Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Nasdaq Options Regulatory Fee, 40099-40101 [2018-17258]

Download as PDF Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE–2018–69 and should be submitted on or before September 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–17255 Filed 8–10–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: 83 FR 25496, June 1, 2018. PREVIOUSLY ANNOUNCED TIME AND DATE OF THE MEETING: Tuesday, June 5, 2018 at 10:00 a.m. The Open Meeting scheduled for Tuesday, June 5, 2018 at 10:00 a.m. has been changed to Tuesday, June 5, 2018 at 11:30 a.m. The following items will not be considered during the Commission’s Open Meeting: • Whether to adopt a new rule as well as amendments to rules and forms to provide certain registered investment companies (‘‘funds’’) with an optional method to transmit shareholder reports. • whether to issue a release requesting comment about processing fees for delivering shareholder reports and other materials to fund investors. • whether to issue a release requesting comment from individual investors and other interested parties on how to enhance the delivery, design, and content of fund disclosures, including shareholder reports and prospectuses. CONTACT PERSON FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551– 5400. sradovich on DSK3GMQ082PROD with NOTICES CHANGES IN THE MEETING: Dated: June 4, 2018. Brent J. Fields, Secretary. forth in sections A, B, and C below, of the most significant aspects of such statements. [FR Doc. 2018–17390 Filed 8–9–18; 11:15 am] A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83794; File No. SR– NASDAQ–2018–062] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Nasdaq Options Regulatory Fee August 7, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 27, 2018, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to revise The Nasdaq Options Market LLC’s Rules (‘‘NOM’’) at Chapter XV, Section 5 to amend the Nasdaq Options Regulatory Fee or ‘‘ORF.’’ While the changes proposed herein are effective upon filing, the Exchange has designated the amendments become operative on August 1, 2018. The text of the proposed rule change is available on the Exchange’s website 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 1 15 21 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 20:42 Aug 10, 2018 2 17 Jkt 244001 40099 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00119 Fmt 4703 Sfmt 4703 1. Purpose Currently, Nasdaq assesses an ORF of $0.0027 per contract side. The Exchange proposes to decrease this ORF to $0.0008 per contract side. In light of recent market volumes on NOM, the Exchange is proposing to change the amount of ORF that will be collected by the Exchange. The Exchange’s proposed change to the ORF should balance the Exchange’s regulatory revenue against the anticipated costs. Collection of ORF Currently, NOM assesses its ORF for each customer option transaction that is either: (1) executed by a Participant on NOM; or (2) cleared by a NOM Participant at The Options Clearing Corporation (‘‘OCC’’) in the customer range,3 even if the transaction was executed by a non-member of NOM, regardless of the exchange on which the transaction occurs.4 If the OCC clearing member is a NOM Participant, ORF is assessed and collected on all cleared customer contracts (after adjustment for CMTA5); and (2) if the OCC clearing member is not a NOM Participant, ORF is collected only on the cleared customer contracts executed at NOM, taking into account any CMTA instructions which may result in collecting the ORF from a non-member. By way of example, if Broker A, a NOM Participant, routes a customer order to CBOE and the transaction executes on CBOE and clears in Broker A’s OCC Clearing account, ORF will be collected by NOM from Broker A’s clearing account at OCC via direct debit. While this transaction was executed on a market other than NOM, it was cleared by a NOM Participant in the member’s OCC clearing account in the customer range, therefore there is a regulatory nexus between NOM and the transaction. If Broker A was not a NOM Participant, then no ORF should be assessed and collected because there is no nexus; the transaction did not 3 Participants must record the appropriate account origin code on all orders at the time of entry in order. The Exchange represents that it has surveillances in place to verify that members mark orders with the correct account origin code. 4 The Exchange uses reports from OCC when assessing and collecting the ORF. 5 CMTA or Clearing Member Trade Assignment is a form of ‘‘give-up’’ whereby the position will be assigned to a specific clearing firm at OCC. E:\FR\FM\13AUN1.SGM 13AUN1 40100 Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices sradovich on DSK3GMQ082PROD with NOTICES execute on NOM nor was it cleared by a NOM Participant. In the case where a Participant both executes a transaction and clears the transaction, the ORF is assessed to and collected from that Participant. In the case where a Participant executes a transaction and a different member clears the transaction, the ORF is assessed to and collected from the Participant who clears the transaction and not the Participant who executes the transaction. In the case where a nonmember executes a transaction at an away market and a Participant clears the transaction, the ORF is assessed to and collected from the Participant who clears the transaction. In the case where a Participant executes a transaction on NOM and a non-member clears the transaction, the ORF is assessed to the Participant that executed the transaction on NOM and collected from the nonmember who cleared the transaction. In the case where a Participant executes a transaction at an away market and a non-member clears the transaction, the ORF is not assessed to the Participant who executed the transaction or collected from the non-member who cleared the transaction because the Exchange does not have access to the data to make absolutely certain that ORF should apply. Further, the data does not allow the Exchange to identify the Participant executing the trade at an away market. ORF Revenue and Monitoring of ORF The Exchange monitors the amount of revenue collected from the ORF to ensure that it, in combination with other regulatory fees and fines, does not exceed regulatory costs. In determining whether an expense is considered a regulatory cost, the Exchange reviews all costs and makes determinations if there is a nexus between the expense and a regulatory function. The Exchange notes that fines collected by the Exchange in connection with a disciplinary matter offset ORF. The ORF is designed to recover a material portion of the costs to the Exchange of the supervision and regulation of its members, including performing routine surveillances, investigations, examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. The Exchange believes that revenue generated from the ORF, when combined with all of the Exchange’s other regulatory fees, will cover a material portion, but not all, of the Exchange’s regulatory costs. The Exchange will continue to monitor the amount of revenue collected from the ORF to ensure that it, in combination VerDate Sep<11>2014 20:42 Aug 10, 2018 Jkt 244001 with its other regulatory fees and fines, does not exceed regulatory costs. If the Exchange determines regulatory revenues exceed regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. Proposal The Exchange is proposing to decrease the ORF from $0.0027 to $0.0008 as of August 1, 2018. In light of recent market volumes on NOM, the Exchange is proposing to decrease the amount of ORF that will be collected by the Exchange. The Exchange regularly reviews its ORF to ensure that the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs. The Exchange believes this adjustment will permit the Exchange to cover a material portion of its regulatory costs, while not exceeding regulatory costs. The Exchange notified Participants via an Options Trader Alert of the proposed change to the ORF thirty (30) calendar days prior to the proposed operative date, August 1, 2018.6 The Exchange believes that the prior notification market participants will ensure market participants are prepared to configure their systems to properly account for the ORF. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 7 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act 8 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 its facility and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that decreasing the ORF from $0.0027 to $0.0008 as of August 1, 2018 is reasonable because the Exchange’s collection of ORF needs to be balanced against the amount of regulatory costs incurred by the Exchange. The Exchange believes that the proposed adjustments noted herein will serve to balance the Exchange’s regulatory revenue against the anticipated regulatory costs. The Exchange believes that amending the ORF from $0.0027 to $0.0008 as of August 1, 2018 is equitable and not unfairly discriminatory because assessing the ORF to each Participant for options transactions cleared by OCC 6 See Options Trader Alert #2018–27. U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4) and (5). 7 15 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 in the customer range where the execution occurs on another exchange and is cleared by a NOM Participant is an equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. The ORF is collected by OCC on behalf of NOM from Exchange clearing members for all customer transactions they clear or from non-members for all customer transactions they clear that were executed on NOM. The Exchange believes the ORF ensures fairness by assessing fees to Participants based on the amount of customer options business they conduct. Regulating customer trading activity is much more labor intensive and requires greater expenditure of human and technical resources than regulating non-customer trading activity, which tends to be more automated and less labor-intensive. As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the non-customer component (e.g., Participant proprietary transactions) of its regulatory program. The ORF is designed to recover a material portion of the costs of supervising and regulating Participants’ customer options business including performing routine surveillances, investigations, examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. The Exchange will monitor the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The Exchange has designed the ORF to generate revenues that, when combined with all of the Exchange’s other regulatory fees, will be less than or equal to the Exchange’s regulatory costs, which is consistent with the Commission’s view that regulatory fees be used for regulatory purposes and not to support the Exchange’s business side. 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. This proposal does not create an unnecessary or inappropriate intra-market burden on competition because the ORF applies to all customer activity, thereby raising regulatory revenue to offset regulatory expenses. It also supplements the regulatory revenue derived from noncustomer activity. This proposal does E:\FR\FM\13AUN1.SGM 13AUN1 Federal Register / Vol. 83, No. 156 / Monday, August 13, 2018 / Notices not create an unnecessary or inappropriate inter-market burden on competition because it is a regulatory fee that supports regulation in furtherance of the purposes of the Act. The Exchange is obligated to ensure that the amount of regulatory revenue collected from the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs. 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.9 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: sradovich on DSK3GMQ082PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– NASDAQ–2018–062 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 No. SR–NASDAQ–2018–062. 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 website (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 website 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–NASDAQ–2018–062, and should be submitted on or before September 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–17258 Filed 8–10–18; 8:45 am] BILLING CODE 8011–01–P U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 20:42 Aug 10, 2018 Jkt 244001 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 is filing a proposal to amend the MIAX PEARL Fee Schedule (the ‘‘Fee Schedule’’) to modify certain of the Exchange’s system connectivity fees. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal office, 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 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83785; File No. SR– PEARL–2018–16] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee Schedule August 7, 2018. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 31, 2018, MIAX PEARL, LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 9 15 40101 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 The Exchange proposes to amend the Fee Schedule regarding connectivity to the Exchange. Specifically, the Exchange proposes to amend Sections 5(a) and (b) of the Fee Schedule to increase the network connectivity fees for the 1 Gigabit (‘‘Gb’’) fiber connection, the 10Gb fiber connection, and the 10Gb ultra-low latency (‘‘ULL’’) fiber connection, which are charged to both Members 3 and non-Members of the Exchange for connectivity to the Exchange’s primary/secondary facility. The Exchange also proposes to increase the network connectivity fees for the 1Gb and 10Gb fiber connections for connectivity to the Exchange’s disaster recovery facility. 3 The term ‘‘Member’’ means an individual or organization that is registered with the Exchange pursuant to Chapter II of the Exchange’s Rules for purposes of trading on the Exchange as an ‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. E:\FR\FM\13AUN1.SGM 13AUN1

Agencies

[Federal Register Volume 83, Number 156 (Monday, August 13, 2018)]
[Notices]
[Pages 40099-40101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17258]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83794; File No. SR-NASDAQ-2018-062]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Nasdaq Options Regulatory Fee

August 7, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 27, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to revise The Nasdaq Options Market LLC's 
Rules (``NOM'') at Chapter XV, Section 5 to amend the Nasdaq Options 
Regulatory Fee or ``ORF.''
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on August 1, 
2018.
    The text of the proposed rule change is available on the Exchange's 
website 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
    Currently, Nasdaq assesses an ORF of $0.0027 per contract side. The 
Exchange proposes to decrease this ORF to $0.0008 per contract side. In 
light of recent market volumes on NOM, the Exchange is proposing to 
change the amount of ORF that will be collected by the Exchange. The 
Exchange's proposed change to the ORF should balance the Exchange's 
regulatory revenue against the anticipated costs.
Collection of ORF
    Currently, NOM assesses its ORF for each customer option 
transaction that is either: (1) executed by a Participant on NOM; or 
(2) cleared by a NOM Participant at The Options Clearing Corporation 
(``OCC'') in the customer range,\3\ even if the transaction was 
executed by a non-member of NOM, regardless of the exchange on which 
the transaction occurs.\4\ If the OCC clearing member is a NOM 
Participant, ORF is assessed and collected on all cleared customer 
contracts (after adjustment for CMTA\5\); and (2) if the OCC clearing 
member is not a NOM Participant, ORF is collected only on the cleared 
customer contracts executed at NOM, taking into account any CMTA 
instructions which may result in collecting the ORF from a non-member.
---------------------------------------------------------------------------

    \3\ Participants must record the appropriate account origin code 
on all orders at the time of entry in order. The Exchange represents 
that it has surveillances in place to verify that members mark 
orders with the correct account origin code.
    \4\ The Exchange uses reports from OCC when assessing and 
collecting the ORF.
    \5\ CMTA or Clearing Member Trade Assignment is a form of 
``give-up'' whereby the position will be assigned to a specific 
clearing firm at OCC.
---------------------------------------------------------------------------

    By way of example, if Broker A, a NOM Participant, routes a 
customer order to CBOE and the transaction executes on CBOE and clears 
in Broker A's OCC Clearing account, ORF will be collected by NOM from 
Broker A's clearing account at OCC via direct debit. While this 
transaction was executed on a market other than NOM, it was cleared by 
a NOM Participant in the member's OCC clearing account in the customer 
range, therefore there is a regulatory nexus between NOM and the 
transaction. If Broker A was not a NOM Participant, then no ORF should 
be assessed and collected because there is no nexus; the transaction 
did not

[[Page 40100]]

execute on NOM nor was it cleared by a NOM Participant.
    In the case where a Participant both executes a transaction and 
clears the transaction, the ORF is assessed to and collected from that 
Participant. In the case where a Participant executes a transaction and 
a different member clears the transaction, the ORF is assessed to and 
collected from the Participant who clears the transaction and not the 
Participant who executes the transaction. In the case where a non-
member executes a transaction at an away market and a Participant 
clears the transaction, the ORF is assessed to and collected from the 
Participant who clears the transaction. In the case where a Participant 
executes a transaction on NOM and a non-member clears the transaction, 
the ORF is assessed to the Participant that executed the transaction on 
NOM and collected from the non-member who cleared the transaction. In 
the case where a Participant executes a transaction at an away market 
and a non-member clears the transaction, the ORF is not assessed to the 
Participant who executed the transaction or collected from the non-
member who cleared the transaction because the Exchange does not have 
access to the data to make absolutely certain that ORF should apply. 
Further, the data does not allow the Exchange to identify the 
Participant executing the trade at an away market.
ORF Revenue and Monitoring of ORF
    The Exchange monitors the amount of revenue collected from the ORF 
to ensure that it, in combination with other regulatory fees and fines, 
does not exceed regulatory costs. In determining whether an expense is 
considered a regulatory cost, the Exchange reviews all costs and makes 
determinations if there is a nexus between the expense and a regulatory 
function. The Exchange notes that fines collected by the Exchange in 
connection with a disciplinary matter offset ORF.
    The ORF is designed to recover a material portion of the costs to 
the Exchange of the supervision and regulation of its members, 
including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities.
    The Exchange believes that revenue generated from the ORF, when 
combined with all of the Exchange's other regulatory fees, will cover a 
material portion, but not all, of the Exchange's regulatory costs. The 
Exchange will continue to monitor the amount of revenue collected from 
the ORF to ensure that it, in combination with its other regulatory 
fees and fines, does not exceed regulatory costs. If the Exchange 
determines regulatory revenues exceed regulatory costs, the Exchange 
will adjust the ORF by submitting a fee change filing to the 
Commission.
Proposal
    The Exchange is proposing to decrease the ORF from $0.0027 to 
$0.0008 as of August 1, 2018. In light of recent market volumes on NOM, 
the Exchange is proposing to decrease the amount of ORF that will be 
collected by the Exchange. The Exchange regularly reviews its ORF to 
ensure that the ORF, in combination with its other regulatory fees and 
fines, does not exceed regulatory costs. The Exchange believes this 
adjustment will permit the Exchange to cover a material portion of its 
regulatory costs, while not exceeding regulatory costs.
    The Exchange notified Participants via an Options Trader Alert of 
the proposed change to the ORF thirty (30) calendar days prior to the 
proposed operative date, August 1, 2018.\6\ The Exchange believes that 
the prior notification market participants will ensure market 
participants are prepared to configure their systems to properly 
account for the ORF.
---------------------------------------------------------------------------

    \6\ See Options Trader Alert #2018-27.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act \8\ 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 its facility and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that decreasing the ORF from $0.0027 to 
$0.0008 as of August 1, 2018 is reasonable because the Exchange's 
collection of ORF needs to be balanced against the amount of regulatory 
costs incurred by the Exchange. The Exchange believes that the proposed 
adjustments noted herein will serve to balance the Exchange's 
regulatory revenue against the anticipated regulatory costs.
    The Exchange believes that amending the ORF from $0.0027 to $0.0008 
as of August 1, 2018 is equitable and not unfairly discriminatory 
because assessing the ORF to each Participant for options transactions 
cleared by OCC in the customer range where the execution occurs on 
another exchange and is cleared by a NOM Participant is an equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities. The ORF is 
collected by OCC on behalf of NOM from Exchange clearing members for 
all customer transactions they clear or from non-members for all 
customer transactions they clear that were executed on NOM. The 
Exchange believes the ORF ensures fairness by assessing fees to 
Participants based on the amount of customer options business they 
conduct. Regulating customer trading activity is much more labor 
intensive and requires greater expenditure of human and technical 
resources than regulating non-customer trading activity, which tends to 
be more automated and less labor-intensive. As a result, the costs 
associated with administering the customer component of the Exchange's 
overall regulatory program are materially higher than the costs 
associated with administering the non-customer component (e.g., 
Participant proprietary transactions) of its regulatory program.
    The ORF is designed to recover a material portion of the costs of 
supervising and regulating Participants' customer options business 
including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities. The Exchange will monitor the 
amount of revenue collected from the ORF to ensure that it, in 
combination with its other regulatory fees and fines, does not exceed 
the Exchange's total regulatory costs. The Exchange has designed the 
ORF to generate revenues that, when combined with all of the Exchange's 
other regulatory fees, will be less than or equal to the Exchange's 
regulatory costs, which is consistent with the Commission's view that 
regulatory fees be used for regulatory purposes and not to support the 
Exchange's business side.

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. This proposal does not create 
an unnecessary or inappropriate intra-market burden on competition 
because the ORF applies to all customer activity, thereby raising 
regulatory revenue to offset regulatory expenses. It also supplements 
the regulatory revenue derived from non-customer activity. This 
proposal does

[[Page 40101]]

not create an unnecessary or inappropriate inter-market burden on 
competition because it is a regulatory fee that supports regulation in 
furtherance of the purposes of the Act. The Exchange is obligated to 
ensure that the amount of regulatory revenue collected from the ORF, in 
combination with its other regulatory fees and fines, does not exceed 
regulatory costs.

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.\9\
---------------------------------------------------------------------------

    \9\ 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 [email protected]. Please include 
File No. SR-NASDAQ-2018-062 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 No. SR-NASDAQ-2018-062. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File No. SR-NASDAQ-2018-062, and should be submitted on 
or before September 4, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17258 Filed 8-10-18; 8:45 am]
 BILLING CODE 8011-01-P
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