Participant removes liquidity from another Participant under Common Ownership. In the alternative, Participants that add 1.50% of Customer, Professional, Firm, Broker-Dealer or NonNOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of total industry customer equity and ETF option ADV contracts per day in a month and meet or exceed the cap for the NASDAQ Stock Market Opening Cross during the month will be subject to the following pricing applicable to executions less than 10,000 contracts: A $0.32 per contract Penny Pilot Options Fee for Removing Liquidity when the Participant is (i) both the buyer and seller or (ii) the E:\FR\FM\24JAN1.SGM 24JAN1 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES to execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month is reasonable because it is one of the same requirements to qualify for note ‘‘c’’ in Chapter XV, Section 2 of NOM Rules.20 The third volume requirement to add greater than 1.5 million shares per day of nondisplayed volume within the NASDAQ Stock Market within a month is a new requirement, which must be met in addition to the first and second volume requirements. The Exchange believes that this requirement is reasonable because linking rebates on NOM to activity on the NASDAQ Stock Market is not novel. The Exchange believes that requiring Participants to add nondisplayed volume within the NASDAQ Stock Market is reasonable because this type of liquidity benefits all market participants by way of interacting with Participant removes liquidity from another Participant under Common Ownership. Finally, Participants that add 1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Pilot Options and/ or Non-Penny Pilot Options of total industry customer equity and ETF option ADV contracts per day in a month will be subject to the following pricing applicable to executions less than 10,000 contracts: A $0.32 per contract Penny Pilot Options Fee for Removing Liquidity when the Participant is (i) both the buyer and seller or (ii) the Participant removes liquidity from another Participant under Common Ownership. 20 Note ‘‘c’’ of Chapter XV, Section 2 pays an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity, in addition to the Tier 8 rebate of $0.48 per contract if a Participant: (1) Adds 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 and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month; or (2) adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.30% or more of total industry customer equity and ETF option ADV contracts per day in a month will receive an additional $0.05 per contract Penny Pilot Options Customer and/or Professional Rebate to Add Liquidity for each transaction which adds liquidity in Penny Pilot Options in that month; or (3) (a) adds Customer, Professional, Firm, NonNOM Market Maker and/or Broker-Dealer 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, (b) adds Customer, Professional, Firm, NonNOM Market Maker and/or Broker-Dealer liquidity in Non-Penny Pilot Options above 0.15% of total industry customer equity and ETF option ADV contracts per day in a month, and (c) executes greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month. VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 that liquidity on the equity market.21 By encouraging market participants to increase their participation on the equities market by delivering nondisplayed volume, the Exchange is rewarding Participants with an opportunity to earn an additional options incentive, provided all requirements are met. The Exchange notes that previous and current rebates offered by NOM relate to activity on the NASDAQ Stock Market.22 Similarly, the NASDAQ Stock Market offers enhanced rebates that are based on activity on NOM.23 Moreover, the Exchange notes that any NOM Options Participant may trade equities on the NASDAQ Stock Market because they are approved members.24 Further, the Exchange believes it is reasonable to make this rebate exclusive of any other rebates in Tiers 1 through 8 or other rebate incentives on NOM for Customer and Professional order flow in Chapter XV, Section 2(1) of NOM Rules. As noted above, the proposed rebates are higher, and in some cases significantly higher, than the rebates that a NOM Participant may currently receive for adding liquidity in Penny Pilot and Non-Penny Pilot Options as a Customer or Professional. Given the size of the proposed rebates, the Exchange believes it is reasonable to make these rebates exclusive of other rebates on NOM for Customer and Professional order flow. Finally, the Exchange also believes the proposal is reasonable because the proposed rebates apply to both transactions in Penny Pilot and Non-Penny Pilot Options. The Exchange believes that the amount of the rebate ($0.55 per contract for Penny Pilot Options and $1.05 per contract for Non-Penny Pilot Options) 21 Orders that are non-displayed would not be disseminated on the NASDAQ Stock Market Order Book feed. A Participant may be incentivized to increase their participation on the NASDAQ Stock Market, which may result in interacting with such non-displayed volume. Increased order interaction benefits all market participants. 22 See current note ‘‘e’’ of Chapter XV, Section IV [sic] of NOM Rules which provides a rebate to NOM Participants that transact in all securities through one or more of its Nasdaq Market Center MPIDs that represent 3.00% or more of Consolidated Volume in the same month on the NASDAQ Stock Market. 23 For example, Nasdaq provides an enhanced rebate on the NASDAQ Stock Market of $0.00295 if the member adds 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 ADV in the customer clearing range for Equity and ETF option contracts per day in a month on NOM. See Nasdaq Rule 7018. 24 Although a NOM Participant may incur additional labor and/or costs to establish connectivity to the NASDAQ Stock Market, there are no additional membership fees for NOM Participants that want to transact on the NASDAQ Stock Market. PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 8233 along with the various criteria for qualifying for the rebate ((a) add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, (b) execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month, and (c) add greater than 1.5 million shares per day of nondisplayed within the NASDAQ Stock Market within a month) is equitable and not unfairly discriminatory because any Participant that qualifies for this rebate will be uniformly paid $0.55 per contract for Penny Pilot Options and $1.05 per contract for Non-Penny Pilot Options. The requirements for earning this rebate will be applied uniformly to all market participants. The Exchange believes that requiring Participants to add non-displayed volume is equitable and not unfairly discriminatory because the Exchange will pay the incentive, in a uniform manner, to Participants that have met all criteria required for the rebate. The Exchange believes that the requirement that a NOM Participant add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of total industry customer equity and ETF option ADV contracts per day in a month, execute greater than 0.04% of Consolidated Volume (‘‘CV’’) via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within the NASDAQ Stock Market Closing Cross within a month, and add greater than 1.5 million shares per day of nondisplayed volume within the NASDAQ Stock Market within a month is equitable and not unfairly discriminatory because while the requirements for qualifying for the proposed rebates may be more stringent than other requirements for qualifying for other rebates currently offered by NOM, the Exchange believes that these requirements are proportionate to the amount of the proposed rebates and equitably reflect the purpose of the proposed rebates, which is to incentivize NOM Participants to transact greater volume on NOM and the NASDAQ Stock Market. Moreover, all similarly-situated NOM Participants, e.g., those that add liquidity in either Penny Pilot or Non-Penny Pilot Options as either Customers or Professionals and also transact on the NASDAQ Stock E:\FR\FM\24JAN1.SGM 24JAN1 8234 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices Market, are equally capable of qualifying for the proposed rebates, and the same rebates will be paid to all NOM Participants that qualify for them. Further, the Exchange believes that it is equitable and not unfairly discriminatory to offer this rebate to NOM Participants that add liquidity as Customers or Professionals, and not to offer this rebate to NOM Participants that add liquidity as Firms,25 NOM Market Makers,26 Non-NOM Market Makers, or Broker-Dealers.27 Nasdaq notes that Customer liquidity offers unique benefits to the market which benefits all market participants by providing more trading opportunities, which attracts Specialists and Market Makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. The Exchange believes that encouraging Participants to add Professional liquidity is similarly beneficial, as the rebates may cause market participants to select NOM as a venue to send Professional order flow, increasing competition among the exchanges. As with Customer liquidity, the Exchange believes that increased Professional additional order flow should benefit other market participants. B. Self-Regulatory Organization’s Statement on Burden on Competition sradovich on DSK3GMQ082PROD with NOTICES 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. 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 25 The term ‘‘Firm’’ or (‘‘F’’) applies to any transaction that is identified by a Participant for clearing in the Firm range at OCC. 26 The term ‘‘NOM Market Maker’’ or (‘‘M’’) 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. 27 The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to any transaction which is not subject to any of the other transaction fees applicable within a particular category. VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 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 the proposed rebates will impose any burden on competition that is not necessary or appropriate. The Exchange notes that the purpose of the proposed rebate is to incentivize NOM Participants to transact on NOM and the NASDAQ Stock Market. All similarlysituated NOM Participants, e.g., those that add liquidity in either Penny Pilot or Non-Penny Pilot Options as either Customers or Professionals and also transact the requisite volumes on the NASDAQ Stock Market, are equally capable of qualifying for the proposed rebates. Additionally, the Exchange will pay the same rebates, in a uniform manner, to all NOM Participants that qualify for them. The Exchange believes that Customer and Professional order flow provides unique benefits to all participants on the Exchange and may even facilitate inter-market competition, and is therefore offering the proposed rebates to NOM Participants that add liquidity as either a Customer or a Professional accordingly. With respect to linking the proposed rebates to a participant’s activity on the NASDAQ Stock Market, NOM currently offers rebates that are based on activity on the NASDAQ Stock Market.28 Similarly, the NASDAQ Stock Market currently offers reduced transaction fees that are based on activity on NOM.29 Finally, because they are approved members, any NOM Options Participant may trade equities on the NASDAQ Stock Market and therefore attempt to qualify for the proposed rebates.30 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. 28 See note 22 above. note 23 above. 30 See note 24 above. 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.31 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–2017–001 on the subject line. 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–2017–001. 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 29 See PO 00000 Frm 00061 Fmt 4703 31 15 Sfmt 4703 E:\FR\FM\24JAN1.SGM U.S.C. 78s(b)(3)(A)(ii). 24JAN1 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices 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–2017–001 and should be submitted on or before February 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.32 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–01464 Filed 1–23–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79812; File No. SR–BX– 2016–063] Self-Regulatory Organizations; NASDAQ BX, Inc.; Order Granting Approval of Proposed Rule Change To Amend the PRISM Price Improvement Auction in BX Chapter VI, Section 9 and To Make Pilot Program Permanent January 17, 2017. I. Introduction On November 21, 2016, NASDAQ BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to amend the eligibility requirements for its Price Improvement Auction mechanism (‘‘PRISM’’ or ‘‘Auction’’) and make permanent those aspects of the PRISM auction that are currently operating on a pilot basis. The proposed rule change was published for comment in the Federal Register on December 9, 2016.3 The Commission received no comments regarding the proposal. This order approves the proposed rule change. sradovich on DSK3GMQ082PROD with NOTICES II. Description of the Proposal The Exchange established PRISM in November 2015 as a price improvement 32 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 79465 (December 5, 2016), 81 FR 89167 (‘‘Notice’’). 1 15 VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 mechanism.4 Pursuant to Chapter VI, Section 9 of the BX Options Rules, a Participant (an ‘‘Initiating Participant’’) may electronically submit for execution an order it represents as agent on behalf of a Public Customer,5 Professional customer, broker dealer, or any other entity (‘‘PRISM Order’’) against principal interest or against any other order it represents as agent (an ‘‘Initiating Order’’), provided it submits the PRISM Order for electronic execution into the Auction. Parts of PRISM are currently operating on a pilot basis (‘‘Pilot’’),6 which is set to expire on January 18, 2017.7 The Exchange proposes to make the Pilot permanent, and also proposes to amend the Auction eligibility requirements for certain PRISM Orders of less than 50 option contracts. A. PRISM Eligibility Requirements for PRISM Orders of Fewer Than 50 Contracts Currently, a PRISM Auction may be initiated if certain conditions are met. If the PRISM Order is for the account of a Public Customer, the Initiating Participant must stop the entire PRISM Order at a price that is equal to or better than the National Best Bid/Offer (‘‘NBBO’’) on the opposite side of the market from the PRISM Order, provided that such price must be at least one minimum trading increment (specified in Chapter VI, Section 5 of the BX Options Rules) better than any limit order on the limit order book on the same side of the market as the PRISM Order.8 If the PRISM Order is for the account of a broker dealer or any other 4 See Securities Exchange Release No. 76301 (October 29, 2015), 80 FR 68347 (November 4, 2015) (SR–BX–2015–032) (‘‘PRISM Approval Order’’). 5 A Public Customer means a person that is not a broker or dealer in securities. See Chapter I, Section 1(a)(50) of the BX Options Rules. A ‘‘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). A Participant or a Public Customer may, without limitation, be a Professional. All Professional orders shall be appropriately marked by Participants. See Chapter I, Section 1(a)(49) of the BX Options Rules. For purposes of PRISM rule, a Public Customer order does not include a Professional order. See Chapter VI, Section 9 of the BX Options Rules. 6 Three components of PRISM were approved by the Commission on a pilot basis: (1) The early conclusion of the PRISM Auction; (2) the provision that an unrelated market or marketable limit order (against the BX BBO) on the opposite side of the market from the PRISM Order received during the Auction will not cause the Auction to end early and will execute against interest outside of the Auction; and (3) no minimum size requirement of orders. 7 See Securities Exchange Act Release No. 78249 (July 7, 2016), 81 FR 45334 (July 13, 2016) (SR–BX– 2016–038). 8 See Chapter VI, Section 9(i)(A) of the BX Options Rules. PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 8235 person or entity that is not a Public Customer, the Initiating Participant must stop the entire PRISM Order at a price that is the better of: (i) The BX BBO price improved by at least the minimum trading increment on the same side of the market as the PRISM Order, or (ii) the PRISM Order’s limit price (if the order is a limit order), provided in either case that such price is at or better than the NBBO.9 BX proposes to amend the Auction eligibility requirements to require that, if the PRISM Order is for less than 50 option contracts, and if the difference between the NBBO is $0.01, the Initiating Participant must stop the entire PRISM Order at one minimum price improvement increment better than the NBBO on the opposite side of the market from the PRISM Order, and better than any limit order on the limit order book on the same side of the market as the PRISM Order. Thus, BX would require that the PRISM Order receive at least $0.01 price improvement if that PRISM Order is for less than 50 contracts and if the difference between the NBBO is $0.01. This requirement will apply regardless of whether the PRISM Order is for the account of a Public Customer, or where the PRISM Order is for the account of a broker dealer or any other person or entity that is not a Public Customer. The Exchange will retain the current requirements for Auction eligibility in all other instances. Accordingly, if the PRISM Order is for the account of a Public Customer and such order is for 50 option contracts or more or if the difference between the NBBO is greater than $0.01, the Initiating Participant must stop the entire PRISM Order at a price that is equal to or better than the NBBO on the opposite side of the market from the PRISM Order, provided that such price must be at least one minimum trading increment better than any limit order on the limit order book on the same side of the market as the PRISM Order. If the PRISM Order is for the account of a broker dealer or any other person or entity that is not a Public Customer and such order is for 50 option contracts or more, or if the difference between the NBBO is greater than $0.01, the Initiating Participant must stop the entire PRISM Order at a price that is the better of: (i) The BX BBO price improved by at least the Minimum Increment on the same side of the market as the PRISM Order, or (ii) the PRISM Order’s limit price (if the order is a limit order), provided in 9 See Chapter VI, Section 9(i)(B) of the BX Options Rules. E:\FR\FM\24JAN1.SGM 24JAN1

Agencies

[Federal Register Volume 82, Number 14 (Tuesday, January 24, 2017)]
[Notices]
[Pages 8230-8235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01464]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79809; File No. SR-NASDAQ-2017-001]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Transaction Fees To Implement New Incentive

January 17, 2017.
    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 January 3, 2017, 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.
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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. Nasdaq proposes to implement a 
new incentive for NOM Participants that add liquidity for Customer and 
Professional orders in Penny and Non-Penny Pilot Options as described 
further below.
    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

[[Page 8231]]

Exchange has prepared summaries, set forth in sections A, B, and C 
below, of the most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to create an alternative method for earning a 
rebate for adding liquidity for both Customers \3\ and Professionals 
\4\ in Penny Pilot \5\ and Non-Penny Pilot Options. For Customers and 
Professionals transacting in Penny Pilot Options, the Exchange 
currently pays a volume-based tiered rebate to add liquidity. That 
rebate consists of 8 tiers, ranging from $0.20 per contract to $0.48 
per contract, with the volume requirements increasing with each tier. 
Thus, a NOM Participant would qualify for a rebate of $0.20 per 
contract in Tier 1 for Customers and Professionals if it added 
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. In comparison, a 
Participant would qualify for a rebate of $0.48 in Tier 8 for Customers 
and Professionals if it 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 if 
the Participant adds: (1) Customer and/or Professional liquidity in 
Penny Pilot Options and/or Non-Penny Pilot Options of 0.25% or more of 
total industry customer equity and ETF option ADV contracts per day in 
a month, and (2) has added liquidity in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent 1.00% or more of 
Consolidated Volume in a month or qualifies for MARS.\6\
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    \3\ The term ``Customer'' or (``C'') applies to any transaction 
that is identified by a Participant for clearing in the Customer 
range at The Options Clearing Corporation (``OCC'') which is not for 
the account of broker or dealer or for the account of a 
``Professional'' (as that term is defined in Chapter I, Section 
1(a)(48)).
    \4\ The term ``Professional'' or (``P'') 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) pursuant 
to Chapter I, Section 1(a)(48). All Professional orders shall be 
appropriately marked by Participants.
    \5\ The Penny Pilot was established in March 2008. See 
Securities Exchange Act Release No. 57579 (March 28, 2008), 73 FR 
18587 (April 4, 2008) (SR-NASDAQ-2008-026) (notice of filing and 
immediate effectiveness establishing Penny Pilot). Since that date, 
the Penny Pilot has been expanded and is currently extended through 
December 31, 2016 or the date of permanent approval, if earlier. See 
Securities Exchange Act Release No. 78037 (June 10, 2016), 81 FR 
39299 (June 16, 2016) (SR-NASDAQ-2016-052).
    \6\ MARS refers to the Market Access and Routing Subsidy, which 
is set forth in Chapter XV, Section 6 [sic]. The MARS payment 
comprises four volume-based tiers, and is paid to NOM Participants 
that route eligible contracts to NOM through a participating NOM 
Participant's System. The MARS Payment will be paid on all executed 
Eligible Contracts that add liquidity. See NOM Rules at Chapter XV, 
Section 6 [sic].
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    Currently, Customers and Professionals transacting in Non-Penny 
Pilot Options on NOM receive a $0.80 per contract Rebate to Add 
Liquidity. In addition, a Participant that qualifies for a Customer or 
Professional Penny Pilot Options Rebate to Add Liquidity in Tiers 2, 3, 
4, 5 or 6 in a month will receive an additional $0.10 per contract Non-
Penny Pilot Options Rebate to Add Liquidity for each transaction which 
adds liquidity in Non-Penny Pilot Options in that month. A Participant 
that qualifies for a Customer or Professional Penny Pilot Options 
Rebate to Add Liquidity in Tiers 7 or 8 in a month will receive an 
additional $0.20 per contract Non-Penny Pilot Options Rebate to Add 
Liquidity for each transaction which adds liquidity in Non-Penny Pilot 
Options in that month.
    Furthermore, a Participant that may receive a $0.53 per contract 
Rebate to Add Liquidity in Penny Pilot Options as a Customer or 
Professional, and $1.00 per contract Rebate to Add Liquidity in Non-
Penny Pilot Options as a Customer or Professional, if that NOM 
Participant transacts on the NASDAQ Stock Market through one or more of 
its Nasdaq Market Center MPIDs in the same month, and such transactions 
in all securities on the NASDAQ Stock Market that month through all of 
its Nasdaq Market Center MPIDs represent 3.00% or more of Consolidated 
Volume.\7\ Participants that qualify for this rebate would not be 
eligible for any other rebates in Tiers 1 through 8 or other rebate 
incentives on NOM for Customer and Professional order flow in Chapter 
XV, Section 2(1) of NOM Rules.\8\
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    \7\ Consolidated Volume would be determined as set forth in 
Nasdaq Rule 7018(a).
    \8\ In calculating total volume, the Exchange will add the NOM 
Participant's total volume transacted on the NASDAQ Stock Market in 
a given month across its Nasdaq Market Center MPIDs, and will divide 
this number by the total industry Consolidated Volume.
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    The Exchange proposes an additional incentive to a Participant that 
adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
above 1.45% of total industry customer equity and ETF option ADV 
contracts per day in a month, (b) executes greater than 0.04% of 
Consolidated Volume (``CV'') \9\ via Market-on-Close/Limit-on-Close 
(``MOC/LOC'') \10\ volume within the NASDAQ Stock Market Closing Cross 
within a month, and (c) adds greater than 1.5 million shares per day of 
non-displayed volume within the NASDAQ Stock Market within a month. The 
Participant would receive a $0.55 per contract rebate to add liquidity 
in Penny Pilot Options as Customer or Professional and $1.05 per 
contract rebate to add liquidity in Non-Penny Pilot Options as Customer 
or Professional. Participants that qualify for this rebate would not be 
eligible for any other rebates in Tiers 1-8 or other rebate incentives 
on NOM for Customer and Professional order flow in Chapter XV, Section 
2(1). The Exchange believes that the new incentives will attract a 
greater amount of order flow on NOM by offering a discounted rate.
---------------------------------------------------------------------------

    \9\ See note 7 above.
    \10\ MOC/LOC, as set forth in NASDAQ Rule 4754, represents the 
volume in the NASDAQ Stock Market Closing Cross that allows market 
participants to contribute order flow that will result in executions 
at the official closing price for the day in the NASDAQ listed 
security. A ``MOC Order'' is an order type entered without a price 
that may be executed only during the NASDAQ Closing Cross, which 
refers to the equity closing cross. A ``LOC Order'' is an order type 
entered with a price that may be executed only in the NASDAQ Closing 
Cross.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its

[[Page 8232]]

broader forms that are most important to investors and listed 
companies.'' \13\
---------------------------------------------------------------------------

    \13\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission 
\14\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of 
a market-based approach in evaluating the fairness of market data fees 
against a challenge claiming that Congress mandated a cost-based 
approach.\15\ As the court emphasized, the Commission ``intended in 
Regulation NMS that `market forces, rather than regulatory 
requirements' play a role in determining the market data . . . to be 
made available to investors and at what cost.'' \16\
---------------------------------------------------------------------------

    \14\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \15\ See NetCoalition, at 534-535.
    \16\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers' . . . . '' \17\ Although the court and 
the SEC were discussing the cash equities markets, the Exchange 
believes that these views apply with equal force to the options 
markets.
---------------------------------------------------------------------------

    \17\ Id. at 539 (quoting Securities Exchange Act Release No. 
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) 
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------

    The Exchange notes that the purpose of the proposed rebates is to 
incentivize NOM Participants to transact greater volume on NOM and the 
NASDAQ Stock Market in order to qualify for a higher rebate on NOM. The 
Exchange believes that the amount of the rebate ($0.55 per contract for 
Penny Pilot Options and $1.05 per contract for Non-Penny Pilot Options) 
along with the various criteria for qualifying for the rebate ((a) add 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer 
liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 
1.45% of total industry customer equity and ETF option ADV contracts 
per day in a month, (b) execute greater than 0.04% of Consolidated 
Volume (``CV'') via Market-on-Close/Limit-on-Close (``MOC/LOC'') volume 
within the NASDAQ Stock Market Closing Cross within a month, and (c) 
add greater than 1.5 million shares per day of non-displayed within the 
NASDAQ Stock Market within a month) are reasonable. With respect to the 
rebate for Penny Pilot Options, the Exchange notes that the proposed 
$0.55 per contract rebate is higher than the currently highest rebate 
available ($0.53 per contract) to Customers and Professionals for 
adding liquidity in Penny Pilot Options.\18\ The Exchange believes the 
proposed rebate of $0.55 per contract is reasonable because the 
proposed rebate requires three components ((a) add Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Pilot Options and/or Non-Penny Pilot Options above 1.45% of 
total industry customer equity and ETF option ADV contracts per day in 
a month, (b) execute greater than 0.04% of Consolidated Volume (``CV'') 
via Market-on-Close/Limit-on-Close (``MOC/LOC'') volume within the 
NASDAQ Stock Market Closing Cross within a month, and (c) add greater 
than 1.5 million shares per day of non-displayed volume within the 
NASDAQ Stock Market within a month) to be met by NOM Participants in 
order to qualify for that rebate. These requirements require more 
volume to be submitted on NOM than the current highest rebate requires 
today. Similarly, the Exchange believes the proposed $1.05 rebate per 
contract for Non-Penny Pilot Options is reasonable for similar reasons. 
The requirements to obtain this rebate require more volume to be 
submitted on NOM.
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    \18\ As noted above, a NOM Participant will receive a rebate of 
$0.48 per contract for adding liquidity as a Customer or 
Professional in Penny Pilot Options if it qualifies for Tier 8. In 
addition, as noted in footnote c of Chapter XV, Section 2, a NOM 
Participant may receive an additional rebate of up to $0.05 per 
contract in Penny Pilot Options, for a total rebate of $0.53 per 
contract. Specifically, Participants that: (1) 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 and/or Professional Rebate to 
Add Liquidity for each transaction which adds liquidity in Penny 
Pilot Options in that month; or (2) add Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Pilot Options and/or Non-Penny Pilot Options of 1.30% or more of 
total industry customer equity and ETF option ADV contracts per day 
in a month will receive an additional $0.05 per contract Penny Pilot 
Options Customer and/or Professional Rebate to Add Liquidity for 
each transaction which adds liquidity in Penny Pilot Options in that 
month; or (3) (a) add Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer 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, (b) add 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Non-Penny Pilot Options above 0.15% of total 
industry customer equity and ETF option ADV contracts per day in a 
month, and (c) execute greater than 0.04% of Consolidated Volume 
(``CV'') via Market-on-Close/Limit-on-Close (``MOC/LOC'') volume 
within the NASDAQ Stock Market Closing Cross within a month will 
receive an additional $0.05 per contract Penny Pilot Options 
Customer and/or Professional Rebate to Add Liquidity for each 
transaction which adds liquidity in Penny Pilot Options in a month. 
Consolidated Volume shall mean the total consolidated volume 
reported to all consolidated transaction reporting plans by all 
exchanges and trade reporting facilities during a month in equity 
securities, excluding executed orders with a size of less than one 
round lot. For purposes of calculating Consolidated Volume and the 
extent of an equity member's trading activity, expressed as a 
percentage of or ratio to Consolidated Volume, the date of the 
annual reconstitution of the Russell Investments Indexes shall be 
excluded from both total Consolidated Volume and the member's 
trading activity.
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    The Exchange believes that the requirement that a NOM Participant 
add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
above 1.45% of total industry customer equity and ETF option ADV 
contracts per day in a month, execute greater than 0.04% of 
Consolidated Volume (``CV'') via Market-on-Close/Limit-on-Close (``MOC/
LOC'') volume within the NASDAQ Stock Market Closing Cross within a 
month, and add greater than 1.5 million shares per day of non-displayed 
volume within the NASDAQ Stock Market within a month is reasonable 
because the Exchange is offering to pay a rebate of $0.55 per contract, 
the highest rebate. These more stringent volume-based requirements 
bring a greater amount of volume to both NOM and the NASDAQ Stock 
Market. The first volume requirement, which requires volume to be added 
to NOM, is reasonable because it is similar to that required to qualify 
for certain NOM Market Maker discounted remove fees.\19\ The second 
volume requirement

[[Page 8233]]

to execute greater than 0.04% of Consolidated Volume (``CV'') via 
Market-on-Close/Limit-on-Close (``MOC/LOC'') volume within the NASDAQ 
Stock Market Closing Cross within a month is reasonable because it is 
one of the same requirements to qualify for note ``c'' in Chapter XV, 
Section 2 of NOM Rules.\20\ The third volume requirement to add greater 
than 1.5 million shares per day of non-displayed volume within the 
NASDAQ Stock Market within a month is a new requirement, which must be 
met in addition to the first and second volume requirements. The 
Exchange believes that this requirement is reasonable because linking 
rebates on NOM to activity on the NASDAQ Stock Market is not novel. The 
Exchange believes that requiring Participants to add non-displayed 
volume within the NASDAQ Stock Market is reasonable because this type 
of liquidity benefits all market participants by way of interacting 
with that liquidity on the equity market.\21\ By encouraging market 
participants to increase their participation on the equities market by 
delivering non-displayed volume, the Exchange is rewarding Participants 
with an opportunity to earn an additional options incentive, provided 
all requirements are met. The Exchange notes that previous and current 
rebates offered by NOM relate to activity on the NASDAQ Stock 
Market.\22\ Similarly, the NASDAQ Stock Market offers enhanced rebates 
that are based on activity on NOM.\23\ Moreover, the Exchange notes 
that any NOM Options Participant may trade equities on the NASDAQ Stock 
Market because they are approved members.\24\
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    \19\ See note ``2'' of Chapter XV, Section 2 of NOM Rules. The 
note ``2 ``rebate is offered to Non-NOM Market Makers and NOM Market 
Makers that add 1.30% of Customer, Professional, Firm, Broker-Dealer 
or Non-NOM Market Maker liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of total industry customer equity and ETF option 
ADV contracts per day in a month will be subject to the following 
pricing applicable to executions: A $0.48 per contract Penny Pilot 
Options Fee for Removing Liquidity when the Participant is (i) both 
the buyer and the seller or (ii) the Participant removes liquidity 
from another Participant under Common Ownership. In the alternative, 
Participants that add 1.50% of Customer, Professional, Firm, Broker-
Dealer or Non-NOM Market Maker liquidity in Penny Pilot Options and/
or Non-Penny Pilot Options of total industry customer equity and ETF 
option ADV contracts per day in a month and meet or exceed the cap 
for the NASDAQ Stock Market Opening Cross during the month will be 
subject to the following pricing applicable to executions less than 
10,000 contracts: A $0.32 per contract Penny Pilot Options Fee for 
Removing Liquidity when the Participant is (i) both the buyer and 
seller or (ii) the Participant removes liquidity from another 
Participant under Common Ownership. Finally, Participants that add 
1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM 
Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot 
Options of total industry customer equity and ETF option ADV 
contracts per day in a month will be subject to the following 
pricing applicable to executions less than 10,000 contracts: A $0.32 
per contract Penny Pilot Options Fee for Removing Liquidity when the 
Participant is (i) both the buyer and seller or (ii) the Participant 
removes liquidity from another Participant under Common Ownership.
    \20\ Note ``c'' of Chapter XV, Section 2 pays an additional 
$0.05 per contract Penny Pilot Options Customer and/or Professional 
Rebate to Add Liquidity, in addition to the Tier 8 rebate of $0.48 
per contract if a Participant: (1) Adds 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 and/or Professional Rebate to Add Liquidity for 
each transaction which adds liquidity in Penny Pilot Options in that 
month; or (2) adds Customer, Professional, Firm, Non-NOM Market 
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or 
Non-Penny Pilot Options of 1.30% or more of total industry customer 
equity and ETF option ADV contracts per day in a month will receive 
an additional $0.05 per contract Penny Pilot Options Customer and/or 
Professional Rebate to Add Liquidity for each transaction which adds 
liquidity in Penny Pilot Options in that month; or (3) (a) adds 
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot 
Options above 0.80% of total industry customer equity and ETF option 
ADV contracts per day in a month, (b) adds Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Non-
Penny Pilot Options above 0.15% of total industry customer equity 
and ETF option ADV contracts per day in a month, and (c) executes 
greater than 0.04% of Consolidated Volume (``CV'') via Market-on-
Close/Limit-on-Close (``MOC/LOC'') volume within the NASDAQ Stock 
Market Closing Cross within a month.
    \21\ Orders that are non-displayed would not be disseminated on 
the NASDAQ Stock Market Order Book feed. A Participant may be 
incentivized to increase their participation on the NASDAQ Stock 
Market, which may result in interacting with such non-displayed 
volume. Increased order interaction benefits all market 
participants.
    \22\ See current note ``e'' of Chapter XV, Section IV [sic] of 
NOM Rules which provides a rebate to NOM Participants that transact 
in all securities through one or more of its Nasdaq Market Center 
MPIDs that represent 3.00% or more of Consolidated Volume in the 
same month on the NASDAQ Stock Market.
    \23\ For example, Nasdaq provides an enhanced rebate on the 
NASDAQ Stock Market of $0.00295 if the member adds 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 ADV in the customer clearing range 
for Equity and ETF option contracts per day in a month on NOM. See 
Nasdaq Rule 7018.
    \24\ Although a NOM Participant may incur additional labor and/
or costs to establish connectivity to the NASDAQ Stock Market, there 
are no additional membership fees for NOM Participants that want to 
transact on the NASDAQ Stock Market.
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    Further, the Exchange believes it is reasonable to make this rebate 
exclusive of any other rebates in Tiers 1 through 8 or other rebate 
incentives on NOM for Customer and Professional order flow in Chapter 
XV, Section 2(1) of NOM Rules. As noted above, the proposed rebates are 
higher, and in some cases significantly higher, than the rebates that a 
NOM Participant may currently receive for adding liquidity in Penny 
Pilot and Non-Penny Pilot Options as a Customer or Professional. Given 
the size of the proposed rebates, the Exchange believes it is 
reasonable to make these rebates exclusive of other rebates on NOM for 
Customer and Professional order flow. Finally, the Exchange also 
believes the proposal is reasonable because the proposed rebates apply 
to both transactions in Penny Pilot and Non-Penny Pilot Options.
    The Exchange believes that the amount of the rebate ($0.55 per 
contract for Penny Pilot Options and $1.05 per contract for Non-Penny 
Pilot Options) along with the various criteria for qualifying for the 
rebate ((a) add Customer, Professional, Firm, Non-NOM Market Maker and/
or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny 
Pilot Options above 1.45% of total industry customer equity and ETF 
option ADV contracts per day in a month, (b) execute greater than 0.04% 
of Consolidated Volume (``CV'') via Market-on-Close/Limit-on-Close 
(``MOC/LOC'') volume within the NASDAQ Stock Market Closing Cross 
within a month, and (c) add greater than 1.5 million shares per day of 
non-displayed within the NASDAQ Stock Market within a month) is 
equitable and not unfairly discriminatory because any Participant that 
qualifies for this rebate will be uniformly paid $0.55 per contract for 
Penny Pilot Options and $1.05 per contract for Non-Penny Pilot Options. 
The requirements for earning this rebate will be applied uniformly to 
all market participants. The Exchange believes that requiring 
Participants to add non-displayed volume is equitable and not unfairly 
discriminatory because the Exchange will pay the incentive, in a 
uniform manner, to Participants that have met all criteria required for 
the rebate.
    The Exchange believes that the requirement that a NOM Participant 
add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options 
above 1.45% of total industry customer equity and ETF option ADV 
contracts per day in a month, execute greater than 0.04% of 
Consolidated Volume (``CV'') via Market-on-Close/Limit-on-Close (``MOC/
LOC'') volume within the NASDAQ Stock Market Closing Cross within a 
month, and add greater than 1.5 million shares per day of non-displayed 
volume within the NASDAQ Stock Market within a month is equitable and 
not unfairly discriminatory because while the requirements for 
qualifying for the proposed rebates may be more stringent than other 
requirements for qualifying for other rebates currently offered by NOM, 
the Exchange believes that these requirements are proportionate to the 
amount of the proposed rebates and equitably reflect the purpose of the 
proposed rebates, which is to incentivize NOM Participants to transact 
greater volume on NOM and the NASDAQ Stock Market. Moreover, all 
similarly-situated NOM Participants, e.g., those that add liquidity in 
either Penny Pilot or Non-Penny Pilot Options as either Customers or 
Professionals and also transact on the NASDAQ Stock

[[Page 8234]]

Market, are equally capable of qualifying for the proposed rebates, and 
the same rebates will be paid to all NOM Participants that qualify for 
them. Further, the Exchange believes that it is equitable and not 
unfairly discriminatory to offer this rebate to NOM Participants that 
add liquidity as Customers or Professionals, and not to offer this 
rebate to NOM Participants that add liquidity as Firms,\25\ NOM Market 
Makers,\26\ Non-NOM Market Makers, or Broker-Dealers.\27\ Nasdaq notes 
that Customer liquidity offers unique benefits to the market which 
benefits all market participants by providing more trading 
opportunities, which attracts Specialists and Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange believes that encouraging Participants to add Professional 
liquidity is similarly beneficial, as the rebates may cause market 
participants to select NOM as a venue to send Professional order flow, 
increasing competition among the exchanges. As with Customer liquidity, 
the Exchange believes that increased Professional additional order flow 
should benefit other market participants.
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    \25\ The term ``Firm'' or (``F'') applies to any transaction 
that is identified by a Participant for clearing in the Firm range 
at OCC.
    \26\ The term ``NOM Market Maker'' or (``M'') 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.
    \27\ The term ``Broker-Dealer'' or (``B'') applies to any 
transaction which is not subject to any of the other transaction 
fees applicable within a particular category.
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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. 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 the proposed rebates will impose 
any burden on competition that is not necessary or appropriate. The 
Exchange notes that the purpose of the proposed rebate is to 
incentivize NOM Participants to transact on NOM and the NASDAQ Stock 
Market. All similarly-situated NOM Participants, e.g., those that add 
liquidity in either Penny Pilot or Non-Penny Pilot Options as either 
Customers or Professionals and also transact the requisite volumes on 
the NASDAQ Stock Market, are equally capable of qualifying for the 
proposed rebates. Additionally, the Exchange will pay the same rebates, 
in a uniform manner, to all NOM Participants that qualify for them. The 
Exchange believes that Customer and Professional order flow provides 
unique benefits to all participants on the Exchange and may even 
facilitate inter-market competition, and is therefore offering the 
proposed rebates to NOM Participants that add liquidity as either a 
Customer or a Professional accordingly. With respect to linking the 
proposed rebates to a participant's activity on the NASDAQ Stock 
Market, NOM currently offers rebates that are based on activity on the 
NASDAQ Stock Market.\28\ Similarly, the NASDAQ Stock Market currently 
offers reduced transaction fees that are based on activity on NOM.\29\ 
Finally, because they are approved members, any NOM Options Participant 
may trade equities on the NASDAQ Stock Market and therefore attempt to 
qualify for the proposed rebates.\30\
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    \28\ See note 22 above.
    \29\ See note 23 above.
    \30\ See note 24 above.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\31\
---------------------------------------------------------------------------

    \31\ 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-2017-001 on the subject line.

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-2017-001. 
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

[[Page 8235]]

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-2017-001 and should be submitted on or before 
February 14, 2017.
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    \32\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01464 Filed 1-23-17; 8:45 am]
 BILLING CODE 8011-01-P