Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices 40803 

18 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 Generally, under MARS, the Exchange pays 

participating NOM Participants to subsidize their 

costs of providing routing services to route orders 

to NOM. The Exchange believes that the proposed 

amendment to MARS will continue to attract higher 

volumes of electronic equity and ETF options 

volume to the Exchange from non-NOM 

Participants as well as NOM Participants. The order 

routing functionalities permit NOM Participants to 

provide access and connectivity to other 

Participants as well as utilize such access for 

themselves. The Exchange notes that one NOM 

Participant is eligible for payments under MARS, 

while another NOM Participant might potentially 

be liable for transaction charges associated with the 

execution of the order, because those orders were 

delivered to the Exchange through a NOM 

Participant’s connection to the Exchange and that 

Participant qualified for the MARS Payment. 4Specifically the Participant’s System is 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. The Participant’s 

System would also need to cause NOM to be 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 is permitted to avail itself of this 

arrangement, provided that its order routing 

functionality incorporates the features described 

herein and the Participant satisfies NOM that it 

appears to be robust and reliable. Participants 

remain solely responsible for implementing and 

operating its System. 

5For 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. 

6The specified MARS Payments are 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 payments are made 

with respect to orders that are routed to NOM, but 

not executed. Also, a Participant is not entitled to 

receive any other revenue from the Exchange for the 

use of its System specifically with respect to orders 

routed to NOM. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–17628 Filed 8–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83824; File No. SR– 

NASDAQ–2018–063] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Pricing at Chapter XV, 

Section 2 Entitled ‘‘Nasdaq Options 

Market—Fees and Rebates’’ 

August 10, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on July 31, 

2018, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s pricing at Chapter XV, 

Section 2 entitled ‘‘Nasdaq Options 

Market—Fees and Rebates,’’ which 

governs pricing for Nasdaq Participants 

using The Nasdaq Options Market LLC 

(‘‘NOM’’), Nasdaq’s facility for 

executing and routing standardized 

equity and index options. The Exchange 

proposes to amend an incentive offered 

today related to its subsidy program, the 

Market Access and Routing Subsidy or 

‘‘MARS.’’ 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments become 

operative on August 1, 2018. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

NOM proposes to amend the 

Exchange’s pricing at Chapter XV, 

Section 2 entitled ‘‘Nasdaq Options 

Market—Fees and Rebates.’’ 

Specifically, the Exchange proposes to 

amend an incentive in note ‘‘d’’ offered 

to NOM Participants that qualify for any 

MARS Payment Tier in Chapter XV, 

Section 2(6) related to the MARS 

subsidy program. MARS pays a subsidy 

to NOM Participants that provide 

certain order routing functionalities to 

other NOM Participants and/or use such 

functionalities themselves.3

Background on MARS 

Today, to qualify for MARS, a NOM 

Participant’s routing system (hereinafter 

‘‘System’’) is required to meet certain 

criteria.4

MARS Payments are made to NOM 

Participants that have System Eligibility 

and have routed the requisite number of 

Eligible Contracts daily in a month 

(‘‘Average Daily Volume’’), which were 

executed on NOM.5 Today, NOM 

Participants that have System Eligibility 

and have executed the requisite number 

of Eligible Contracts in a month will be 

paid the following rebates: 6

Tiers 

Average Daily 

Volume 

(‘‘ADV’’) 

MARS 

payment 

(penny) 

MARS 

payment 

(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 


sradovich on DSK3GMQ082PROD with NOTICES
40804 Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices 

7The 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 which is not for the account 

of broker or dealer or for the account of a 

‘‘Professional.’’ See Chapter XV. 8The term ‘‘Professional’’ or (‘‘P’’) means any 

person or entity that (i) is not a broker or dealer in 

securities, and (ii) places more than 390 orders in 

listed options per day on average during a calendar 

month for its own beneficial account(s) pursuant to 

Chapter I, Section 1(a)(48). All Professional orders 

shall be appropriately marked by Participants. See 

Chapter XV. 

9See Chapter XV, Section 2(1), note ‘‘d.’’ 

10The note ‘‘c’’ incentive can be found at Chapter 

XV, Section 2(1) and provides additional incentives 

to NOM Participants that qualify for the Penny Pilot 

Options Customer and/or Professional Rebate to 

Add Liquidity Tier 6 in addition to meeting certain 

criteria specified in note ‘‘c’’. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(4) and (5). 

13See MIAX PEARL Fee Schedule, Section 1(a). 

MIAX PEARL offers priority customers and nonpriority customers a $0.25 per contract maker rebate 

in tier 1 for adding liquidity in penny classes. See 

Cboe BZX Options Exchange (‘‘BZX’’) Fee 

Schedule. BZX offers customers and professionals 

a base rebate of $0.25 per contract for adding 

liquidity in penny pilot options. Under NOM’s 

proposal, NOM Participants would similarly have 

the opportunity to earn up a $0.25 per contract 

Penny Pilot Options Customer and/or Professional 

Rebate to Add Liquidity in Tier 1 (i.e., the $0.20 per 

contract Tier 1 rebate plus the additional $0.05 note 

‘‘d’’ incentive), provided they meet the requisite 

qualifications. 

14See note 13 above. 

15 15 U.S.C. 78s(b)(3)(A)(ii). 

NOM Participants that qualify for 

Customer 7 and Professional 8 Penny 

Pilot Options Rebate to Add Liquidity 

Tier 6 will receive an extra $0.09 per 

contract rebate in addition to any MARS 

Payment tier on MARS Eligible 

Contracts the NOM Participant qualifies 

for in a given month. 

Incentive 

Today, the Exchange pays certain 

Customer and Professional Penny Pilot 

Options Rebates to Add Liquidity. 

These rebates are structured as a 6 tier 

rebate program ranging from $0.20 to 

$0.48 per contract, with increasing 

volume requirements for each tier. In 

addition to the Customer and 

Professional Penny Pilot Options 

Rebates to Add Liquidity, the NOM 

Participant may also qualify for an 

additional rebate provided the NOM 

Participant qualifies for any MARS 

Payment Tier for each transaction which 

adds liquidity in Penny Pilot Options in 

that month. Further, the Exchange pays 

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 1–6.9

Also, today, NOM Participants that 

qualify for a note ‘‘c’’ incentive receive 

the greater of the note ‘‘c’’ or note ‘‘d’’ 

incentive.10

The Exchange now proposes to amend 

note ‘‘d’’ to increase the additional 

$0.04 per contract Penny Pilot Options 

Customer and/or Professional Rebate to 

Add Liquidity currently offered to NOM 

Participants that qualify for any MARS 

Payment Tier in addition to qualifying 

for Customer and/or Professional Rebate 

to Add Liquidity Tier 1 to $0.05 per 

contract for each transaction which adds 

liquidity in Penny Pilot Options in that 

month. For those NOM Participants that 

qualify for Customer and/or Professional 

Rebate to Add Liquidity Tiers 2–6, the 

Exchange will continue to provide the 

additional $0.04 per contract rebate for 

each transaction that adds liquidity in 

Penny Pilot Options in that month, 

provided the NOM Participant also 

qualifies for any MARS Payment Tier. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,11 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,12 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among Participants and issuers and 

other persons using any facility or 

system which the Exchange operates or 

controls, and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes it is reasonable 

to amend note ‘‘d’’ in Chapter XV, 

Section 2(1) to increase the additional 

$0.04 per contract rebate for NOM 

Participants qualifying for Penny Pilot 

Options Customer and/or Professional 

Rebate to Add Liquidity Tier 1 in 

addition to qualifying for any MARS 

Payment tier to $0.05 per contract for 

each transaction that adds liquidity in 

Penny Pilot Options for that month. The 

proposed amendment should continue 

to encourage NOM Participants to 

qualify for the Penny Pilot Options 

Customer and/or Professional Rebate to 

Add Liquidity Tier 1 in addition to any 

MARS Payment tier, thereby executing 

a greater amount of order flow on NOM 

to the benefit of all market participants 

who may interact with the order flow. 

Furthermore, the proposed changes will 

allow the Exchange to remain 

competitive with other options 

exchanges that offer similar 

incentives.13

Further, the Exchange’s proposal to 

amend the note ‘‘d’’ incentive as 

described above is equitable and not 

unfairly discriminatory. All NOM 

Participants are eligible to qualify for a 

MARS Payment, provided they have 

System Eligibility, and all NOM 

Participants may be eligible for the 

Penny Pilot Options Customer and/or 

Professional Rebate to Add Liquidity 

Tier 1 provided they execute qualifying 

volume. All NOM Participants are 

eligible to qualify for the note ‘‘d’’ 

incentive provided the requisite 

requirements are met. The Exchange 

would uniformly pay the additional 

note ‘‘d’’ incentive to all qualifying 

NOM 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. The 

Exchange’s proposal to amend the note 

‘‘d’’ incentive as described above does 

not impose an undue burden on 

competition. All NOM Participants are 

eligible to qualify for a MARS Payment, 

provided they have System Eligibility, 

and all NOM Participants may be 

eligible for a Penny Pilot Options 

Customer and/or Professional Rebate to 

Add Liquidity provided they execute 

qualifying volume. All NOM 

Participants are eligible to qualify for 

the note ‘‘d’’ incentive provided the 

requisite requirements are met. The 

Exchange would uniformly pay the 

additional note ‘‘d’’ incentive to all 

qualifying NOM Participants. 

Furthermore, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues if they 

deem fee levels at a particular venue to 

be excessive, or rebate opportunities 

available at other venues to be more 

favorable. The Exchange’s proposal 

reflects this competitive environment as 

it will allow the Exchange remain 

competitive with other options 

exchanges that offer similar incentives, 

as discussed above.14

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.15

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 159 / Thursday, August 16, 2018 / Notices 40805 

16 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Rule 4702(b)(14). 

4Tape C securities are those that are listed on the 

Exchange, Tape A securities are those that are listed 

on NYSE, and Tape B securities are those that are 

listed on exchanges other than Nasdaq or NYSE. 

5To be designated a QMM, a member must meet 

the following criteria: (1) The member is not 

assessed any ‘‘Excess Order Fee’’ under Rule 7018 

during the month; (2) the member quotes at the 

NBBO at least 25% of the time during regular 

market hours in an average of at least 1,000 

securities per day during the month; and (3) the 

member is a registered Nasdaq market maker. See 

Rule 7014(d). 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2018–063 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–2018–063. 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2018–063, and 

should be submitted on or before 

September 6, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2018–17635 Filed 8–15–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83823; File No. SR– 

NASDAQ–2018–064] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Fees Under Rules 7014(e) and 7018(a) 

August 10, 2018 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that, on August 

1, 2018, 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 

Exchange’s fees at Rule 7014(e) to apply 

additional criteria required to qualify for 

a fee of $0.0029 per share executed, and 

to amend Rule 7018(a) to assess no fees 

for Midpoint Extended Life Orders 3 in 

securities of all three Tapes.4

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.cchwallstreet.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s fees 

at Rule 7014(e), concerning Qualified 

Market Makers (‘‘QMMs’’),5 to apply 

additional criteria required to qualify for 

a fee of $0.0029 per share executed, and 

to amend Rule 7018(a), concerning the 

fees and credits provided for the use of 

the order execution and routing services 

of the Nasdaq Market Center by 

members for all securities priced at $1 

or more that it trades, to assess no fees 

for Midpoint Extended Life Orders in 

securities of all three Tapes. Rule 

7014(e) provides the fees and rebates 

applicable to QMMs. Rule 7018(a)(1) 

sets forth the fees and credits for the 

execution and routing of orders in 

Nasdaq-listed securities (Tape C); Rule 

7018(a)(2) sets forth the fees and credits 

for the execution and routing of 

securities listed on the New York Stock 

Exchange LLC (Tape A); and Rule 

7018(a)(3) sets forth the fees and credits 

for the execution and routing of 

securities listed on exchanges other than 

Nasdaq and NYSE (Tape B). The 

Exchange is proposing to assess no fee 

for all Midpoint Extended Life Orders. 

First Change 

Under Rule 7014(e), the Exchange 

charges a QMM $0.0030 per share 

executed for removing liquidity in 

Nasdaq-listed securities priced at $1 or 

more, and $0.00295 per share executed 

for removing liquidity in securities 

priced at $1 or more per share listed on 


sradovich on DSK3GMQ082PROD with NOTICES