Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Options 7, Section 2(1), 65372-65376 [2018-27511]
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ACTION:
Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices
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.
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
Date of required notice:
December 20, 2018.
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.
DATES: Date of required notice:
December 20, 2018.
FOR FURTHER INFORMATION CONTACT:
Elizabeth Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 14,
2018, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 93 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2019–52,
CP2019–56.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Elizabeth 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 December 14,
2018, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express & Priority Mail
Contract 80 to Competitive Product List.
Documents are available at
www.prc.gov, Docket Nos. MC2019–50,
CP2019–54.
SUPPLEMENTARY INFORMATION:
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2018–27497 Filed 12–19–18; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Postal
ACTION: Notice.
AGENCY:
[FR Doc. 2018–27500 Filed 12–19–18; 8:45 am]
BILLING CODE 7710–12–P
ServiceTM.
POSTAL SERVICE
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:
Date of required notice:
December 20, 2018.
DATES:
FOR FURTHER INFORMATION CONTACT:
Elizabeth 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 December 14,
2018, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 92 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2019–51,
CP2019–55.
SUPPLEMENTARY INFORMATION:
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2018–27498 Filed 12–19–18; 8:45 am]
BILLING CODE 7710–12–P
VerDate Sep<11>2014
BILLING CODE 7710–12–P
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
17:21 Dec 19, 2018
Jkt 247001
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2018–27499 Filed 12–19–18; 8:45 am]
Postal ServiceTM.
ACTION: Notice.
AGENCY:
SUMMARY:
DATES:
khammond on DSK30JT082PROD with NOTICES
www.prc.gov, Docket Nos. MC2019–48,
CP2019–52.
POSTAL SERVICE
Product Change—Priority Mail Express
and Priority Mail Negotiated Service
Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
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.
DATES: Date of required notice:
December 20, 2018.
FOR FURTHER INFORMATION CONTACT:
Elizabeth Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 14,
2018, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express & Priority Mail
Contract 78 to Competitive Product List.
Documents are available at
SUMMARY:
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84822; File No. SR–
NASDAQ–2018–101]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Exchange’s Transaction Fees at
Options 7, Section 2(1)
December 14, 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 December
3, 2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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 amend the
Exchange’s transaction fees at Options
7, Section 2(1), which governs the
pricing for Nasdaq participants using
The Nasdaq Options Market (‘‘NOM’’),
Nasdaq’s facility for executing and
routing standardized equity and index
options. The proposed changes are
described further below.
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
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices
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 purpose of the proposed rule
change is to amend NOM pricing at
Options 7, Section 2(1) to modify the
Rebates to Add Liquidity in Penny Pilot
Options for Customers,3 Professionals,4
and NOM Market Makers.5 Each change
is discussed below.
Customer and Professional Rebate To
Add Liquidity in Penny Pilot Options
Today, the Exchange offers Customer
and Professional Rebates to Add
Liquidity in Penny Pilot Options. These
rebates are structured as a six tier
program ranging from $0.20 to $0.48 per
contract, with increasing volume
requirements for each tier. Participants
that qualify for the $0.48 per contract
Tier 6 rebate are also eligible for a
supplemental rebate, provided they
meet the requisite qualifications in note
‘‘c’’ of Section 2(1). In particular,
paragraphs (1), (2), and (3) of note ‘‘c’’
provide three additional incentives of
$0.02, $0.05, and $0.05 per contract,
respectively, each with corresponding
qualifications to achieve the rebate, as
follows: ‘‘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.’’
The Exchange now proposes to amend
the criteria in paragraph (3)(b) to
decrease the percentage of total industry
customer equity and ETF option ADV
contracts per day in a month from
0.15% to 0.12%. As proposed,
Participants will receive an additional
$0.05 per contract rebate if they add
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Non-Penny Pilot Options
above 0.12% of total industry customer
equity and ETF option ADV contracts
per day in a month, and also meet the
other qualifications in paragraphs (3)(a)
and (3)(c). The Exchange believes that
this will offer Participants an increased
opportunity to qualify for the additional
paragraph (3) incentive and receive the
$0.05 per contract rebate, in addition to
the $0.48 per contract Tier 6 rebate, by
amending one of the qualifications to
require less volume. The Exchange is
not amending any other criteria in note
‘‘c’’ other than the proposed change in
paragraph (3)(b). Participants that
qualify for Tier 6 and the supplemental
rebate in paragraph (3) will continue to
receive a total rebate of $0.53 per
contract.
NOM Market Maker Rebate To Add
Liquidity in Penny Pilot Options
Today, the Exchange offers NOM
Market Maker Rebates to Add Liquidity
in Penny Pilot Options. These rebates
are structured as a six tier program as
follows:
Monthly
volume
Tier 1 .........
Tier 2 .........
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Tier 3 .........
Rebate to add
liquidity
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and ETF option average daily volume
(‘‘ADV’’) contracts per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.10% to 0.25% of total industry customer equity and ETF option ADV contracts
per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options above 0.25% to 0.60% of total industry customer equity and ETF option ADV contracts
per day in a month.
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)).
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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.
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$0.20.
$0.25.
$0.30 or $0.40 in the following
symbols AAPL, QQQ, IWM,
SPY and VXX.
5 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.
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Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices
Monthly
volume
Tier 4 .........
Tier 5 .........
Tier 6 .........
Rebate to add
liquidity
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of above 0.60% to 0.90% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of above 0.30% of total industry customer equity and ETF option ADV contracts per day
in a month and qualifies for the Tier 6 Customer and/or Professional Rebate to Add Liquidity
in Penny Pilot Options.
Participant (1) adds NOM Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot
Options above 0.95% of total industry customer equity and ETF option ADV contracts per day
in a month, (2) executes Total Volume of 250,000 or more contracts per day in a month, of
which 30,000 or more contracts per day in a month must be removing liquidity, and (3) adds
Firm, Broker-Dealer and Non-NOM Market Maker liquidity in Non-Penny Pilot Options of
10,000 or more contracts per day in a month.
$0.32 or $0.40 in the following
symbols AAPL, QQQ, IWM,
VXX and SPY.
$0.40.
$0.48.
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* ‘‘Total Volume’’ shall be defined as Customer, Professional, Firm, Broker-Dealer, Non-NOM Market Maker and NOM Market Maker volume in
Penny Pilot Options and/or Non-Penny Pilot Options which either adds or removes liquidity on NOM.
The Exchange first proposes to amend
the criteria in Tier 2 to decrease the
percentage of total industry customer
equity and ETF option ADV contract per
day in a month from 0.25% to 0.20%,
and make a corresponding change in
Tier 3 to decrease the percentage from
0.25% to 0.20%. As proposed,
Participants will receive a $0.25 per
contract Tier 2 rebate for adding NOM
Market Maker 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. In addition, Participants will
receive a $0.30 per contract (or $0.40
per contract in the symbols AAPL,
QQQ, IWM, SPY and VXX) Tier 3 rebate
for adding NOM Market Maker liquidity
in Penny Pilot Options and/or NonPenny Pilot Options above 0.20% to
0.60% of total industry customer equity
and ETF option ADV contracts per day
in a month.
The Exchange also proposes to create
an alternative way for Participants to
earn the Tier 6 rebate. Specifically,
Participants will also be eligible to
receive the $0.48 per contract Tier 6
rebate for: (1) adding NOM Market
Maker liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options above
1.50% of total industry customer equity
and ETF option ADV contracts per day
in a month, and (2) executing Total
Volume of 250,000 or more contracts
per day in a month, of which 15,000 or
more contracts per day in a month must
be removing liquidity. The Exchange
also proposes to make related clean-up
changes by renumbering the existing
three-prong method to qualify for Tier 6
as paragraph (a) and the proposed
alternative method as paragraph (b).
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
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of the Act,6 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,7 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Customer and Professional Rebate To
Add Liquidity in Penny Pilot Options
The Exchange believes that its
proposal to amend note ‘‘c’’ at
paragraph (3)(b) to decrease the
percentage of total industry customer
equity and ETF option ADV contracts
per day in a month from 0.15% to
0.12% to qualify for the additional $0.05
per contract incentive in paragraph (3)
is reasonable. As discussed above, the
Exchange believes that this will offer
Participants an increased opportunity to
qualify for the paragraph (3) incentive
and receive a $0.05 per contract rebate
by amending one of the qualifications to
require less volume. The Exchange also
believes that this incentive will
continue to encourage Participants to
add more liquidity on NOM to earn a
higher Tier 8 rebate in addition to the
incentives in note ‘‘c.’’ Participants that
qualify for this incentive would be paid
the Tier 8 rebate of $0.48 per contract
plus the additional note ‘‘c,’’ paragraph
(3) rebate of $0.05 per contract for a total
rebate of $0.53 per contract.
The Exchange’s proposal to amend
note ‘‘c’’ at paragraph (3)(b) is equitable
and not unfairly discriminatory because
all similarly situated Participants are
equally capable of qualifying for the
paragraph (3) incentive, and the same
rebates will be paid to all qualifying
Participants. Further, the Exchange
believes that it is equitable and not
6 15
7 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
Frm 00038
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unfairly discriminatory to offer this
rebate to NOM Participants that transact
as Customers or Professionals, and not
to other market participants. Customer
liquidity offers unique benefits to the
market 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,
which benefits all market participants
by attracting valuable liquidity to the
market and thereby enhancing the
trading quality and efficiency of all.
NOM Market Maker Rebate To Add
Liquidity in Penny Pilot Options
The Exchange believes that its
proposal to amend the NOM Market
Maker Rebate to Add Liquidity in Penny
Pilot Options by modifying the criteria
in Tier 2 to decrease the percentage of
total industry customer equity and ETF
option ADV contract per day in a month
from 0.25% to 0.20%, and making a
corresponding change in Tier 3 to
decrease the percentage from 0.25% to
0.20% is reasonable. The Exchange
believes that the amended qualifications
will provide an increased opportunity
for Participants to qualify for the rebates
in Tiers 2 and 3 by amending the
corresponding criteria to require less
volume. The Exchange also believes that
this incentive will continue to
encourage Participants to add more
liquidity on NOM to earn the Tier 2 and
Tier 3 rebates.
The Exchange believes that its
proposal to create an additional
opportunity for Participants to earn the
Tier 6 NOM Market Maker Rebate to
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Add Liquidity in Penny Pilot Options is
reasonable because it will encourage
Participants to send additional order
flow to NOM to earn a higher rebate,
which will benefit all market
participants by providing opportunities
for increased order interaction. As
proposed, in addition to the current
method to qualify for the $0.48 per
contract Tier 6 rebate,8 Participants will
also be eligible to receive the Tier 6
rebate for: (1) Adding NOM Market
Maker liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options above
1.50% of total industry customer equity
and ETF option ADV contracts per day
in a month, and (2) executing Total
Volume of 250,000 or more contracts
per day in a month, of which 15,000 or
more contracts per day in a month must
be removing liquidity. The proposed
alternative is similar to the existing
method for achieving the same $0.48 per
contract Tier 6 rebate except the
proposed will have two components as
opposed to three for the existing.9
The Exchange believes that the
proposed first prong (i.e., add NOM
Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot
Options above 1.50% of total industry
customer equity and ETF option ADV
contracts per day in a month) is
reasonable because the Exchange
already offers rebates based on
percentages of total industry customer
equity and ETF option ADV contracts,
including within the first prong of the
existing Tier 6 rebate qualifications as
described above. While the first prong of
the current Tier 6 qualifications also has
a comparable percentage threshold
(0.95%) that is lower than the 1.50%
threshold in the proposed alternative to
achieve the same $0.48 per contract
rebate, the proposed alternative has
fewer components than the existing
method as described above, which
offsets the higher percentage threshold.
Furthermore, the proposed second
prong (i.e., execute Total Volume of
250,000 or more contracts per day in a
month, of which 15,000 or more
8 Today, a Participant is eligible to receive the
Tier 6 rebate for (1) adding NOM Market Maker
liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options above 0.95% of total industry
customer equity and ETF option ADV contracts per
day in a month, (2) executing Total Volume of
250,000 or more contracts per day in a month, of
which 30,000 or more contracts per day in a month
must be removing liquidity, and (3) adding Firm,
Broker-Dealer and Non-NOM Market Maker
liquidity in Non-Penny Pilot Options of 10,000 or
more contracts per day in a month.
9 Specifically, the proposed alternative will not
have a requirement similar to the third prong of the
existing criteria (i.e., add Firm, Broker-Dealer and
Non-NOM Market Maker liquidity in Non-Penny
Pilot Options of 10,000 or more contracts per day
in a month).
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17:21 Dec 19, 2018
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contracts per day in a month must be
removing liquidity) is reasonable
because it is comparable to the second
prong of the existing method (i.e.,
execute Total Volume of 250,000 or
more contracts per day in a month, of
which 30,000 or more contracts per day
in a month must be removing liquidity).
As is true of the existing qualifications,
the proposed criteria will attract both
liquidity providers and removers to
NOM, thereby providing opportunities
for increased order interaction from
additional order flow.
The Exchange’s proposed changes to
Tiers 2, 3, and 6 of the NOM Market
Maker Rebate to Add Liquidity in Penny
Pilot Options as described above are
equitable and not unfairly
discriminatory because all eligible
Participants that qualify for these
incentives will uniformly receive the
rebate. Further, the Exchange believes
that it is equitable and not unfairly
discriminatory to offer this rebate to
NOM Participants that transact as NOM
Market Makers because unlike other
market participants, NOM Market
Makers add value through continuous
quoting and the commitment of
capital.10 Because NOM Market Makers
have these obligations to the market and
regulatory requirements that normally
do not apply to other market
participants, the Exchange believes that
offering these rebates to only NOM
Market Makers is equitable and not
unfairly discriminatory in light of their
obligations. Finally, encouraging NOM
Market Makers to add greater liquidity
benefits all market participants in the
quality of order interaction.
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. All of the
proposed changes to the Customer,
Professional, and NOM Market Maker
Rebates to Add Liquidity in Penny Pilot
Options are designed to attract
additional order flow to NOM, which
strengthens NOM’s competitive
10 Pursuant to Chapter VII (Market Participants),
Section 5 (Obligations of Market Makers), in
registering as a market maker, an Options
Participant commits himself to various obligations.
Transactions of a Market Maker in its market
making capacity must constitute a course of
dealings reasonably calculated to contribute to the
maintenance of a fair and orderly market, and
Market Makers should not make bids or offers or
enter into transactions that are inconsistent with
such course of dealings. Further, all Market Makers
are designated as specialists on NOM for all
purposes under the Act or rules thereunder. See
Chapter VII, Section 5.
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65375
position. Greater liquidity benefits all
market participants by providing more
trading opportunities and attracting
greater participation by market makers.
An increase in the activity of these
market participants in turn facilitates
tighter spreads.
The Exchange 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 and rebates to
remain competitive. Because
competitors are free to modify their own
fees and rebates in response, the
Exchange believes that the degree to
which pricing changes in this market
may impose any burden on competition
is extremely limited.
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.11
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–2018–101 on the subject line.
11 15
E:\FR\FM\20DEN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
20DEN1
65376
Federal Register / Vol. 83, No. 244 / Thursday, December 20, 2018 / Notices
Paper Comments
ACTION:
• 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–2018–101. 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
Number SR–NASDAQ–2018–101 and
should be submitted on or before
January 10, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27511 Filed 12–19–18; 8:45 am]
BILLING CODE 8011–01–P
khammond on DSK30JT082PROD with NOTICES
SECURITIES AND EXCHANGE
COMMISSION
Investment Company Act Release No.
33325; 812–14969
Hoya Capital Real Estate, LLC, et al.
December 17, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
12 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:21 Dec 19, 2018
Jkt 247001
Notice.
Notice of an application for an order
under section 6(c) of the Investment
Company Act of 1940 (the ‘‘Act’’) for an
exemption from sections 2(a)(32),
5(a)(1), 22(d), and 22(e) of the Act and
rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) index-based series of certain
open-end management investment
companies (‘‘Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; and
(e) certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds.
APPLICANTS: Hoya Capital Real Estate,
LLC (the ‘‘Initial Adviser’’), a
Connecticut limited liability company
that is registered as an investment
adviser under the Investment Advisers
Act of 1940, ETF Series Solutions (the
‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company with
multiple series, and Quasar Distributors,
LLC, (the ‘‘Distributor’’), a Delaware
limited liability company and brokerdealer registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
FILING DATES: The application was filed
on October 29, 2018.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on January 11, 2019, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit, or for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
PO 00000
Frm 00040
Fmt 4703
Sfmt 4703
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549–1090;
Applicants: Hoya Capital Real Estate,
LLC, 137 Rowayton Avenue, Suite 430,
Rowayton, Connecticut 06853; ETF
Series Solutions, 615 East Michigan
Street, Milwaukee, Wisconsin 53202;
Quasar Distributors, LLC, 777 East
Wisconsin Avenue, 6th Floor,
Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Senior Counsel, at (202)
551–6876, or Andrea Ottomanelli
Magovern, Branch Chief, at (202) 551–
6821 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as index
exchange traded funds (‘‘ETFs’’).1 Fund
shares will be purchased and redeemed
at their NAV in Creation Units only. All
orders to purchase Creation Units and
all redemption requests will be placed
by or through an ‘‘Authorized
Participant,’’ which will have signed a
participant agreement with the
Distributor. Shares will be listed and
traded individually on a national
securities exchange, where share prices
will be based on the current bid/offer
market. Any order granting the
requested relief would be subject to the
1 Applicants request that the order apply to the
Hoya Capital Housing 100 Index ETF and any
additional series of the Trust and any other openend management investment company or series
thereof (each, included in the term ‘‘Fund’’), each
of which will operate as an ETF and will track a
specified index comprised of domestic and/or
foreign equity securities and/or domestic and/or
foreign fixed income securities (each, an
‘‘Underlying Index’’). Each Fund will (a) be advised
by the Initial Adviser or an entity controlling,
controlled by, or under common control with the
Initial Adviser (each such entity and any successor
thereto, an ‘‘Adviser’’) and (b) comply with the
terms and conditions of the application. For
purposes of the requested order, the term
‘‘successor’’ is limited to an entity or entities that
result from a reorganization into another
jurisdiction or a change in the type of business
organization.
E:\FR\FM\20DEN1.SGM
20DEN1
]]>Agencies
[Federal Register Volume 83, Number 244 (Thursday, December 20, 2018)]
[Notices]
[Pages 65372-65376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27511]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84822; File No. SR-NASDAQ-2018-101]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's Transaction Fees at Options 7, Section 2(1)
December 14, 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 December 3, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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 amend the Exchange's transaction fees at
Options 7, Section 2(1), which governs the pricing for Nasdaq
participants using The Nasdaq Options Market (``NOM''), Nasdaq's
facility for executing and routing standardized equity and index
options. The proposed changes are described further below.
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
[[Page 65373]]
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 purpose of the proposed rule change is to amend NOM pricing at
Options 7, Section 2(1) to modify the Rebates to Add Liquidity in Penny
Pilot Options for Customers,\3\ Professionals,\4\ and NOM Market
Makers.\5\ Each change is discussed below.
---------------------------------------------------------------------------
\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 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.
---------------------------------------------------------------------------
Customer and Professional Rebate To Add Liquidity in Penny Pilot
Options
Today, the Exchange offers Customer and Professional Rebates to Add
Liquidity in Penny Pilot Options. These rebates are structured as a six
tier program ranging from $0.20 to $0.48 per contract, with increasing
volume requirements for each tier. Participants that qualify for the
$0.48 per contract Tier 6 rebate are also eligible for a supplemental
rebate, provided they meet the requisite qualifications in note ``c''
of Section 2(1). In particular, paragraphs (1), (2), and (3) of note
``c'' provide three additional incentives of $0.02, $0.05, and $0.05
per contract, respectively, each with corresponding qualifications to
achieve the rebate, as follows: ``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.''
The Exchange now proposes to amend the criteria in paragraph (3)(b)
to decrease the percentage of total industry customer equity and ETF
option ADV contracts per day in a month from 0.15% to 0.12%. As
proposed, Participants will receive an additional $0.05 per contract
rebate if they add Customer, Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Non-Penny Pilot Options above 0.12%
of total industry customer equity and ETF option ADV contracts per day
in a month, and also meet the other qualifications in paragraphs (3)(a)
and (3)(c). The Exchange believes that this will offer Participants an
increased opportunity to qualify for the additional paragraph (3)
incentive and receive the $0.05 per contract rebate, in addition to the
$0.48 per contract Tier 6 rebate, by amending one of the qualifications
to require less volume. The Exchange is not amending any other criteria
in note ``c'' other than the proposed change in paragraph (3)(b).
Participants that qualify for Tier 6 and the supplemental rebate in
paragraph (3) will continue to receive a total rebate of $0.53 per
contract.
NOM Market Maker Rebate To Add Liquidity in Penny Pilot Options
Today, the Exchange offers NOM Market Maker Rebates to Add
Liquidity in Penny Pilot Options. These rebates are structured as a six
tier program as follows:
------------------------------------------------------------------------
Rebate to add
Monthly volume liquidity
------------------------------------------------------------------------
Tier 1........... Participant adds NOM Market Maker $0.20.
liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options
of up to 0.10% of total industry
customer equity and ETF option
average daily volume (``ADV'')
contracts per day in a month.
Tier 2........... Participant adds NOM Market Maker $0.25.
liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options
above 0.10% to 0.25% of total
industry customer equity and ETF
option ADV contracts per day in
a month.
Tier 3........... Participant adds NOM Market Maker $0.30 or $0.40 in
liquidity in Penny Pilot Options the following
and/or Non-Penny Pilot Options symbols AAPL,
above 0.25% to 0.60% of total QQQ, IWM, SPY and
industry customer equity and ETF VXX.
option ADV contracts per day in
a month.
[[Page 65374]]
Tier 4........... Participant adds NOM Market Maker $0.32 or $0.40 in
liquidity in Penny Pilot Options the following
and/or Non-Penny Pilot Options symbols AAPL,
of above 0.60% to 0.90% of total QQQ, IWM, VXX and
industry customer equity and ETF SPY.
option ADV contracts per day in
a month.
Tier 5........... Participant adds NOM Market Maker $0.40.
liquidity in Penny Pilot Options
and/or Non-Penny Pilot Options
of above 0.30% of total industry
customer equity and ETF option
ADV contracts per day in a month
and qualifies for the Tier 6
Customer and/or Professional
Rebate to Add Liquidity in Penny
Pilot Options.
Tier 6........... Participant (1) adds NOM Market $0.48.
Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot
Options above 0.95% of total
industry customer equity and ETF
option ADV contracts per day in
a month, (2) executes Total
Volume of 250,000 or more
contracts per day in a month, of
which 30,000 or more contracts
per day in a month must be
removing liquidity, and (3) adds
Firm, Broker-Dealer and Non-NOM
Market Maker liquidity in Non-
Penny Pilot Options of 10,000 or
more contracts per day in a
month.
------------------------------------------------------------------------
* ``Total Volume'' shall be defined as Customer, Professional, Firm,
Broker-Dealer, Non-NOM Market Maker and NOM Market Maker volume in
Penny Pilot Options and/or Non-Penny Pilot Options which either adds
or removes liquidity on NOM.
The Exchange first proposes to amend the criteria in Tier 2 to
decrease the percentage of total industry customer equity and ETF
option ADV contract per day in a month from 0.25% to 0.20%, and make a
corresponding change in Tier 3 to decrease the percentage from 0.25% to
0.20%. As proposed, Participants will receive a $0.25 per contract Tier
2 rebate for adding NOM Market Maker 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. In
addition, Participants will receive a $0.30 per contract (or $0.40 per
contract in the symbols AAPL, QQQ, IWM, SPY and VXX) Tier 3 rebate for
adding NOM Market Maker liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 0.20% to 0.60% of total industry customer
equity and ETF option ADV contracts per day in a month.
The Exchange also proposes to create an alternative way for
Participants to earn the Tier 6 rebate. Specifically, Participants will
also be eligible to receive the $0.48 per contract Tier 6 rebate for:
(1) adding NOM Market Maker liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options above 1.50% of total industry customer equity
and ETF option ADV contracts per day in a month, and (2) executing
Total Volume of 250,000 or more contracts per day in a month, of which
15,000 or more contracts per day in a month must be removing liquidity.
The Exchange also proposes to make related clean-up changes by
renumbering the existing three-prong method to qualify for Tier 6 as
paragraph (a) and the proposed alternative method as paragraph (b).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Customer and Professional Rebate To Add Liquidity in Penny Pilot
Options
The Exchange believes that its proposal to amend note ``c'' at
paragraph (3)(b) to decrease the percentage of total industry customer
equity and ETF option ADV contracts per day in a month from 0.15% to
0.12% to qualify for the additional $0.05 per contract incentive in
paragraph (3) is reasonable. As discussed above, the Exchange believes
that this will offer Participants an increased opportunity to qualify
for the paragraph (3) incentive and receive a $0.05 per contract rebate
by amending one of the qualifications to require less volume. The
Exchange also believes that this incentive will continue to encourage
Participants to add more liquidity on NOM to earn a higher Tier 8
rebate in addition to the incentives in note ``c.'' Participants that
qualify for this incentive would be paid the Tier 8 rebate of $0.48 per
contract plus the additional note ``c,'' paragraph (3) rebate of $0.05
per contract for a total rebate of $0.53 per contract.
The Exchange's proposal to amend note ``c'' at paragraph (3)(b) is
equitable and not unfairly discriminatory because all similarly
situated Participants are equally capable of qualifying for the
paragraph (3) incentive, and the same rebates will be paid to all
qualifying Participants. Further, the Exchange believes that it is
equitable and not unfairly discriminatory to offer this rebate to NOM
Participants that transact as Customers or Professionals, and not to
other market participants. Customer liquidity offers unique benefits to
the market 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, which benefits all market participants by
attracting valuable liquidity to the market and thereby enhancing the
trading quality and efficiency of all.
NOM Market Maker Rebate To Add Liquidity in Penny Pilot Options
The Exchange believes that its proposal to amend the NOM Market
Maker Rebate to Add Liquidity in Penny Pilot Options by modifying the
criteria in Tier 2 to decrease the percentage of total industry
customer equity and ETF option ADV contract per day in a month from
0.25% to 0.20%, and making a corresponding change in Tier 3 to decrease
the percentage from 0.25% to 0.20% is reasonable. The Exchange believes
that the amended qualifications will provide an increased opportunity
for Participants to qualify for the rebates in Tiers 2 and 3 by
amending the corresponding criteria to require less volume. The
Exchange also believes that this incentive will continue to encourage
Participants to add more liquidity on NOM to earn the Tier 2 and Tier 3
rebates.
The Exchange believes that its proposal to create an additional
opportunity for Participants to earn the Tier 6 NOM Market Maker Rebate
to
[[Page 65375]]
Add Liquidity in Penny Pilot Options is reasonable because it will
encourage Participants to send additional order flow to NOM to earn a
higher rebate, which will benefit all market participants by providing
opportunities for increased order interaction. As proposed, in addition
to the current method to qualify for the $0.48 per contract Tier 6
rebate,\8\ Participants will also be eligible to receive the Tier 6
rebate for: (1) Adding NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 1.50% of total industry
customer equity and ETF option ADV contracts per day in a month, and
(2) executing Total Volume of 250,000 or more contracts per day in a
month, of which 15,000 or more contracts per day in a month must be
removing liquidity. The proposed alternative is similar to the existing
method for achieving the same $0.48 per contract Tier 6 rebate except
the proposed will have two components as opposed to three for the
existing.\9\
---------------------------------------------------------------------------
\8\ Today, a Participant is eligible to receive the Tier 6
rebate for (1) adding NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 0.95% of total industry
customer equity and ETF option ADV contracts per day in a month, (2)
executing Total Volume of 250,000 or more contracts per day in a
month, of which 30,000 or more contracts per day in a month must be
removing liquidity, and (3) adding Firm, Broker-Dealer and Non-NOM
Market Maker liquidity in Non-Penny Pilot Options of 10,000 or more
contracts per day in a month.
\9\ Specifically, the proposed alternative will not have a
requirement similar to the third prong of the existing criteria
(i.e., add Firm, Broker-Dealer and Non-NOM Market Maker liquidity in
Non-Penny Pilot Options of 10,000 or more contracts per day in a
month).
---------------------------------------------------------------------------
The Exchange believes that the proposed first prong (i.e., add NOM
Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot
Options above 1.50% of total industry customer equity and ETF option
ADV contracts per day in a month) is reasonable because the Exchange
already offers rebates based on percentages of total industry customer
equity and ETF option ADV contracts, including within the first prong
of the existing Tier 6 rebate qualifications as described above. While
the first prong of the current Tier 6 qualifications also has a
comparable percentage threshold (0.95%) that is lower than the 1.50%
threshold in the proposed alternative to achieve the same $0.48 per
contract rebate, the proposed alternative has fewer components than the
existing method as described above, which offsets the higher percentage
threshold.
Furthermore, the proposed second prong (i.e., execute Total Volume
of 250,000 or more contracts per day in a month, of which 15,000 or
more contracts per day in a month must be removing liquidity) is
reasonable because it is comparable to the second prong of the existing
method (i.e., execute Total Volume of 250,000 or more contracts per day
in a month, of which 30,000 or more contracts per day in a month must
be removing liquidity). As is true of the existing qualifications, the
proposed criteria will attract both liquidity providers and removers to
NOM, thereby providing opportunities for increased order interaction
from additional order flow.
The Exchange's proposed changes to Tiers 2, 3, and 6 of the NOM
Market Maker Rebate to Add Liquidity in Penny Pilot Options as
described above are equitable and not unfairly discriminatory because
all eligible Participants that qualify for these incentives will
uniformly receive the rebate. Further, the Exchange believes that it is
equitable and not unfairly discriminatory to offer this rebate to NOM
Participants that transact as NOM Market Makers because unlike other
market participants, NOM Market Makers add value through continuous
quoting and the commitment of capital.\10\ Because NOM Market Makers
have these obligations to the market and regulatory requirements that
normally do not apply to other market participants, the Exchange
believes that offering these rebates to only NOM Market Makers is
equitable and not unfairly discriminatory in light of their
obligations. Finally, encouraging NOM Market Makers to add greater
liquidity benefits all market participants in the quality of order
interaction.
---------------------------------------------------------------------------
\10\ Pursuant to Chapter VII (Market Participants), Section 5
(Obligations of Market Makers), in registering as a market maker, an
Options Participant commits himself to various obligations.
Transactions of a Market Maker in its market making capacity must
constitute a course of dealings reasonably calculated to contribute
to the maintenance of a fair and orderly market, and Market Makers
should not make bids or offers or enter into transactions that are
inconsistent with such course of dealings. Further, all Market
Makers are designated as specialists on NOM for all purposes under
the Act or rules thereunder. See Chapter VII, Section 5.
---------------------------------------------------------------------------
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. All of the proposed changes to
the Customer, Professional, and NOM Market Maker Rebates to Add
Liquidity in Penny Pilot Options are designed to attract additional
order flow to NOM, which strengthens NOM's competitive position.
Greater liquidity benefits all market participants by providing more
trading opportunities and attracting greater participation by market
makers. An increase in the activity of these market participants in
turn facilitates tighter spreads.
The Exchange 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 and rebates to remain
competitive. Because competitors are free to modify their own fees and
rebates in response, the Exchange believes that the degree to which
pricing changes in this market may impose any burden on competition is
extremely limited.
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.\11\
---------------------------------------------------------------------------
\11\ 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-2018-101 on the subject line.
[[Page 65376]]
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-2018-101. 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 Number SR-NASDAQ-2018-101 and should be submitted
on or before January 10, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27511 Filed 12-19-18; 8:45 am]
BILLING CODE 8011-01-P
