Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Proposed Rule Change To Amend The NASDAQ Options Market LLC Pricing Schedule at Options 7, Section 2 and Update Other Rule Text Within Options 7, Section 1 and Options 7, Section 5, 55887-55902 [2020-19946]
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89767; File No. SR–
NASDAQ–2020–056]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Proposed
Rule Change To Amend The NASDAQ
Options Market LLC Pricing Schedule
at Options 7, Section 2 and Update
Other Rule Text Within Options 7,
Section 1 and Options 7, Section 5
September 3, 2020.
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 August
21, 2020, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend The
NASDAQ Options Market LLC (‘‘NOM’’)
Pricing Schedule at Options 7, Section
2, ‘‘Nasdaq Options Market Fees and
Rebates.’’ The Exchange also proposes
to amend certain rule citations within
Options 7, update other rule text within
Options 7, Section 1, ‘‘Collection of
Exchange Fees and Other ClaimsNasdaq Options Market,’’ and Options
7, Section 5, ‘‘Nasdaq Options
Regulatory Fee.’’
The Exchange originally filed the
proposed pricing changes on August 3,
2020 as SR–NASDAQ–2020–047. On
15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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1
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August 13, 2020, the Exchange
withdrew that filing and submitted SR–
NASDAQ–2020–052. On August 21,
2020, the Exchange withdrew SR–
NASDAQ–2020–052 and replaced it
with this proposal.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
NOM’s Pricing Schedule at Options 7,
Section 2, ‘‘Nasdaq Options Market Fees
and Rebates.’’ The Exchange also
proposes to amend certain rule citations
within Options 7, update other rule text
within Options 7, Section 1, ‘‘Collection
of Exchange Fees and Other ClaimsNasdaq Options Market,’’ and Options
7, Section 5, ‘‘Nasdaq Options
Regulatory Fee.’’ Each change will be
described below.
Options 7, Section 2
Today, NOM Options 7, Section 2(1)
provides for various fees and rebates
applicable to NOM Participants. Today,
PO 00000
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55887
the table of fees and rebates is divided
into Penny Pilot Options and NonPenny Pilot Options.3 The Exchange
pays Customer 4 and Professional 5
Rebates to Add Liquidity in Penny
Symbols based on a table. To determine
the applicable percentage of total
industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny and Non-Penny Symbol
Customer and/or Professional volume
that adds liquidity is included. The
table for Customer and Professional
Rebates to Add Liquidity in Penny
Symbols is currently as follows:
3 The Exchange proposes to replace the terms
‘‘Pilot Options’’ and ‘‘Pilot’’ with ‘‘Symbol’’ or
‘‘Symbols’’ throughout Options 7, Section 2. On
April 1, 2020, the Commission approved the
amendment to the OLPP to make permanent the
Pilot Program (the ‘‘OLPP Program’’). See Securities
Exchange Act Release No. 88532 (April 1, 2020), 85
FR 19545 (April 7, 2020) (File No. 4–443)
(‘‘Approval Order’’). The Exchange recently filed a
proposal to amend NOM Options 3, Section 3 to
conform the rule to Section 3.1 of the Plan for the
Purpose of Developing and Implementing
Procedures Designed to Facilitate the Listing and
Trading of Standardized Options (the ‘‘OLPP’’). See
Securities Exchange Act Release No. 89167 (June
26, 2020), 85 FR 39953 (July 2, 2020) (SR–
NASDAQ–2020–036). The Exchange’s proposal
amended NOM Options 3, Section 3 to refer to a
Penny Interval Program instead of a Penny Pilot
Program. This proposed change conforms the name
of the program and removes a reference to a list of
Penny Pilot Program symbols. The Exchange’s
proposal hereafter utilizes the term ‘‘Penny
Symbols’’ and ‘‘Non-Penny Symbols’’ for these
reasons.
4 As proposed within Options 7, Section 1, 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 Options
1, Section 1(a)(47)).
5 As proposed within Options 7, Section 1 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
Options 1, Section 1(a)(47). All Professional orders
shall be appropriately marked by Participants.
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
Monthly
volume
Tier 1 ..............
Tier 2 ..............
Tier 3 ..............
Tier 4 ..............
Tier 5 ..............
Tier 6 ..............
Rebate to add
liquidity
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options of up to 0.10% of total industry customer equity and
ETF option average daily volume (‘‘ADV’’) contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.30% to 0.40% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.40% to 0.80% of total industry customer equity and ETF option ADV contracts per day in a month.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options above 0.80% or more of total industry customer equity
and ETF option ADV contracts per day in a month, or Participant adds: (1) Customer and/or Professional liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 0.20% or more of total industry customer
equity and ETF option ADV contracts per day in a month, and (2) has added liquidity in all securities
through one or more of its Nasdaq Market Center MPIDs that represent 1.00% or more of Consolidated Volume in a month or qualifies for MARS (defined below).
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Further, pursuant to current note ‘‘d’’,
with respect to Customer and
Professional Rebates to Add Liquidity in
Penny Symbols, this note provides that,
NOM Participants that qualify for any
MARS Payment Tier in Section (6) will
receive: (1) 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, in addition to qualifying
Customer and/or Professional Rebate to
Add Liquidity Tier 1, or (2) an
additional $0.04 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, in
addition to qualifying Penny Pilot
Options Customer and/or Professional
Rebate to Add Liquidity Tiers 2–6. NOM
Participants that qualify for a note ‘‘c’’
incentive will receive the greater of the
note ‘‘c’’ 6 or note ‘‘d’’ incentive.
6 Current note ‘‘c’’ of Options 7, Section 2(1)
provides, ‘‘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
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Also, pursuant to current note ‘‘e’’,
NOM Participants that transact in all
securities through one or more of its
Nasdaq Market Center MPIDs that
represent 3.00% or more of
Consolidated Volume in the same
month on The Nasdaq Stock Market will
receive a $0.50 per contract rebate to
add liquidity in Penny Pilot Options as
Customer or Professional and $1.00 per
contract rebate to add liquidity in NonPenny Pilot Options as Customer or
Professional. Participants that qualify
for this rebate would not be eligible for
any other rebates in Tiers 1–6 or other
rebate incentives on NOM for Customer
and Professional order flow in Options
7, Section 2(1).
Finally, pursuant to current note ‘‘f’’,
NOM Participants that (a) add
Penny Pilot Options and/or Non-Penny Pilot
Options above 0.80% of total industry customer
equity and ETF option ADV contracts per day in a
month, (b) add Customer, Professional, Firm, NonNOM Market Maker and/or Broker-Dealer liquidity
in Non-Penny Pilot Options above 0.12% of total
industry customer equity and ETF option ADV
contracts per day in a month, and (c) execute
greater than 0.04% of Consolidated Volume (‘‘CV’’)
via Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’)
volume within The Nasdaq Stock Market Closing
Cross within a month will receive an additional
$0.05 per contract Penny Pilot Options Customer
and/or Professional Rebate to Add Liquidity for
each transaction which adds liquidity in Penny
Pilot Options in a month. Consolidated Volume
shall mean the total consolidated volume reported
to all consolidated transaction reporting plans by all
exchanges and trade reporting facilities during a
month in equity securities, excluding executed
orders with a size of less than one round lot. For
purposes of calculating Consolidated Volume and
the extent of an equity member’s trading activity,
expressed as a percentage of or ratio to
Consolidated Volume, the date of the annual
reconstitution of the Russell Investments Indexes
shall be excluded from both total Consolidated
Volume and the member’s trading activity.’’
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$0.20
0.25
0.42
0.43
0.45
c 0.48
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options above 1.20%
of total industry customer equity and
ETF option ADV contracts per day in a
month, (b) execute greater than 0.04% of
Consolidated Volume (‘‘CV’’) via
Market-on-Close/Limit-on-Close
(‘‘MOC/LOC’’) volume within The
Nasdaq Stock Market Closing Cross
within a month, and (c) add greater than
1.5 million shares per day of
nondisplayed volume within The
Nasdaq Stock Market within a month
will receive a $0.55 per contract rebate
to add liquidity in Penny Pilot Options
as Customer or Professional and $1.05
per contract rebate to add liquidity in
Non-Penny Pilot Options as Customer or
Professional. Participants that qualify
for this rebate would not be eligible for
any other rebates in Tiers 1–6 or other
rebate incentives on NOM for Customer
and Professional order flow in Options
7, Section 2(1).
Penny Symbols
Today, Firms,7 Non-NOM Market
Makers,8 and Broker-Dealers 9 are paid a
$0.10 per contract Rebate to Add
7 The term ‘‘Firm’’ or (‘‘F’’) applies to any
transaction that is identified by a Participant for
clearing in the Firm range at OCC. See Options 7,
Section 1.
8 The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’)
is a registered market maker on another options
exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to
NOM. See Options 7, Section 1.
9 The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to
any transaction which is not subject to any of the
other transaction fees applicable within a particular
category. See Options 7, Section 1.
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Liquidity in Penny Symbols. NOM
Market Makers 10 are paid Rebates to
Add Liquidity in Penny Symbols will be
paid as noted below.
Monthly
volume
Rebate to add
liquidity
Tier 1 .......................
Tier 2 .......................
Tier 3 .......................
Tier 4 .......................
Tier 5 ## ...................
Tier 6 .......................
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55889
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 0.20% of total industry customer equity and ETF option
ADV contracts per day in a month.
Participant: (a) Adds 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: Or (b)(1) transacts in all securities through
one or more of its Nasdaq Market Center MPIDs that represent 0.70% or more of Consolidated Volume (‘‘CV’’) which adds liquidity in the same month on The Nasdaq Stock
Market, (2) transacts in Tape B securities through one or more of its Nasdaq Market
Center MPIDs that represent 0.18% or more of CV which adds liquidity in the same
month on The Nasdaq Stock Market, and (3) executes greater than 0.01% of CV via
Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’) volume within The Nasdaq Stock Market
Closing Cross in the same month.
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 0.40% of total industry customer equity and ETF option ADV
contracts per day in a month and transacts in all securities through one or more of its
Nasdaq Market Center MPIDs that represent 0.40% or more of Consolidated Volume
(‘‘CV’’) which adds liquidity in the same month on The Nasdaq Stock Market.
Participant: (a)(1) Adds NOM Market Maker liquidity in Penny Pilot Options and/or NonPenny 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; or
(b)(1) adds 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) executes 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.
$0.20.
$0.25.
$0.30 or $0.40 in the following symbols AAPL,
QQQ, IWM, SPY and VXX.
$0.32 or $0.40 in the following symbols AAPL,
QQQ, IWM, VXX and SPY.
$0.44.
$0.48.
Total Volume is defined as Customer,
Professional, Firm, Broker-Dealer,
Non876K54–NOM Market Maker and
NOM Market Maker volume in Penny
Symbols and/or Non-Penny Symbols
which either adds or removes liquidity
on NOM. Pursuant to current note ‘‘##’’,
NOM Participants that qualify for the
Tier 5 NOM Market Maker Rebate to
Add Liquidity in Penny Pilot Options
and add NOM Market Maker liquidity in
Penny Pilot Options and/or Non-Penny
Pilot Options of above 0.50% of total
industry customer equity and ETF
option ADV contracts per day in a
month, will receive a $0.46 per contract
rebate to add liquidity in Penny Pilot
Options as Market Maker in lieu of the
Tier 5 rebate.
The Exchange assesses Customers and
Professionals a $0.48 per contract Fee
for Removing Liquidity in Penny
Symbols. Firms, Non-NOM Market
Makers, NOM Market Makers and
Broker-Dealers are assessed a $0.50 per
contract Fee for Removing Liquidity in
Penny Symbols.
With respect to the fees assessed to
Non-NOM Market Makers and NOM
Market Makers, pursuant to current note
‘‘2’’, Participants that add 1.30% of
Customer, Professional, Firm, BrokerDealer or Non-NOM Market Maker
liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of total
industry customer equity and ETF
option ADV contracts per day in a
month are subject to the following
pricing applicable to executions: A
$0.48 per contract Penny Pilot Options
Fee for Removing Liquidity when the
Participant is (i) both the buyer and the
seller or (ii) the Participant removes
liquidity from another Participant under
Common Ownership. Further,
Participants that add 1.50% of
Customer, Professional, Firm, BrokerDealer or Non-NOM Market Maker
liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of total
industry customer equity and ETF
option ADV contracts per day in a
month and meet or exceed the cap for
The Nasdaq Stock Market Opening
Cross during the month are subject to
the following pricing applicable to
executions less than 10,000 contracts: A
$0.32 per contract Penny Pilot Options
Fee for Removing Liquidity when the
Participant is (i) both the buyer and
seller or (ii) the Participant removes
liquidity from another Participant under
Common Ownership. Finally,
Participants that add 1.75% of
Customer, Professional, Firm, BrokerDealer or Non-NOM Market Maker
liquidity in Penny Pilot Options and/or
Non-Penny Pilot Options of total
industry customer equity and ETF
option ADV contracts per day in a
month are subject to the following
pricing applicable to executions less
than 10,000 contracts: A $0.32 per
contract Penny Pilot Options Fee for
Removing Liquidity when the
10 As proposed, the term ‘‘NOM Market Maker’’
or (‘‘M’’) is a Participant that has registered as a
Market Maker on NOM pursuant to Options 2,
Section 1, and must also remain in good standing
pursuant to Options 2, Section 9. 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. See proposed
Options 7, Section 1.
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
Participant is (i) both the buyer and
seller or (ii) the Participant removes
liquidity from another Participant under
Common Ownership.
Non-Penny Symbols
Today, the Exchange assesses no Fee
for Adding Liquidity to Customers and
Professionals in Non-Penny Symbols.
Firms, Non-NOM Market Makers and
Broker-Dealers are assessed a $0.45 per
contract Fee for Adding Liquidity in
Non-Penny Symbols. Finally, NOM
Market Makers are assessed a $0.35 per
contract Fee for Adding Liquidity in
Non-Penny Symbols. The NOM Market
Maker Fee for Adding Liquidity in NonPenny Symbols will apply unless
Participants meet the volume thresholds
set forth in current note ‘‘5’’.
Pursuant to current note ‘‘5’’,
Participants that add NOM Market
Maker liquidity in Non-Penny Symbols
of 7,500 to 9,999 ADV contracts per day
in a month are assessed a $0.00 per
contract Non-Penny Options Fee for
Adding Liquidity in that month.
Participants that add NOM Market
Maker liquidity in Non-Penny Pilot
Options of 10,000 or more ADV
contracts per day in a month receive the
Non-Penny Rebate to Add Liquidity for
that month instead of paying the NonPenny Fee for Adding Liquidity.
The Exchange assesses Customers and
Professionals an $0.85 per contact Fee
for Removing Liquidity in Non-Penny
Symbols. Firms, Non-NOM Market
Makers, NOM Market Makers and
Broker-Dealers are assessed a $1.10 Fee
for Removing Liquidity in Non-Penny
Symbols.
Customers and Professionals are paid
an $0.80 per contract Rebate to Add
Liquidity in Non-Penny Symbols.
Pursuant to current note ‘‘1’’, a
Participant that qualifies for Customer
or Professional Penny Pilot Options
Rebate to Add Liquidity Tiers 2, 3, 4, or
5 in a month will receive an additional
$0.10 per contract Non-Penny Pilot
Options Rebate to Add Liquidity for
each transaction which adds liquidity in
Non-Penny Pilot Options in that month.
A Participant that qualifies for Customer
or Professional Penny Pilot Options
Rebate to Add Liquidity Tier 6 in a
month will receive an additional $0.20
per contract Non-Penny Pilot Options
Rebate to Add Liquidity for each
transaction which adds liquidity in
Non-Penny Pilot Options in that month.
Further, as discussed above, pursuant
to current note ‘‘e’’, NOM Participants
that transact in all securities through
one or more of its Nasdaq Market Center
MPIDs that represent 3.00% or more of
Consolidated Volume in the same
month on The Nasdaq Stock Market will
receive a $0.50 per contract rebate to
add liquidity in Penny Pilot Options as
Customer or Professional and $1.00 per
contract rebate to add liquidity in NonPenny Pilot Options as Customer or
Professional. Participants that qualify
for this rebate would not be eligible for
any other rebates in Tiers 1–6 or other
rebate incentives on NOM for Customer
and Professional order flow in Options
7, Section 2(1).
Finally, as discussed above, pursuant
to current note ‘‘f’’, NOM Participants
that (a) add Customer, Professional,
Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot
Options above 1.20% of total industry
customer equity and ETF option ADV
contracts per day in a month, (b)
execute greater than 0.04% of
Consolidated Volume (‘‘CV’’) via
Market-on-Close/Limit-on-Close
(‘‘MOC/LOC’’) volume within The
Nasdaq Stock Market Closing Cross
within a month, and (c) add greater than
1.5 million shares per day of
nondisplayed volume within The
Nasdaq Stock Market within a month
will receive a $0.55 per contract rebate
to add liquidity in Penny Pilot Options
as Customer or Professional and $1.05
per contract rebate to add liquidity in
Non-Penny Pilot Options as Customer or
Professional. Participants that qualify
for this rebate would not be eligible for
any other rebates in Tiers 1–6 or other
rebate incentives on NOM for Customer
and Professional order flow in Options
7, Section 2(1).
Firms, Non-NOM Market Makers and
Broker-Dealers are not eligible for a
Rebate to Add Liquidity in Non-Penny
Symbols.
NOM Market Makers receive a $0.30
per contract Rebate for Adding Liquidity
in Non-Penny Symbols, when the NOM
Market Maker qualifies for the volume
thresholds set forth in note ‘‘5’’, which
was described above. Additionally, if a
NOM Market Maker qualifies for note
‘‘6’’, they may receive additional
incentives. Current note ‘‘6’’ provides
that Participants that qualify for the Tier
6 NOM Market Maker Rebate to Add
Liquidity in Penny Pilot Options will
receive a $0.86 per contract NOM
Market Maker Rebate to Add Liquidity
in Non-Penny Pilot Options.11
Participants that qualify for a note ‘‘&’’
incentive in the MARS Payment
Schedule in Options 7, Section 2(6)
receive an additional $0.02 per contract
NOM Market Maker Rebate to Add
Liquidity in Non-Penny Pilot Options,
in addition to receiving an $0.86 per
contract NOM Market Maker Rebate to
Add Liquidity in Non-Penny Pilot
Options. Participants that qualify for a
note ‘‘5’’ incentive receive the greater of
the note ‘‘5’’ or note ‘‘6’’ incentive.
Proposal
The Exchange proposes to restructure
NOM’s Pricing Schedule within Options
7, Section 2 for Penny and Non-Penny
Symbols. The Exchange’s proposal
introduces new tables as explained in
detail below.
The Exchange proposes to rename
Options 7, Section 2(1) ‘‘Fees and
Rebates for Execution of Contracts on
The Nasdaq Options Market.’’ This
section is currently titled ‘‘Fees for
Execution of Contracts on The Nasdaq
Options Market.’’ This change is
proposed as the Exchange provides for
rebates within Options 7, Section 2(1).
First, the Exchange proposes the
below new table for its Rebates to Add
Liquidity in Penny Symbols.
REBATES TO ADD LIQUIDITY IN PENNY SYMBOLS
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Tier 1
Customer 1 8 9 10 .......................................
Professional 1 9 10 .....................................
Broker-Dealer ...........................................
Firm ..........................................................
Non-NOM Market Maker ..........................
11 Current note ‘‘6’’ of Options 7, Section 2(1)
provides, ‘‘Participants that qualify for the Tier 6
NOM Market Maker Rebate to Add Liquidity in
Penny Pilot Options will receive a $0.86 per
contract NOM Market Maker Rebate to Add
VerDate Sep<11>2014
16:38 Sep 09, 2020
Jkt 250001
($0.20)
(0.20)
(0.10)
(0.10)
(0.10)
Tier 2
Tier 3
($0.25)
(0.25)
(0.10)
(0.10)
(0.10)
($0.42)
(0.42)
(0.10)
(0.10)
(0.10)
Liquidity in Non-Penny Pilot Options. Participants
that qualify for a note ‘‘&’’ incentive in the MARS
Payment Schedule in Section (6) will receive an
additional $0.02 per contract NOM Market Maker
Rebate to Add Liquidity in Non-Penny Pilot
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
Tier 4
($0.43)
(0.43)
(0.10)
(0.10)
(0.10)
Tier 5
($0.45)
(0.45)
(0.10)
(0.10)
(0.10)
Tier 6
7 ($0.48)
(0.48)
(0.10)
(0.10)
(0.10)
Options, in addition to receiving a $0.86 per
contract NOM Market Maker Rebate to Add
Liquidity in Non-Penny Pilot Options. Participants
that qualify for a note ‘‘5’’ incentive will receive the
greater of the note ‘‘5’’ or note ‘‘6’’ incentive.’’
E:\FR\FM\10SEN1.SGM
10SEN1
Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
55891
REBATES TO ADD LIQUIDITY IN PENNY SYMBOLS—Continued
Tier 1
NOM Market Maker 3 ...............................
(0.20)
khammond on DSKJM1Z7X2PROD with NOTICES
Customer Rebates To Add Liquidity in
Penny Symbols
With respect to Customer Rebates to
Add Liquidity in Penny Symbols, the
rebates paid for each tier 12 will
continue to be the same. Also, the
Exchange is relocating the current tier
qualifications within new note ‘‘1,’’
with no changes. No changes are being
made to the Customer Rebates to Add
Liquidity in Penny Symbols, the rebates
are simply being restructured into a new
format.
Today, note ‘‘c’’ 13 is referenced with
respect to Customer and Professional
Tier 6 Rebate to Add Liquidity in Penny
Symbols. The Exchange proposes to
relocate note ‘‘c’’ to new note ‘‘7’’ 14 and
12 Today, the Exchange pays Customers, in Penny
Symbols the following Rebates to Add Liquidity:
$0.20 per contract for Tier 1, $0.25 per contract for
Tier 2, $0.42 per contract for Tier 3, $0.43 per
contract for Tier 4, $0.45 per contract for Tier 5, and
$0.48 per contract for Tier 6.
13 See note 6 above.
14 Proposed new note ‘‘7’’ provides, ‘‘Participants
that: (1) add Customer, Professional, Firm, NonNOM Market Maker and/or Broker-Dealer liquidity
in Penny Symbols and/or Non-Penny Symbols 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
Symbol Customer Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Symbol
in that month; or (2) add Customer, Professional,
Firm, Non-NOM Market Maker and/or BrokerDealer liquidity in Penny Symbols and/or NonPenny Symbols 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 Symbol Customer Rebate to Add
Liquidity for each transaction which adds liquidity
in Penny Symbols in that month; or (3) (a) add
Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols 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
Symbols above 0.12% 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
Symbol Customer Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Symbols
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
VerDate Sep<11>2014
16:38 Sep 09, 2020
Jkt 250001
Tier 2
Tier 3
(0.25)
4 (0.30)
amend the note. New note ‘‘7’’ is being
amended to remove the incentive rebate
applicable to Professionals orders as
they relate to Rebates to Add Liquidity
in Penny Symbols. With this proposal,
new note ‘‘7’’ would provide that
Participants that add Customer,
Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in
Penny Symbols and/or Non-Penny
Symbols of 1.15% or more of total
industry customer equity and ETF
option ADV contracts per day in a
month receive an additional $0.02 per
contract Penny Symbol Customer Rebate
to Add Liquidity for each transaction
which adds liquidity in Penny Symbols
in that month. With this proposal, only
a Customer would receive the additional
$0.02 per contract incentive. Today,
Participants that 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 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. With this proposal, only a
Customer would receive the additional
$0.05 per contract incentive. Finally,
today, Participants that add (a)
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 0.12% 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 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. With this proposal,
shall be excluded from both total Consolidated
Volume and the member’s trading activity.’’
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
Tier 4
4 (0.32)
Tier 5
11 (0.44)
Tier 6
(0.48)
only a Customer would receive the
additional $0.05 per contract incentive.
A Professional order would no longer
receive the additional incentives. The
Exchange believes that despite no longer
offering certain incentives for
Professional orders, the Exchange will
continue to attract order flow to NOM.
The description and calculation of
Consolidated Volume 15 remains
unchanged.
With respect to current notes ‘‘***’’,
‘‘d’’,16 ‘‘e’’,17 and ‘‘f,’’ 18 which apply to
15 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. See current note ‘‘c’’ within
Options 7, Section 2.
16 Current note ‘‘d’’ of Options 7, Section 2(1)
provides, ‘‘NOM Participants that qualify for any
MARS Payment Tier in Section (6) will receive: (1)
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, in
addition to qualifying Customer and/or Professional
Rebate to Add Liquidity Tier 1, or (2) an additional
$0.04 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, in addition to
qualifying Penny Pilot Options Customer and/or
Professional Rebate to Add Liquidity Tiers 2–6.
NOM Participants that qualify for a note ‘‘c’’
incentive will receive the greater of the note ‘‘c’’ or
note ‘‘d’’ incentive.’’
17 Current note ‘‘e’’ of Options 7, Section 2(1)
provides, ‘‘NOM Participants that transact in all
securities through one or more of its Nasdaq Market
Center MPIDs that represent 3.00% or more of
Consolidated Volume in the same month on The
Nasdaq Stock Market will receive a $0.50 per
contract rebate to add liquidity in Penny Pilot
Options as Customer or Professional and $1.00 per
contract rebate to add liquidity in Non-Penny Pilot
Options as Customer or Professional. Participants
that qualify for this rebate would not be eligible for
any other rebates in Tiers 1–6 or other rebate
incentives on NOM for Customer and Professional
order flow in Options 7, Section 2(1).’’
18 Current note ‘‘f’’ of Options 7, Section 2(1)
provides, ‘‘NOM Participants that (a) add Customer,
Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Pilot Options and/
or Non-Penny Pilot Options above 1.20% of total
industry customer equity and ETF option ADV
contracts per day in a month, (b) execute greater
than 0.04% of Consolidated Volume (‘‘CV’’) via
Market-on-Close/Limit-on-Close (‘‘MOC/LOC’’)
volume within The Nasdaq Stock Market Closing
Cross within a month, and (c) add greater than 1.5
million shares per day of non-displayed volume
E:\FR\FM\10SEN1.SGM
Continued
10SEN1
55892
Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Customer Rebates to Add Liquidity in
Penny Symbols, the Exchange proposes
to relocate these notes, respectively, to
new notes ‘‘1’’, ‘‘8’’, ‘‘9’’, and ‘‘10’’.
Current note ‘‘* * *’’ provides, ‘‘The
Customer and Professional Rebate to
Add Liquidity in Penny Pilot Options
will be paid as noted below. To
determine the applicable percentage of
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny Pilot and Non-Penny Pilot
Customer and/or Professional volume
that adds liquidity will be included.’’
The Exchange proposes to relocate this
note to new note 1,19 and amend the
note to provide, ‘‘The Customer and
Professional Rebate to Add Liquidity in
Penny Symbols will be paid per the
highest tier achieved below. To
determine the applicable percentage of
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny Symbol and Non-Penny Symbol
Customer and/or Professional volume
that adds liquidity will be included.’’
While the proposed rule text is being
amended to make clear that Penny
Symbols will continue to be paid the
highest tier achieved, this is the case
today. The Exchange is not amending
the manner in which the tiers are being
applied today. As is the case today, to
determine the applicable percentage of
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny Symbol and Non-Penny Symbol
Customer and/or Professional volume
that adds liquidity will be included.
The Exchange proposes to relocate
note ‘‘d’’ into new note ‘‘8’’ and amend
the note. Proposed new note ‘‘8’’
removes the incentive rebate applicable
to Professionals orders as they relate to
Rebates to Add Liquidity in Penny
Symbols, when the NOM Participant
qualifies for any MARS Payment Tier in
Options, 7 Section 2(6). Today,
Customer and Professional orders
receive an additional $0.05 per contract
Penny Symbol Rebate to Add Liquidity
for each transaction which adds
liquidity in Penny Symbols in that
month, in addition to qualifying
Customer and/or Professional Rebate to
within The Nasdaq Stock Market within a month
will receive a $0.55 per contract rebate to add
liquidity in Penny Pilot Options as Customer or
Professional and $1.05 per contract rebate to add
liquidity in Non-Penny Pilot Options as Customer
or Professional. Participants that qualify for this
rebate would not be eligible for any other rebates
in Tiers 1–6 or other rebate incentives on NOM for
Customer and Professional order flow in Options 7,
Section 2(1).’’
19 Current note 1 of Options 7, Section 2(1) is
being relocated to new note ‘‘12’’.
VerDate Sep<11>2014
16:38 Sep 09, 2020
Jkt 250001
Add Liquidity Tier 1. With this
proposed change, only a Customer
would receive the additional $0.05 per
contract incentive. Also, today, a NOM
Participant qualifies for any MARS
Payment Tier in Options, 7 Section 2(6)
may receive an additional $0.04 per
contract Penny Symbols Customer and/
or Professional Rebate to Add Liquidity
for each transaction which adds
liquidity in Penny Symbols in that
month, in addition to qualifying Penny
Symbols Customer Rebate to Add
Liquidity Tiers 2–6. With this proposal,
only a Customer would receive the
additional $0.04 per contract incentive.
The above-referenced incentives would
no longer be available to Professionals.
The Exchange believes that despite no
longer offering certain incentives for
Professional orders, the Exchange will
continue to attract order flow to NOM.
Finally, the last sentence of current note
‘‘d’’ is being amended to state,
‘‘Participants that qualify for note ‘‘7’’
and note ‘‘8’’ incentives will receive the
greater of the note ‘‘7’’ or note ‘‘8’’
incentive, but not both.’’ The proposed
wording, requires NOM Participants
that qualify for both new notes ‘‘7’’ and
‘‘8’’, to receive the greater of notes ‘‘7’’
or ‘‘8’’. Today, NOM Participants may
only obtain the greater of notes ‘‘c’’ or
‘‘d’’. This new language is not
substantively amending the current rule
text as any NOM Participant could
qualify for notes ‘‘c’’ or ‘‘d’’ today and,
as currently noted within note ‘‘d’’, the
NOM Participant would receive the
greater incentive. As proposed, note ‘‘8’’
would provide:
NOM Participants that qualify for any
MARS Payment Tier in Section (6) will
receive: (1) an additional $0.05 per contract
Penny Symbol Customer Rebate to Add
Liquidity for each transaction which adds
liquidity in Penny Symbols in that month, in
addition to qualifying Customer Rebate to
Add Liquidity Tier 1, or (2) an additional
$0.04 per contract Penny Symbol Customer
Rebate to Add Liquidity for each transaction
which adds liquidity in Penny Symbols in
that month, in addition to qualifying Penny
Symbol Customer Rebate to Add Liquidity
Tiers 2–6. NOM Participants that qualify for
note ‘‘7’’ and note ‘‘8’’ incentives will receive
the greater of the note ‘‘7’’ or note ‘‘8’’
incentive, but not both.
Note ‘‘e’’ is being relocated to new
note ‘‘9’’ and is being amended. New
note ‘‘9’’ provides,
NOM Participants that transact in all
securities through one or more of its Nasdaq
Market Center MPIDs that represent 3.00% or
more of Consolidated Volume in the same
month on The Nasdaq Stock Market will
receive a $0.50 per contract Rebate to Add
Liquidity in Penny Symbols as Customer, a
$0.48 per contract rebate as Professional, a
$1.00 per contract Rebate to Add Liquidity in
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
Non-Penny Symbols as Customer, and a
$0.90 per contract Rebate to Add liquidity in
Non-Penny Symbols as Professional.
Participants that qualify for this rebate would
not be eligible for any other rebates in Tiers
1–6 or other rebate incentives on NOM for
Customer and Professional order flow in
Options 7, Section 2(1).
The Exchange is amending current note
‘‘e’’ to reduce the incentive paid to a
Professional. The Exchange currently
pays a $0.50 per contract Rebate to Add
Liquidity in Penny Symbols to a
Customer and a Professional. With this
proposal, the Exchange would continue
to pay a Customer a $0.50 per contract
Rebate to Add Liquidity in Penny
Symbols and would now pay a
Professional a $0.48 per contract Rebate
to Add Liquidity in Penny Symbols.
Also, the Exchange currently pays a
$1.00 per contract Rebate to Add
Liquidity in Non-Penny Symbols to a
Customer and a Professional. With this
proposal, the Exchange would continue
to pay a Customer a $1.00 per contract
Rebate to Add Liquidity in Non-Penny
Symbols and would now pay a
Professional a $0.90 per contract Rebate
to Add Liquidity in Non-Penny
Symbols. The Exchange believes that
despite lowering rebates for
Professionals, the Exchange will
continue to attract order flow to NOM.
Note ‘‘f’’ 20 is being relocated to note
‘‘10’’ and amended. New note 10
provides,
NOM Participants that (a) add Customer,
Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above
1.20% of total industry customer equity and
ETF option ADV contracts per day in a
month, (b) execute greater than 0.04% of
Consolidated Volume (‘‘CV’’) via Market-onClose/Limit-on-Close (‘‘MOC/LOC’’) volume
within The Nasdaq Stock Market Closing
Cross within a month, and (c) add greater
than 1.5 million shares per day of nondisplayed volume within The Nasdaq Stock
Market within a month will receive a $0.55
per contract Rebate to Add Liquidity in
Penny Symbols as Customer, a $0.48 per
contract Rebate to Add Liquidity in Penny
Symbols as Professional, and a $1.05 per
contract Rebate to Add Liquidity in NonPenny Symbols as Customer, and a $0.90 per
contract Rebate to Add Liquidity in NonPenny Symbols as Professional. Participants
that qualify for this rebate would not be
eligible for any other rebates in Tiers 1–6 or
other rebate incentives on NOM for Customer
and Professional order flow in Options 7,
Section 2(1).
The Exchange is proposing to amend the
Rebates to Add Liquidity in Penny
Symbols for Customers and
Professionals to lower Professional
rebates. Today, provided a Customer
20 See
E:\FR\FM\10SEN1.SGM
note 19 above.
10SEN1
Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
qualified for the note ‘‘f’’ incentive, the
Customer and Professional would be
paid a $0.55 per contract Rebate to Add
Liquidity in Penny Symbols as
Customer or Professional and $1.05 per
contract Rebate to Add Liquidity in
Non-Penny Symbols. With this
proposal, the Exchange proposes to
continue to pay Participants a Customer
Rebate to Add Liquidity in Penny
Symbols of $0.55 per contract. As
proposed, Participants would receive a
lower Professional Rebate to Add
Liquidity in Penny Symbols of $0.48 per
contract. Also with this proposal, the
Exchange proposes to continue to pay
Participants a Customer Rebate to Add
Liquidity in Non-Penny Symbols of
$1.05 per contract. As proposed,
Participants would receive a lower
Professional Rebate to Add Liquidity in
Non-Penny Symbols of $0.90 per
contract. The Exchange believes that
despite lowering rebates for
Professionals, the Exchange will
continue to attract order flow to NOM.
khammond on DSKJM1Z7X2PROD with NOTICES
Professional Rebates To Add Liquidity
in Penny Symbols
Today, the Exchange pays Customer
and Professional orders the same
Rebates to Add Liquidity in Penny
Symbols, as described above, subject to
a six tiers of qualification and notes
‘‘* * *’’, ‘‘d,’’ ‘‘e,’’ and ‘‘f,’’ as
specifically detailed above. The
Exchange proposes to pay the same
rebates for each tier.21 Also, the
Exchange is relocating the current tier
qualifications within new note ‘‘1,’’
with no changes. As noted above, the
Exchange proposes to remove or lower
certain incentives for Professionals.
While the Exchange proposes to
continue to pay additional incentives or
higher incentives for Customers, but not
Professionals, the Exchange believes
that it will continue to attract order flow
to NOM.
Broker-Dealer, Firm, Non-NOM Market
Maker Rebates To Add Liquidity in
Penny Symbols
Today, Broker-Dealers, Firms and
Non-NOM Market Makers orders are
paid a $0.10 per contract Rebate to Add
Liquidity in Penny Symbols. The
Exchange intends to continue to pay
Participants who submit Broker-Dealers,
Firms and Non-NOM Market Makers
orders a $0.10 per contract Rebate to
Add Liquidity in Penny Symbols
regardless of volume. Therefore, as
21 Today, the Exchange pays Professionals, in
Penny Symbols the following Rebates to Add
Liquidity: $0.20 per contract for Tier 1, $0.25 per
contract for Tier 2, $0.42 per contract for Tier 3,
$0.43 per contract for Tier 4, $0.45 per contract for
Tier 5, and $0.48 per contract for Tier 6.
VerDate Sep<11>2014
16:38 Sep 09, 2020
Jkt 250001
proposed, Tiers 1–6 would pay a $0.10
per contract Rebate to Add Liquidity in
Penny Symbols to Participants who
submit Broker-Dealers, Firms and NonNOM Market Makers orders.
NOM Market Maker Rebates To Add
Liquidity in Penny Symbols
Today, NOM Market Makers are paid
a Rebate to Add Liquidity in Penny
Symbols based on a 6 tier qualifications
as described above. The Exchange
proposes to relocate the tier
qualifications into note 3 without
changing any of the rule text and
retaining the meaning of ‘‘Total
Volume.’’
With respect to the rebates, the
Exchange is not amending the NOM
Market Maker Rebates to Add Liquidity
in Penny Symbols. The Exchange
proposes to create a new note ‘‘4’’ which
provides, ‘‘Participants who achieve the
NOM Market Maker Tier 3 or Tier 4
Rebate to Add Liquidity will receive
$0.40 per contract to add liquidity in in
the following symbols: AAPL, SPY,
QQQ, IWM, and VXX.’’ This new note
‘‘4’’ captures the current pricing of $0.40
per contract in the following symbols
AAPL, QQQ, IWM, VXX and SPY for
NOM Market Maker Tiers 3 and 4,
without change. Current note ‘‘##’’ is
being relocated to new note ‘‘11’’
without change.22
Second, the Exchange proposes to
restructure the Fees and Rebates to Add
Liquidity in Non-Penny Symbols as
follows:
FEES AND REBATES TO ADD LIQUIDITY
IN NON-PENNY SYMBOLS
Customer 9 10 12 .....................
Professional 9 10 12 ................
Broker-Dealer .......................
Firm .......................................
Non-NOM Market Maker ......
NOM Market Maker 5 6 ..........
($0.80)
(0.80)
0.45
0.45
0.45
0.35/(0.30)
Customer and Professional Fees and
Rebates To Add Liquidity in Non-Penny
Symbols
The Exchange is proposing to
continue to assess a Customer and a
Professional no Fee for Adding
Liquidity in Non-Penny Symbols and
pay a Customer and a Professional an
$0.80 per contract Rebate to Add
Liquidity in Non-Penny Symbols. Notes
22 Current note ‘‘##’’ of Options 7, Section 2(1)
provides, ‘‘NOM Participants that qualify for the
Tier 5 NOM Market Maker Rebate to Add Liquidity
in Penny Pilot Options and add NOM Market Maker
liquidity in Penny Pilot Options and/or Non-Penny
Pilot Options of above 0.50% of total industry
customer equity and ETF option ADV contracts per
day in a month, will receive a $0.46 per contract
rebate to add liquidity in Penny Pilot Options as
Market Maker in lieu of the Tier 5 rebate.’’
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
55893
‘‘e’’ 23 and ‘‘f’’,24 which are proposed to
be relocated to new notes ‘‘9’’ and ‘‘10,’’
will continue to apply to the Customer
and Professional Rebates to Add
Liquidity in Non-Penny Symbols. The
Exchange described the proposed
amendments to new notes ‘‘9’’ and ‘‘10’’
above in the Penny Symbol section.
Current note 1 25 is being relocated to
new note ‘‘12’’ and amended. New note
‘‘12’’ will continue to apply to Customer
and Professional Rebates to Add
Liquidity in Non-Penny Symbols. As
proposed, new note ‘‘12’’ provides,
A Participant that qualifies for Customer or
Professional Penny Symbol Rebate to Add
Liquidity Tiers 2, 3, 4, or 5 in a month will
receive an additional $0.10 per contract NonPenny Symbol Rebate to Add Liquidity for
each transaction which adds liquidity in
Non-Penny Symbols in that month. A
Participant that qualifies for Customer or
Professional Penny Symbol Rebate to Add
Liquidity Tier 6 in a month will receive an
additional $0.20 per contract Non-Penny
Symbol Rebate to Add Liquidity as Customer
and an additional $0.10 per contract NonPenny Symbol Rebate to Add Liquidity as
Professional for such transactions which add
liquidity in Non-Penny Symbols in that
month.
The Exchange proposes to reduce the
incentive for a Professional with new
note ‘‘12’’. Today, both a Customer and
a Professional that qualify for Customer
or Professional Penny Symbol Rebate to
Add Liquidity Tier 6 in a month receive
an additional $0.20 per contract NonPenny Symbol Rebate to Add Liquidity
for each transaction which adds
liquidity in Non-Penny Symbols in that
month. With this proposal, a Customer
that qualifies for new note ‘‘12’’would
continue to receive an additional $0.20
per contract Non-Penny Symbol Rebate
to Add Liquidity for such transactions
which add liquidity in Non-Penny
Symbols in that month. With this
proposal, a Professional that qualifies
for new note ‘‘12’’ would now receive
an additional $0.10 per contract NonPenny Symbol Rebate to Add Liquidity
for such transactions which add
liquidity in Non-Penny Symbols in that
month. The Exchange believes that
See note 18 above.
See note 19 above.
25 Current note 1 of Options 7, Section 2(1)
provides, ‘‘A Participant that qualifies for Customer
or Professional Penny Pilot Options Rebate to Add
Liquidity Tiers 2, 3, 4, or 5 in a month will receive
an additional $0.10 per contract Non-Penny Pilot
Options Rebate to Add Liquidity for each
transaction which adds liquidity in Non-Penny
Pilot Options in that month. A Participant that
qualifies for Customer or Professional Penny Pilot
Options Rebate to Add Liquidity Tier 6 in a month
will receive an additional $0.20 per contract NonPenny Pilot Options Rebate to Add Liquidity for
each transaction which adds liquidity in NonPenny Pilot Options in that month.’’
23
24
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55894
Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
despite lowering rebates for
Professionals, the Exchange will
continue to attract order flow to NOM.
Today, Firms, Non-NOM Market
Makers and Broker Dealers pay a $0.45
per contract Fee for Add Liquidity in
Non-Penny Symbols, this will remain
the same. Today, NOM Market Makers
pay a $0.35 per contract Fee for Adding
Liquidity in Non-Penny Symbols; this is
not changing. In addition to this NOM
Market Maker Fee for Add Liquidity in
Non-Penny Symbols, current note ‘‘5’’ 26
applies. Current note ‘‘5’’ will continue
to apply, however, this note is being
amended to provide, ‘‘The NOM Market
Maker Fee for Adding Liquidity in NonPenny Symbols will apply unless
Participants meet the volume thresholds
set forth in this note. Participants that
add NOM Market Maker liquidity in
Non-Penny Symbols of 10,000 to 14,999
ADV contracts per day in a month will
be assessed a $0.00 per contract NonPenny Options Fee for Adding Liquidity
in that month. Participants that add
NOM Market Maker liquidity in NonPenny Symbols of 15,000 or more ADV
contracts per day in a month will
receive the Non-Penny Rebate to Add
Liquidity for that month instead of
paying the Non-Penny Fee for Adding
Liquidity.’’ The Exchange proposes to
require a greater amount of Non-Penny
Symbol ADV (7,500 to 9,999 ADV is
being increased to 10,000 to 14,999
ADV) in order to qualify for a $0.00 per
contract Non-Penny Options Fee for
Adding Liquidity in that month. Also,
the Exchange proposes to require a
greater amount of NOM Market Maker
liquidity in Non-Penny Symbols (10,000
ADV is being increased to 15,000 ADV)
to receive the Non-Penny Rebate to Add
Liquidity for that month instead of
paying the Non-Penny Fee for Adding
Liquidity. The Exchange believes that
this proposal will encourage NOM
Market Makers to add a greater amount
of liquidity on NOM.
Today, Firms, Non-NOM Market
Makers and Broker Dealers receive no
Rebate to Add Liquidity in Non-Penny
Symbols. This will remain the same.
Today, NOM Market Makers receive a
$0.30 per contract Rebate to Add
Liquidity, subject to notes ‘‘5’’ and
‘‘6’’.27 This will remain the same. Note
‘‘6’’ is being amended to provide,
Participants that qualify for the Tier 6
NOM Market Maker Rebate to Add Liquidity
in Penny Symbols will receive a $0.86 per
contract NOM Market Maker Rebate to Add
Liquidity in Non-Penny Symbols.
Participants that qualify for a Tier 7 or higher
in the MARS Payment Schedule in Section
(6) will receive an additional $0.02 per
contract NOM Market Maker Rebate to Add
Liquidity in Non-Penny Symbols, in addition
to receiving a $0.86 per contract NOM Market
Maker Rebate to Add Liquidity in Non-Penny
Symbols. Participants that qualify for note
‘‘5’’ and note ‘‘6’’ incentives will receive the
greater of the note ‘‘5’’ or note ‘‘6’’ incentive,
but not both incentives.
The Exchange proposes to amend
current note ‘‘6’’ to replace the
qualification related to note ‘‘&’’ with
MARS Tier 7 or higher. The Exchange
notes that the removal of note ‘‘&’’ and
addition of new MARS Tier 7 are
discussed below in the MARS section of
this proposal. Also, similar to the
clarification that is being made in new
note ‘‘8’’ with respect to achieving the
greater of two incentives, the Exchange
proposes to make clear in amended note
‘‘6’’ that Participants may qualify for
either note ‘‘5’’ or note ‘‘6’’, but not
both. This change reflects current
practice
Third, the Exchange proposes to
restructure the Fees to Remove
Liquidity in Penny and Non-Penny
Symbols as follows:
FEES TO REMOVE LIQUIDITY IN PENNY AND NON-PENNY SYMBOLS
Penny
Symbols
khammond on DSKJM1Z7X2PROD with NOTICES
Customer .................................................................................................................................................................
Professional .............................................................................................................................................................
Broker-Dealer ...........................................................................................................................................................
Firm ..........................................................................................................................................................................
Non-NOM Market Maker 2 .......................................................................................................................................
NOM Market Maker 2 ...............................................................................................................................................
$0.48
0.48
0.50
0.50
0.50
0.50
Non-Penny
Symbols
$0.85
0.85
1.10
1.10
1.10
1.10
Today, the Exchange assesses the
following Penny Symbol Fees to
Remove Liquidity: $0.48 per contract for
Customer and Professional and $0.50
per contract for Firms, Non-NOM
Market Makers, NOM Market Makers
and Broker-Dealers. These rates are not
changing. Additionally, current note
2,28 applies to NOM Market Maker
Penny Symbol Fees to Remove Liquidity
and will continue to apply, with only
changes to account for the reference to
‘‘Penny Pilot,’’ as explained above.
Today, the Exchange assesses the
following Non-Penny Symbol Fees to
Remove Liquidity: $0.85 per contract for
Customers and Professionals and $1.10
per contract for Firms, Non-NOM
Market Makers, NOM Market Makers
and Broker-Dealers. These rates are not
changing.
26 Current note ‘‘5’’ at Options 7, Section 2(1)
provides, ‘‘The NOM Market Maker Fee for Adding
Liquidity in Non-Pilot Options will apply unless
Participants meet the volume thresholds set forth in
this note. Participants that add NOM Market Maker
liquidity in Non-Penny Pilot Options of 7,500 to
9,999 ADV contracts per day in a month will be
assessed a $0.00 per contract Non-Penny Options
Fee for Adding Liquidity in that month.
Participants that add NOM Market Maker liquidity
in Non-Penny Pilot Options of 10,000 or more ADV
contracts per day in a month will receive the NonPenny Rebate to Add Liquidity for that month
instead of paying the Non-Penny Fee for Adding
Liquidity.’’
27 See note 12 above.
28 Current note ‘‘2’’ of Options 7, Section 2(1)
provides, ‘‘Participants that add 1.30% of Customer,
Professional, Firm, Broker-Dealer or Non-NOM
Market Maker liquidity in Penny Pilot Options and/
or Non-Penny Pilot Options of total industry
customer equity and ETF option ADV contracts per
day in a month will be subject to the following
pricing applicable to executions: a $0.48 per
contract Penny Pilot Options Fee for Removing
Liquidity when the Participant is (i) both the buyer
and the seller or (ii) the Participant removes
liquidity from another Participant under Common
Ownership. Participants that add 1.50% of
Customer, Professional, Firm, Broker-Dealer or NonNOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total
industry customer equity and ETF option ADV
contracts per day in a month and meet or exceed
the cap for The Nasdaq Stock Market Opening Cross
during the month will be subject to the following
pricing applicable to executions less than 10,000
contracts: a $0.32 per contract Penny Pilot Options
Fee for Removing Liquidity when the Participant is
(i) both the buyer and seller or (ii) the Participant
removes liquidity from another Participant under
Common Ownership. Participants that add 1.75%
of Customer, Professional, Firm, Broker-Dealer or
Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total
industry customer equity and ETF option ADV
contracts per day in a month will be subject to the
following pricing applicable to executions less than
10,000 contracts: a $0.32 per contract Penny Pilot
Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and seller or (ii) the
Participant removes liquidity from another
Participant under Common Ownership.’’
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
MARS Pricing
As set forth in Options 7, Section 2(6),
the Exchange currently offers a Market
Access and Routing Subsidy (‘‘MARS’’)
to qualifying Participants that provide
certain order routing functionalities to
other Participants and/or use such
functionalities themselves. Generally,
under MARS, the Exchange pays
participating NOM Participants to
subsidize their costs of providing
routing services to route orders to NOM
as a way to attract higher volumes of
electronic equity and ETF options to the
Exchange from market participants. In
particular, Participants that have System
Average daily
volume
Tiers
khammond on DSKJM1Z7X2PROD with NOTICES
1
2
3
4
5
Eligibility 29 and have executed the
requisite number of Eligible Contracts 30
daily in a month (‘‘Average Daily
Volume’’ or ‘‘ADV’’) are entitled to a
MARS Payment. The Exchange
currently pays the following MARS
Payments according to ADV submitted
on NOM:31
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
2,000
5,000
10,000
20,000
45,000
MARS
Payment
(Penny)
$0.07
0.09
0.11
0.15
0.17
MARS
Payment
(Non-Penny)
$0.15
0.20
0.30
0.50
0.60
The Exchange also provides
Participants that qualify for the Tier 6
Customer and Professional Rebate to
Add Liquidity in Penny Symbols in
Section 2(1) 32 an additional $0.09 per
contract incentive in Penny Pilot
Options, which is paid in addition to
any Penny MARS Payment tier on
MARS Eligible Contracts the NOM
Participant qualifies for in a given
month.33
In addition, the Exchange currently
offers Participants that have total
Affiliated Entity 34 or Common
Ownership 35 average daily add volume
(‘‘ADAV’’) of 3.00% or more of total
industry customer equity and ETF
option ADV contracts per day in a
month an additional $0.01 per contract
in Penny Symbols and an additional
$0.03 per contract in Non-Penny
Symbols, in addition to any MARS
Payment tier on MARS Eligible
Contracts the Participant qualifies for in
a given month.36
For Participants that qualify for the
Tier 5 MARS Payment, the Exchange
also provides two supplemental rebates
that are based on progressively
increasing volume requirements of
executed MARS Eligible Contracts ADV
and total Affiliated Entity or Common
Ownership ADAV. First, the Exchange
offers Participants that execute at least
75,000 of MARS Eligible Contracts per
day and have total Affiliated Entity or
Common Ownership ADAV of 3.25% or
more of total industry customer equity
and ETF option ADV contracts per day
in a month an additional $0.01 per
contract in Penny Symbols and an
additional $0.10 per contract in NonPenny Symbols, in addition to MARS
Payment Tier 5 on MARS Eligible
Contracts the Participant qualifies for in
a given month.37
Second, Participants that execute at
least 100,000 of MARS Eligible
Contracts per day and have a total
Affiliated Entity or Common Ownership
ADAV of 3.25% or more of total
industry customer equity and ETF
option ADV contracts per day in a
month are eligible to receive an
additional $0.02 per contract in Penny
Symbols and an additional $0.19 per
contract in Non-Penny Symbols, in
addition to MARS Payment Tier 5 on
MARS Eligible Contracts the Participant
qualifies for in a given month.38 NOM
Participants that qualify for the note ‘‘&’’
incentive would not receive the note
‘‘@’’ incentive.
The Exchange now proposes a
number of changes to its MARS
program. As an initial matter, the
Exchange proposes to eliminate the
additional incentives set forth in notes
‘‘@’’ and ‘‘&,’’ and instead offer new
MARS Payment Tiers 6–9. The
29 To qualify for MARS, the Participant’s routing
system (‘‘System’’) would be required to: (1) Enable
the electronic routing of orders to all of the U.S.
options exchanges, including NOM; (2) provide
current consolidated market data from the U.S.
options exchanges; and (3) be capable of interfacing
with NOM’s API to access current NOM match
engine functionality. Further, the Participant’s
System would also need to cause NOM to be the
one of the top three default destination exchanges
for (a) individually executed marketable orders if
NOM is at the national best bid or offer (‘‘NBBO’’),
regardless of size or time or (b) orders that establish
a new NBBO on NOM’s Order Book, but allow any
user to manually override NOM as a default
destination on an order-by-order basis. Any NOM
Participant would be permitted to avail itself of this
arrangement, provided that its order routing
functionality incorporates the features described
above and satisfies NOM that it appears to be robust
and reliable. The Participant remains solely
responsible for implementing and operating its
System.
30 For the purpose of qualifying for the MARS
Payment, Eligible Contracts may include Firm, NonNOM Market Maker, Broker-Dealer, or Joint Back
Office or ‘‘JBO’’ equity option orders that add
liquidity and are electronically delivered and
executed. Eligible Contracts do not include Mini
Option orders.
31 The specified MARS Payment will be paid on
all executed Eligible Contracts that add liquidity,
which are routed to NOM through a participating
NOM Participant’s System and meet the requisite
Eligible Contracts ADV. No payment will be made
with respect to orders that are routed to NOM, but
not executed. Furthermore, a Participant will not be
entitled to receive any other revenue from the
Exchange for the use of its System specifically with
respect to orders routed to NOM.
32 To qualify for the Tier 6 Customer and
Professional Rebate to Add Liquidity in Penny
Symbols, the Participant must add Customer,
Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.80% or more of total
industry customer equity and ETF option ADV
contracts per day in a month, or the Participant
must add: (1) Customer and/or Professional
liquidity in Penny Symbols and/or Non-Penny
Symbols of 0.20% or more of total industry
customer equity and ETF option ADV contracts per
day in a month, and (2) has added liquidity in all
securities through one or more of its Nasdaq Market
Center MPIDs that represent 1.00% or more of
Consolidated Volume in a month or qualifies for
MARS. See Options 7, Section 2(1).
33 See note ‘‘*’’ in Section 2(6).
34 The term ‘‘Affiliated Entity’’ is a relationship
between an Appointed MM and an Appointed OFP
for purposes of aggregating eligible volume for
pricing in Options 7, Sections 2(1) and 2(6) for
which a volume threshold or volume percentage is
required to qualify for higher rebates or lower fees.
The term ‘‘Appointed MM’’ is a NOM Market Maker
who has been appointed by an Order Flow Provider
(‘‘OFP’’) for purposes of qualifying as an Affiliated
Entity. An OFP is a Participant, other than a NOM
Market Maker, that submits orders, as agent or
principal, to the Exchange. The term ‘‘Appointed
OFP’’ is an OFP who has been appointed by a NOM
Market Maker for purposes of qualifying as an
Affiliated Entity. Participants under Common
Ownership may not qualify as a counterparty
comprising an Affiliated Entity. Each Participant
may qualify for only one (1) Affiliated Entity
relationship at any given time.
35 The term ‘‘Common Ownership’’ shall mean
Participants under 75% common ownership or
control. Common Ownership shall apply to all
pricing in Options 7, Section 2 for which a volume
threshold or volume percentage is required to
obtain the pricing.
36 See note ‘‘∧’’ in Section 2(6).
37 See note ‘‘@’’ in Section 2(6).
38 See note ‘‘&’’ in Section 2(6).
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
proposed MARS Payment Tiers will
retain some features of the note ‘‘@’’ and
note ‘‘&’’ incentives, namely the ADV
requirements of executed MARS Eligible
Contracts, while eliminating the total
Affiliated Entity or Common Ownership
ADAV requirement. At the time the
Exchange adopted the note ‘‘@’’ and
note ‘‘&’’ incentives, the Exchange
sought to encourage market participants
to aggregate volume for purposes of
qualifying for the additional rebates,
and ultimately, increase volume and
activity on the Exchange. These changes
have met with some success, and the
Exchange will therefore continue to
incentivize this behavior through the
note ‘‘∧’’ incentive. Nonetheless, the
Exchange has yet to achieve the level of
additional volume and activity it desires
Average daily
volume
(‘‘ADV’’)
Tiers
1
2
3
4
5
6
7
8
9
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
khammond on DSKJM1Z7X2PROD with NOTICES
In addition, the Exchange proposes to
apply the existing note ‘‘∧’’ incentive to
the new MARS Payment Tiers 6 through
9 so that NOM Participants that have
total Affiliated Entity or Common
Ownership ADAV of 3.00% or more of
total industry customer equity and ETF
option ADV contracts per day in a
month would receive an additional
$0.01 per contract in Penny Symbols
and an additional $0.03 per contract in
Non-Penny Symbols. This would be
paid in addition to MARS Payment
Tiers 6–9 on MARS Eligible Contracts
the NOM Participant qualifies for in a
given month, similar to how the note
‘‘∧’’ incentive is paid on MARS Payment
Tiers 1–5 today.
Lastly, the Exchange proposes to
amend the existing note ‘‘*’’ incentive.
As amended, NOM Participants that
qualify for Customer and Professional
Penny Symbols Rebate to Add Liquidity
Tier 6 will receive a $0.20 per contract
rebate in Penny Symbols in lieu of the
Penny MARS Payment Tiers 1–5 on
MARS Eligible Contracts the NOM
Participant qualifies for in a given
month.
Technical Amendments
The Exchange proposes to amend
Options 7 to add ‘‘Section 1 General
Provisions’’ before the rule text. The
Exchange would also remove ‘‘Section
1’’ before the title ‘‘Collection of
Exchange Fees and Other ClaimsNasdaq Options Market’’ and
incorporate that text within the new
Section 1, which includes other rule
text. The amendment will assist
Participants when citing to the rule text,
which currently has no section
reference. The Exchange also proposes
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16:38 Sep 09, 2020
Jkt 250001
and as such, the Exchange proposes to
reformulate its MARS program in order
to improve the attractiveness of this
program to new and existing
Participants. As noted above, the
revised MARS program will add new
MARS Payment Tiers 6 through 9, and
will also amend some of the existing
MARS rebates. The proposed MARS
pricing schedule will be as follows:
to add the word ‘‘The’’ before the name
‘‘Nasdaq Options Market.’’
The Exchange also proposes to update
rule citations to reflect current
citations.39 The Exchange previously
relocated the Rulebook 40 and certain
rule citations were not updated. Finally,
the Exchange proposes to remove an
obsolete date within Options 7, Section
5, ‘‘Nasdaq Options Regulatory Fee.’’
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,41 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,42 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange’s proposed changes to
its Pricing Schedule are reasonable in
several respects. As a threshold matter,
the Exchange is subject to significant
competitive forces in the market for
options securities transaction services
39 See amendments to descriptions of terms
‘‘Customer’’, ‘‘NOM Market Maker’’ ‘‘Professional,’’
and ‘‘Joint Back Office’’ within Options 7. This
section is proposed to be relocated to Options 7,
Section 1. Current Options 7, Section 1, which
described the Collection of Exchange Fees and
Other Claims-Nasdaq Options Market, is also being
amended.
40 See Securities Exchange Act Release No. 87778
(December 17, 2019), 84 FR 70590 (SR–NASDAQ–
2019–098) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Relocate
Rules From Its Current Rulebook Into Its New
Rulebook Shell).
41 15 U.S.C. 78 f(b).
42 15 U.S.C. 78f(b)(4) and (5).
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2,000
5,000
10,000
20,000
45,000
75,000
100,000
125,000
150,000
MARS
Payment
(Penny)
$0.11
0.11
0.11
0.15
0.17
0.20
0.20
0.20
0.21
MARS
Payment
(Non-Penny)
$0.24
0.29
0.39
0.50
0.60
0.75
0.78
0.81
0.84
that constrain its pricing determinations
in that market. The fact that this market
is competitive has long been recognized
by the courts. In NetCoalition v.
Securities and Exchange Commission,
the D.C. Circuit stated as follows: ‘‘[n]o
one disputes that competition for order
flow is ‘fierce.’ . . . As the SEC
explained, ‘[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
of order flow from broker
dealers’. . . .’’ 43
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 44
43 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
44 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for options
security transaction services. The
Exchange is only one of sixteen options
exchanges to which market participants
may direct their order flow. Within this
environment, market participants can
freely and often do shift their order flow
among the Exchange and competing
venues in response to changes in their
respective pricing schedules. As such,
the proposal represents a reasonable
attempt by the Exchange to increase its
liquidity and market share relative to its
competitors.
khammond on DSKJM1Z7X2PROD with NOTICES
Options 7, Section 2
The Exchange’s proposal to
restructure rebates and fees into new
pricing tables, without changes to the
fees and rebates or pricing
qualifications, as applicable, is
reasonable, equitable and not unfairly
discriminatory because the restructuring
is intended to bring greater clarity to the
current fees and rebates assessed and
paid by NOM. The Exchange believes
that the new table formats allow
Participants to more easily reference the
pricing on NOM. Also, renaming
Options 7, Section 2(1) to specifically
refer to rebates is reasonable, equitable
and not unfairly discriminatory as it
will bring greater clarity to the pricing.
Rebates To Add Liquidity in Penny
Symbols
The Exchange’s proposal to relocate
note ‘‘c’’ to new note ‘‘7’’, and relocate
note ‘‘d’’ into new note ‘‘8’’, while
amending these notes to remove the
incentive rebates for Professionals
transacting Penny Symbols in each of
those notes (‘‘7’’ and ‘‘8’’) is reasonable,
equitable and not unfairly
discriminatory. The Customer and
Professional Rebates to Add Liquidity in
Penny Symbols should continue to
attract Customer and Professional order
flow to NOM. The additional incentives
that would now be offered solely to
Customer Rebates to Add Liquidity in
Penny Symbols, and no longer offered to
Professionals, are intended to attract
additional Customer liquidity. Today,
the Exchange pays the same Customer
and Professional Rebates to Add
Liquidity in Penny Symbols. These
rebates for Customers and Professionals
will continue to be the same. Customer
liquidity offers unique benefits to the
market which benefits all market
participants. Customer liquidity benefits
all market participants by providing
more trading opportunities, which
attracts market makers. An increase in
the activity of these market participants
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16:38 Sep 09, 2020
Jkt 250001
in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants. The Exchange believes that
continuing to encourage Participants to
add Professional liquidity creates
competition among options exchanges
because the Exchange believes that the
rebates may cause market participants to
select NOM as a venue to send
Professional order flow. Paying the
incentives 45 within new notes ‘‘7’’ and
‘‘8’’ solely to Customers and not
Professionals is consistent with the
treatment of Customer orders on other
options venues, which pay Customers
the highest rebates.46 Customer liquidity
is the most sought after liquidity among
Participants and by continuing to offer
the new notes ‘‘7’’ and ‘‘8’’ incentives
only to Customers, the Exchange
believes that NOM will continue to
attract this valuable order flow. The
incentives offered in new notes ‘‘7’’ and
‘‘8’’ would be uniformly applied to
qualifying Participants.
The Exchange’s proposal to relocate
note ‘‘***’’ to new note ‘‘1’’,47 and to
modify the introduction to former note
‘‘***’’, proposed note ‘‘1’’, to provide,
‘‘The Customer and Professional Rebate
to Add Liquidity in Penny Symbols will
be paid per the highest tier achieved
below. To determine the applicable
percentage of total industry customer
equity and ETF option average daily
volume, unless otherwise stated, the
Participant’s Penny Symbol and NonPenny Symbol Customer and/or
Professional volume that adds liquidity
will be included,’’ is reasonable,
equitable and not unfairly
discriminatory. The rule text is being
amended to make clear that Penny
Symbols will continue to be paid the
highest tier achieved, as is the case
today, the Exchange is not amending the
manner in which the tiers are being
applied today. As is the case today, to
determine the applicable percentage of
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny Symbol and Non-Penny Symbol
Customer and/or Professional volume
that adds liquidity will be included. All
Participants would continue to be
uniformly paid the highest Customer
and Professional Rebate to Add
45 Today, Customers and Professionals are
entitled to various incentives within notes ‘‘c’’ and
‘‘d’’ related to Rebates to Add Liquidity in Penny
Symbols. See notes 6 and 17, respectively above.
46 See Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
47 Current note 1 within Options 7, Section 2(1)
is being amended and relocated to note ‘‘12’’.
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55897
Liquidity tier in Penny Symbols as
described in new note ‘‘1’’.
The Exchange’s proposal to relocate
note ‘‘e’’ to new note ‘‘9’’ and note ‘‘f’’
into new note ‘‘10’’ and amend notes
‘‘9’’ and ‘‘10’’ to lower the incentive
paid to a Professional for Rebates to Add
Liquidity in Penny Symbols and NonPenny Symbols is reasonable, equitable
and not unfairly discriminatory.48 The
Exchange proposes to continue to
incentivize Professionals with this
proposal, however, the Professional
would be incentivized with a lower
rebate incentive as compared to a
Customer. With this proposal, Customer
incentives within new notes ‘‘9’’ and
‘‘10’’ would remain unchanged. As
proposed, Professional incentives would
be lowered for each of these notes.49
Today, the Exchange pays the same
Customer and Professional Rebates to
Add Liquidity in Penny Symbols and
Non-Penny Symbols. These rebates for
Customers and Professionals will
continue to be the same. The Exchange
believes that it is reasonable to continue
to pay Professionals the same rebates as
Customers, but offer lower additional
incentives while continuing to
incentivize Customers to qualify for
additional incentives in order to obtain
the highest rebates offered on NOM.
Customer liquidity, unlike Professional
liquidity, offers unique benefits to the
market which benefits all market
participants. Customer liquidity benefits
all market participants by providing
more trading opportunities, which
attracts market makers. An increase in
the activity of these market participants
in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants. Paying higher rebates to
Customers is consistent with the
treatment of Customers on other options
venues that are paid the highest
rebates.50 Customer liquidity is the most
sought after liquidity among
Participants. With respect to
Professionals, the Exchange believes
that continuing to encourage
Participants to add Professional
48 New notes ‘‘9’’ and ‘‘10’’ apply to both Penny
Symbols and Non-Penny Symbols.
49 As proposed, new note ‘‘9’’ would lower the
Professional Rebate to Add Liquidity incentive in
Penny Symbols from $0.50 to $0.48 per contract
and the Professional Rebate to Add Liquidity
incentive in Non-Penny Symbols from $1.00 to
$0.90 per contract. As proposed, new note ‘‘10’’
would lower the Professional Rebate to Add
Liquidity incentive in Penny Symbols from $0.55 to
$0.48 per contract and the Professional Rebate to
Add Liquidity incentive in Non-Penny Symbols
from $1.05 to $0.90 per contract.
50 See Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
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liquidity creates competition among
options exchanges because the
Exchange believes that the rebates may
cause market participants to select NOM
as a venue to send Professional order
flow. The Exchange notes that is
equitable and not unfairly
discriminatory to lower incentives for
Professionals, who unlike Customers,
have access to sophisticated trading
systems that contain functionality not
available to Customers. The new notes
‘‘9’’ and ‘‘10’’ incentives would be
uniformly applied to qualifying
Participants.
khammond on DSKJM1Z7X2PROD with NOTICES
NOM Market Maker Rebates To Add
Liquidity in Penny Symbols
The Exchange’s proposal to create a
new note ‘‘4’’ which provides,
‘‘Participants who achieve the NOM
Market Maker Tier 3 or Tier 4 Rebate to
Add Liquidity will receive $0.40 per
contract to add liquidity in the
following symbols: AAPL, SPY, QQQ,
IWM, and VXX’’ is reasonable, equitable
and not unfairly discriminatory. This
new note captures the current pricing of
$0.40 per contract in the following
symbols AAPL, QQQ, IWM, VXX and
SPY for NOM Market Maker Tiers 3 and
4. New note ‘‘4’’ will make clear the
current pricing applicable to symbols:
AAPL, SPY, QQQ, IWM, and VXX. The
current pricing, which was relocated to
new note ‘‘4’’, would continue to be
uniformly applied to all Participants
that qualify.
Fees and Rebates To Add Liquidity in
Non-Penny Symbols
The Exchange’s proposal to relocate
current note 1 51 to new ‘‘12’’ and
amend note ‘‘12’’ is reasonable,
equitable and not unfairly
discriminatory. Today, both a Customer
and a Professional that qualify for
Customer or Professional Penny Symbol
Rebate to Add Liquidity Tier 6 in a
month receive an additional $0.20 per
contract Non-Penny Symbol Rebate to
Add Liquidity for each transaction
which adds liquidity in Non-Penny
Symbols in that month. With this
proposal, a Customer that qualifies
would continue to receive an additional
$0.20 per contract Non-Penny Symbol
Rebate to Add Liquidity for such
transactions which add liquidity in
Non-Penny Symbols in that month.
With this proposal, a Professional that
qualifies would now receive an
additional $0.10 per contract NonPenny Symbol Rebate to Add Liquidity
for such transactions which add
liquidity in Non-Penny Symbols in that
month. The Exchange believes that
51 See
note 27 above.
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despite lowering rebates for
Professionals, the Exchange will
continue to attract order flow to NOM.
The Exchange proposes to continue to
incentivize Professionals with this
proposal, however, the Professional
would be incentivized with a lower
rebate as compared to a Customer. The
Customer incentive within new note
‘‘12’’ remains unchanged. Today, the
Exchange pays the same Tier 6
Customer and Professional Rebates to
Add Liquidity in Penny Symbols and
Non-Penny Symbols. These rebates for
Customers and Professionals will
continue to be the same. Customer
liquidity offers unique benefits to the
market which benefits all market
participants. Customer liquidity benefits
all market participants by providing
more trading opportunities, which
attracts market makers. An increase in
the activity of these market participants
in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants. The Exchange believes that
continuing to encourage Participants to
add Professional liquidity creates
competition among options exchanges
because the Exchange believes that the
rebates may cause market participants to
select NOM as a venue to send
Professional order flow. Paying higher
rebates to Customers is consistent with
the treatment of Customers on other
options venues that are paid the highest
rebates.52 Customer liquidity is the most
sought after liquidity among
Participants. The new note ‘‘12’’
incentive would be uniformly applied to
qualifying Participants.
The Exchange’s proposal to amend
current note ‘‘5’’ 53 to increase the ADV
thresholds (7,500 to 9,999 ADV becomes
10,000 to 14,999 ADV and 10,000 ADV
becomes 15,000 ADV) is reasonable,
equitable and not unfairly
discriminatory. The Exchange believes
that the proposed increases in requisite
ADV for the incentive related to the Fee
for Adding Liquidity in Non-Penny
Symbols will encourage NOM Market
Makers to add a greater amount of
liquidity on NOM. Any Participant may
interact with the additional liquidity
attracted by this incentive. Further, the
Exchange would continue to uniformly
apply this note ‘‘5’’ incentive to any
qualifying Participant.
The Exchange’s proposal to amend
current note ‘‘6’’ 54 is reasonable,
equitable and not unfairly
52 See Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
53 See note 28 above.
54 See note 12 above.
PO 00000
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discriminatory. The Exchange proposes
to amend current note ‘‘6’’ to replace the
qualification related to note ‘‘&’’ within
MARS 55 with new ‘‘MARS Tier 7 or
higher.’’ The Exchange believes that this
replacement will continue to attract
order flow to NOM in order to earn the
amended note ‘‘6’’ incentive. As
discussed in the MARS section of this
proposal, in order to qualify for new
MARS Tiers 7 or higher, Participants
must execute at least 100,000 of MARS
Eligible Contract per day. Thus, the
proposed qualification for the additional
note ‘‘6’’ incentive will have the same
ADV threshold requirement as the
current qualification, but will eliminate
the total Affiliated Entity or Common
Ownership ADAV requirement. By
adjusting the qualifications for the note
‘‘6’’ incentive in this manner, the
Exchange seeks to further encourage
Participants to send high volumes of
electronic equity and ETF options to
NOM for execution in order to receive
this rebate.
The Exchange notes that the
additional note ‘‘6’’ incentive continues
to be the highest available NOM Market
Maker Rebate to Add Liquidity in NonPenny Symbols (totaling $0.88 per
contract).56 As proposed, the Exchange
believes that the rebate qualifications
are appropriate and commensurate with
the rebate amount. In particular, while
the Exchange will eliminate the total
Affiliated Entity or Common Ownership
ADAV requirement for this additional
note ‘‘6’’ incentive, the Exchange will
continue to require Participants to meet
both the stringent volume requirements
of executing at least 100,000 of MARS
Eligible Contract per day (i.e., MARS
Tiers 7 or higher) and the stringent
requirements set forth in the Tier 6
NOM Market Maker Rebate to Add
Liquidity in Penny Symbols, in order to
receive this rebate.
The Exchange will uniformly apply
the amended note ‘‘6’’ incentive to all
qualifying NOM Participants. Similar to
55 Options 7, Section 2(6) note ‘‘&’’ provides,
‘‘NOM Participants that execute at least 100,000 of
MARS Eligible Contracts per day and have total
Affiliated Entity or Common Ownership ADAV of
3.25% 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 in
Penny Pilot Options and an additional $0.19 per
contract in Non-Penny Pilot Options, in addition to
MARS Payment tier 5 on MARS Eligible Contracts
the NOM Participant qualifies for in a given month.
NOM Participants that qualify for the note ‘‘&’’
incentive will not receive the note ‘‘@’’ incentive.’’
56 Specifically, Participants that qualify for Tier 7
or higher in the MARS Payment Schedule in
Section (6) would receive an additional $0.02 per
contract NOM Market Maker Rebate to Add
Liquidity in Non-Penny Symbols, in addition to
receiving a $0.86 per contract NOM Market Maker
Rebate to Add Liquidity in Non-Penny Symbols, for
a total rebate of $0.88 per contract.
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the clarification that is being made in
other notes, with respect to achieving
the greater of two incentives, the
Exchange’s proposal to make clear in
amended note ‘‘6’’ that Participants may
qualify for either note ‘‘5’’ or note ‘‘6’’,
but not both, is reasonable, equitable
and not unfairly discriminatory. This
change will bring greater clarity to the
application of the incentives. This
change reflects current practice.
khammond on DSKJM1Z7X2PROD with NOTICES
MARS Pricing
The Exchange believes that the
proposed changes to MARS pricing
described above represent a reasonable
attempt by the Exchange to fortify
participation in the MARS program. In
particular, the Exchange believes that it
is reasonable to eliminate the note ‘‘@’’
and note ‘‘&’’ incentives because it will
replace them with an amended MARS
Payment schedule comprising of
modified MARS rebates and new ADV
tiers. The Exchange must periodically
assess the effectiveness of the incentives
it provides and scale back on certain
incentives so that the Exchange may
apply its resources to other, possibly
more effective, rebates such as the
proposed MARS Payment schedule. The
Exchange believes that the proposed
MARS Payment schedule will better
align the cost of offering the MARS
program with the benefit it brings to the
marketplace. The proposed schedule is
designed to attract higher volumes of
electronic equity and ETF options
orders to the Exchange, which will, in
turn, benefit all NOM Participants by
offering greater price discovery,
increased transparency, and an
increased opportunity to trade on the
Exchange. The Exchange intends for the
proposed schedule to achieve these
results by increasing the number of ADV
tiers in the schedule from five to nine
and, at each tier, paying a base rebate
that will be roughly the same as or
greater than that which it pays now. For
example, qualifying Participants would
be entitled to receive a MARS Payment
of $0.11 in Tiers 1 and 2 for Penny
executions under this proposal
(compared to $0.07 and $0.09 in Tiers
1 and 2 today), and entitled to receive
MARS Payments of $0.24, $0.29, and
$0.39 in Tiers 1, 2, and 3, respectively,
for Non-Penny executions (compared to
$0.15, $0.20, and $0.30 in Tiers 1–3
today). Furthermore, Participants that
qualify for new MARS Payment Tiers 6–
9 would receive base rebates ranging
from $0.20 to $0.21 for Penny Symbols
and from $0.75 to $0.84 for Non-Penny
Symbols, whereas the highest base
rebates currently available under the
MARS program are $0.17 for Penny
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Symbols and $0.60 for Non-Penny
Symbols.
The Exchange also believes that the
proposed ADV thresholds for new
MARS Payment Tiers 6–9 are set at
reasonable levels that would make the
associated rebates achievable and
attractive to existing and potential
program participants. As noted above,
the new MARS Payment Tiers retain
some features of the note ‘‘@’’ and note
‘‘&’’ incentives, namely the ADV
threshold requirements of executed
MARS Eligible Contracts, while
eliminating the total Affiliated Entity or
Common Ownership ADAV
requirement, thus making it easier to
qualify for some tiers. For example, new
MARS Payment Tiers 6 and 7 retain the
note ‘‘@’’ and note ‘‘&’’ requirements
that Participants meet 75,000 and
100,000 Eligible Contracts ADV,
respectively, to qualify for the
associated MARS Payments without the
added requirement of meeting certain
total Affiliated Entity or Common
Ownership ADAV thresholds. Taken
together, the Exchange believes that the
proposed MARS Payment Tiers will
incentivize current and new program
participants to achieve the higher tiers
in order to receive the associated
rebates.
The Exchange also believes that it is
reasonable to apply the note ‘‘∧’’
incentive to new MARS Payment Tiers
6–9 in order to continue incentivizing
Participants to pool their volume in
order to meet the total Affiliated Entity
or Common Ownership ADAV
requirement. The resulting increased
volume and liquidity would benefit all
market participants by providing more
trading opportunities and tighter
spreads.
The Exchange believes that the
amended note ‘‘*’’ incentive is
reasonable as it will continue to
encourage Participants to achieve the
highest Customer and Professional
Rebate to Add Liquidity in Penny
Symbols in Tier 6 and also qualify for
MARS. As proposed, the Exchange will
no longer provide $0.09 in Penny
Symbols in addition to the Penny MARS
Payment Tiers 1–5, but will instead
provide a $0.20 per contract rebate in
lieu of the MARS Payments. The
Exchange believes this is reasonable for
several reasons. As an initial matter, in
Penny MARS Payment Tiers 1–3,
Participants that qualify for the
amended note ‘‘*’’ incentive would be
eligible to receive a rebate that is
roughly the same or greater than the
rebate which they receive today. For
example, Participants that qualify for
Penny MARS Payment Tier 1 or Tier 2,
and also qualify for the Tier 6 Customer
PO 00000
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55899
and Professional Rebate to Add
Liquidity in Penny Symbols, would
receive a rebate of $0.20 per contract
under this proposal, whereas today,
they would receive $0.16 per contract
and $0.18 per contract in Tiers 1 and 2,
respectively. While qualifying
Participants would receive a lower
rebate in Penny MARS Payment Tiers 4
and 5 under this proposal than they
would today,57 the Exchange believes
this is reasonable given the significantly
higher rebates it is proposing to provide
for the Non-Penny MARS Payment Tiers
to promote Non-Penny Symbol order
flow to the Exchange. The Exchange
further believes that the amended note
‘‘*’’ rebate will better align the cost of
offering this rebate with the benefit it
brings to the marketplace as a means of
incentivizing market participants to add
Penny Symbol order flow sent to the
Exchange.
The Exchange believes that its
proposal to modify MARS pricing as
described above is equitable and not
unfairly discriminatory because all
Participants may qualify for MARS
provided they have requisite System
Eligibility. In addition, while the
Exchange is proposing to eliminate the
note ‘‘@’’ and note ‘‘&’’ incentives, it
will retain the features of these rebates
in the proposed MARS Payment Tiers
and in the note ‘‘∧’’ incentive, as
discussed above. As a result, the
Exchange does not believe that the
proposed changes will have a
disproportionate effect on any market
participant type. Furthermore, the
Exchange believes that it is equitable
and not unfairly discriminatory to
continue to offer the note ‘‘*’’ incentive
to Penny Symbols than Non-Penny
Symbols due to the Exchange’s desire to
specifically promote Penny Symbol
order flow to qualify for this rebate in
this manner. Furthermore, the Exchange
is also seeking to promote increased
Non-Penny Symbol order flow with the
significant MARS rebates it is proposing
above. Ultimately, an increase in overall
order flow will improve the quality of
NOM, and increase its attractiveness to
existing and prospective market
participants.
Technical Amendments
The Exchange’s proposal to amend
Options 7 to add ‘‘Section 1 General
Provisions’’ before the rule text, remove
‘‘Section 1’’ before the title ‘‘Collection
of Exchange Fees and Other ClaimsNasdaq Options Market’’ and
57 Today, Participants would be eligible to receive
$0.24 per contract and $0.26 per contract in Tiers
5 and 6, respectively, if they also qualify for the
Tier 6 Customer and Professional Rebate to Add
Liquidity in Penny Symbols.
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incorporate the rule text within new
Options 7, Section 1, which includes
other rule text, is reasonable, equitable
and not unfairly discriminatory. The
Exchange believes that these proposed
changes will assist Participants in
referencing the rule text that currently
has no section reference. The Exchange
also proposes to add the word ‘‘The’’
before the name ‘‘Nasdaq Options
Market’’ for clarity.
The Exchange’s proposal to amend
Options 7, Section 2, Nasdaq Options
Market—Fees and Rebates, to replace
the terms ‘‘Pilot Options’’ and ‘‘Pilot’’
with ‘‘Symbol’’ or ‘‘Symbols,’’ as
appropriate, is reasonable, equitable and
not unfairly discriminatory. This
amendment seeks to conform the name
of the program.
The Exchange’s proposal to update
rule citations to reflect current citations
is reasonable, equitable and not unfairly
discriminatory. The Exchange relocated
the Rulebook 58 and certain rule
citations were not updated.59 These
amendments will bring greater clarity to
the Rules.
Finally, the Exchange’s proposal to
remove an obsolete date within Options
7, Section 5, ‘‘Nasdaq Options
Regulatory Fee’’ is reasonable, equitable
and not unfairly discriminatory. This
amendment will bring greater clarity to
the Rules.
khammond on DSKJM1Z7X2PROD with NOTICES
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.
Intermarket Competition
The proposal does not impose an
undue burden on intermarket
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants another choice of
where to transact options. The Exchange
notes that it operates in a highly
competitive market in which market
participants can readily favor competing
venues if they deem fee levels at a
particular venue to be excessive, or
rebate opportunities available at other
venues to be more favorable. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges that
58 See Securities Exchange Act Release No. 87778
(December 17, 2019), 84 FR 70590 (SR–NASDAQ–
2019–098) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Relocate
Rules From Its Current Rulebook Into Its New
Rulebook Shell).
59 See note 41 above.
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have been exempted from compliance
with the statutory standards applicable
to exchanges. Because competitors are
free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
Intramarket Competition
The proposed amendments do not
impose an undue burden on intramarket
competition.
Options 7, Section 2
The Exchange’s proposal to
restructure rebates and fees into new
pricing tables, without changes to the
fees and rebates or pricing
qualifications, as applicable, does not
impose an undue burden on
competition because the restructuring is
intended to bring greater clarity to the
current fee and rebates assessed and
paid by NOM. The Exchange believes
that the new table formats allow
Participant to more easily reference the
pricing on NOM.
Rebates To Add Liquidity in Penny
Symbols
The Exchange’s proposal to relocate
note ‘‘c’’ to new note ‘‘7’’, and relocate
note ‘‘d’’ into new note ‘‘8, while
amending these notes to remove the
incentive rebates for Professionals
transacting Penny Symbols in each of
those notes (‘‘7’’ and ‘‘8’’) does not
impose an undue burden on
competition. Customer liquidity offers
unique benefits to the market which
benefits all market participants.
Customer liquidity benefits all market
participants by providing more trading
opportunities, which attracts market
makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants. The Exchange believes that
continuing to encourage Participants to
add Professional liquidity creates
competition among options exchanges
because the Exchange believes that the
rebates may cause market participants to
select NOM as a venue to send
Professional order flow. Paying the
incentives 60 within new notes ‘‘7’’ and
‘‘8’’ solely to Customers and not
Professionals is consistent with the
treatment of Customer orders on other
60 Today, Customers and Professionals are
entitled to various incentives within notes ‘‘c’’ and
‘‘d’’ related to Rebates to Add Liquidity in Penny
Symbols. See notes 6 and 17, respectively above.
PO 00000
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Sfmt 4703
options venues, which pay Customers
the highest rebates.61 Customer liquidity
is the most sought after liquidity among
Participants and by continuing to offer
the new notes ‘‘7’’ and ‘‘8’’ incentives
only to Customers, the Exchange
believes that NOM will continue to
attract this valuable order flow. The
incentives offered in new notes ‘‘7’’ and
‘‘8’’ would be uniformly applied to
qualifying Participants.
The Exchange’s proposal to relocate
note ‘‘***’’ to new note 1,62 and instead
provide, ‘‘The Customer and
Professional Rebate to Add Liquidity in
Penny Symbols will be paid per the
highest tier achieved below. To
determine the applicable percentage of
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Participant’s
Penny Symbol and Non-Penny Symbol
Customer and/or Professional volume
that adds liquidity will be included,’’
does not impose an undue burden on
competition. All Participants would
continue to be uniformly paid the
highest Customer and Professional
Rebate to Add Liquidity tier in Penny
Symbols as described in new note ‘‘1’’.
The Exchange’s proposal to relocate
note ‘‘e’’ to new note ‘‘9’’ and amend
note ‘‘9,’’ and relocate note ‘‘f’’ into new
note ‘‘10’’ and amend note ‘‘10’’ to
lower the incentive paid to a
Professional for Rebates to Add
Liquidity in Penny Symbols and NonPenny Symbols does not impose an
undue burden on competition.63 As
proposed, Professional incentives would
be lowered for each of these notes.64
Today, the Exchange pays the same
Customer and Professional Rebates to
Add Liquidity in Penny Symbols and
Non-Penny Symbols. These rebates for
Customers and Professionals will
continue to be the same. Customer
liquidity offers unique benefits to the
market which benefits all market
participants. Customer liquidity benefits
all market participants by providing
more trading opportunities, which
61 See Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
62 Current note 1 within Options 7, Section 2(1)
is being amended and relocated to new note ‘‘12’’.
63 New notes ‘‘9’’ and ‘‘10’’ apply to both Penny
Symbols and Non-Penny Symbols.
64 As proposed, new note ‘‘9’’ would lower the
Professional Rebate to Add Liquidity incentive in
Penny Symbols from $0.50 to $0.48 per contract
and the Professional Rebate to Add Liquidity
incentive in Non-Penny Symbols from $1.00 to
$0.90 per contract. As proposed, new note ‘‘10’’
would lower the Professional Rebate to Add
Liquidity incentive in Penny Symbols from $0.55 to
$0.48 per contract and the Professional Rebate to
Add Liquidity incentive in Non-Penny Symbols
from $1.05 to $0.90 per contract.
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attracts market makers. An increase in
the activity of these market participants
in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants. The Exchange believes that
continuing to encourage Participants to
add Professional liquidity creates
competition among options exchanges
because the Exchange believes that the
rebates may cause market participants to
select NOM as a venue to send
Professional order flow. Paying higher
rebates to Customers is consistent with
the treatment of Customers on other
options venues that are paid the highest
rebates.65 Customer liquidity is the most
sought after liquidity among
Participants. The new notes ‘‘9’’ and
‘‘10’’ incentives would be uniformly
applied to qualifying Participants.
khammond on DSKJM1Z7X2PROD with NOTICES
NOM Market Maker Rebates To Add
Liquidity in Penny Symbols
The Exchange’s proposal to create a
new note ‘‘4’’ which provides,
‘‘Participants who achieve the NOM
Market Maker Tier 3 or Tier 4 Rebate to
Add Liquidity will receive $0.40 per
contract to add liquidity in in the
following symbols: AAPL, SPY, QQQ,
IWM, and VXX’’ does not impose an
undue burden on competition. This new
note captures the current pricing of
$0.40 per contract in the following
symbols AAPL, QQQ, IWM, VXX and
SPY for NOM Market Maker Tiers 3 and
4. New note ‘‘4’’ will make clear the
current pricing applicable to symbols:
AAPL, SPY, QQQ, IWM, and VXX. The
current pricing, which was relocated to
new note ‘‘4’’, would continue to be
uniformly applied to all Participants
that qualify.
Fees and Rebates To Add Liquidity in
Non-Penny Symbols
The Exchange’s proposal to relocate
current note 1 66 to new ‘‘12’’ and
amend note ‘‘12’’ does not impose an
undue burden on competition. Today,
the Exchange pays the same Tier 6
Customer and Professional Rebates to
Add Liquidity in Penny Symbols and
Non-Penny Symbols. These rebates for
Customers and Professionals will
continue to be the same. Customer
liquidity offers unique benefits to the
market which benefits all market
participants. Customer liquidity benefits
all market participants by providing
more trading opportunities, which
attracts market makers. An increase in
the activity of these market participants
65 See
Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
66 See note 27 above.
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in turn facilitates tighter spreads, which
may cause an additional corresponding
increase in order flow from other market
participants. Paying higher rebates to
Customers is consistent with the
treatment of Customers on other options
venues that are paid the highest
rebates.67 Customer liquidity is the most
sought after liquidity among
Participants. The new note ‘‘12’’
incentive would be uniformly applied to
qualifying Participants.
The Exchange’s proposal to amend
current note ‘‘5’’ 68 to increase the
requisite ADV related to the Fee for
Adding Liquidity in Non-Penny
Symbols (7,500 to 9,999 ADV becomes
10,000 to 14,999 ADV and 10,000 ADV
becomes 15,000 ADV) does not impose
an undue burden on competition. The
Exchange would continue to uniformly
apply this note ‘‘5’’ incentive to any
qualifying Participant.
The Exchange’s proposal to amend
note ‘‘6’’ 69 does not impose an undue
burden on competition. The Exchange
will uniformly apply the amended note
‘‘6’’ incentive to all qualifying NOM
Participants. Similar to the clarification
that is being made in other notes, with
respect to achieving the greater of two
incentives, the Exchange’s proposal to
make clear in amended note ‘‘6’’ that
Participants may qualify for either note
‘‘5’’ or note ‘‘6’’, but not both, does not
impose an undue burden on
competition. This change will bring
greater clarity to the application of the
incentives. This change reflects current
practice.
MARS Pricing
The Exchange does not believe that
the proposed changes to MARS pricing
will impose any undue burden on intramarket competition. As noted above, all
Participants may qualify for MARS
provided they have requisite System
Eligibility. All of the proposed MARS
pricing changes are generally 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.
Technical Amendments
The Exchange’s proposal to amend
Options 7 to add ‘‘Section 1 General
67 See Nasdaq PHLX LLC Options 7, Section 1.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
68 See note 28 above.
69 See note 12 above.
PO 00000
Frm 00090
Fmt 4703
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55901
Provisions’’ before the rule text, remove
‘‘Section 1’’ before the title ‘‘Collection
of Exchange Fees and Other ClaimsNasdaq Options Market’’ and
incorporate the rule text within new
Options 7, Section 1, which includes
other rule text, does not impose an
undue burden on competition. The
Exchange believes that these proposed
changes will assist Participants in
referencing the rule text that currently
has no section reference. The Exchange
also proposes to add the word ‘‘The’’
before the name ‘‘Nasdaq Options
Market’’ for clarity.
The Exchange’s proposal to amend
Options 7, Section 2, Nasdaq Options
Market—Fees and Rebates, to replace
the terms ‘‘Pilot Options’’ and ‘‘Pilot’’
with ‘‘Symbol’’ or ‘‘Symbols,’’ as
appropriate, does not impose an undue
burden on competition. This
amendment seeks to conform the name
of the program.
The Exchange’s proposal to update
rule citations to reflect current citations
does not impose an undue burden on
competition. The Exchange relocated
the Rulebook 70 and certain rule
citations were not updated.71 These
amendments will bring greater clarity to
the Rules.
Finally, the Exchange’s proposal to
remove an obsolete date within Options
7, Section 5, ‘‘Nasdaq Options
Regulatory Fee’’ does not impose an
undue burden on competition. This
amendment will bring greater clarity to
the Rules.
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.72
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
70 See Securities Exchange Act Release No. 87778
(December 17, 2019), 84 FR 70590 (SR–NASDAQ–
2019–098) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Relocate
Rules From Its Current Rulebook Into Its New
Rulebook Shell).
71 See note 41 above.
72 15 U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 85, No. 176 / Thursday, September 10, 2020 / Notices
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.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.73
J. Matthew DeLesDernier,
Assistant Secretary.
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:
[FR Doc. 2020–19946 Filed 9–9–20; 8:45 am]
khammond on DSKJM1Z7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2020–056 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2020–056. 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–2020–056 and
should be submitted on or before
October 1, 2020.
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89773; File No. SR–NYSE–
2020–40]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Section 902.02 of the NYSE Listed
Company Manual To Waive Initial
Listing Fees and First Partial Year
Annual Listing Fees for Any Issuer Not
Listed on a National Securities
Exchange That Is Listing Upon Closing
of Its Acquisition of a SPAC Listed on
the NYSE
September 4, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
25, 2020, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘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 selfregulatory organization. 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
Section 902.02 of the NYSE Listed
Company Manual (the ‘‘Manual’’) to
waive initial listing fees and the first
partial year annual fee for any company
not listed on a national securities
exchange that is listing upon closing of
its acquisition of a special purpose
acquisition company listed on the
NYSE. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
73 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
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Fmt 4703
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Section 902.02 of the Manual to waive
initial listing fees and the first partial
year annual fee for any company not
listed on a national securities exchange
that is listing upon closing of its
acquisition of a special purpose
acquisition company (‘‘SPAC’’) listed on
the NYSE.
When a SPAC consummates its
business combination, the SPAC is
typically the legal acquirer in the
transaction and, provided it meets the
continued listing standards applied in
connection with a business combination
by a listed SPAC, it can remain listed on
the Exchange. Section 902.11 of the
Manual specifies that a listed SPAC is
not required to pay any supplemental
listing fees for any shares issued in
connection with its business
combination, so there are no listing fees
payable in connection with a business
combination between an NYSE listed
SPAC and a company which is not
listed on a national securities exchange
where the NYSE listed SPAC is the
acquirer in the transaction.4 Similarly,
the NYSE does not have any provision
4 Section
902.11 provides as follows:
An Acquisition Company which remains listed
upon consummation of its Business Combination
will not be subject to any fees in relation to the
issuance of any additional shares in connection
with the consummation of the Business
Combination or the issuance of any additional
shares in a transaction which is occurring at the
same time as the Business Combination with a
closing contractually contingent on the
consummation of the Business Combination.
As the treatment of the issuance of additional
shares by a NYSE listed SPAC in connection with
its business combination is specifically dealt with
by the fee waiver set forth in Section 902.11, the
provisions of Section 902.03 with respect to the
issuance of additional shares are inapplicable to
issuances that qualify for the waiver under Section
902.11.
E:\FR\FM\10SEN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55887-55902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19946]
[[Page 55887]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89767; File No. SR-NASDAQ-2020-056]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Proposed Rule Change To Amend The NASDAQ Options Market LLC Pricing
Schedule at Options 7, Section 2 and Update Other Rule Text Within
Options 7, Section 1 and Options 7, Section 5
September 3, 2020.
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 August 21, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend The NASDAQ Options Market LLC
(``NOM'') Pricing Schedule at Options 7, Section 2, ``Nasdaq Options
Market Fees and Rebates.'' The Exchange also proposes to amend certain
rule citations within Options 7, update other rule text within Options
7, Section 1, ``Collection of Exchange Fees and Other Claims-Nasdaq
Options Market,'' and Options 7, Section 5, ``Nasdaq Options Regulatory
Fee.''
The Exchange originally filed the proposed pricing changes on
August 3, 2020 as SR-NASDAQ-2020-047. On August 13, 2020, the Exchange
withdrew that filing and submitted SR-NASDAQ-2020-052. On August 21,
2020, the Exchange withdrew SR-NASDAQ-2020-052 and replaced it with
this proposal.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend NOM's Pricing Schedule at Options 7,
Section 2, ``Nasdaq Options Market Fees and Rebates.'' The Exchange
also proposes to amend certain rule citations within Options 7, update
other rule text within Options 7, Section 1, ``Collection of Exchange
Fees and Other Claims-Nasdaq Options Market,'' and Options 7, Section
5, ``Nasdaq Options Regulatory Fee.'' Each change will be described
below.
Options 7, Section 2
Today, NOM Options 7, Section 2(1) provides for various fees and
rebates applicable to NOM Participants. Today, the table of fees and
rebates is divided into Penny Pilot Options and Non-Penny Pilot
Options.\3\ The Exchange pays Customer \4\ and Professional \5\ Rebates
to Add Liquidity in Penny Symbols based on a table. To determine the
applicable percentage of total industry customer equity and ETF option
average daily volume, unless otherwise stated, the Participant's Penny
and Non-Penny Symbol Customer and/or Professional volume that adds
liquidity is included. The table for Customer and Professional Rebates
to Add Liquidity in Penny Symbols is currently as follows:
---------------------------------------------------------------------------
\3\ The Exchange proposes to replace the terms ``Pilot Options''
and ``Pilot'' with ``Symbol'' or ``Symbols'' throughout Options 7,
Section 2. On April 1, 2020, the Commission approved the amendment
to the OLPP to make permanent the Pilot Program (the ``OLPP
Program''). See Securities Exchange Act Release No. 88532 (April 1,
2020), 85 FR 19545 (April 7, 2020) (File No. 4-443) (``Approval
Order''). The Exchange recently filed a proposal to amend NOM
Options 3, Section 3 to conform the rule to Section 3.1 of the Plan
for the Purpose of Developing and Implementing Procedures Designed
to Facilitate the Listing and Trading of Standardized Options (the
``OLPP''). See Securities Exchange Act Release No. 89167 (June 26,
2020), 85 FR 39953 (July 2, 2020) (SR-NASDAQ-2020-036). The
Exchange's proposal amended NOM Options 3, Section 3 to refer to a
Penny Interval Program instead of a Penny Pilot Program. This
proposed change conforms the name of the program and removes a
reference to a list of Penny Pilot Program symbols. The Exchange's
proposal hereafter utilizes the term ``Penny Symbols'' and ``Non-
Penny Symbols'' for these reasons.
\4\ As proposed within Options 7, Section 1, 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 Options 1, Section 1(a)(47)).
\5\ As proposed within Options 7, Section 1 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 Options 1, Section
1(a)(47). All Professional orders shall be appropriately marked by
Participants.
[[Page 55888]]
------------------------------------------------------------------------
Rebate to add
Monthly volume liquidity
------------------------------------------------------------------------
Tier 1.................... Participant adds Customer, $0.20
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options of up
to 0.10% of total industry
customer equity and ETF
option average daily volume
(``ADV'') contracts per day
in a month.
Tier 2.................... Participant adds Customer, 0.25
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options above
0.10% to 0.20% of total
industry customer equity
and ETF option ADV
contracts per day in a
month.
Tier 3.................... Participant adds Customer, 0.42
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options above
0.20% to 0.30% of total
industry customer equity
and ETF option ADV
contracts per day in a
month.
Tier 4.................... Participant adds Customer, 0.43
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options above
0.30% to 0.40% of total
industry customer equity
and ETF option ADV
contracts per day in a
month.
Tier 5.................... Participant adds Customer, 0.45
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options above
0.40% to 0.80% of total
industry customer equity
and ETF option ADV
contracts per day in a
month.
Tier 6.................... Participant adds Customer, \c\ 0.48
Professional, Firm, Non-NOM
Market Maker and/or Broker-
Dealer liquidity in Penny
Pilot Options and/or Non-
Penny Pilot Options above
0.80% or more of total
industry customer equity
and ETF option ADV
contracts per day in a
month, or Participant adds:
(1) Customer and/or
Professional liquidity in
Penny Pilot Options and/or
Non-Penny Pilot Options of
0.20% or more of total
industry customer equity
and ETF option ADV
contracts per day in a
month, and (2) has added
liquidity in all securities
through one or more of its
Nasdaq Market Center MPIDs
that represent 1.00% or
more of Consolidated Volume
in a month or qualifies for
MARS (defined below).
------------------------------------------------------------------------
Further, pursuant to current note ``d'', with respect to Customer
and Professional Rebates to Add Liquidity in Penny Symbols, this note
provides that, NOM Participants that qualify for any MARS Payment Tier
in Section (6) will receive: (1) 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, in addition to qualifying Customer and/or Professional Rebate to
Add Liquidity Tier 1, or (2) an additional $0.04 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, in addition to qualifying Penny Pilot Options Customer and/or
Professional Rebate to Add Liquidity Tiers 2-6. NOM Participants that
qualify for a note ``c'' incentive will receive the greater of the note
``c'' \6\ or note ``d'' incentive.
---------------------------------------------------------------------------
\6\ Current note ``c'' of Options 7, Section 2(1) provides,
``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 0.12% 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.''
---------------------------------------------------------------------------
Also, pursuant to current note ``e'', NOM Participants that
transact in all securities through one or more of its Nasdaq Market
Center MPIDs that represent 3.00% or more of Consolidated Volume in the
same month on The Nasdaq Stock Market will receive a $0.50 per contract
rebate to add liquidity in Penny Pilot Options as Customer or
Professional and $1.00 per contract rebate to add liquidity in Non-
Penny Pilot Options as Customer or Professional. Participants that
qualify for this rebate would not be eligible for any other rebates in
Tiers 1-6 or other rebate incentives on NOM for Customer and
Professional order flow in Options 7, Section 2(1).
Finally, pursuant to current note ``f'', NOM Participants that (a)
add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options
above 1.20% of total industry customer equity and ETF option ADV
contracts per day in a month, (b) execute greater than 0.04% of
Consolidated Volume (``CV'') via Market-on-Close/Limit-on-Close (``MOC/
LOC'') volume within The Nasdaq Stock Market Closing Cross within a
month, and (c) add greater than 1.5 million shares per day of
nondisplayed volume within The Nasdaq Stock Market within a month will
receive a $0.55 per contract rebate to add liquidity in Penny Pilot
Options as Customer or Professional and $1.05 per contract rebate to
add liquidity in Non-Penny Pilot Options as Customer or Professional.
Participants that qualify for this rebate would not be eligible for any
other rebates in Tiers 1-6 or other rebate incentives on NOM for
Customer and Professional order flow in Options 7, Section 2(1).
Penny Symbols
Today, Firms,\7\ Non-NOM Market Makers,\8\ and Broker-Dealers \9\
are paid a $0.10 per contract Rebate to Add
[[Page 55889]]
Liquidity in Penny Symbols. NOM Market Makers \10\ are paid Rebates to
Add Liquidity in Penny Symbols will be paid as noted below.
---------------------------------------------------------------------------
\7\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC. See Options 7, Section 1.
\8\ The term ``Non-NOM Market Maker'' or (``O'') is a registered
market maker on another options exchange that is not a NOM Market
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market
Maker designation to orders routed to NOM. See Options 7, Section 1.
\9\ The term ``Broker-Dealer'' or (``B'') applies to any
transaction which is not subject to any of the other transaction
fees applicable within a particular category. See Options 7, Section
1.
\10\ As proposed, the term ``NOM Market Maker'' or (``M'') is a
Participant that has registered as a Market Maker on NOM pursuant to
Options 2, Section 1, and must also remain in good standing pursuant
to Options 2, Section 9. 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. See proposed Options 7,
Section 1.
----------------------------------------------------------------------------------------------------------------
Monthly volume Rebate to add liquidity
----------------------------------------------------------------------------------------------------------------
Tier 1................................ Participant adds NOM Market Maker liquidity $0.20.
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 liquidity $0.25.
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.
Tier 3................................ Participant: (a) Adds NOM Market Maker $0.30 or $0.40 in the
liquidity in Penny Pilot Options and/or following symbols AAPL,
Non-Penny Pilot Options above 0.20% to QQQ, IWM, SPY and VXX.
0.60% of total industry customer equity
and ETF option ADV contracts per day in a
month: Or (b)(1) transacts in all
securities through one or more of its
Nasdaq Market Center MPIDs that represent
0.70% or more of Consolidated Volume
(``CV'') which adds liquidity in the same
month on The Nasdaq Stock Market, (2)
transacts in Tape B securities through one
or more of its Nasdaq Market Center MPIDs
that represent 0.18% or more of CV which
adds liquidity in the same month on The
Nasdaq Stock Market, and (3) executes
greater than 0.01% of CV via Market-on-
Close/Limit-on-Close (``MOC/LOC'') volume
within The Nasdaq Stock Market Closing
Cross in the same month.
Tier 4................................ Participant adds NOM Market Maker liquidity $0.32 or $0.40 in the
in Penny Pilot Options and/or Non-Penny following symbols AAPL,
Pilot Options of above 0.60% to 0.90% of QQQ, IWM, VXX and SPY.
total industry customer equity and ETF
option ADV contracts per day in a month.
Tier 5 ............................. Participant adds NOM Market Maker liquidity $0.44.
in Penny Pilot Options and/or Non-Penny
Pilot Options of above 0.40% of total
industry customer equity and ETF option
ADV contracts per day in a month and
transacts in all securities through one or
more of its Nasdaq Market Center MPIDs
that represent 0.40% or more of
Consolidated Volume (``CV'') which adds
liquidity in the same month on The Nasdaq
Stock Market.
Tier 6................................ Participant: (a)(1) Adds NOM Market Maker $0.48.
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; or (b)(1) adds 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) executes 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.
----------------------------------------------------------------------------------------------------------------
Total Volume is defined as Customer, Professional, Firm, Broker-Dealer,
Non876K54-NOM Market Maker and NOM Market Maker volume in Penny Symbols
and/or Non-Penny Symbols which either adds or removes liquidity on NOM.
Pursuant to current note ``##'', NOM Participants that qualify for the
Tier 5 NOM Market Maker Rebate to Add Liquidity in Penny Pilot Options
and add NOM Market Maker liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options of above 0.50% of total industry customer equity
and ETF option ADV contracts per day in a month, will receive a $0.46
per contract rebate to add liquidity in Penny Pilot Options as Market
Maker in lieu of the Tier 5 rebate.
The Exchange assesses Customers and Professionals a $0.48 per
contract Fee for Removing Liquidity in Penny Symbols. Firms, Non-NOM
Market Makers, NOM Market Makers and Broker-Dealers are assessed a
$0.50 per contract Fee for Removing Liquidity in Penny Symbols.
With respect to the fees assessed to Non-NOM Market Makers and NOM
Market Makers, pursuant to current note ``2'', Participants that add
1.30% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market
Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options
of total industry customer equity and ETF option ADV contracts per day
in a month are subject to the following pricing applicable to
executions: A $0.48 per contract Penny Pilot Options Fee for Removing
Liquidity when the Participant is (i) both the buyer and the seller or
(ii) the Participant removes liquidity from another Participant under
Common Ownership. Further, Participants that add 1.50% of Customer,
Professional, Firm, Broker-Dealer or Non-NOM Market Maker liquidity in
Penny Pilot Options and/or Non-Penny Pilot Options of total industry
customer equity and ETF option ADV contracts per day in a month and
meet or exceed the cap for The Nasdaq Stock Market Opening Cross during
the month are subject to the following pricing applicable to executions
less than 10,000 contracts: A $0.32 per contract Penny Pilot Options
Fee for Removing Liquidity when the Participant is (i) both the buyer
and seller or (ii) the Participant removes liquidity from another
Participant under Common Ownership. Finally, Participants that add
1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM Market
Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot Options
of total industry customer equity and ETF option ADV contracts per day
in a month are subject to the following pricing applicable to
executions less than 10,000 contracts: A $0.32 per contract Penny Pilot
Options Fee for Removing Liquidity when the
[[Page 55890]]
Participant is (i) both the buyer and seller or (ii) the Participant
removes liquidity from another Participant under Common Ownership.
Non-Penny Symbols
Today, the Exchange assesses no Fee for Adding Liquidity to
Customers and Professionals in Non-Penny Symbols. Firms, Non-NOM Market
Makers and Broker-Dealers are assessed a $0.45 per contract Fee for
Adding Liquidity in Non-Penny Symbols. Finally, NOM Market Makers are
assessed a $0.35 per contract Fee for Adding Liquidity in Non-Penny
Symbols. The NOM Market Maker Fee for Adding Liquidity in Non-Penny
Symbols will apply unless Participants meet the volume thresholds set
forth in current note ``5''.
Pursuant to current note ``5'', Participants that add NOM Market
Maker liquidity in Non-Penny Symbols of 7,500 to 9,999 ADV contracts
per day in a month are assessed a $0.00 per contract Non-Penny Options
Fee for Adding Liquidity in that month. Participants that add NOM
Market Maker liquidity in Non-Penny Pilot Options of 10,000 or more ADV
contracts per day in a month receive the Non-Penny Rebate to Add
Liquidity for that month instead of paying the Non-Penny Fee for Adding
Liquidity.
The Exchange assesses Customers and Professionals an $0.85 per
contact Fee for Removing Liquidity in Non-Penny Symbols. Firms, Non-NOM
Market Makers, NOM Market Makers and Broker-Dealers are assessed a
$1.10 Fee for Removing Liquidity in Non-Penny Symbols.
Customers and Professionals are paid an $0.80 per contract Rebate
to Add Liquidity in Non-Penny Symbols. Pursuant to current note ``1'',
a Participant that qualifies for Customer or Professional Penny Pilot
Options Rebate to Add Liquidity Tiers 2, 3, 4, or 5 in a month will
receive an additional $0.10 per contract Non-Penny Pilot Options Rebate
to Add Liquidity for each transaction which adds liquidity in Non-Penny
Pilot Options in that month. A Participant that qualifies for Customer
or Professional Penny Pilot Options Rebate to Add Liquidity Tier 6 in a
month will receive an additional $0.20 per contract Non-Penny Pilot
Options Rebate to Add Liquidity for each transaction which adds
liquidity in Non-Penny Pilot Options in that month.
Further, as discussed above, pursuant to current note ``e'', NOM
Participants that transact in all securities through one or more of its
Nasdaq Market Center MPIDs that represent 3.00% or more of Consolidated
Volume in the same month on The Nasdaq Stock Market will receive a
$0.50 per contract rebate to add liquidity in Penny Pilot Options as
Customer or Professional and $1.00 per contract rebate to add liquidity
in Non-Penny Pilot Options as Customer or Professional. Participants
that qualify for this rebate would not be eligible for any other
rebates in Tiers 1-6 or other rebate incentives on NOM for Customer and
Professional order flow in Options 7, Section 2(1).
Finally, as discussed above, pursuant to current note ``f'', NOM
Participants that (a) add Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-
Penny Pilot Options above 1.20% of total industry customer equity and
ETF option ADV contracts per day in a month, (b) execute greater than
0.04% of Consolidated Volume (``CV'') via Market-on-Close/Limit-on-
Close (``MOC/LOC'') volume within The Nasdaq Stock Market Closing Cross
within a month, and (c) add greater than 1.5 million shares per day of
nondisplayed volume within The Nasdaq Stock Market within a month will
receive a $0.55 per contract rebate to add liquidity in Penny Pilot
Options as Customer or Professional and $1.05 per contract rebate to
add liquidity in Non-Penny Pilot Options as Customer or Professional.
Participants that qualify for this rebate would not be eligible for any
other rebates in Tiers 1-6 or other rebate incentives on NOM for
Customer and Professional order flow in Options 7, Section 2(1).
Firms, Non-NOM Market Makers and Broker-Dealers are not eligible
for a Rebate to Add Liquidity in Non-Penny Symbols.
NOM Market Makers receive a $0.30 per contract Rebate for Adding
Liquidity in Non-Penny Symbols, when the NOM Market Maker qualifies for
the volume thresholds set forth in note ``5'', which was described
above. Additionally, if a NOM Market Maker qualifies for note ``6'',
they may receive additional incentives. Current note ``6'' provides
that Participants that qualify for the Tier 6 NOM Market Maker Rebate
to Add Liquidity in Penny Pilot Options will receive a $0.86 per
contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Pilot
Options.\11\ Participants that qualify for a note ``&'' incentive in
the MARS Payment Schedule in Options 7, Section 2(6) receive an
additional $0.02 per contract NOM Market Maker Rebate to Add Liquidity
in Non-Penny Pilot Options, in addition to receiving an $0.86 per
contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Pilot
Options. Participants that qualify for a note ``5'' incentive receive
the greater of the note ``5'' or note ``6'' incentive.
---------------------------------------------------------------------------
\11\ Current note ``6'' of Options 7, Section 2(1) provides,
``Participants that qualify for the Tier 6 NOM Market Maker Rebate
to Add Liquidity in Penny Pilot Options will receive a $0.86 per
contract NOM Market Maker Rebate to Add Liquidity in Non-Penny Pilot
Options. Participants that qualify for a note ``&'' incentive in the
MARS Payment Schedule in Section (6) will receive an additional
$0.02 per contract NOM Market Maker Rebate to Add Liquidity in Non-
Penny Pilot Options, in addition to receiving a $0.86 per contract
NOM Market Maker Rebate to Add Liquidity in Non-Penny Pilot Options.
Participants that qualify for a note ``5'' incentive will receive
the greater of the note ``5'' or note ``6'' incentive.''
---------------------------------------------------------------------------
Proposal
The Exchange proposes to restructure NOM's Pricing Schedule within
Options 7, Section 2 for Penny and Non-Penny Symbols. The Exchange's
proposal introduces new tables as explained in detail below.
The Exchange proposes to rename Options 7, Section 2(1) ``Fees and
Rebates for Execution of Contracts on The Nasdaq Options Market.'' This
section is currently titled ``Fees for Execution of Contracts on The
Nasdaq Options Market.'' This change is proposed as the Exchange
provides for rebates within Options 7, Section 2(1).
First, the Exchange proposes the below new table for its Rebates to
Add Liquidity in Penny Symbols.
Rebates To Add Liquidity in Penny Symbols
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer 1 8 9 10....................................... ($0.20) ($0.25) ($0.42) ($0.43) ($0.45) \7\ ($0.48)
Professional 1 9 10..................................... (0.20) (0.25) (0.42) (0.43) (0.45) (0.48)
Broker-Dealer........................................... (0.10) (0.10) (0.10) (0.10) (0.10) (0.10)
Firm.................................................... (0.10) (0.10) (0.10) (0.10) (0.10) (0.10)
Non-NOM Market Maker.................................... (0.10) (0.10) (0.10) (0.10) (0.10) (0.10)
[[Page 55891]]
NOM Market Maker \3\.................................... (0.20) (0.25) \4\ (0.30) \4\ (0.32) \11\ (0.44) (0.48)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Rebates To Add Liquidity in Penny Symbols
With respect to Customer Rebates to Add Liquidity in Penny Symbols,
the rebates paid for each tier \12\ will continue to be the same. Also,
the Exchange is relocating the current tier qualifications within new
note ``1,'' with no changes. No changes are being made to the Customer
Rebates to Add Liquidity in Penny Symbols, the rebates are simply being
restructured into a new format.
---------------------------------------------------------------------------
\12\ Today, the Exchange pays Customers, in Penny Symbols the
following Rebates to Add Liquidity: $0.20 per contract for Tier 1,
$0.25 per contract for Tier 2, $0.42 per contract for Tier 3, $0.43
per contract for Tier 4, $0.45 per contract for Tier 5, and $0.48
per contract for Tier 6.
---------------------------------------------------------------------------
Today, note ``c'' \13\ is referenced with respect to Customer and
Professional Tier 6 Rebate to Add Liquidity in Penny Symbols. The
Exchange proposes to relocate note ``c'' to new note ``7'' \14\ and
amend the note. New note ``7'' is being amended to remove the incentive
rebate applicable to Professionals orders as they relate to Rebates to
Add Liquidity in Penny Symbols. With this proposal, new note ``7''
would provide that Participants that add Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols of 1.15% or more of total industry customer
equity and ETF option ADV contracts per day in a month receive an
additional $0.02 per contract Penny Symbol Customer Rebate to Add
Liquidity for each transaction which adds liquidity in Penny Symbols in
that month. With this proposal, only a Customer would receive the
additional $0.02 per contract incentive. Today, Participants that 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 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. With this proposal, only a Customer would
receive the additional $0.05 per contract incentive. Finally, today,
Participants that add (a) 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 0.12% 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 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. With this proposal, only a Customer would receive
the additional $0.05 per contract incentive. A Professional order would
no longer receive the additional incentives. The Exchange believes that
despite no longer offering certain incentives for Professional orders,
the Exchange will continue to attract order flow to NOM. The
description and calculation of Consolidated Volume \15\ remains
unchanged.
---------------------------------------------------------------------------
\13\ See note 6 above.
\14\ Proposed new note ``7'' provides, ``Participants that: (1)
add Customer, Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols 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 Symbol Customer Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Symbol in that month; or
(2) add Customer, Professional, Firm, Non-NOM Market Maker and/or
Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols 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 Symbol Customer Rebate to Add Liquidity for each
transaction which adds liquidity in Penny Symbols in that month; or
(3) (a) add Customer, Professional, Firm, Non-NOM Market Maker and/
or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols
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
Symbols above 0.12% 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
Symbol Customer Rebate to Add Liquidity for each transaction which
adds liquidity in Penny Symbols 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.''
\15\ 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. See current note ``c'' within Options 7, Section
2.
---------------------------------------------------------------------------
With respect to current notes ``***'', ``d'',\16\ ``e'',\17\ and
``f,'' \18\ which apply to
[[Page 55892]]
Customer Rebates to Add Liquidity in Penny Symbols, the Exchange
proposes to relocate these notes, respectively, to new notes ``1'',
``8'', ``9'', and ``10''.
---------------------------------------------------------------------------
\16\ Current note ``d'' of Options 7, Section 2(1) provides,
``NOM Participants that qualify for any MARS Payment Tier in Section
(6) will receive: (1) 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, in addition to qualifying Customer and/or Professional Rebate
to Add Liquidity Tier 1, or (2) an additional $0.04 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, in addition to qualifying Penny Pilot Options
Customer and/or Professional Rebate to Add Liquidity Tiers 2-6. NOM
Participants that qualify for a note ``c'' incentive will receive
the greater of the note ``c'' or note ``d'' incentive.''
\17\ Current note ``e'' of Options 7, Section 2(1) provides,
``NOM Participants that transact in all securities through one or
more of its Nasdaq Market Center MPIDs that represent 3.00% or more
of Consolidated Volume in the same month on The Nasdaq Stock Market
will receive a $0.50 per contract rebate to add liquidity in Penny
Pilot Options as Customer or Professional and $1.00 per contract
rebate to add liquidity in Non-Penny Pilot Options as Customer or
Professional. Participants that qualify for this rebate would not be
eligible for any other rebates in Tiers 1-6 or other rebate
incentives on NOM for Customer and Professional order flow in
Options 7, Section 2(1).''
\18\ Current note ``f'' of Options 7, Section 2(1) provides,
``NOM Participants that (a) add Customer, Professional, Firm, Non-
NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options above 1.20% of total industry
customer equity and ETF option ADV contracts per day in a month, (b)
execute greater than 0.04% of Consolidated Volume (``CV'') via
Market-on-Close/Limit-on-Close (``MOC/LOC'') volume within The
Nasdaq Stock Market Closing Cross within a month, and (c) add
greater than 1.5 million shares per day of non-displayed volume
within The Nasdaq Stock Market within a month will receive a $0.55
per contract rebate to add liquidity in Penny Pilot Options as
Customer or Professional and $1.05 per contract rebate to add
liquidity in Non-Penny Pilot Options as Customer or Professional.
Participants that qualify for this rebate would not be eligible for
any other rebates in Tiers 1-6 or other rebate incentives on NOM for
Customer and Professional order flow in Options 7, Section 2(1).''
---------------------------------------------------------------------------
Current note ``* * *'' provides, ``The Customer and Professional
Rebate to Add Liquidity in Penny Pilot Options will be paid as noted
below. To determine the applicable percentage of total industry
customer equity and ETF option average daily volume, unless otherwise
stated, the Participant's Penny Pilot and Non-Penny Pilot Customer and/
or Professional volume that adds liquidity will be included.'' The
Exchange proposes to relocate this note to new note 1,\19\ and amend
the note to provide, ``The Customer and Professional Rebate to Add
Liquidity in Penny Symbols will be paid per the highest tier achieved
below. To determine the applicable percentage of total industry
customer equity and ETF option average daily volume, unless otherwise
stated, the Participant's Penny Symbol and Non-Penny Symbol Customer
and/or Professional volume that adds liquidity will be included.''
While the proposed rule text is being amended to make clear that Penny
Symbols will continue to be paid the highest tier achieved, this is the
case today. The Exchange is not amending the manner in which the tiers
are being applied today. As is the case today, to determine the
applicable percentage of total industry customer equity and ETF option
average daily volume, unless otherwise stated, the Participant's Penny
Symbol and Non-Penny Symbol Customer and/or Professional volume that
adds liquidity will be included.
---------------------------------------------------------------------------
\19\ Current note 1 of Options 7, Section 2(1) is being
relocated to new note ``12''.
---------------------------------------------------------------------------
The Exchange proposes to relocate note ``d'' into new note ``8''
and amend the note. Proposed new note ``8'' removes the incentive
rebate applicable to Professionals orders as they relate to Rebates to
Add Liquidity in Penny Symbols, when the NOM Participant qualifies for
any MARS Payment Tier in Options, 7 Section 2(6). Today, Customer and
Professional orders receive an additional $0.05 per contract Penny
Symbol Rebate to Add Liquidity for each transaction which adds
liquidity in Penny Symbols in that month, in addition to qualifying
Customer and/or Professional Rebate to Add Liquidity Tier 1. With this
proposed change, only a Customer would receive the additional $0.05 per
contract incentive. Also, today, a NOM Participant qualifies for any
MARS Payment Tier in Options, 7 Section 2(6) may receive an additional
$0.04 per contract Penny Symbols Customer and/or Professional Rebate to
Add Liquidity for each transaction which adds liquidity in Penny
Symbols in that month, in addition to qualifying Penny Symbols Customer
Rebate to Add Liquidity Tiers 2-6. With this proposal, only a Customer
would receive the additional $0.04 per contract incentive. The above-
referenced incentives would no longer be available to Professionals.
The Exchange believes that despite no longer offering certain
incentives for Professional orders, the Exchange will continue to
attract order flow to NOM. Finally, the last sentence of current note
``d'' is being amended to state, ``Participants that qualify for note
``7'' and note ``8'' incentives will receive the greater of the note
``7'' or note ``8'' incentive, but not both.'' The proposed wording,
requires NOM Participants that qualify for both new notes ``7'' and
``8'', to receive the greater of notes ``7'' or ``8''. Today, NOM
Participants may only obtain the greater of notes ``c'' or ``d''. This
new language is not substantively amending the current rule text as any
NOM Participant could qualify for notes ``c'' or ``d'' today and, as
currently noted within note ``d'', the NOM Participant would receive
the greater incentive. As proposed, note ``8'' would provide:
NOM Participants that qualify for any MARS Payment Tier in
Section (6) will receive: (1) an additional $0.05 per contract Penny
Symbol Customer Rebate to Add Liquidity for each transaction which
adds liquidity in Penny Symbols in that month, in addition to
qualifying Customer Rebate to Add Liquidity Tier 1, or (2) an
additional $0.04 per contract Penny Symbol Customer Rebate to Add
Liquidity for each transaction which adds liquidity in Penny Symbols
in that month, in addition to qualifying Penny Symbol Customer
Rebate to Add Liquidity Tiers 2-6. NOM Participants that qualify for
note ``7'' and note ``8'' incentives will receive the greater of the
note ``7'' or note ``8'' incentive, but not both.
Note ``e'' is being relocated to new note ``9'' and is being
amended. New note ``9'' provides,
NOM Participants that transact in all securities through one or
more of its Nasdaq Market Center MPIDs that represent 3.00% or more
of Consolidated Volume in the same month on The Nasdaq Stock Market
will receive a $0.50 per contract Rebate to Add Liquidity in Penny
Symbols as Customer, a $0.48 per contract rebate as Professional, a
$1.00 per contract Rebate to Add Liquidity in Non-Penny Symbols as
Customer, and a $0.90 per contract Rebate to Add liquidity in Non-
Penny Symbols as Professional. Participants that qualify for this
rebate would not be eligible for any other rebates in Tiers 1-6 or
other rebate incentives on NOM for Customer and Professional order
flow in Options 7, Section 2(1).
The Exchange is amending current note ``e'' to reduce the incentive
paid to a Professional. The Exchange currently pays a $0.50 per
contract Rebate to Add Liquidity in Penny Symbols to a Customer and a
Professional. With this proposal, the Exchange would continue to pay a
Customer a $0.50 per contract Rebate to Add Liquidity in Penny Symbols
and would now pay a Professional a $0.48 per contract Rebate to Add
Liquidity in Penny Symbols. Also, the Exchange currently pays a $1.00
per contract Rebate to Add Liquidity in Non-Penny Symbols to a Customer
and a Professional. With this proposal, the Exchange would continue to
pay a Customer a $1.00 per contract Rebate to Add Liquidity in Non-
Penny Symbols and would now pay a Professional a $0.90 per contract
Rebate to Add Liquidity in Non-Penny Symbols. The Exchange believes
that despite lowering rebates for Professionals, the Exchange will
continue to attract order flow to NOM.
Note ``f'' \20\ is being relocated to note ``10'' and amended. New
note 10 provides,
---------------------------------------------------------------------------
\20\ See note 19 above.
NOM Participants that (a) add Customer, Professional, Firm, Non-
NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols above 1.20% of total industry customer
equity and ETF option ADV contracts per day in a month, (b) execute
greater than 0.04% of Consolidated Volume (``CV'') via Market-on-
Close/Limit-on-Close (``MOC/LOC'') volume within The Nasdaq Stock
Market Closing Cross within a month, and (c) add greater than 1.5
million shares per day of non-displayed volume within The Nasdaq
Stock Market within a month will receive a $0.55 per contract Rebate
to Add Liquidity in Penny Symbols as Customer, a $0.48 per contract
Rebate to Add Liquidity in Penny Symbols as Professional, and a
$1.05 per contract Rebate to Add Liquidity in Non-Penny Symbols as
Customer, and a $0.90 per contract Rebate to Add Liquidity in Non-
Penny Symbols as Professional. Participants that qualify for this
rebate would not be eligible for any other rebates in Tiers 1-6 or
other rebate incentives on NOM for Customer and Professional order
---------------------------------------------------------------------------
flow in Options 7, Section 2(1).
The Exchange is proposing to amend the Rebates to Add Liquidity in
Penny Symbols for Customers and Professionals to lower Professional
rebates. Today, provided a Customer
[[Page 55893]]
qualified for the note ``f'' incentive, the Customer and Professional
would be paid a $0.55 per contract Rebate to Add Liquidity in Penny
Symbols as Customer or Professional and $1.05 per contract Rebate to
Add Liquidity in Non-Penny Symbols. With this proposal, the Exchange
proposes to continue to pay Participants a Customer Rebate to Add
Liquidity in Penny Symbols of $0.55 per contract. As proposed,
Participants would receive a lower Professional Rebate to Add Liquidity
in Penny Symbols of $0.48 per contract. Also with this proposal, the
Exchange proposes to continue to pay Participants a Customer Rebate to
Add Liquidity in Non-Penny Symbols of $1.05 per contract. As proposed,
Participants would receive a lower Professional Rebate to Add Liquidity
in Non-Penny Symbols of $0.90 per contract. The Exchange believes that
despite lowering rebates for Professionals, the Exchange will continue
to attract order flow to NOM.
Professional Rebates To Add Liquidity in Penny Symbols
Today, the Exchange pays Customer and Professional orders the same
Rebates to Add Liquidity in Penny Symbols, as described above, subject
to a six tiers of qualification and notes ``* * *'', ``d,'' ``e,'' and
``f,'' as specifically detailed above. The Exchange proposes to pay the
same rebates for each tier.\21\ Also, the Exchange is relocating the
current tier qualifications within new note ``1,'' with no changes. As
noted above, the Exchange proposes to remove or lower certain
incentives for Professionals. While the Exchange proposes to continue
to pay additional incentives or higher incentives for Customers, but
not Professionals, the Exchange believes that it will continue to
attract order flow to NOM.
---------------------------------------------------------------------------
\21\ Today, the Exchange pays Professionals, in Penny Symbols
the following Rebates to Add Liquidity: $0.20 per contract for Tier
1, $0.25 per contract for Tier 2, $0.42 per contract for Tier 3,
$0.43 per contract for Tier 4, $0.45 per contract for Tier 5, and
$0.48 per contract for Tier 6.
---------------------------------------------------------------------------
Broker-Dealer, Firm, Non-NOM Market Maker Rebates To Add Liquidity in
Penny Symbols
Today, Broker-Dealers, Firms and Non-NOM Market Makers orders are
paid a $0.10 per contract Rebate to Add Liquidity in Penny Symbols. The
Exchange intends to continue to pay Participants who submit Broker-
Dealers, Firms and Non-NOM Market Makers orders a $0.10 per contract
Rebate to Add Liquidity in Penny Symbols regardless of volume.
Therefore, as proposed, Tiers 1-6 would pay a $0.10 per contract Rebate
to Add Liquidity in Penny Symbols to Participants who submit Broker-
Dealers, Firms and Non-NOM Market Makers orders.
NOM Market Maker Rebates To Add Liquidity in Penny Symbols
Today, NOM Market Makers are paid a Rebate to Add Liquidity in
Penny Symbols based on a 6 tier qualifications as described above. The
Exchange proposes to relocate the tier qualifications into note 3
without changing any of the rule text and retaining the meaning of
``Total Volume.''
With respect to the rebates, the Exchange is not amending the NOM
Market Maker Rebates to Add Liquidity in Penny Symbols. The Exchange
proposes to create a new note ``4'' which provides, ``Participants who
achieve the NOM Market Maker Tier 3 or Tier 4 Rebate to Add Liquidity
will receive $0.40 per contract to add liquidity in in the following
symbols: AAPL, SPY, QQQ, IWM, and VXX.'' This new note ``4'' captures
the current pricing of $0.40 per contract in the following symbols
AAPL, QQQ, IWM, VXX and SPY for NOM Market Maker Tiers 3 and 4, without
change. Current note ``##'' is being relocated to new note ``11''
without change.\22\
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\22\ Current note ``##'' of Options 7, Section 2(1) provides,
``NOM Participants that qualify for the Tier 5 NOM Market Maker
Rebate to Add Liquidity in Penny Pilot Options and add NOM Market
Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot
Options of above 0.50% of total industry customer equity and ETF
option ADV contracts per day in a month, will receive a $0.46 per
contract rebate to add liquidity in Penny Pilot Options as Market
Maker in lieu of the Tier 5 rebate.''
---------------------------------------------------------------------------
Second, the Exchange proposes to restructure the Fees and Rebates
to Add Liquidity in Non-Penny Symbols as follows:
Fees and Rebates To Add Liquidity in Non-Penny Symbols
------------------------------------------------------------------------
------------------------------------------------------------------------
Customer 9 10 12........................................ ($0.80)
Professional 9 10 12.................................... (0.80)
Broker-Dealer........................................... 0.45
Firm.................................................... 0.45
Non-NOM Market Maker.................................... 0.45
NOM Market Maker 5 6.................................... 0.35/(0.30)
------------------------------------------------------------------------
Customer and Professional Fees and Rebates To Add Liquidity in Non-
Penny Symbols
The Exchange is proposing to continue to assess a Customer and a
Professional no Fee for Adding Liquidity in Non-Penny Symbols and pay a
Customer and a Professional an $0.80 per contract Rebate to Add
Liquidity in Non-Penny Symbols. Notes ``e'' \23\ and ``f'',\24\ which
are proposed to be relocated to new notes ``9'' and ``10,'' will
continue to apply to the Customer and Professional Rebates to Add
Liquidity in Non-Penny Symbols. The Exchange described the proposed
amendments to new notes ``9'' and ``10'' above in the Penny Symbol
section.
---------------------------------------------------------------------------
\23\ See note 18 above.
\24\ See note 19 above.
---------------------------------------------------------------------------
Current note 1 \25\ is being relocated to new note ``12'' and
amended. New note ``12'' will continue to apply to Customer and
Professional Rebates to Add Liquidity in Non-Penny Symbols. As
proposed, new note ``12'' provides,
---------------------------------------------------------------------------
\25\ Current note 1 of Options 7, Section 2(1) provides, ``A
Participant that qualifies for Customer or Professional Penny Pilot
Options Rebate to Add Liquidity Tiers 2, 3, 4, or 5 in a month will
receive an additional $0.10 per contract Non-Penny Pilot Options
Rebate to Add Liquidity for each transaction which adds liquidity in
Non-Penny Pilot Options in that month. A Participant that qualifies
for Customer or Professional Penny Pilot Options Rebate to Add
Liquidity Tier 6 in a month will receive an additional $0.20 per
contract Non-Penny Pilot Options Rebate to Add Liquidity for each
transaction which adds liquidity in Non-Penny Pilot Options in that
month.''
A Participant that qualifies for Customer or Professional Penny
Symbol Rebate to Add Liquidity Tiers 2, 3, 4, or 5 in a month will
receive an additional $0.10 per contract Non-Penny Symbol Rebate to
Add Liquidity for each transaction which adds liquidity in Non-Penny
Symbols in that month. A Participant that qualifies for Customer or
Professional Penny Symbol Rebate to Add Liquidity Tier 6 in a month
will receive an additional $0.20 per contract Non-Penny Symbol
Rebate to Add Liquidity as Customer and an additional $0.10 per
contract Non-Penny Symbol Rebate to Add Liquidity as Professional
for such transactions which add liquidity in Non-Penny Symbols in
---------------------------------------------------------------------------
that month.
The Exchange proposes to reduce the incentive for a Professional with
new note ``12''. Today, both a Customer and a Professional that qualify
for Customer or Professional Penny Symbol Rebate to Add Liquidity Tier
6 in a month receive an additional $0.20 per contract Non-Penny Symbol
Rebate to Add Liquidity for each transaction which adds liquidity in
Non-Penny Symbols in that month. With this proposal, a Customer that
qualifies for new note ``12''would continue to receive an additional
$0.20 per contract Non-Penny Symbol Rebate to Add Liquidity for such
transactions which add liquidity in Non-Penny Symbols in that month.
With this proposal, a Professional that qualifies for new note ``12''
would now receive an additional $0.10 per contract Non-Penny Symbol
Rebate to Add Liquidity for such transactions which add liquidity in
Non-Penny Symbols in that month. The Exchange believes that
[[Page 55894]]
despite lowering rebates for Professionals, the Exchange will continue
to attract order flow to NOM.
Today, Firms, Non-NOM Market Makers and Broker Dealers pay a $0.45
per contract Fee for Add Liquidity in Non-Penny Symbols, this will
remain the same. Today, NOM Market Makers pay a $0.35 per contract Fee
for Adding Liquidity in Non-Penny Symbols; this is not changing. In
addition to this NOM Market Maker Fee for Add Liquidity in Non-Penny
Symbols, current note ``5'' \26\ applies. Current note ``5'' will
continue to apply, however, this note is being amended to provide,
``The NOM Market Maker Fee for Adding Liquidity in Non-Penny Symbols
will apply unless Participants meet the volume thresholds set forth in
this note. Participants that add NOM Market Maker liquidity in Non-
Penny Symbols of 10,000 to 14,999 ADV contracts per day in a month will
be assessed a $0.00 per contract Non-Penny Options Fee for Adding
Liquidity in that month. Participants that add NOM Market Maker
liquidity in Non-Penny Symbols of 15,000 or more ADV contracts per day
in a month will receive the Non-Penny Rebate to Add Liquidity for that
month instead of paying the Non-Penny Fee for Adding Liquidity.'' The
Exchange proposes to require a greater amount of Non-Penny Symbol ADV
(7,500 to 9,999 ADV is being increased to 10,000 to 14,999 ADV) in
order to qualify for a $0.00 per contract Non-Penny Options Fee for
Adding Liquidity in that month. Also, the Exchange proposes to require
a greater amount of NOM Market Maker liquidity in Non-Penny Symbols
(10,000 ADV is being increased to 15,000 ADV) to receive the Non-Penny
Rebate to Add Liquidity for that month instead of paying the Non-Penny
Fee for Adding Liquidity. The Exchange believes that this proposal will
encourage NOM Market Makers to add a greater amount of liquidity on
NOM.
---------------------------------------------------------------------------
\26\ Current note ``5'' at Options 7, Section 2(1) provides,
``The NOM Market Maker Fee for Adding Liquidity in Non-Pilot Options
will apply unless Participants meet the volume thresholds set forth
in this note. Participants that add NOM Market Maker liquidity in
Non-Penny Pilot Options of 7,500 to 9,999 ADV contracts per day in a
month will be assessed a $0.00 per contract Non-Penny Options Fee
for Adding Liquidity in that month. Participants that add NOM Market
Maker liquidity in Non-Penny Pilot Options of 10,000 or more ADV
contracts per day in a month will receive the Non-Penny Rebate to
Add Liquidity for that month instead of paying the Non-Penny Fee for
Adding Liquidity.''
---------------------------------------------------------------------------
Today, Firms, Non-NOM Market Makers and Broker Dealers receive no
Rebate to Add Liquidity in Non-Penny Symbols. This will remain the
same. Today, NOM Market Makers receive a $0.30 per contract Rebate to
Add Liquidity, subject to notes ``5'' and ``6''.\27\ This will remain
the same. Note ``6'' is being amended to provide,
---------------------------------------------------------------------------
\27\ See note 12 above.
Participants that qualify for the Tier 6 NOM Market Maker Rebate
to Add Liquidity in Penny Symbols will receive a $0.86 per contract
NOM Market Maker Rebate to Add Liquidity in Non-Penny Symbols.
Participants that qualify for a Tier 7 or higher in the MARS Payment
Schedule in Section (6) will receive an additional $0.02 per
contract NOM Market Maker Rebate to Add Liquidity in Non-Penny
Symbols, in addition to receiving a $0.86 per contract NOM Market
Maker Rebate to Add Liquidity in Non-Penny Symbols. Participants
that qualify for note ``5'' and note ``6'' incentives will receive
the greater of the note ``5'' or note ``6'' incentive, but not both
---------------------------------------------------------------------------
incentives.
The Exchange proposes to amend current note ``6'' to replace the
qualification related to note ``&'' with MARS Tier 7 or higher. The
Exchange notes that the removal of note ``&'' and addition of new MARS
Tier 7 are discussed below in the MARS section of this proposal. Also,
similar to the clarification that is being made in new note ``8'' with
respect to achieving the greater of two incentives, the Exchange
proposes to make clear in amended note ``6'' that Participants may
qualify for either note ``5'' or note ``6'', but not both. This change
reflects current practice
Third, the Exchange proposes to restructure the Fees to Remove
Liquidity in Penny and Non-Penny Symbols as follows:
Fees To Remove Liquidity in Penny and Non-Penny Symbols
------------------------------------------------------------------------
Non-Penny
Penny Symbols Symbols
------------------------------------------------------------------------
Customer................................ $0.48 $0.85
Professional............................ 0.48 0.85
Broker-Dealer........................... 0.50 1.10
Firm.................................... 0.50 1.10
Non-NOM Market Maker \2\................ 0.50 1.10
NOM Market Maker \2\.................... 0.50 1.10
------------------------------------------------------------------------
Today, the Exchange assesses the following Penny Symbol Fees to
Remove Liquidity: $0.48 per contract for Customer and Professional and
$0.50 per contract for Firms, Non-NOM Market Makers, NOM Market Makers
and Broker-Dealers. These rates are not changing. Additionally, current
note 2,\28\ applies to NOM Market Maker Penny Symbol Fees to Remove
Liquidity and will continue to apply, with only changes to account for
the reference to ``Penny Pilot,'' as explained above.
---------------------------------------------------------------------------
\28\ Current note ``2'' of Options 7, Section 2(1) provides,
``Participants that add 1.30% of Customer, Professional, Firm,
Broker-Dealer or Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total industry customer
equity and ETF option ADV contracts per day in a month will be
subject to the following pricing applicable to executions: a $0.48
per contract Penny Pilot Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and the seller or (ii) the
Participant removes liquidity from another Participant under Common
Ownership. Participants that add 1.50% of Customer, Professional,
Firm, Broker-Dealer or Non-NOM Market Maker liquidity in Penny Pilot
Options and/or Non-Penny Pilot Options of total industry customer
equity and ETF option ADV contracts per day in a month and meet or
exceed the cap for The Nasdaq Stock Market Opening Cross during the
month will be subject to the following pricing applicable to
executions less than 10,000 contracts: a $0.32 per contract Penny
Pilot Options Fee for Removing Liquidity when the Participant is (i)
both the buyer and seller or (ii) the Participant removes liquidity
from another Participant under Common Ownership. Participants that
add 1.75% of Customer, Professional, Firm, Broker-Dealer or Non-NOM
Market Maker liquidity in Penny Pilot Options and/or Non-Penny Pilot
Options of total industry customer equity and ETF option ADV
contracts per day in a month will be subject to the following
pricing applicable to executions less than 10,000 contracts: a $0.32
per contract Penny Pilot Options Fee for Removing Liquidity when the
Participant is (i) both the buyer and seller or (ii) the Participant
removes liquidity from another Participant under Common Ownership.''
---------------------------------------------------------------------------
Today, the Exchange assesses the following Non-Penny Symbol Fees to
Remove Liquidity: $0.85 per contract for Customers and Professionals
and $1.10 per contract for Firms, Non-NOM Market Makers, NOM Market
Makers and Broker-Dealers. These rates are not changing.
[[Page 55895]]
MARS Pricing
As set forth in Options 7, Section 2(6), the Exchange currently
offers a Market Access and Routing Subsidy (``MARS'') to qualifying
Participants that provide certain order routing functionalities to
other Participants and/or use such functionalities themselves.
Generally, under MARS, the Exchange pays participating NOM Participants
to subsidize their costs of providing routing services to route orders
to NOM as a way to attract higher volumes of electronic equity and ETF
options to the Exchange from market participants. In particular,
Participants that have System Eligibility \29\ and have executed the
requisite number of Eligible Contracts \30\ daily in a month (``Average
Daily Volume'' or ``ADV'') are entitled to a MARS Payment. The Exchange
currently pays the following MARS Payments according to ADV submitted
on NOM:\31\
---------------------------------------------------------------------------
\29\ To qualify for MARS, the Participant's routing system
(``System'') would be required to: (1) Enable the electronic routing
of orders to all of the U.S. options exchanges, including NOM; (2)
provide current consolidated market data from the U.S. options
exchanges; and (3) be capable of interfacing with NOM's API to
access current NOM match engine functionality. Further, the
Participant's System would also need to cause NOM to be the one of
the top three default destination exchanges for (a) individually
executed marketable orders if NOM is at the national best bid or
offer (``NBBO''), regardless of size or time or (b) orders that
establish a new NBBO on NOM's Order Book, but allow any user to
manually override NOM as a default destination on an order-by-order
basis. Any NOM Participant would be permitted to avail itself of
this arrangement, provided that its order routing functionality
incorporates the features described above and satisfies NOM that it
appears to be robust and reliable. The Participant remains solely
responsible for implementing and operating its System.
\30\ For the purpose of qualifying for the MARS Payment,
Eligible Contracts may include Firm, Non-NOM Market Maker, Broker-
Dealer, or Joint Back Office or ``JBO'' equity option orders that
add liquidity and are electronically delivered and executed.
Eligible Contracts do not include Mini Option orders.
\31\ The specified MARS Payment will be paid on all executed
Eligible Contracts that add liquidity, which are routed to NOM
through a participating NOM Participant's System and meet the
requisite Eligible Contracts ADV. No payment will be made with
respect to orders that are routed to NOM, but not executed.
Furthermore, a Participant will not be entitled to receive any other
revenue from the Exchange for the use of its System specifically
with respect to orders routed to NOM.
----------------------------------------------------------------------------------------------------------------
Average daily MARS Payment MARS Payment
Tiers volume (Penny) (Non-Penny)
----------------------------------------------------------------------------------------------------------------
1............................................................... 2,000 $0.07 $0.15
2............................................................... 5,000 0.09 0.20
3............................................................... 10,000 0.11 0.30
4............................................................... 20,000 0.15 0.50
5............................................................... 45,000 0.17 0.60
----------------------------------------------------------------------------------------------------------------
The Exchange also provides Participants that qualify for the Tier 6
Customer and Professional Rebate to Add Liquidity in Penny Symbols in
Section 2(1) \32\ an additional $0.09 per contract incentive in Penny
Pilot Options, which is paid in addition to any Penny MARS Payment tier
on MARS Eligible Contracts the NOM Participant qualifies for in a given
month.\33\
---------------------------------------------------------------------------
\32\ To qualify for the Tier 6 Customer and Professional Rebate
to Add Liquidity in Penny Symbols, the Participant must add
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above
0.80% or more of total industry customer equity and ETF option ADV
contracts per day in a month, or the Participant must add: (1)
Customer and/or Professional liquidity in Penny Symbols and/or Non-
Penny Symbols of 0.20% or more of total industry customer equity and
ETF option ADV contracts per day in a month, and (2) has added
liquidity in all securities through one or more of its Nasdaq Market
Center MPIDs that represent 1.00% or more of Consolidated Volume in
a month or qualifies for MARS. See Options 7, Section 2(1).
\33\ See note ``*'' in Section 2(6).
---------------------------------------------------------------------------
In addition, the Exchange currently offers Participants that have
total Affiliated Entity \34\ or Common Ownership \35\ average daily add
volume (``ADAV'') of 3.00% or more of total industry customer equity
and ETF option ADV contracts per day in a month an additional $0.01 per
contract in Penny Symbols and an additional $0.03 per contract in Non-
Penny Symbols, in addition to any MARS Payment tier on MARS Eligible
Contracts the Participant qualifies for in a given month.\36\
---------------------------------------------------------------------------
\34\ The term ``Affiliated Entity'' is a relationship between an
Appointed MM and an Appointed OFP for purposes of aggregating
eligible volume for pricing in Options 7, Sections 2(1) and 2(6) for
which a volume threshold or volume percentage is required to qualify
for higher rebates or lower fees. The term ``Appointed MM'' is a NOM
Market Maker who has been appointed by an Order Flow Provider
(``OFP'') for purposes of qualifying as an Affiliated Entity. An OFP
is a Participant, other than a NOM Market Maker, that submits
orders, as agent or principal, to the Exchange. The term ``Appointed
OFP'' is an OFP who has been appointed by a NOM Market Maker for
purposes of qualifying as an Affiliated Entity. Participants under
Common Ownership may not qualify as a counterparty comprising an
Affiliated Entity. Each Participant may qualify for only one (1)
Affiliated Entity relationship at any given time.
\35\ The term ``Common Ownership'' shall mean Participants under
75% common ownership or control. Common Ownership shall apply to all
pricing in Options 7, Section 2 for which a volume threshold or
volume percentage is required to obtain the pricing.
\36\ See note ``[supcaret]'' in Section 2(6).
---------------------------------------------------------------------------
For Participants that qualify for the Tier 5 MARS Payment, the
Exchange also provides two supplemental rebates that are based on
progressively increasing volume requirements of executed MARS Eligible
Contracts ADV and total Affiliated Entity or Common Ownership ADAV.
First, the Exchange offers Participants that execute at least 75,000 of
MARS Eligible Contracts per day and have total Affiliated Entity or
Common Ownership ADAV of 3.25% or more of total industry customer
equity and ETF option ADV contracts per day in a month an additional
$0.01 per contract in Penny Symbols and an additional $0.10 per
contract in Non-Penny Symbols, in addition to MARS Payment Tier 5 on
MARS Eligible Contracts the Participant qualifies for in a given
month.\37\
---------------------------------------------------------------------------
\37\ See note ``@'' in Section 2(6).
---------------------------------------------------------------------------
Second, Participants that execute at least 100,000 of MARS Eligible
Contracts per day and have a total Affiliated Entity or Common
Ownership ADAV of 3.25% or more of total industry customer equity and
ETF option ADV contracts per day in a month are eligible to receive an
additional $0.02 per contract in Penny Symbols and an additional $0.19
per contract in Non-Penny Symbols, in addition to MARS Payment Tier 5
on MARS Eligible Contracts the Participant qualifies for in a given
month.\38\ NOM Participants that qualify for the note ``&'' incentive
would not receive the note ``@'' incentive.
---------------------------------------------------------------------------
\38\ See note ``&'' in Section 2(6).
---------------------------------------------------------------------------
The Exchange now proposes a number of changes to its MARS program.
As an initial matter, the Exchange proposes to eliminate the additional
incentives set forth in notes ``@'' and ``&,'' and instead offer new
MARS Payment Tiers 6-9. The
[[Page 55896]]
proposed MARS Payment Tiers will retain some features of the note ``@''
and note ``&'' incentives, namely the ADV requirements of executed MARS
Eligible Contracts, while eliminating the total Affiliated Entity or
Common Ownership ADAV requirement. At the time the Exchange adopted the
note ``@'' and note ``&'' incentives, the Exchange sought to encourage
market participants to aggregate volume for purposes of qualifying for
the additional rebates, and ultimately, increase volume and activity on
the Exchange. These changes have met with some success, and the
Exchange will therefore continue to incentivize this behavior through
the note ``[supcaret]'' incentive. Nonetheless, the Exchange has yet to
achieve the level of additional volume and activity it desires and as
such, the Exchange proposes to reformulate its MARS program in order to
improve the attractiveness of this program to new and existing
Participants. As noted above, the revised MARS program will add new
MARS Payment Tiers 6 through 9, and will also amend some of the
existing MARS rebates. The proposed MARS pricing schedule will be as
follows:
----------------------------------------------------------------------------------------------------------------
Average daily
Tiers volume MARS Payment MARS Payment
(``ADV'') (Penny) (Non-Penny)
----------------------------------------------------------------------------------------------------------------
1............................................................... 2,000 $0.11 $0.24
2............................................................... 5,000 0.11 0.29
3............................................................... 10,000 0.11 0.39
4............................................................... 20,000 0.15 0.50
5............................................................... 45,000 0.17 0.60
6............................................................... 75,000 0.20 0.75
7............................................................... 100,000 0.20 0.78
8............................................................... 125,000 0.20 0.81
9............................................................... 150,000 0.21 0.84
----------------------------------------------------------------------------------------------------------------
In addition, the Exchange proposes to apply the existing note
``[supcaret]'' incentive to the new MARS Payment Tiers 6 through 9 so
that NOM Participants that have total Affiliated Entity or Common
Ownership ADAV of 3.00% or more of total industry customer equity and
ETF option ADV contracts per day in a month would receive an additional
$0.01 per contract in Penny Symbols and an additional $0.03 per
contract in Non-Penny Symbols. This would be paid in addition to MARS
Payment Tiers 6-9 on MARS Eligible Contracts the NOM Participant
qualifies for in a given month, similar to how the note ``[supcaret]''
incentive is paid on MARS Payment Tiers 1-5 today.
Lastly, the Exchange proposes to amend the existing note ``*''
incentive. As amended, NOM Participants that qualify for Customer and
Professional Penny Symbols Rebate to Add Liquidity Tier 6 will receive
a $0.20 per contract rebate in Penny Symbols in lieu of the Penny MARS
Payment Tiers 1-5 on MARS Eligible Contracts the NOM Participant
qualifies for in a given month.
Technical Amendments
The Exchange proposes to amend Options 7 to add ``Section 1 General
Provisions'' before the rule text. The Exchange would also remove
``Section 1'' before the title ``Collection of Exchange Fees and Other
Claims-Nasdaq Options Market'' and incorporate that text within the new
Section 1, which includes other rule text. The amendment will assist
Participants when citing to the rule text, which currently has no
section reference. The Exchange also proposes to add the word ``The''
before the name ``Nasdaq Options Market.''
The Exchange also proposes to update rule citations to reflect
current citations.\39\ The Exchange previously relocated the Rulebook
\40\ and certain rule citations were not updated. Finally, the Exchange
proposes to remove an obsolete date within Options 7, Section 5,
``Nasdaq Options Regulatory Fee.''
---------------------------------------------------------------------------
\39\ See amendments to descriptions of terms ``Customer'', ``NOM
Market Maker'' ``Professional,'' and ``Joint Back Office'' within
Options 7. This section is proposed to be relocated to Options 7,
Section 1. Current Options 7, Section 1, which described the
Collection of Exchange Fees and Other Claims-Nasdaq Options Market,
is also being amended.
\40\ See Securities Exchange Act Release No. 87778 (December 17,
2019), 84 FR 70590 (SR-NASDAQ-2019-098) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Relocate Rules
From Its Current Rulebook Into Its New Rulebook Shell).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\41\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\42\ 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.
---------------------------------------------------------------------------
\41\ 15 U.S.C. 78 f(b).
\42\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposed changes to its Pricing Schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \43\
---------------------------------------------------------------------------
\43\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \44\
---------------------------------------------------------------------------
\44\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
[[Page 55897]]
Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
sixteen options exchanges to which market participants may direct their
order flow. Within this environment, market participants can freely and
often do shift their order flow among the Exchange and competing venues
in response to changes in their respective pricing schedules. As such,
the proposal represents a reasonable attempt by the Exchange to
increase its liquidity and market share relative to its competitors.
Options 7, Section 2
The Exchange's proposal to restructure rebates and fees into new
pricing tables, without changes to the fees and rebates or pricing
qualifications, as applicable, is reasonable, equitable and not
unfairly discriminatory because the restructuring is intended to bring
greater clarity to the current fees and rebates assessed and paid by
NOM. The Exchange believes that the new table formats allow
Participants to more easily reference the pricing on NOM. Also,
renaming Options 7, Section 2(1) to specifically refer to rebates is
reasonable, equitable and not unfairly discriminatory as it will bring
greater clarity to the pricing.
Rebates To Add Liquidity in Penny Symbols
The Exchange's proposal to relocate note ``c'' to new note ``7'',
and relocate note ``d'' into new note ``8'', while amending these notes
to remove the incentive rebates for Professionals transacting Penny
Symbols in each of those notes (``7'' and ``8'') is reasonable,
equitable and not unfairly discriminatory. The Customer and
Professional Rebates to Add Liquidity in Penny Symbols should continue
to attract Customer and Professional order flow to NOM. The additional
incentives that would now be offered solely to Customer Rebates to Add
Liquidity in Penny Symbols, and no longer offered to Professionals, are
intended to attract additional Customer liquidity. Today, the Exchange
pays the same Customer and Professional Rebates to Add Liquidity in
Penny Symbols. These rebates for Customers and Professionals will
continue to be the same. Customer liquidity offers unique benefits to
the market which benefits all market participants. Customer liquidity
benefits all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. The Exchange believes that
continuing to encourage Participants to add Professional liquidity
creates competition among options exchanges because the Exchange
believes that the rebates may cause market participants to select NOM
as a venue to send Professional order flow. Paying the incentives \45\
within new notes ``7'' and ``8'' solely to Customers and not
Professionals is consistent with the treatment of Customer orders on
other options venues, which pay Customers the highest rebates.\46\
Customer liquidity is the most sought after liquidity among
Participants and by continuing to offer the new notes ``7'' and ``8''
incentives only to Customers, the Exchange believes that NOM will
continue to attract this valuable order flow. The incentives offered in
new notes ``7'' and ``8'' would be uniformly applied to qualifying
Participants.
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\45\ Today, Customers and Professionals are entitled to various
incentives within notes ``c'' and ``d'' related to Rebates to Add
Liquidity in Penny Symbols. See notes 6 and 17, respectively above.
\46\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
The Exchange's proposal to relocate note ``***'' to new note
``1'',\47\ and to modify the introduction to former note ``***'',
proposed note ``1'', to provide, ``The Customer and Professional Rebate
to Add Liquidity in Penny Symbols will be paid per the highest tier
achieved below. To determine the applicable percentage of total
industry customer equity and ETF option average daily volume, unless
otherwise stated, the Participant's Penny Symbol and Non-Penny Symbol
Customer and/or Professional volume that adds liquidity will be
included,'' is reasonable, equitable and not unfairly discriminatory.
The rule text is being amended to make clear that Penny Symbols will
continue to be paid the highest tier achieved, as is the case today,
the Exchange is not amending the manner in which the tiers are being
applied today. As is the case today, to determine the applicable
percentage of total industry customer equity and ETF option average
daily volume, unless otherwise stated, the Participant's Penny Symbol
and Non-Penny Symbol Customer and/or Professional volume that adds
liquidity will be included. All Participants would continue to be
uniformly paid the highest Customer and Professional Rebate to Add
Liquidity tier in Penny Symbols as described in new note ``1''.
---------------------------------------------------------------------------
\47\ Current note 1 within Options 7, Section 2(1) is being
amended and relocated to note ``12''.
---------------------------------------------------------------------------
The Exchange's proposal to relocate note ``e'' to new note ``9''
and note ``f'' into new note ``10'' and amend notes ``9'' and ``10'' to
lower the incentive paid to a Professional for Rebates to Add Liquidity
in Penny Symbols and Non-Penny Symbols is reasonable, equitable and not
unfairly discriminatory.\48\ The Exchange proposes to continue to
incentivize Professionals with this proposal, however, the Professional
would be incentivized with a lower rebate incentive as compared to a
Customer. With this proposal, Customer incentives within new notes
``9'' and ``10'' would remain unchanged. As proposed, Professional
incentives would be lowered for each of these notes.\49\ Today, the
Exchange pays the same Customer and Professional Rebates to Add
Liquidity in Penny Symbols and Non-Penny Symbols. These rebates for
Customers and Professionals will continue to be the same. The Exchange
believes that it is reasonable to continue to pay Professionals the
same rebates as Customers, but offer lower additional incentives while
continuing to incentivize Customers to qualify for additional
incentives in order to obtain the highest rebates offered on NOM.
Customer liquidity, unlike Professional liquidity, offers unique
benefits to the market which benefits all market participants. Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Paying higher rebates to Customers
is consistent with the treatment of Customers on other options venues
that are paid the highest rebates.\50\ Customer liquidity is the most
sought after liquidity among Participants. With respect to
Professionals, the Exchange believes that continuing to encourage
Participants to add Professional
[[Page 55898]]
liquidity creates competition among options exchanges because the
Exchange believes that the rebates may cause market participants to
select NOM as a venue to send Professional order flow. The Exchange
notes that is equitable and not unfairly discriminatory to lower
incentives for Professionals, who unlike Customers, have access to
sophisticated trading systems that contain functionality not available
to Customers. The new notes ``9'' and ``10'' incentives would be
uniformly applied to qualifying Participants.
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\48\ New notes ``9'' and ``10'' apply to both Penny Symbols and
Non-Penny Symbols.
\49\ As proposed, new note ``9'' would lower the Professional
Rebate to Add Liquidity incentive in Penny Symbols from $0.50 to
$0.48 per contract and the Professional Rebate to Add Liquidity
incentive in Non-Penny Symbols from $1.00 to $0.90 per contract. As
proposed, new note ``10'' would lower the Professional Rebate to Add
Liquidity incentive in Penny Symbols from $0.55 to $0.48 per
contract and the Professional Rebate to Add Liquidity incentive in
Non-Penny Symbols from $1.05 to $0.90 per contract.
\50\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
NOM Market Maker Rebates To Add Liquidity in Penny Symbols
The Exchange's proposal to create a new note ``4'' which provides,
``Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity will receive $0.40 per contract to add liquidity in
the following symbols: AAPL, SPY, QQQ, IWM, and VXX'' is reasonable,
equitable and not unfairly discriminatory. This new note captures the
current pricing of $0.40 per contract in the following symbols AAPL,
QQQ, IWM, VXX and SPY for NOM Market Maker Tiers 3 and 4. New note
``4'' will make clear the current pricing applicable to symbols: AAPL,
SPY, QQQ, IWM, and VXX. The current pricing, which was relocated to new
note ``4'', would continue to be uniformly applied to all Participants
that qualify.
Fees and Rebates To Add Liquidity in Non-Penny Symbols
The Exchange's proposal to relocate current note 1 \51\ to new
``12'' and amend note ``12'' is reasonable, equitable and not unfairly
discriminatory. Today, both a Customer and a Professional that qualify
for Customer or Professional Penny Symbol Rebate to Add Liquidity Tier
6 in a month receive an additional $0.20 per contract Non-Penny Symbol
Rebate to Add Liquidity for each transaction which adds liquidity in
Non-Penny Symbols in that month. With this proposal, a Customer that
qualifies would continue to receive an additional $0.20 per contract
Non-Penny Symbol Rebate to Add Liquidity for such transactions which
add liquidity in Non-Penny Symbols in that month. With this proposal, a
Professional that qualifies would now receive an additional $0.10 per
contract Non-Penny Symbol Rebate to Add Liquidity for such transactions
which add liquidity in Non-Penny Symbols in that month. The Exchange
believes that despite lowering rebates for Professionals, the Exchange
will continue to attract order flow to NOM. The Exchange proposes to
continue to incentivize Professionals with this proposal, however, the
Professional would be incentivized with a lower rebate as compared to a
Customer. The Customer incentive within new note ``12'' remains
unchanged. Today, the Exchange pays the same Tier 6 Customer and
Professional Rebates to Add Liquidity in Penny Symbols and Non-Penny
Symbols. These rebates for Customers and Professionals will continue to
be the same. Customer liquidity offers unique benefits to the market
which benefits all market participants. Customer liquidity benefits all
market participants by providing more trading opportunities, which
attracts market makers. An increase in the activity of these market
participants in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants. The Exchange believes that continuing to encourage
Participants to add Professional liquidity creates competition among
options exchanges because the Exchange believes that the rebates may
cause market participants to select NOM as a venue to send Professional
order flow. Paying higher rebates to Customers is consistent with the
treatment of Customers on other options venues that are paid the
highest rebates.\52\ Customer liquidity is the most sought after
liquidity among Participants. The new note ``12'' incentive would be
uniformly applied to qualifying Participants.
---------------------------------------------------------------------------
\51\ See note 27 above.
\52\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
The Exchange's proposal to amend current note ``5'' \53\ to
increase the ADV thresholds (7,500 to 9,999 ADV becomes 10,000 to
14,999 ADV and 10,000 ADV becomes 15,000 ADV) is reasonable, equitable
and not unfairly discriminatory. The Exchange believes that the
proposed increases in requisite ADV for the incentive related to the
Fee for Adding Liquidity in Non-Penny Symbols will encourage NOM Market
Makers to add a greater amount of liquidity on NOM. Any Participant may
interact with the additional liquidity attracted by this incentive.
Further, the Exchange would continue to uniformly apply this note ``5''
incentive to any qualifying Participant.
---------------------------------------------------------------------------
\53\ See note 28 above.
---------------------------------------------------------------------------
The Exchange's proposal to amend current note ``6'' \54\ is
reasonable, equitable and not unfairly discriminatory. The Exchange
proposes to amend current note ``6'' to replace the qualification
related to note ``&'' within MARS \55\ with new ``MARS Tier 7 or
higher.'' The Exchange believes that this replacement will continue to
attract order flow to NOM in order to earn the amended note ``6''
incentive. As discussed in the MARS section of this proposal, in order
to qualify for new MARS Tiers 7 or higher, Participants must execute at
least 100,000 of MARS Eligible Contract per day. Thus, the proposed
qualification for the additional note ``6'' incentive will have the
same ADV threshold requirement as the current qualification, but will
eliminate the total Affiliated Entity or Common Ownership ADAV
requirement. By adjusting the qualifications for the note ``6''
incentive in this manner, the Exchange seeks to further encourage
Participants to send high volumes of electronic equity and ETF options
to NOM for execution in order to receive this rebate.
---------------------------------------------------------------------------
\54\ See note 12 above.
\55\ Options 7, Section 2(6) note ``&'' provides, ``NOM
Participants that execute at least 100,000 of MARS Eligible
Contracts per day and have total Affiliated Entity or Common
Ownership ADAV of 3.25% 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 in Penny Pilot Options and an
additional $0.19 per contract in Non-Penny Pilot Options, in
addition to MARS Payment tier 5 on MARS Eligible Contracts the NOM
Participant qualifies for in a given month. NOM Participants that
qualify for the note ``&'' incentive will not receive the note ``@''
incentive.''
---------------------------------------------------------------------------
The Exchange notes that the additional note ``6'' incentive
continues to be the highest available NOM Market Maker Rebate to Add
Liquidity in Non-Penny Symbols (totaling $0.88 per contract).\56\ As
proposed, the Exchange believes that the rebate qualifications are
appropriate and commensurate with the rebate amount. In particular,
while the Exchange will eliminate the total Affiliated Entity or Common
Ownership ADAV requirement for this additional note ``6'' incentive,
the Exchange will continue to require Participants to meet both the
stringent volume requirements of executing at least 100,000 of MARS
Eligible Contract per day (i.e., MARS Tiers 7 or higher) and the
stringent requirements set forth in the Tier 6 NOM Market Maker Rebate
to Add Liquidity in Penny Symbols, in order to receive this rebate.
---------------------------------------------------------------------------
\56\ Specifically, Participants that qualify for Tier 7 or
higher in the MARS Payment Schedule in Section (6) would receive an
additional $0.02 per contract NOM Market Maker Rebate to Add
Liquidity in Non-Penny Symbols, in addition to receiving a $0.86 per
contract NOM Market Maker Rebate to Add Liquidity in Non-Penny
Symbols, for a total rebate of $0.88 per contract.
---------------------------------------------------------------------------
The Exchange will uniformly apply the amended note ``6'' incentive
to all qualifying NOM Participants. Similar to
[[Page 55899]]
the clarification that is being made in other notes, with respect to
achieving the greater of two incentives, the Exchange's proposal to
make clear in amended note ``6'' that Participants may qualify for
either note ``5'' or note ``6'', but not both, is reasonable, equitable
and not unfairly discriminatory. This change will bring greater clarity
to the application of the incentives. This change reflects current
practice.
MARS Pricing
The Exchange believes that the proposed changes to MARS pricing
described above represent a reasonable attempt by the Exchange to
fortify participation in the MARS program. In particular, the Exchange
believes that it is reasonable to eliminate the note ``@'' and note
``&'' incentives because it will replace them with an amended MARS
Payment schedule comprising of modified MARS rebates and new ADV tiers.
The Exchange must periodically assess the effectiveness of the
incentives it provides and scale back on certain incentives so that the
Exchange may apply its resources to other, possibly more effective,
rebates such as the proposed MARS Payment schedule. The Exchange
believes that the proposed MARS Payment schedule will better align the
cost of offering the MARS program with the benefit it brings to the
marketplace. The proposed schedule is designed to attract higher
volumes of electronic equity and ETF options orders to the Exchange,
which will, in turn, benefit all NOM Participants by offering greater
price discovery, increased transparency, and an increased opportunity
to trade on the Exchange. The Exchange intends for the proposed
schedule to achieve these results by increasing the number of ADV tiers
in the schedule from five to nine and, at each tier, paying a base
rebate that will be roughly the same as or greater than that which it
pays now. For example, qualifying Participants would be entitled to
receive a MARS Payment of $0.11 in Tiers 1 and 2 for Penny executions
under this proposal (compared to $0.07 and $0.09 in Tiers 1 and 2
today), and entitled to receive MARS Payments of $0.24, $0.29, and
$0.39 in Tiers 1, 2, and 3, respectively, for Non-Penny executions
(compared to $0.15, $0.20, and $0.30 in Tiers 1-3 today). Furthermore,
Participants that qualify for new MARS Payment Tiers 6-9 would receive
base rebates ranging from $0.20 to $0.21 for Penny Symbols and from
$0.75 to $0.84 for Non-Penny Symbols, whereas the highest base rebates
currently available under the MARS program are $0.17 for Penny Symbols
and $0.60 for Non-Penny Symbols.
The Exchange also believes that the proposed ADV thresholds for new
MARS Payment Tiers 6-9 are set at reasonable levels that would make the
associated rebates achievable and attractive to existing and potential
program participants. As noted above, the new MARS Payment Tiers retain
some features of the note ``@'' and note ``&'' incentives, namely the
ADV threshold requirements of executed MARS Eligible Contracts, while
eliminating the total Affiliated Entity or Common Ownership ADAV
requirement, thus making it easier to qualify for some tiers. For
example, new MARS Payment Tiers 6 and 7 retain the note ``@'' and note
``&'' requirements that Participants meet 75,000 and 100,000 Eligible
Contracts ADV, respectively, to qualify for the associated MARS
Payments without the added requirement of meeting certain total
Affiliated Entity or Common Ownership ADAV thresholds. Taken together,
the Exchange believes that the proposed MARS Payment Tiers will
incentivize current and new program participants to achieve the higher
tiers in order to receive the associated rebates.
The Exchange also believes that it is reasonable to apply the note
``[supcaret]'' incentive to new MARS Payment Tiers 6-9 in order to
continue incentivizing Participants to pool their volume in order to
meet the total Affiliated Entity or Common Ownership ADAV requirement.
The resulting increased volume and liquidity would benefit all market
participants by providing more trading opportunities and tighter
spreads.
The Exchange believes that the amended note ``*'' incentive is
reasonable as it will continue to encourage Participants to achieve the
highest Customer and Professional Rebate to Add Liquidity in Penny
Symbols in Tier 6 and also qualify for MARS. As proposed, the Exchange
will no longer provide $0.09 in Penny Symbols in addition to the Penny
MARS Payment Tiers 1-5, but will instead provide a $0.20 per contract
rebate in lieu of the MARS Payments. The Exchange believes this is
reasonable for several reasons. As an initial matter, in Penny MARS
Payment Tiers 1-3, Participants that qualify for the amended note ``*''
incentive would be eligible to receive a rebate that is roughly the
same or greater than the rebate which they receive today. For example,
Participants that qualify for Penny MARS Payment Tier 1 or Tier 2, and
also qualify for the Tier 6 Customer and Professional Rebate to Add
Liquidity in Penny Symbols, would receive a rebate of $0.20 per
contract under this proposal, whereas today, they would receive $0.16
per contract and $0.18 per contract in Tiers 1 and 2, respectively.
While qualifying Participants would receive a lower rebate in Penny
MARS Payment Tiers 4 and 5 under this proposal than they would
today,\57\ the Exchange believes this is reasonable given the
significantly higher rebates it is proposing to provide for the Non-
Penny MARS Payment Tiers to promote Non-Penny Symbol order flow to the
Exchange. The Exchange further believes that the amended note ``*''
rebate will better align the cost of offering this rebate with the
benefit it brings to the marketplace as a means of incentivizing market
participants to add Penny Symbol order flow sent to the Exchange.
---------------------------------------------------------------------------
\57\ Today, Participants would be eligible to receive $0.24 per
contract and $0.26 per contract in Tiers 5 and 6, respectively, if
they also qualify for the Tier 6 Customer and Professional Rebate to
Add Liquidity in Penny Symbols.
---------------------------------------------------------------------------
The Exchange believes that its proposal to modify MARS pricing as
described above is equitable and not unfairly discriminatory because
all Participants may qualify for MARS provided they have requisite
System Eligibility. In addition, while the Exchange is proposing to
eliminate the note ``@'' and note ``&'' incentives, it will retain the
features of these rebates in the proposed MARS Payment Tiers and in the
note ``[supcaret]'' incentive, as discussed above. As a result, the
Exchange does not believe that the proposed changes will have a
disproportionate effect on any market participant type. Furthermore,
the Exchange believes that it is equitable and not unfairly
discriminatory to continue to offer the note ``*'' incentive to Penny
Symbols than Non-Penny Symbols due to the Exchange's desire to
specifically promote Penny Symbol order flow to qualify for this rebate
in this manner. Furthermore, the Exchange is also seeking to promote
increased Non-Penny Symbol order flow with the significant MARS rebates
it is proposing above. Ultimately, an increase in overall order flow
will improve the quality of NOM, and increase its attractiveness to
existing and prospective market participants.
Technical Amendments
The Exchange's proposal to amend Options 7 to add ``Section 1
General Provisions'' before the rule text, remove ``Section 1'' before
the title ``Collection of Exchange Fees and Other Claims-Nasdaq Options
Market'' and
[[Page 55900]]
incorporate the rule text within new Options 7, Section 1, which
includes other rule text, is reasonable, equitable and not unfairly
discriminatory. The Exchange believes that these proposed changes will
assist Participants in referencing the rule text that currently has no
section reference. The Exchange also proposes to add the word ``The''
before the name ``Nasdaq Options Market'' for clarity.
The Exchange's proposal to amend Options 7, Section 2, Nasdaq
Options Market--Fees and Rebates, to replace the terms ``Pilot
Options'' and ``Pilot'' with ``Symbol'' or ``Symbols,'' as appropriate,
is reasonable, equitable and not unfairly discriminatory. This
amendment seeks to conform the name of the program.
The Exchange's proposal to update rule citations to reflect current
citations is reasonable, equitable and not unfairly discriminatory. The
Exchange relocated the Rulebook \58\ and certain rule citations were
not updated.\59\ These amendments will bring greater clarity to the
Rules.
---------------------------------------------------------------------------
\58\ See Securities Exchange Act Release No. 87778 (December 17,
2019), 84 FR 70590 (SR-NASDAQ-2019-098) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Relocate Rules
From Its Current Rulebook Into Its New Rulebook Shell).
\59\ See note 41 above.
---------------------------------------------------------------------------
Finally, the Exchange's proposal to remove an obsolete date within
Options 7, Section 5, ``Nasdaq Options Regulatory Fee'' is reasonable,
equitable and not unfairly discriminatory. This amendment will bring
greater clarity to the Rules.
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.
Intermarket Competition
The proposal does not impose an undue burden on intermarket
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants another
choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges that have been exempted from compliance with the statutory
standards applicable to exchanges. Because competitors are free to
modify their own fees in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which fee changes in this market may impose any
burden on competition is extremely limited.
Intramarket Competition
The proposed amendments do not impose an undue burden on
intramarket competition.
Options 7, Section 2
The Exchange's proposal to restructure rebates and fees into new
pricing tables, without changes to the fees and rebates or pricing
qualifications, as applicable, does not impose an undue burden on
competition because the restructuring is intended to bring greater
clarity to the current fee and rebates assessed and paid by NOM. The
Exchange believes that the new table formats allow Participant to more
easily reference the pricing on NOM.
Rebates To Add Liquidity in Penny Symbols
The Exchange's proposal to relocate note ``c'' to new note ``7'',
and relocate note ``d'' into new note ``8, while amending these notes
to remove the incentive rebates for Professionals transacting Penny
Symbols in each of those notes (``7'' and ``8'') does not impose an
undue burden on competition. Customer liquidity offers unique benefits
to the market which benefits all market participants. Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. The Exchange believes that
continuing to encourage Participants to add Professional liquidity
creates competition among options exchanges because the Exchange
believes that the rebates may cause market participants to select NOM
as a venue to send Professional order flow. Paying the incentives \60\
within new notes ``7'' and ``8'' solely to Customers and not
Professionals is consistent with the treatment of Customer orders on
other options venues, which pay Customers the highest rebates.\61\
Customer liquidity is the most sought after liquidity among
Participants and by continuing to offer the new notes ``7'' and ``8''
incentives only to Customers, the Exchange believes that NOM will
continue to attract this valuable order flow. The incentives offered in
new notes ``7'' and ``8'' would be uniformly applied to qualifying
Participants.
---------------------------------------------------------------------------
\60\ Today, Customers and Professionals are entitled to various
incentives within notes ``c'' and ``d'' related to Rebates to Add
Liquidity in Penny Symbols. See notes 6 and 17, respectively above.
\61\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
The Exchange's proposal to relocate note ``***'' to new note 1,\62\
and instead provide, ``The Customer and Professional Rebate to Add
Liquidity in Penny Symbols will be paid per the highest tier achieved
below. To determine the applicable percentage of total industry
customer equity and ETF option average daily volume, unless otherwise
stated, the Participant's Penny Symbol and Non-Penny Symbol Customer
and/or Professional volume that adds liquidity will be included,'' does
not impose an undue burden on competition. All Participants would
continue to be uniformly paid the highest Customer and Professional
Rebate to Add Liquidity tier in Penny Symbols as described in new note
``1''.
---------------------------------------------------------------------------
\62\ Current note 1 within Options 7, Section 2(1) is being
amended and relocated to new note ``12''.
---------------------------------------------------------------------------
The Exchange's proposal to relocate note ``e'' to new note ``9''
and amend note ``9,'' and relocate note ``f'' into new note ``10'' and
amend note ``10'' to lower the incentive paid to a Professional for
Rebates to Add Liquidity in Penny Symbols and Non-Penny Symbols does
not impose an undue burden on competition.\63\ As proposed,
Professional incentives would be lowered for each of these notes.\64\
Today, the Exchange pays the same Customer and Professional Rebates to
Add Liquidity in Penny Symbols and Non-Penny Symbols. These rebates for
Customers and Professionals will continue to be the same. Customer
liquidity offers unique benefits to the market which benefits all
market participants. Customer liquidity benefits all market
participants by providing more trading opportunities, which
[[Page 55901]]
attracts market makers. An increase in the activity of these market
participants in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants. The Exchange believes that continuing to encourage
Participants to add Professional liquidity creates competition among
options exchanges because the Exchange believes that the rebates may
cause market participants to select NOM as a venue to send Professional
order flow. Paying higher rebates to Customers is consistent with the
treatment of Customers on other options venues that are paid the
highest rebates.\65\ Customer liquidity is the most sought after
liquidity among Participants. The new notes ``9'' and ``10'' incentives
would be uniformly applied to qualifying Participants.
---------------------------------------------------------------------------
\63\ New notes ``9'' and ``10'' apply to both Penny Symbols and
Non-Penny Symbols.
\64\ As proposed, new note ``9'' would lower the Professional
Rebate to Add Liquidity incentive in Penny Symbols from $0.50 to
$0.48 per contract and the Professional Rebate to Add Liquidity
incentive in Non-Penny Symbols from $1.00 to $0.90 per contract. As
proposed, new note ``10'' would lower the Professional Rebate to Add
Liquidity incentive in Penny Symbols from $0.55 to $0.48 per
contract and the Professional Rebate to Add Liquidity incentive in
Non-Penny Symbols from $1.05 to $0.90 per contract.
\65\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
NOM Market Maker Rebates To Add Liquidity in Penny Symbols
The Exchange's proposal to create a new note ``4'' which provides,
``Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity will receive $0.40 per contract to add liquidity in in
the following symbols: AAPL, SPY, QQQ, IWM, and VXX'' does not impose
an undue burden on competition. This new note captures the current
pricing of $0.40 per contract in the following symbols AAPL, QQQ, IWM,
VXX and SPY for NOM Market Maker Tiers 3 and 4. New note ``4'' will
make clear the current pricing applicable to symbols: AAPL, SPY, QQQ,
IWM, and VXX. The current pricing, which was relocated to new note
``4'', would continue to be uniformly applied to all Participants that
qualify.
Fees and Rebates To Add Liquidity in Non-Penny Symbols
The Exchange's proposal to relocate current note 1 \66\ to new
``12'' and amend note ``12'' does not impose an undue burden on
competition. Today, the Exchange pays the same Tier 6 Customer and
Professional Rebates to Add Liquidity in Penny Symbols and Non-Penny
Symbols. These rebates for Customers and Professionals will continue to
be the same. Customer liquidity offers unique benefits to the market
which benefits all market participants. Customer liquidity benefits all
market participants by providing more trading opportunities, which
attracts market makers. An increase in the activity of these market
participants in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants. Paying higher rebates to Customers is consistent with the
treatment of Customers on other options venues that are paid the
highest rebates.\67\ Customer liquidity is the most sought after
liquidity among Participants. The new note ``12'' incentive would be
uniformly applied to qualifying Participants.
---------------------------------------------------------------------------
\66\ See note 27 above.
\67\ See Nasdaq PHLX LLC Options 7, Section 1. Phlx pays rebates
exclusively to Customers. See also Nasdaq GEMX, LLC Options 7,
Section 3. Priority Customers receive the highest rebates.
---------------------------------------------------------------------------
The Exchange's proposal to amend current note ``5'' \68\ to
increase the requisite ADV related to the Fee for Adding Liquidity in
Non-Penny Symbols (7,500 to 9,999 ADV becomes 10,000 to 14,999 ADV and
10,000 ADV becomes 15,000 ADV) does not impose an undue burden on
competition. The Exchange would continue to uniformly apply this note
``5'' incentive to any qualifying Participant.
---------------------------------------------------------------------------
\68\ See note 28 above.
---------------------------------------------------------------------------
The Exchange's proposal to amend note ``6'' \69\ does not impose an
undue burden on competition. The Exchange will uniformly apply the
amended note ``6'' incentive to all qualifying NOM Participants.
Similar to the clarification that is being made in other notes, with
respect to achieving the greater of two incentives, the Exchange's
proposal to make clear in amended note ``6'' that Participants may
qualify for either note ``5'' or note ``6'', but not both, does not
impose an undue burden on competition. This change will bring greater
clarity to the application of the incentives. This change reflects
current practice.
---------------------------------------------------------------------------
\69\ See note 12 above.
---------------------------------------------------------------------------
MARS Pricing
The Exchange does not believe that the proposed changes to MARS
pricing will impose any undue burden on intra-market competition. As
noted above, all Participants may qualify for MARS provided they have
requisite System Eligibility. All of the proposed MARS pricing changes
are generally 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.
Technical Amendments
The Exchange's proposal to amend Options 7 to add ``Section 1
General Provisions'' before the rule text, remove ``Section 1'' before
the title ``Collection of Exchange Fees and Other Claims-Nasdaq Options
Market'' and incorporate the rule text within new Options 7, Section 1,
which includes other rule text, does not impose an undue burden on
competition. The Exchange believes that these proposed changes will
assist Participants in referencing the rule text that currently has no
section reference. The Exchange also proposes to add the word ``The''
before the name ``Nasdaq Options Market'' for clarity.
The Exchange's proposal to amend Options 7, Section 2, Nasdaq
Options Market--Fees and Rebates, to replace the terms ``Pilot
Options'' and ``Pilot'' with ``Symbol'' or ``Symbols,'' as appropriate,
does not impose an undue burden on competition. This amendment seeks to
conform the name of the program.
The Exchange's proposal to update rule citations to reflect current
citations does not impose an undue burden on competition. The Exchange
relocated the Rulebook \70\ and certain rule citations were not
updated.\71\ These amendments will bring greater clarity to the Rules.
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\70\ See Securities Exchange Act Release No. 87778 (December 17,
2019), 84 FR 70590 (SR-NASDAQ-2019-098) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Relocate Rules
From Its Current Rulebook Into Its New Rulebook Shell).
\71\ See note 41 above.
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Finally, the Exchange's proposal to remove an obsolete date within
Options 7, Section 5, ``Nasdaq Options Regulatory Fee'' does not impose
an undue burden on competition. This amendment will bring greater
clarity to the Rules.
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.\72\
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\72\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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
[[Page 55902]]
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 Number SR-NASDAQ-2020-056 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2020-056. 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-2020-056 and
should be submitted on or before October 1, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\73\
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\73\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-19946 Filed 9-9-20; 8:45 am]
BILLING CODE 8011-01-P
