Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Customer and Professional Penny Pilot Options Tier 8 Rebate To Add Liquidity, 32731-32734 [2017-14891]
Download as PDF
<![CDATA[
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 135 / Monday, July 17, 2017 / Notices
(e.g., if the software can be downloaded
over the internet after being
purchased).18 In the case of any
exchange, it is costly to build and
maintain a trading platform, but the
incremental cost of trading each
additional share on an existing platform,
or distributing an additional instance of
data, is very low. Market information
and executions are each produced
jointly (in the sense that the activities of
trading and placing orders are the
source of the information that is
distributed) and are each subject to
significant scale economies.
Competition among trading platforms
can be expected to constrain the
aggregate return each platform earns
from the sale of its joint products. The
level of competition and contestability
in the market is evident in the
numerous alternative venues that
compete for order flow, including SRO
markets, as well as internalizing BDs
and various forms of alternative trading
systems (‘‘ATSs’’), including dark pools
and electronic communication networks
(‘‘ECNs’’). Each SRO market competes to
produce transaction reports via trade
executions. It is common for BDs to
further and exploit this competition by
sending their order flow and transaction
reports to multiple markets, rather than
providing them all to a single market.
Competitive markets for order flow,
executions, and transaction reports
provide pricing discipline for the inputs
of proprietary data products. The large
number of SROs, TRFs, BDs, and ATSs
that currently produce proprietary data
or are currently capable of producing it
provides further pricing discipline for
proprietary data products. Each SRO,
TRF, ATS, and BD is currently
permitted to produce proprietary data
products, and many currently do or
have announced plans to do so,
including Nasdaq, NYSE, NYSE MKT,
NYSE Arca, and the BATS exchanges.
As noted above, the very fact that the
Exchange is proposing to provide a
sample of PHOTO Historical Data free of
charge to generate potential customer
interest is itself evidence of a
competitive market.
In this competitive environment, an
‘‘excessive’’ price for one product will
have to be reflected in lower prices for
other products sold by the Exchange, or
otherwise the Exchange may experience
a loss in sales that may adversely affect
its profitability. In this case, the
proposed rule change enhances
competition by lowering the price of the
18 See William J. Baumol and Daniel G. Swanson,
‘‘The New Economy and Ubiquitous Competitive
Price Discrimination: Identifying Defensible Criteria
of Market Power,’’ Antitrust Law Journal, Vol. 70,
No. 3 (2003).
VerDate Sep<11>2014
17:45 Jul 14, 2017
Jkt 241001
product through distribution of free
samples. As such, the Exchange believes
that the proposed changes will enhance,
and not impair, competition in the
financial markets.
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.19
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–
Phlx–2017–53 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–Phlx–2017–53. 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
PO 00000
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2017–53, and should be submitted on or
before August 7, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017–14887 Filed 7–14–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81121; File No. SR–
NASDAQ–2017–067]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Customer and Professional Penny
Pilot Options Tier 8 Rebate To Add
Liquidity
July 11, 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 June 30,
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
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
19 15
U.S.C. 78s(b)(3)(A)(ii).
Frm 00056
Fmt 4703
Sfmt 4703
32731
E:\FR\FM\17JYN1.SGM
17JYN1
32732
Federal Register / Vol. 82, No. 135 / Monday, July 17, 2017 / Notices
solicit comments on the proposed rule
change from interested persons.
at the Commission’s Public Reference
Room.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The Exchange proposes to modify the
NASDAQ Options Market LLC’s
(‘‘NOM’’) pricing at Chapter XV, Section
2(1), to amend the Customer 3 and
Professional 4 Penny Pilot Options Tier
8 Rebate to Add Liquidity.
While changes to the Pricing
Schedule pursuant to this proposal are
effective upon filing, the Exchange has
designated these changes to be operative
on July 3, 2017.
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
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Customer and Professional Penny Pilot
Options Rebate to Add Liquidity tiers.
Specifically, the Exchange proposes to
amend the current qualifications related
to the Tier 8 Customer and Professional
Penny Pilot Options rebate. The
proposed new Tier 8 qualifications
should continue to attract Customer and
Professional order flow to NOM. This
order flow benefits other market
participants through order interaction.
Today, the Exchange pays Customer
and Professional Penny Pilot Options
Rebates to Add Liquidity as follows:
Rebate to add
liquidity
Tier
Monthly volume
1 ..........................
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and ETF option average daily volume (‘‘ADV’’) contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options above 0.40% to 0.75% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant has Total Volume of 100,000 or more contracts per day in a month, of which 25,000 or
more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options.
Participant has Total Volume of 150,000 or more contracts per day in a month, of which 50,000 or
more contracts per day in a month must be Customer and/or Professional liquidity in Penny Pilot Options.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options above 0.75% or more of total industry customer equity and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer
and/or Professional liquidity in Penny Pilot Options and/or 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 (defined below).
2 ..........................
3 ..........................
4 ..........................
5 ..........................
6 ..........................
7 ..........................
8 ..........................
$0.20
0.25
0.42
0.43
0.45
0.45
0.47
0.48
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Today, the Exchange pays a $0.48 per
contract rebate 5 to Participants that
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.’’ See Chapter XV.
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 approximately marked by Participants.
5 Note ‘‘c,’’ which is applicable to the Tier 8
rebate, provides additional rebates to Participants
that: (1) Add Customer, Professional, Firm, Non-
VerDate Sep<11>2014
17:45 Jul 14, 2017
Jkt 241001
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
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
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-onClose/Limit-on-Close (‘‘MOC/LOC’’) volume within
the NASDAQ Stock Market Closing Cross within a
month will receive an additional $0.05 per contract
E:\FR\FM\17JYN1.SGM
17JYN1
Federal Register / Vol. 82, No. 135 / Monday, July 17, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
qualify for a Tier 8 Customer or
Professional Penny Pilot Options Rebate
to Add Liquidity by adding Customer,
Professional, Firm,6 Non-NOM Market
Maker 7 and/or Broker-Dealer 8 liquidity
in Penny Pilot Options and/or NonPenny Pilot Options above 0.75% or
more of total industry customer equity
and ETF option ADV contracts per day
in a month, or adding: (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.9
The Exchange is proposing to
continue to pay a $0.48 per contract
rebate provided, a NOM Participant
adds Customer, Professional, Firm, NonNOM Market Maker and/or BrokerDealer liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options above
0.75% or more of total industry
customer equity and ETF option ADV
contracts per day in a month, or
Participant adds: (1) Customer and/or
Professional liquidity in Penny Pilot
Options and/or Non-Penny Pilot
Options of 0.20% 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
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.
6 The term ‘‘Firm’’ or (‘‘F’’) applies to any
transaction that is identified by a Participant for
clearing in the Firm range at OCC.
7 The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is
a registered market maker on another options
exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to
NOM.
8 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.
9 NOM Participants that have System Eligibility
and have executed the requisite number of Eligible
Contracts in a month are paid MARS rebates based
on average daily volume in a month. See Chapter
XV, Section 2(6).
VerDate Sep<11>2014
17:45 Jul 14, 2017
Jkt 241001
represent 1.00% or more of
Consolidated Volume in a month or
qualifies for MARS.
The Exchange’s proposal to amend
the current qualification from 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 to 0.20% or more of total
industry customer equity and ETF
option ADV contracts per day in a
month should provide Participants the
ability to qualify for this tier by
executing less contracts which represent
industry volume in a given month. The
Exchange believes that this amendment
should incentivize Participants to
transact more volume to qualify for a
Tier 8 rebate since one of the qualifiers
requires a lower percentage of total
industry customer equity and ETF
option ADV contracts per day in a
month as compared to the current
percentage.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,11 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 Exchange’s proposal to amend
the current qualifications related to the
Tier 8 Customer and Professional Penny
Pilot Options Rebate to Add Liquidity is
reasonable because the rebate should
continue to attract Customer and
Professional order flow to NOM. The
additional Customer and Professional
order flow to NOM benefits other
market participants by providing
additional liquidity with which to
interact. Customer liquidity offers
unique benefits to the market which
benefits all market participants.
Customer liquidity benefits all market
participants by providing more trading
opportunities, which attracts 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 creates
competition among options exchanges
PO 00000
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
Frm 00058
Fmt 4703
Sfmt 4703
32733
because the Exchange believes that the
rebates may cause market participants to
select NOM as a venue to send
Professional order flow. Amending the
current qualification 0.25% or more of
total industry customer equity and ETF
option ADV contracts to 0.20% or more
of total industry customer equity and
ETF option ADV contracts affords
Participants the ability to qualify for this
Tier 8 because it requires less volume as
a result of the proposed lower
percentage of industry volume. With
this proposal, Participants that
consistently send order flow to the
Exchange may continue to qualify for
Tier 8 rebates and other Participants
may send additional order flow to
qualify for a Tier 8 rebate with the lower
requirement.
The Exchange’s proposal to amend
the current qualifications related to the
Tier 8 Customer and Professional Penny
Pilot Options Rebate to Add Liquidity is
equitable and not unfairly
discriminatory because all Participants
are eligible to earn rebates. These
rebates would be uniformly paid to all
qualifying Participants.
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. The
proposed pricing change is competitive
and does not impose a burden on intermarket competition. If the change
proposed herein is unattractive to
market participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed change
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
The Exchange’s proposal to amend
the current qualifications related to the
Tier 8 Customer and Professional Penny
Pilot Options Rebate to Add Liquidity
does not impose an undue burden on
intra-market competition because all
Participants are eligible to earn rebates
and these rebates would be uniformly
paid to all qualifying Participants.
E:\FR\FM\17JYN1.SGM
17JYN1
32734
Federal Register / Vol. 82, No. 135 / Monday, July 17, 2017 / 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.12
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.
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–2017–067 and should be
submitted on or before August 7, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017–14891 Filed 7–14–17; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2017–067 on the subject line.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Nasdaq Rule 5705(b) To Provide for the
Inclusion of Cash in an Index or
Portfolio Underlying a Series of Index
Fund Shares
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–2017–067. 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
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81120; File No. SR–
NASDAQ–2017–062]
July 11, 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 June 30,
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 and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Nasdaq Rule 5705(b) to provide for the
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
12 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
17:45 Jul 14, 2017
Jkt 241001
PO 00000
Frm 00059
Fmt 4703
Sfmt 4703
inclusion of cash in an index or
portfolio underlying a series of Index
Fund Shares. This filing is substantively
identical to a NYSE Arca, Inc. filing
previously approved by the Commission
(SR–NYSEArca–2017–30, as amended).3
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 amend
Nasdaq Rule 5705(b)(3) and 5705(b)(4)
to provide for the inclusion of cash in
an index or portfolio underlying a series
of Index Fund Shares.4 Nasdaq Rule
5705(b) provides ‘‘generic’’ criteria
permitting listing and trading of Index
Fund Shares pursuant to Rule 19b–4(e)
under the Act 5 when the underlying
index or portfolio satisfies the criteria
set forth in Nasdaq Rule 5705(b).
The Exchange understands that
certain index providers have included,
or intend to include, cash as a
component in indexes or portfolios that
also include equity or fixed income
securities components. An index
provider may, for example, provide a
certain index weighting allocation to
cash or may periodically change an
allocation to cash based on the index
provider’s assessment of market risk
associated with other asset classes in the
applicable index.6
3 See Securities Exchange Act Release No. 80777
(May 25, 2017), 82 FR 25378 (June 1, 2017) (SR–
NYSEArca–2017–30).
4 See Nasdaq Rule 5705(b)(1)(A) and (B).
5 17 CFR 240.19b–4(e).
6 The Exchange notes that shares of the following
exchange-traded funds based on indexes or
portfolios that include cash as a component are
currently listed and traded on the BATS BZX
Exchange, Inc.: QuantX Risk Managed Growth ETF;
E:\FR\FM\17JYN1.SGM
17JYN1
]]>Agencies
[Federal Register Volume 82, Number 135 (Monday, July 17, 2017)]
[Notices]
[Pages 32731-32734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14891]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81121; File No. SR-NASDAQ-2017-067]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Customer and Professional Penny Pilot Options Tier 8 Rebate
To Add Liquidity
July 11, 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 June 30, 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
[[Page 32732]]
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify the NASDAQ Options Market LLC's
(``NOM'') pricing at Chapter XV, Section 2(1), to amend the Customer
\3\ and Professional \4\ Penny Pilot Options Tier 8 Rebate to Add
Liquidity.
---------------------------------------------------------------------------
\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.'' See Chapter XV.
\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
approximately marked by Participants.
---------------------------------------------------------------------------
While changes to the Pricing Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on July 3, 2017.
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Customer and Professional Penny
Pilot Options Rebate to Add Liquidity tiers. Specifically, the Exchange
proposes to amend the current qualifications related to the Tier 8
Customer and Professional Penny Pilot Options rebate. The proposed new
Tier 8 qualifications should continue to attract Customer and
Professional order flow to NOM. This order flow benefits other market
participants through order interaction.
Today, the Exchange pays Customer and Professional Penny Pilot
Options Rebates to Add Liquidity as follows:
----------------------------------------------------------------------------------------------------------------
Rebate to add
Tier Monthly volume liquidity
----------------------------------------------------------------------------------------------------------------
1............................................ Participant adds Customer, Professional, Firm, $0.20
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of up to 0.10% of total
industry customer equity and ETF option
average daily volume (``ADV'') contracts per
day in a month.
2............................................ Participant adds Customer, Professional, Firm, 0.25
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.10% to 0.20% of
total industry customer equity and ETF option
ADV contracts per day in a month.
3............................................ Participant adds Customer, Professional, Firm, 0.42
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.20% to 0.30% of
total industry customer equity and ETF option
ADV contracts per day in a month.
4............................................ Participant adds Customer, Professional, Firm, 0.43
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.30% to 0.40% of
total industry customer equity and ETF option
ADV contracts per day in a month.
5............................................ Participant adds Customer, Professional, Firm, 0.45
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.40% to 0.75% of
total industry customer equity and ETF option
ADV contracts per day in a month.
6............................................ Participant has Total Volume of 100,000 or 0.45
more contracts per day in a month, of which
25,000 or more contracts per day in a month
must be Customer and/or Professional
liquidity in Penny Pilot Options.
7............................................ Participant has Total Volume of 150,000 or 0.47
more contracts per day in a month, of which
50,000 or more contracts per day in a month
must be Customer and/or Professional
liquidity in Penny Pilot Options.
8............................................ Participant adds Customer, Professional, Firm, 0.48
Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.75% or more of
total industry customer equity and ETF option
ADV contracts per day in a month, or
Participant adds: (1) Customer and/or
Professional liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options of 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 (defined below).
----------------------------------------------------------------------------------------------------------------
Today, the Exchange pays a $0.48 per contract rebate \5\ to
Participants that
[[Page 32733]]
qualify for a Tier 8 Customer or Professional Penny Pilot Options
Rebate to Add Liquidity by adding Customer, Professional, Firm,\6\ Non-
NOM Market Maker \7\ and/or Broker-Dealer \8\ liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.75% or more of total
industry customer equity and ETF option ADV contracts per day in a
month, or adding: (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.\9\
---------------------------------------------------------------------------
\5\ Note ``c,'' which is applicable to the Tier 8 rebate,
provides additional rebates to 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.
\6\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC.
\7\ The term ``Non-NOM Market Maker'' or (``O'') is a registered
market maker on another options exchange that is not a NOM Market
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market
Maker designation to orders routed to NOM.
\8\ 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.
\9\ NOM Participants that have System Eligibility and have
executed the requisite number of Eligible Contracts in a month are
paid MARS rebates based on average daily volume in a month. See
Chapter XV, Section 2(6).
---------------------------------------------------------------------------
The Exchange is proposing to continue to pay a $0.48 per contract
rebate provided, a NOM Participant adds Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.75% or more of total
industry customer equity and ETF option ADV contracts per day in a
month, or Participant adds: (1) Customer and/or Professional liquidity
in Penny Pilot Options and/or Non-Penny Pilot Options of 0.20% 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.
The Exchange's proposal to amend the current qualification from
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 to 0.20% or more
of total industry customer equity and ETF option ADV contracts per day
in a month should provide Participants the ability to qualify for this
tier by executing less contracts which represent industry volume in a
given month. The Exchange believes that this amendment should
incentivize Participants to transact more volume to qualify for a Tier
8 rebate since one of the qualifiers requires a lower percentage of
total industry customer equity and ETF option ADV contracts per day in
a month as compared to the current percentage.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposal to amend the current qualifications related
to the Tier 8 Customer and Professional Penny Pilot Options Rebate to
Add Liquidity is reasonable because the rebate should continue to
attract Customer and Professional order flow to NOM. The additional
Customer and Professional order flow to NOM benefits other market
participants by providing additional liquidity with which to interact.
Customer liquidity offers unique benefits to the market which benefits
all market participants. Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
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 creates competition among options exchanges because the
Exchange believes that the rebates may cause market participants to
select NOM as a venue to send Professional order flow. Amending the
current qualification 0.25% or more of total industry customer equity
and ETF option ADV contracts to 0.20% or more of total industry
customer equity and ETF option ADV contracts affords Participants the
ability to qualify for this Tier 8 because it requires less volume as a
result of the proposed lower percentage of industry volume. With this
proposal, Participants that consistently send order flow to the
Exchange may continue to qualify for Tier 8 rebates and other
Participants may send additional order flow to qualify for a Tier 8
rebate with the lower requirement.
The Exchange's proposal to amend the current qualifications related
to the Tier 8 Customer and Professional Penny Pilot Options Rebate to
Add Liquidity is equitable and not unfairly discriminatory because all
Participants are eligible to earn rebates. These rebates would be
uniformly paid to all qualifying Participants.
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. The proposed pricing change is competitive and does not
impose a burden on inter-market competition. If the change proposed
herein is unattractive to market participants, it is likely that the
Exchange will lose market share as a result. Accordingly, the Exchange
does not believe that the proposed change will impair the ability of
members or competing order execution venues to maintain their
competitive standing in the financial markets.
The Exchange's proposal to amend the current qualifications related
to the Tier 8 Customer and Professional Penny Pilot Options Rebate to
Add Liquidity does not impose an undue burden on intra-market
competition because all Participants are eligible to earn rebates and
these rebates would be uniformly paid to all qualifying Participants.
[[Page 32734]]
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.\12\
---------------------------------------------------------------------------
\12\ 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-2017-067 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-2017-067. 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-2017-067 and should
be submitted on or before August 7, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-14891 Filed 7-14-17; 8:45 am]
BILLING CODE 8011-01-P
