Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NOM Options 7, Section 2, 73348-73353 [2022-25947]
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73348
Federal Register / Vol. 87, No. 228 / Tuesday, November 29, 2022 / Notices
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern Market Dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
Competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
khammond on DSKJM1Z7X2PROD with NOTICES
II. Docketed Proceeding(s)
1. Docket No(s).: CP2019–153; Filing
Title: USPS Notice of Amendment to
Priority Mail Express, Priority Mail &
First-Class Package Service Contract 62,
Filed Under Seal; Filing Acceptance
Date: November 22, 2022; Filing
Authority: 39 CFR 3035.105; Public
Representative: Christopher C.Mohr;
Comments Due: December 2, 2022.
2. Docket No(s).: MC2023–56 and
CP2023–55; Filing Title: USPS Request
to Add Priority Mail & First-Class
Package Service Contract 227 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: November 22, 2022;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative: Katalin
K. Clendenin; Comments Due:
December 2, 2022.
3. Docket No(s).: MC2023–57 and
CP2023–56; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail, First-Class Package Service &
Parcel Select Contract 88 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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Date: November 22, 2022; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
December 2, 2022.
4. Docket No(s).: MC2023–58 and
CP2023–57; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail, First-Class Package Service &
Parcel Select Contract 89 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: November 22, 2022; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
December 2, 2022.
5. Docket No(s).: MC2023–59 and
CP2023–58; Filing Title: USPS Request
to Add Priority Mail Contract 768 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: November 22, 2022;
Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Jennaca D. Upperman; Comments Due:
December 2, 2022.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2022–25993 Filed 11–28–22; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96375; File No. SR–
NASDAQ–2022–064]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
NOM Options 7, Section 2
November 22, 2022.
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 November
10, 2022, 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
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00070
Fmt 4703
Sfmt 4703
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.’’ 3
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(1), ‘‘Nasdaq Options Market—
Fees and Rebates,’’ to: (1) amend the
Tier 6 Professional 4 Rebate to Add
Liquidity in Penny Symbols; (2) amend
the criteria for the Tier 3 and Tier 6
Rebates to Add Liquidity in Penny
Symbols; and (3) add an incentive to
achieve a higher Tier 6 Professional
Rebate to Add Liquidity in Penny
Symbols.
3 The Exchange originally filed SR–NASDAQ–
2022–061 on November 1, 2022. On November 10,
2022, the Exchange withdrew SR–NASDAQ–2022–
061 and submitted this rule change.
4 Pursuant to Options 7, Section 1(a) 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. 87, No. 228 / Tuesday, November 29, 2022 / Notices
Today, NOM Options 7, Section 2(1)
provides for various fees and rebates
applicable to NOM Participants.
Specifically, the Rebates to Add
Liquidity in Penny Symbols are as
follows:
REBATES TO ADD LIQUIDITY IN PENNY SYMBOLS
Tier 1
Customer ..........................................................................
Professional .....................................................................
Broker-Dealer ...................................................................
Firm ..................................................................................
Non-NOM Market Maker ..................................................
NOM Market Maker .........................................................
Customer and Professional Rebates to
Add Liquidity in Penny Symbols are
paid per the highest tier achieved
among the 6 available tiers. To
determine the applicable percentage of
($0.20)
(0.20)
(0.10)
(0.10)
(0.10)
(0.20)
Tier 2
Tier 3
($0.25)
(0.25)
(0.10)
(0.10)
(0.10)
(0.25)
Tier 4
($0.43)
(0.43)
(0.10)
(0.10)
(0.10)
4 (0.30)
total industry customer equity and ETF
option average daily volume, unless
otherwise stated, the Exchange
considers the Participant’s Penny and
Non-Penny Symbol Customer and/or
($0.44)
(0.44)
(0.10)
(0.10)
(0.10)
4 (0.32)
Tier 5
($0.45)
(0.45)
(0.10)
(0.10)
(0.10)
11 (0.44)
Tier 6
7 ($0.48)
(0.48)
(0.10)
(0.10)
(0.10)
(0.48)
Professional volume that adds liquidity.
Below are the criteria for each Rebate to
Add Liquidity in Penny Symbol tier.
MONTHLY VOLUME
Tier 1 ......................
Tier 2 ......................
Tier 3 ......................
Tier 4 ......................
Tier 5 ......................
Tier 6 ......................
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols 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 Symbols
and/or Non-Penny Symbols above 0.10% to 0.20% of total industry customer equity and ETF option ADV contracts per
day in a month.
Participant: (a) adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total industry customer equity and ETF option ADV contracts
per day in a month; or (b) adds Customer and/or Professional liquidity in Penny Symbols and/or Non-Penny Symbols of
0.15% to less than 0.20% of total industry customer equity and ETF option ADV contracts per day in a month and qualifies for MARS.
Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols 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 Symbols
and/or Non-Penny Symbols 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 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 Participant adds: (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 (defined below).
Penny Symbols
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Today, Customers and Professionals
are paid the following Penny Symbol
Rebates: for Tier 1 a $0.20 per contract,
for Tier 2 a $0.25 per contract, for Tier
3 a $0.43 per contract, for Tier 4 a $0.44
per contract, for Tier 5 a $0.45 per
contract and for Tier 6 a $0.48 per
contract. Today, Customers may
increase their Tier 6 Penny Symbol
Rebate if they meet certain criteria.5
5 Pursuant to note 7 within Options 7, Section
2(1), 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 BrokerDealer liquidity in Penny Symbols and/or Non-
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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
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Frm 00071
Fmt 4703
Sfmt 4703
Broker-Dealers,6 Firms,7 and Non-NOM
Market Makers 8 are paid a $0.10 per
contract Rebate to Add Liquidity in
Penny Symbols regardless of the tier.
purposes of calculating Consolidated Volume and
the extent of an equity member’s trading activity,
expressed as a percentage of or ratio to
Consolidated Volume, the date of the annual
reconstitution of the Russell Investments Indexes
shall be excluded from both total Consolidated
Volume and the member’s trading activity.
6 Pursuant to Options 7, Section 1(a), 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.
7 Pursuant to Options 7, Section 1(a), the term
‘‘Firm’’ or (‘‘F’’) applies to any transaction that is
identified by a Participant for clearing in the Firm
range at OCC.
8 Pursuant to Options 7, Section 1(a), 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.
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Federal Register / Vol. 87, No. 228 / Tuesday, November 29, 2022 / Notices
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NOM Market Makers 9 are paid the
following Penny Symbol Rebates: for
Tier 1 a $0.20 per contract, for Tier 2 a
$0.25 per contract, for Tier 3 a $0.30 per
contract, for Tier 4 a $0.32 per contract,
for Tier 5 a $0.44 per contract and for
Tier 6 a $0.48 per contract. NOM Market
Makers are also offered Penny Symbol
incentives to increase their rebates.10
The Exchange proposes to decrease
the Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) from $0.48 per
contract to $0.47 per contract.11
The Exchange also proposes to amend
the criteria for the Tier 3 and Tier 6
Rebates to Add Liquidity in Penny
Symbols within Options 7, Section 2(1).
Today, the criteria for the Tier 3 Rebate
to Add Liquidity in Penny Symbols
provides,
Participant: (a) adds Customer,
Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in
Penny Symbols and/or Non-Penny
Symbols above 0.20% to 0.30% of total
industry customer equity and ETF
option ADV contracts per day in a
month; or (b) adds Customer and/or
Professional liquidity in Penny Symbols
and/or Non-Penny Symbols of 0.15% 12
to less than 0.20% 13 of total industry
customer equity and ETF option ADV
contracts per day in a month and
qualifies for MARS.14
The Exchange proposes to instead
provide the following Tier 3 criteria,
Participant: (a) adds Customer,
Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in
Penny Symbols and/or Non-Penny
Symbols above 0.20% to 0.30% of total
industry customer equity and ETF
option ADV contracts per day in a
month; or (b) adds Customer and/or
Professional liquidity in Penny Symbols
and/or Non-Penny Symbols of
0.05% 15 to less than 0.10% of total
industry customer equity and ETF
9 Pursuant to Options 7, Section 1(a), 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.
10 See notes 4–11 of Options 7, Section 2(1).
11 The Exchange is not proposing to amend NonPenny Symbol pricing.
12 10% of total industry customer equity and ETF
option ADV contracts per day in a month equates
to 33,000 contracts.
13 20% of total industry customer equity and ETF
option ADV contracts per day in a month equates
to 66,000 contracts.
14 MARS is the Exchange’s Market Access and
Routing Subsidy program described within Options
7, Section 2(4).
15 5% of total industry customer equity and ETF
option ADV contracts per day in a month equates
to 16,500 contracts.
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option ADV contracts per day in a
month and qualifies for MARS.
With this proposal, the Exchange
intends to lower the criteria to achieve
the Tier 3 Rebate to Add Liquidity in
Penny Symbols when a Participant adds
Customer and/or Professional liquidity
in Penny Symbols and/or Non-Penny
Symbols and qualifies for MARS. The
Exchange believes that lowering the
criteria would allow additional
Participants to qualify for the Tier 3
Rebate to Add Liquidity in Penny
Symbols.
Today, the criteria for the Tier 6
Rebate to Add Liquidity in Penny
Symbols provides,
Participant adds Customer,
Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in
Penny Symbols and/or Non-Penny
Symbols above 0.80% 16 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 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 (defined below).
The Exchange proposes to instead
provide the following Tier 6 criteria,
Participant adds Customer,
Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in
Penny Symbols and/or Non-Penny
Symbols above 0.70% 17 or more of total
industry customer equity and ETF
option ADV contracts per day in a
month, or Participant: (1) adds 18
Customer and/or Professional liquidity
in Penny Symbols and/or Non-Penny
Symbols of 0.10% 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).
With this proposal, the Exchange
intends to lower the criteria to achieve
the Tier 6 Rebate to Add Liquidity in
Penny Symbols when a Participant adds
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Penny Symbols and/or NonPenny Symbols or adds Customer and/
or Professional liquidity in Penny
Symbols and/or Non-Penny Symbols
and has added liquidity in all securities
through one or more of its Nasdaq
Market Center MPIDs or qualifies for
MARS. The Exchange believes that
lowering the criteria would allow for
additional Participants to qualify for the
Tier 6 Rebate to Add Liquidity in Penny
Symbols.
Finally, the Exchange proposes to add
an incentive (‘‘##’’) to achieve a higher
Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1). The new
incentive to the Tier 6 Rebate to Add
Liquidity in Penny Symbols would
provide,
Participants that 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 Participants that (1) add
Customer and/or Professional liquidity
in Penny Symbols and/or Non-Penny
Symbols of 0.20% or more of total
industry adds customer equity and ETF
option ADV contracts per day in a
month, and (2) have 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
qualify for MARS (defined below) will
receive an additional $0.01 per contract
rebate for Professional volume which
adds liquidity in Penny Symbols only.
While the Exchange is lowering the
Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) from $0.48 per
contract to $0.47 per contract, the
proposed Tier 6 ‘‘##’’ incentive would
permit Professionals to achieve a $0.48
per contract Tier 6 Professional Rebate
to Add Liquidity in Penny Symbols
provided they add the same amount of
Customer and/or Professional liquidity
in Penny Symbols and/or Non-Penny
Symbols as they do today and continue
to meet the remainder of the Tier 6
criteria as they do today.
16 80% of total industry customer equity and ETF
option ADV contracts per day in a month equates
to 264,000 contracts.
17 70% of total industry customer equity and ETF
option ADV contracts per day in a month equates
to 231,000 contracts.
18 The Exchange also proposes to relocate the
word ‘‘adds’’ within the Tier 6 criteria so the
paragraph reads clearly.
2. Statutory Basis
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The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,19 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
19 15
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U.S.C. 78f(b).
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Federal Register / Vol. 87, No. 228 / Tuesday, November 29, 2022 / Notices
of the Act,20 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.
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The Proposal Is Reasonable
The 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 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 21
(‘‘NetCoalition’’), the D.C. Circuit stated,
‘‘[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’
. . . .’’ 22
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for options
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. Within the
foregoing context, the proposal
represents a reasonable attempt by the
Exchange to attract additional order
flow to the Exchange and increase its
market share relative to its competitors.
Options 7, Section 2(1)
The Exchange’s proposal to decrease
the Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) from $0.48 per
contract to $0.47 per contract is
reasonable because the Exchange is
20 15
U.S.C. 78f(b)(4) and (5).
v. SEC, 615 F.3d 525 (D.C. Cir.
21 NetCoalition
2010).
22 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
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16:29 Nov 28, 2022
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decreasing the Tier 6 rebate criteria and
offering an incentive to permit
Professionals to achieve a higher rebate.
Participants who are able to achieve
Tier 6 today would continue to be
eligible for the Tier 6 Rebate to Add
Liquidity in Penny Symbols, provided
they continue to provide the same
liquidity. Other Participants may also be
able to qualify for the Tier 6 Rebate to
Add Liquidity in Penny Symbols
because of the lower volume
requirements. Additionally, by
submitting the same volume as today,
Participants would be able to qualify for
the same $0.48 per contract Professional
Rebate to Add Liquidity in Penny
Symbols with the proposed incentive.
The Exchange’s proposal to decrease
the criteria for the Tier 6 Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) is reasonable
because Participants who are able to
achieve Tier 6 rebate today would
continue to be eligible for the Tier 6
Rebate to Add Liquidity in Penny
Symbols, provided they continued to
provide the same liquidity. Other
Participants may also be able to qualify
for the Tier 6 Rebate to Add Liquidity
in Penny Symbols because of the lower
volume requirements. The proposal
permits Participants to qualify for the
Tier 6 Rebate to Add Liquidity in Penny
Symbols when a Participant adds
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Penny Symbols and/or NonPenny Symbols from 0.80% to 0.70% of
total industry customer equity and ETF
option ADV contracts per day in a
month. Additionally, the Exchange is
decreasing the criteria to achieve the
Tier 6 Rebate to Add Liquidity in Penny
Symbols when Participant adds
Customer and/or Professional liquidity
in Penny Symbols and/or Non-Penny
Symbols from 0.20% to .10% or more of
total industry customer equity and ETF
option ADV contracts per day in a
month. The remainder of the criteria
within Tier 6 Rebate to Add Liquidity
in Penny Symbols remains the same.23
The Exchange’s proposal to offer a
Tier 6 incentive (‘‘##’’) is reasonable
because, today, Customers may achieve
a higher Tier 6 Rebate to Add Liquidity
in Penny Symbols by meeting the
criteria in current note 7.24 The
23 The Tier 6 Rebate to Add Liquidity in Penny
Symbols also requires that 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) when Participant is seeking
to achieve the second part of Tier 6 to qualify for
the rebate.
24 Note 7 of Options 7, Section 2(1) provides that
Participants that: (1) add Customer, Professional,
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
73351
Exchange notes that Participants who
today qualify for Tier 6 Professional
Rebate to Add Liquidity in Penny
Symbols would be eligible for the
incentive provided they continue to
submit the same liquidity as today.
Participants that today qualify for a
lower Professional Rebate to Add
Liquidity in Penny Symbols may have
an opportunity to qualify for the Tier 6
Professional Rebate to Add Liquidity in
Penny Symbols which pays the highest
Professional Rebate to Add Liquidity in
Penny Symbols.
The Exchange’s proposal to decrease
the Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) from $0.48 per
contract to $0.47 per contract, amend
the criteria for the Tier 6 rebate, and add
a Tier 6 rebate incentive for Penny
Symbols is equitable and not unfairly
discriminatory because with this
proposal, Customers will continue to be
eligible for the highest rebates offered by
the Exchange. Customer liquidity,
unlike Professional liquidity, offers
unique benefits to the market which
benefits all market participants.
Customer liquidity is the most sought
after liquidity among Participants.
Firm, Non-NOM Market Maker and/or BrokerDealer liquidity in Penny Symbols and/or NonPenny 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 BrokerDealer liquidity in Penny Symbols and/or NonPenny 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 BrokerDealer 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.
E:\FR\FM\29NON1.SGM
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73352
Federal Register / Vol. 87, No. 228 / Tuesday, November 29, 2022 / Notices
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.25 The Exchange believes it is
equitable and not unfairly
discriminatory to continue to pay
Professionals the same or lower rebates
as Customers. With respect to
Professionals, 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. The Exchange notes that is
equitable and not unfairly
discriminatory to lower rebates for
Professionals, who unlike Customers,
have access to sophisticated trading
systems that contain functionality not
available to Customers. The Exchange
would uniformly apply the Tier 6 rebate
criteria and incentive to all Participants
and would uniformly pay rebates to all
qualifying Participants.
The Exchange’s proposal to decrease
the criteria to achieve the Tier 3 Rebate
to Add Liquidity in Penny Symbols
within Options 7, Section 2(1) is
reasonable because Participants who are
able to achieve Tier 3 rebate today
would continue to be eligible for the
Tier 3 Rebate to Add Liquidity in Penny
Symbols, provided they continued to
provide the same liquidity. Other
Participants may also be able to qualify
for the Tier 3 Rebate to Add Liquidity
in Penny Symbols because of the lower
volume requirements.
The Exchange’s proposal to decrease
the criteria to achieve the Tier 3 Rebate
to Add Liquidity in Penny Symbols
within Options 7, Section 2(1) is
equitable and not unfairly
discriminatory because the Exchange
would uniformly apply the Tier 3 rebate
criteria to all Participants and pay the
Tier 3 rebate to all qualifying
Participants.
25 See
Nasdaq PHLX LLC Options 7, Section 2.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
VerDate Sep<11>2014
16:29 Nov 28, 2022
Jkt 259001
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 Exchange operates in a highly
competitive market in which market
participants can readily favor competing
venues if they deem fee levels at a
particular venue to be excessive, or
rebate opportunities available at other
venues to be more favorable. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other 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 pricing changes in this market
may impose any burden on competition
is extremely limited because other
options exchanges offer similar rebate
programs.
Moreover, as noted above, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and rebate changes. In
sum, if the changes proposed herein are
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of Members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
Intramarket Competition
The Exchange’s proposal to decrease
the Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols within
Options 7, Section 2(1) from $0.48 per
contract to $0.47 per contract, amend
the criteria for the Tier 6 rebate, and add
a Tier 6 rebate incentive for Penny
Symbols does not impose an undue
burden on competition. With this
proposal, Customers will continue to be
eligible for the highest rebates offered by
the Exchange. Customer liquidity,
unlike Professional liquidity, offers
unique benefits to the market which
benefits all market participants.
Customer liquidity is the most sought
after liquidity among 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
PO 00000
Frm 00074
Fmt 4703
Sfmt 4703
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.26 Paying Professionals the same
or lower rebates as Customers does not
impose an undue burden on
competition. With respect to
Professionals, 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. Lowering rebates for Professionals,
who unlike Customers, have access to
sophisticated trading systems that
contain functionality not available to
Customers does not impose an undue
burden on competition. Finally, the
Exchange would uniformly apply the
Tier 6 rebate criteria and incentive to all
Participants and would uniformly pay
rebates to all qualifying Participants.
The Exchange’s proposal to decrease
the criteria to achieve the Tier 3 Rebate
to Add Liquidity in Penny Symbols
within Options 7, Section 2(1) does not
impose an undue burden on
competition because the Exchange
would uniformly apply the Tier 3 rebate
criteria to all Participants and pay the
Tier 3 rebate to all qualifying
Participants.
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.27
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
26 See Nasdaq PHLX LLC Options 7, Section 2.
Phlx pays rebates exclusively to Customers. See
also Nasdaq GEMX, LLC Options 7, Section 3.
Priority Customers receive the highest rebates.
27 15 U.S.C. 78s(b)(3)(A)(ii).
E:\FR\FM\29NON1.SGM
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Federal Register / Vol. 87, No. 228 / Tuesday, November 29, 2022 / Notices
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:
• 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–2022–064 on the subject line.
Paper Comments
khammond on DSKJM1Z7X2PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt Exchange Rule
532, Order and Quote Price Protection
Mechanisms and Risk Controls
November 22, 2022.
• 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–2022–064. 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–2022–064 and
should be submitted on or before
December 20, 2022.
16:29 Nov 28, 2022
[FR Doc. 2022–25947 Filed 11–28–22; 8:45 am]
[Release No. 34–96376; File No. SR–
EMERALD–2022–30]
Electronic Comments
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Sherry R. Haywood,
Assistant Secretary.
Jkt 259001
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on November 10, 2022, MIAX Emerald,
LLC (‘‘MIAX Emerald’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change as described in
Items I, II, and III below, which Items
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 (i) adopt
new Exchange Rule 532, Order and
Quote Price Protection Mechanisms and
Risk Controls; and (ii) amend Exchange
Rule 518, Complex Orders.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX Emerald’s
principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
73353
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 adopt new
Exchange Rule 532, Order and Quote
Price Protection Mechanisms and Risk
Controls.3 The Exchange proposes to
adopt a new Managed Protection
Override feature, a new Max Put Price
Protection feature, and a new MIAX
Strategy Price Protection (‘‘MSPP’’) in
new proposed Rule 532. The Exchange
notes that the proposed functionality is
identical to functionality recently
adopted by the Exchange’s affiliate,
MIAX Options Exchange.4
The Exchange also proposes to
relocate and amend paragraph (a),
Vertical Spread Variance (‘‘VSV’’) Price
Protection; paragraph (b), Calendar
Spread Variance (‘‘CSV’’) Price
Protection; and paragraph (c) VSV and
CSV Price Protection, from
Interpretations and Policies .05 of
Exchange Rule 518 to new proposed
Rule 532 as described below.
Additionally, the Exchange proposes
to add a new Butterfly Spread Variance
(‘‘BSV’’) Price Protection to proposed
section (b)(2) of new proposed Rule
532.5 Further, the Exchange proposes to
relocate paragraph (d), Implied Away
Best Bid or Offer (‘‘ixABBO’’) Price
Protection; paragraph (f), Complex
MIAX Emerald Price Collar Protection;
and paragraph (g), Market Maker Single
Side Protection, from Interpretations
and Policies .05 of Exchange Rule 518
to new proposed Rule 532 in their
entirety and without modification as
section (b)(6), Complex MIAX Options
Price Collar Protection; section (b)(7),
Implied Away Best Bid or Offer
(‘‘ixABBO’’) Price Protection; and
section (b)(8), Market Maker Single Side
Protection.6
The Exchange also proposes to amend
Exchange Rule 518, Complex Orders, to
3 The Exchange notes that proposed Rule 532 is
identical to current Rule 532 on the MIAX Options
Exchange.
4 See Securities Exchange Act Release No. 94353
(March 3, 2022), 87 FR 13339 (March 9, 2022) (SR–
MIAX–2021–58).
5 The Exchange notes that the proposed
functionality is identical to functionality recently
adopted by the Exchange’s affiliate, MIAX Options.
See Securities Exchange Act Release No. 94353
(March 3, 2022), 87 FR 13339 (March 9, 2022) (SR–
MIAX–2021–58).
6 The proposed rulebook changes are identical to
recent rulebook changes made by the Exchange’s
affiliate, MIAX Options. See supra note 4.
E:\FR\FM\29NON1.SGM
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]]>Agencies
[Federal Register Volume 87, Number 228 (Tuesday, November 29, 2022)]
[Notices]
[Pages 73348-73353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25947]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96375; File No. SR-NASDAQ-2022-064]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend NOM Options 7, Section 2
November 22, 2022.
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 November 10, 2022, 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.'' \3\
---------------------------------------------------------------------------
\3\ The Exchange originally filed SR-NASDAQ-2022-061 on November
1, 2022. On November 10, 2022, the Exchange withdrew SR-NASDAQ-2022-
061 and submitted this rule change.
---------------------------------------------------------------------------
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(1), ``Nasdaq Options Market--Fees and Rebates,'' to: (1)
amend the Tier 6 Professional \4\ Rebate to Add Liquidity in Penny
Symbols; (2) amend the criteria for the Tier 3 and Tier 6 Rebates to
Add Liquidity in Penny Symbols; and (3) add an incentive to achieve a
higher Tier 6 Professional Rebate to Add Liquidity in Penny Symbols.
---------------------------------------------------------------------------
\4\ Pursuant to Options 7, Section 1(a) 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 73349]]
Today, NOM Options 7, Section 2(1) provides for various fees and
rebates applicable to NOM Participants. Specifically, the Rebates to
Add Liquidity in Penny Symbols are as follows:
Rebates To Add Liquidity in Penny Symbols
----------------------------------------------------------------------------------------------------------------
Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6
----------------------------------------------------------------------------------------------------------------
Customer.......................... ($0.20) ($0.25) ($0.43) ($0.44) ($0.45) \7\ ($0.48)
Professional...................... (0.20) (0.25) (0.43) (0.44) (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)
NOM Market Maker.................. (0.20) (0.25) \4\ (0.30) \4\ (0.32) \11\ (0.44) (0.48)
----------------------------------------------------------------------------------------------------------------
Customer and Professional Rebates to Add Liquidity in Penny Symbols
are paid per the highest tier achieved among the 6 available tiers. To
determine the applicable percentage of total industry customer equity
and ETF option average daily volume, unless otherwise stated, the
Exchange considers the Participant's Penny and Non-Penny Symbol
Customer and/or Professional volume that adds liquidity. Below are the
criteria for each Rebate to Add Liquidity in Penny Symbol tier.
Monthly Volume
------------------------------------------------------------------------
------------------------------------------------------------------------
Tier 1..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols 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, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols 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 Customer,
Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above
0.20% to 0.30% of total industry customer
equity and ETF option ADV contracts per
day in a month; or (b) adds Customer and/
or Professional liquidity in Penny Symbols
and/or Non-Penny Symbols of 0.15% to less
than 0.20% of total industry customer
equity and ETF option ADV contracts per
day in a month and qualifies for MARS.
Tier 4..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols 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, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols 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, 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 Participant adds: (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 (defined
below).
------------------------------------------------------------------------
Penny Symbols
Today, Customers and Professionals are paid the following Penny
Symbol Rebates: for Tier 1 a $0.20 per contract, for Tier 2 a $0.25 per
contract, for Tier 3 a $0.43 per contract, for Tier 4 a $0.44 per
contract, for Tier 5 a $0.45 per contract and for Tier 6 a $0.48 per
contract. Today, Customers may increase their Tier 6 Penny Symbol
Rebate if they meet certain criteria.\5\ Broker-Dealers,\6\ Firms,\7\
and Non-NOM Market Makers \8\ are paid a $0.10 per contract Rebate to
Add Liquidity in Penny Symbols regardless of the tier.
[[Page 73350]]
NOM Market Makers \9\ are paid the following Penny Symbol Rebates: for
Tier 1 a $0.20 per contract, for Tier 2 a $0.25 per contract, for Tier
3 a $0.30 per contract, for Tier 4 a $0.32 per contract, for Tier 5 a
$0.44 per contract and for Tier 6 a $0.48 per contract. NOM Market
Makers are also offered Penny Symbol incentives to increase their
rebates.\10\
---------------------------------------------------------------------------
\5\ Pursuant to note 7 within Options 7, Section 2(1),
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.
\6\ Pursuant to Options 7, Section 1(a), 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.
\7\ Pursuant to Options 7, Section 1(a), the term ``Firm'' or
(``F'') applies to any transaction that is identified by a
Participant for clearing in the Firm range at OCC.
\8\ Pursuant to Options 7, Section 1(a), 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.
\9\ Pursuant to Options 7, Section 1(a), 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.
\10\ See notes 4-11 of Options 7, Section 2(1).
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The Exchange proposes to decrease the Tier 6 Professional Rebate to
Add Liquidity in Penny Symbols within Options 7, Section 2(1) from
$0.48 per contract to $0.47 per contract.\11\
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\11\ The Exchange is not proposing to amend Non-Penny Symbol
pricing.
---------------------------------------------------------------------------
The Exchange also proposes to amend the criteria for the Tier 3 and
Tier 6 Rebates to Add Liquidity in Penny Symbols within Options 7,
Section 2(1). Today, the criteria for the Tier 3 Rebate to Add
Liquidity in Penny Symbols provides,
Participant: (a) adds Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny
Symbols above 0.20% to 0.30% of total industry customer equity and ETF
option ADV contracts per day in a month; or (b) adds Customer and/or
Professional liquidity in Penny Symbols and/or Non-Penny Symbols of
0.15% \12\ to less than 0.20% \13\ of total industry customer equity
and ETF option ADV contracts per day in a month and qualifies for
MARS.\14\
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\12\ 10% of total industry customer equity and ETF option ADV
contracts per day in a month equates to 33,000 contracts.
\13\ 20% of total industry customer equity and ETF option ADV
contracts per day in a month equates to 66,000 contracts.
\14\ MARS is the Exchange's Market Access and Routing Subsidy
program described within Options 7, Section 2(4).
---------------------------------------------------------------------------
The Exchange proposes to instead provide the following Tier 3
criteria,
Participant: (a) adds Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny
Symbols above 0.20% to 0.30% of total industry customer equity and ETF
option ADV contracts per day in a month; or (b) adds Customer and/or
Professional liquidity in Penny Symbols and/or Non-Penny Symbols of
0.05% \15\ to less than 0.10% of total industry customer equity and ETF
option ADV contracts per day in a month and qualifies for MARS.
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\15\ 5% of total industry customer equity and ETF option ADV
contracts per day in a month equates to 16,500 contracts.
---------------------------------------------------------------------------
With this proposal, the Exchange intends to lower the criteria to
achieve the Tier 3 Rebate to Add Liquidity in Penny Symbols when a
Participant adds Customer and/or Professional liquidity in Penny
Symbols and/or Non-Penny Symbols and qualifies for MARS. The Exchange
believes that lowering the criteria would allow additional Participants
to qualify for the Tier 3 Rebate to Add Liquidity in Penny Symbols.
Today, the criteria for the Tier 6 Rebate to Add Liquidity in Penny
Symbols provides,
Participant adds Customer, Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny
Symbols above 0.80% \16\ 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 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 (defined below).
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\16\ 80% of total industry customer equity and ETF option ADV
contracts per day in a month equates to 264,000 contracts.
---------------------------------------------------------------------------
The Exchange proposes to instead provide the following Tier 6
criteria,
Participant adds Customer, Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny
Symbols above 0.70% \17\ or more of total industry customer equity and
ETF option ADV contracts per day in a month, or Participant: (1) adds
\18\ Customer and/or Professional liquidity in Penny Symbols and/or
Non-Penny Symbols of 0.10% 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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\17\ 70% of total industry customer equity and ETF option ADV
contracts per day in a month equates to 231,000 contracts.
\18\ The Exchange also proposes to relocate the word ``adds''
within the Tier 6 criteria so the paragraph reads clearly.
---------------------------------------------------------------------------
With this proposal, the Exchange intends to lower the criteria to
achieve the Tier 6 Rebate to Add Liquidity in Penny Symbols when a
Participant adds Customer, Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny Symbols and/or Non-Penny
Symbols or adds Customer and/or Professional liquidity in Penny Symbols
and/or Non-Penny Symbols and has added liquidity in all securities
through one or more of its Nasdaq Market Center MPIDs or qualifies for
MARS. The Exchange believes that lowering the criteria would allow for
additional Participants to qualify for the Tier 6 Rebate to Add
Liquidity in Penny Symbols.
Finally, the Exchange proposes to add an incentive (``##'') to
achieve a higher Tier 6 Professional Rebate to Add Liquidity in Penny
Symbols within Options 7, Section 2(1). The new incentive to the Tier 6
Rebate to Add Liquidity in Penny Symbols would provide,
Participants that 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 Participants that (1) add
Customer and/or Professional liquidity in Penny Symbols and/or Non-
Penny Symbols of 0.20% or more of total industry adds customer equity
and ETF option ADV contracts per day in a month, and (2) have 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 qualify for MARS (defined below) will receive an additional
$0.01 per contract rebate for Professional volume which adds liquidity
in Penny Symbols only.
While the Exchange is lowering the Tier 6 Professional Rebate to
Add Liquidity in Penny Symbols within Options 7, Section 2(1) from
$0.48 per contract to $0.47 per contract, the proposed Tier 6 ``##''
incentive would permit Professionals to achieve a $0.48 per contract
Tier 6 Professional Rebate to Add Liquidity in Penny Symbols provided
they add the same amount of Customer and/or Professional liquidity in
Penny Symbols and/or Non-Penny Symbols as they do today and continue to
meet the remainder of the Tier 6 criteria as they do today.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\19\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5)
[[Page 73351]]
of the Act,\20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Proposal Is Reasonable
The 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 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 \21\
(``NetCoalition''), the D.C. Circuit stated, ``[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' . . . .'' \22\
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\21\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\22\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options 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. Within the
foregoing context, the proposal represents a reasonable attempt by the
Exchange to attract additional order flow to the Exchange and increase
its market share relative to its competitors.
Options 7, Section 2(1)
The Exchange's proposal to decrease the Tier 6 Professional Rebate
to Add Liquidity in Penny Symbols within Options 7, Section 2(1) from
$0.48 per contract to $0.47 per contract is reasonable because the
Exchange is decreasing the Tier 6 rebate criteria and offering an
incentive to permit Professionals to achieve a higher rebate.
Participants who are able to achieve Tier 6 today would continue to be
eligible for the Tier 6 Rebate to Add Liquidity in Penny Symbols,
provided they continue to provide the same liquidity. Other
Participants may also be able to qualify for the Tier 6 Rebate to Add
Liquidity in Penny Symbols because of the lower volume requirements.
Additionally, by submitting the same volume as today, Participants
would be able to qualify for the same $0.48 per contract Professional
Rebate to Add Liquidity in Penny Symbols with the proposed incentive.
The Exchange's proposal to decrease the criteria for the Tier 6
Rebate to Add Liquidity in Penny Symbols within Options 7, Section 2(1)
is reasonable because Participants who are able to achieve Tier 6
rebate today would continue to be eligible for the Tier 6 Rebate to Add
Liquidity in Penny Symbols, provided they continued to provide the same
liquidity. Other Participants may also be able to qualify for the Tier
6 Rebate to Add Liquidity in Penny Symbols because of the lower volume
requirements. The proposal permits Participants to qualify for the Tier
6 Rebate to Add Liquidity in Penny Symbols when a Participant adds
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Symbols and/or Non-Penny Symbols from 0.80% to 0.70%
of total industry customer equity and ETF option ADV contracts per day
in a month. Additionally, the Exchange is decreasing the criteria to
achieve the Tier 6 Rebate to Add Liquidity in Penny Symbols when
Participant adds Customer and/or Professional liquidity in Penny
Symbols and/or Non-Penny Symbols from 0.20% to .10% or more of total
industry customer equity and ETF option ADV contracts per day in a
month. The remainder of the criteria within Tier 6 Rebate to Add
Liquidity in Penny Symbols remains the same.\23\
---------------------------------------------------------------------------
\23\ The Tier 6 Rebate to Add Liquidity in Penny Symbols also
requires that 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) when Participant is seeking to achieve the second part of
Tier 6 to qualify for the rebate.
---------------------------------------------------------------------------
The Exchange's proposal to offer a Tier 6 incentive (``##'') is
reasonable because, today, Customers may achieve a higher Tier 6 Rebate
to Add Liquidity in Penny Symbols by meeting the criteria in current
note 7.\24\ The Exchange notes that Participants who today qualify for
Tier 6 Professional Rebate to Add Liquidity in Penny Symbols would be
eligible for the incentive provided they continue to submit the same
liquidity as today. Participants that today qualify for a lower
Professional Rebate to Add Liquidity in Penny Symbols may have an
opportunity to qualify for the Tier 6 Professional Rebate to Add
Liquidity in Penny Symbols which pays the highest Professional Rebate
to Add Liquidity in Penny Symbols.
---------------------------------------------------------------------------
\24\ Note 7 of Options 7, Section 2(1) provides that
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.
---------------------------------------------------------------------------
The Exchange's proposal to decrease the Tier 6 Professional Rebate
to Add Liquidity in Penny Symbols within Options 7, Section 2(1) from
$0.48 per contract to $0.47 per contract, amend the criteria for the
Tier 6 rebate, and add a Tier 6 rebate incentive for Penny Symbols is
equitable and not unfairly discriminatory because with this proposal,
Customers will continue to be eligible for the highest rebates offered
by the Exchange. Customer liquidity, unlike Professional liquidity,
offers unique benefits to the market which benefits all market
participants. Customer liquidity is the most sought after liquidity
among Participants.
[[Page 73352]]
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.\25\ The Exchange believes it is
equitable and not unfairly discriminatory to continue to pay
Professionals the same or lower rebates as Customers. With respect to
Professionals, 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. The Exchange notes that is equitable and not unfairly
discriminatory to lower rebates for Professionals, who unlike
Customers, have access to sophisticated trading systems that contain
functionality not available to Customers. The Exchange would uniformly
apply the Tier 6 rebate criteria and incentive to all Participants and
would uniformly pay rebates to all qualifying Participants.
---------------------------------------------------------------------------
\25\ See Nasdaq PHLX LLC Options 7, Section 2. 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 decrease the criteria to achieve the
Tier 3 Rebate to Add Liquidity in Penny Symbols within Options 7,
Section 2(1) is reasonable because Participants who are able to achieve
Tier 3 rebate today would continue to be eligible for the Tier 3 Rebate
to Add Liquidity in Penny Symbols, provided they continued to provide
the same liquidity. Other Participants may also be able to qualify for
the Tier 3 Rebate to Add Liquidity in Penny Symbols because of the
lower volume requirements.
The Exchange's proposal to decrease the criteria to achieve the
Tier 3 Rebate to Add Liquidity in Penny Symbols within Options 7,
Section 2(1) is equitable and not unfairly discriminatory because the
Exchange would uniformly apply the Tier 3 rebate criteria to all
Participants and pay the Tier 3 rebate to all qualifying Participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intermarket Competition
The Exchange operates in a highly competitive market in which
market participants can readily favor competing venues if they deem fee
levels at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees to remain competitive
with other 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 pricing changes in this market may impose any burden on
competition is extremely limited because other options exchanges offer
similar rebate programs.
Moreover, as noted above, price competition between exchanges is
fierce, with liquidity and market share moving freely between exchanges
in reaction to fee and rebate changes. In sum, if the changes proposed
herein are unattractive to market participants, it is likely that the
Exchange will lose market share as a result. Accordingly, the Exchange
does not believe that the proposed changes will impair the ability of
Members or competing order execution venues to maintain their
competitive standing in the financial markets.
Intramarket Competition
The Exchange's proposal to decrease the Tier 6 Professional Rebate
to Add Liquidity in Penny Symbols within Options 7, Section 2(1) from
$0.48 per contract to $0.47 per contract, amend the criteria for the
Tier 6 rebate, and add a Tier 6 rebate incentive for Penny Symbols does
not impose an undue burden on competition. With this proposal,
Customers will continue to be eligible for the highest rebates offered
by the Exchange. Customer liquidity, unlike Professional liquidity,
offers unique benefits to the market which benefits all market
participants. Customer liquidity is the most sought after liquidity
among 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.\26\ Paying Professionals the same or lower rebates as
Customers does not impose an undue burden on competition. With respect
to Professionals, 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. Lowering rebates for Professionals, who unlike Customers,
have access to sophisticated trading systems that contain functionality
not available to Customers does not impose an undue burden on
competition. Finally, the Exchange would uniformly apply the Tier 6
rebate criteria and incentive to all Participants and would uniformly
pay rebates to all qualifying Participants.
---------------------------------------------------------------------------
\26\ See Nasdaq PHLX LLC Options 7, Section 2. 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 decrease the criteria to achieve the
Tier 3 Rebate to Add Liquidity in Penny Symbols within Options 7,
Section 2(1) does not impose an undue burden on competition because the
Exchange would uniformly apply the Tier 3 rebate criteria to all
Participants and pay the Tier 3 rebate to all qualifying Participants.
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.\27\
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings
[[Page 73353]]
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-2022-064 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-2022-064. 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-2022-064 and
should be submitted on or before December 20, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25947 Filed 11-28-22; 8:45 am]
BILLING CODE 8011-01-P
