Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 2335 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(2). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Penny Pilot was established in March 2008 

and in October 2009 was expanded and extended 

through December 31, 2011. See Securities 

Exchange Act Release Nos. 57579 (March 28, 2008), 

73 FR 18587 (April 4, 2008)(SR–NASDAQ–2008– 

026)(notice of filing and immediate effectiveness 

establishing Penny Pilot); 60874 (October 23, 2009), 

74 FR 56682 (November 2, 2009)(SR–NASDAQ– 

Continued 

ATSs operate profitably with 

fragmentary shares of consolidated 

market volume. 

In this environment, a supercompetitive increase in the fees charged 

for either transactions or data has the 

potential to impair revenues from both 

products. A broker-dealer that shifted its 

order flow from one platform to another 

in response to order execution price 

differentials would both reduce the 

value of that platform’s market data and 

reduce its own need to consume data 

from the disfavored platform. If a 

platform increases its market data fees, 

the change may affect the overall cost of 

doing business with the platform, and 

affected market participants will assess 

whether they can lower their trading 

costs by directing orders elsewhere, 

thereby lessening the need for the more 

expensive data, or simply not purchase 

the data. 

In establishing the price for the NYSE 

Arca Integrated Data Feed, the Exchange 

considered the competitiveness of the 

market for data and all of the 

implications of that competition. The 

Exchange believes that it has considered 

all relevant factors and has not 

considered irrelevant factors in order to 

establish fair, reasonable, and not 

unreasonably discriminatory fees and an 

equitable allocation of fees among all 

users. The existence of alternatives to 

the Exchange’s product, including realtime consolidated data, free delayed 

consolidated data, and proprietary data 

from other sources, as well as the 

continued availability of the Exchange’s 

separate data feeds at a lower price, 

ensures that the Exchange cannot set 

unreasonable fees, or fees that are 

unreasonably discriminatory, when 

vendors and subscribers can elect these 

alternatives. Accordingly, the Exchange 

believes that the acceptance of data feed 

products in the marketplace 

demonstrates the consistency of these 

fees with applicable statutory standards. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 20 of the Act and 

subparagraph (f)(2) of Rule 19b–4 21

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

NYSE Arca. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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– 

NYSEArca–2011–96 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2011–96. 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 Web site (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 Web site 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 

a.m. and 3 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; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2011–96 and should be 

submitted on or before February 7, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–686 Filed 1–13–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66126; File No. SR– 

NASDAQ–2012–003] 

Self-Regulatory Organizations; 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Customer Rebate To Add Liquidity in 

Penny Pilot Options 

January 10, 2012. 

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 January 3, 

2012, 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 NASDAQ. 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 NASDAQ Stock Market LLC 

proposes to modify Rule 7050, 

governing pricing for NASDAQ 

members using the NASDAQ Options 

Market (‘‘NOM’’), NASDAQ’s facility for 

executing and routing standardized 

equity and index options. Specifically, 

NOM proposes to amend the 

applicability of the Customer Rebate to 

Add Liquidity for the Penny Pilot 3

Options (‘‘Penny Options’’). 


srobinson on DSK4SPTVN1PROD with NOTICES
2336 Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 

2009–091)(notice of filing and immediate 

effectiveness expanding and extending Penny 

Pilot); 60965 (November 9, 2009), 74 FR 59292 

(November 17, 2009)(SR–NASDAQ–2009– 

097)(notice of filing and immediate effectiveness 

adding seventy-five classes to Penny Pilot); 61455 

(February 1, 2010), 75 FR 6239 (February 8, 

2010)(SR–NASDAQ–2010–013)(notice of filing and 

immediate effectiveness adding seventy-five classes 

to Penny Pilot); 62029 (May 4, 2010), 75 FR 25895 

(May 10, 2010) (SR–NASDAQ–2010–053)(notice of 

filing and immediate effectiveness adding seventyfive classes to Penny Pilot); 65969 (December 15, 

2011, 76 FR 79268 (December 21, 2011) (SR– 

NASDAQ–2011–169) (notice of filing and 

immediate effectiveness extension and replacement 

of Penny Pilot). See also Exchange Rule Chapter VI, 

Section 5. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.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. 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 

NASDAQ proposes to modify 

Exchange Rule 7050 governing the 

rebates and fees assessed for option 

orders entered into NOM. Specifically, 

the Exchange is proposing to modify the 

six tier structure for paying Customer 

Rebates to Add Liquidity in Penny Pilot 

Options. The Exchange proposes to 

reduce the tiers to four tiers and further 

incentivize NOM Participants to route 

Customer orders to the Exchange by 

paying an additional rebate for certain 

orders after the NOM Participant has 

met a volume criteria. The Exchange 

believes that incentivizing NOM 

Participants to send additional 

Customer orders to the Exchange will 

benefit all market participants by adding 

liquidity to the market. 

Specifically, the Exchange currently 

pays a Customer Rebate to Add 

Liquidity in Penny Pilot Options based 

on the following tier structure: 

Monthly volume Rebate to 

add liquidity 

Tier 1 ................... Participant adds Customer liquidity of up to 24,999 contracts per day in a month .............................................. $0.26 

Tier 2 ................... Participant adds Customer liquidity of 25,000—59,999 contracts per day in a month ......................................... 0.36 

Tier 3 ................... Participant adds Customer liquidity of 60,000—124,999 contracts per day in a month ....................................... 0.38 

Tier 4 ................... Participant adds Customer liquidity of 125,000 or more contracts per day in a month ........................................ 0.40 

Tier 5 a ................ Participant adds (1) Customer liquidity of 60,000 or more contracts per day in a month, and (2) NOM Market 

Maker liquidity of 60,000 or more contracts per day in a month.

0.40 

Tier 6 b ................ Participant adds Customer liquidity of 25,000 or more contracts per day in a month, and (2) the Participant simultaneously qualifies for credit under the Investor Support Program set forth in Rule 7014.0.37 

aFor purposes of Tier 5, the Exchange will aggregate the trading activity of separate NOM Participants when computing average daily volumes 

where 75 percent common ownership or control exists between NOM Participants. bFor purposes of Tier 6, the Exchange will allow a NOM Participant to qualify for the rebate if a NASDAQ member under common ownership 

with the NOM Participant qualifies for a credit under the Investor Support Program. Common ownership is defined as 75 percent common ownership or control. 

The Exchange proposes to amend the 

Customer Rebate to Add Liquidity in 

Penny Pilot Options to a four tier 

structure as follows: 

Monthly volume Rebate to 

add liquidity 

Tier 1 ................... Participant adds Customer liquidity of up to 49,999 contracts per day in a month .............................................. $0.26 

Tier 2 ................... Participant adds Customer liquidity of 50,000 or more contracts per day in a month ......................................... 0.42 

Tier 3 a ................. Participant adds (1) Customer liquidity of 100,000 or more contracts per day in a month, and (2) NOM Market 

Maker liquidity of 40,000 or more contracts per day in a month.

0.43 

Tier 4 b ................. Participant adds (1) Customer liquidity of 25,000 or more contracts per day in a month, (2) the Participant 

has certified for the Investor Support Program set forth in Rule 7014; and (3) the Participant executed at 

least one order on NASDAQ’s equity market.

0.40 

aFor purposes of Tier 3, the Exchange will aggregate the trading activity of separate NOM Participants when computing average daily volumes 

where 75 percent common ownership or control exists between NOM Participants. bFor purposes of Tier 4, the Exchange will allow a NOM Participant to qualify for the rebate if a NASDAQ member under common ownership 

with the NOM Participant has certified under the Investor Support Program and executed at least one order on NASDAQ’s equity market. Common ownership is defined as 75 percent common ownership or control. 

Currently, Tier 1 firms that add up to 

24,999 contracts per day in a month of 

liquidity receive a rebate of $0.26 per 

contract. The Exchange is proposing to 

amend Tier 1 to cover up to 49,999 

contracts per day in a month, and to pay 

the same $0.26 per contract rebate. 

Based on past experience, the Exchange 

anticipates that all firms currently 

receiving the $0.26 rebate will maintain 

their current level of rebate. 

Currently, Tier 2 firms that add 

between 25,000 and 59,999 contracts 

per day in a month receive a rebate of 

$0.36 per contract. The Exchange is 

proposing to amend Tier 2 to cover 

50,000 or more contracts per day in a 

month, and to pay a rebate of $0.42 per 

contract. As a result, firms that currently 

contribute between 25,000 and 49,999 

per day of liquidity in Customer 

contracts will receive a lower rebate 

(down from $0.36 to $0.26 per contract). 

However, firms that contribute between 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 2337 

4Aggregation is necessary and appropriate 

because certain NOM participants conduct 

Customer and NOM Market Maker trading activity 

through separate but related broker-dealers. 

5For a detailed description of the ISP, see 

Securities Exchange Act Release No. 63270 

(November 8, 2010), 75 FR 69489 (November 12, 

2010) (NASDAQ–2010–141) (notice of filing and 

immediate effectiveness) (the ‘‘ISP Filing’’). See also 

Securities Exchange Act Release Nos. 63414 

(December 2, 2010), 75 FR 76505 (December 8, 

2010) (NASDAQ–2010–153) (notice of filing and 

immediate effectiveness); and 63628 (January 3, 

2011), 76 FR 1201 (January 7, 2011) (NASDAQ– 

2010–154) (notice of filing and immediate 

effectiveness). 

6See Exchange Rule 7014. 

7Currently, in order to comply with Tier 6, a 

participant must qualify for credit under the ISP. In 

order to qualify for an ISP credit, a Participant 

would need to transact a certain amount of 

displayed liquidity through an ISP-designated port 

which results in an increase in the overall liquidity 

that the member provides to NASDAQ measured as 

a proportion of the consolidated share volume 

traded by all market participants across all trading 

venues. To this end, a member’s ‘‘Baseline 

Participation Ratio’’ is determined by measuring the 

number of shares in liquidity-providing orders 

entered by the member (through any NASDAQ port) 

and executed on NASDAQ and dividing this 

number by the consolidated (across all trading 

venues) share volume of System Securities traded 

in a given month. To determine whether a member 

added liquidity to NASDAQ in a given month, 

NASDAQ would perform the same calculation on 

a monthly basis for the then-current month and 

compare the resulting ratio to the Baseline 

Participation Ratio. For a detailed description of the 

ISP, see Securities Exchange Act Release No. 63270 

(November 8, 2010), 75 FR 69489 (November 12, 

2010) (NASDAQ–2010–141) (notice of filing and 

immediate effectiveness) (the ‘‘ISP Filing’’). See also 

Securities Exchange Act Release Nos. 63414 

(December 2, 2010), 75 FR 76505 (December 8, 

2010) (NASDAQ–2010–153) (notice of filing and 

immediate effectiveness); and 63628 (January 3, 

2011), 76 FR 1201 (January 7, 2011) (NASDAQ– 

2010–154) (notice of filing and immediate 

effectiveness). [sic] by transacting a certain volume. 

8The term ‘‘Baseline Participation Ratio’’ shall 

mean, with respect to a member, the lower of such 

member’s Participation Ratio for the month of 

August 2010 or the month of August 2011, provided 

that in calculating such Participation Ratios, the 

numerator shall be increased by the amount (if any) 

of the member’s Indirect Order Flow for such 

month, and provided further that if the result is 

zero for either month, the Baseline Participation 

Ratio shall be deemed to be 0.485% (when rounded 

to three decimal places). See NASDAQ Rule 

7014(g)(1). 

9The rebate would be paid for a partial execution. 

10 15 U.S.C. 78f. 

50,000 and 59,999 contracts per day of 

Customer order liquidity will receive a 

higher rebate (up from $0.36 to $0.42 

per contract). Based upon current 

volume levels and past trading patterns, 

the Exchange anticipates that firms will 

contribute sufficient liquidity to avoid 

receiving reduced rebates. 

Currently, Tier 3 firms that add 

between 60,000 and 124,999 contracts 

per day in a month receive a rebate of 

$0.38 per contract. This tier is being 

eliminated. NOM Participants who 

previously qualified for Tier 3 would 

now qualify for Tier 2, which is now 

50,000 or more contracts, and would 

receive a higher rebate in Tier 2 (up 

from $0.38 to $0.42 per contract). 

Currently, Tier 4 firms that add 

125,000 contracts or more per day in a 

month receive a rebate of $0.40 per 

contract. This tier is being eliminated. 

NOM Participants who previously 

qualified for Tier 4 would now qualify 

for Tier 2, which is now 50,000 or more 

contracts, and would receive a higher 

rebate in Tier 2 rebate (up from $0.40 to 

$0.42 per contract). 

Currently, Tier 5 firms that (1) 

provide 60,000 or more contracts per 

day in a month of Customer order 

liquidity in Penny Pilot Options, and (2) 

provide 60,000 or more contracts per 

day of NOM Market Maker liquidity 

receive a rebate of $0.40 per contract if 

both criteria are met. For purposes of 

determining qualification for this tier, 

the Exchange aggregates 4 the trading 

activity of separate NOM Participants in 

calculating the average daily volume if 

there is at least 75% common 

ownership between the NOM 

Participants. The Exchange proposes to 

rename this Tier 5 as ‘‘Tier 3’’ and 

modify the Customer volume to require 

that firms: (1) Provide 100,000 or more 

contracts per day in a month of 

Customer order liquidity in Penny Pilot 

Options (an increase from 60,000), and 

(2) provide 40,000 or more contracts per 

day of NOM Market Maker liquidity (a 

decrease from 60,000). If a firm meets 

both criteria, the Exchange would pay 

an increased rebate of $0.43 per 

contract. Based upon current volume 

levels and past trading patterns, the 

Exchange anticipates that firms will 

contribute sufficient liquidity to receive 

an increased rebate. 

Currently, Tier 6 firms that (1) 

provide 25,000 or more contracts per 

day in a month of Customer order 

liquidity in Penny Pilot Options, and (2) 

simultaneously qualify for credit under 

the Investor Support Program (‘‘ISP’’) as 

set forth in NASDAQ Rule 7014 5

receive a rebate of $0.37 per contract. 

Specifically, firms that qualify for a 

credit under the ISP by providing retail 

investor liquidity to NASDAQ’s equity 

market can qualify for a higher rebate on 

NASDAQ’s options market if they 

contribute 25,000 or more contracts per 

day of Customer order liquidity in 

Penny Pilot Options on NOM. The 

Exchange proposes to rename this Tier 

6 as ‘‘Tier 4’’ and pay an increased 

rebate of $0.40 per contract for firms 

that meet the criteria for this tier. In 

addition, the Exchange proposes to 

revise the requirement of newly named 

Tier 4 to state that firms (1) that provide 

25,000 or more contracts per day in a 

month of Customer order liquidity in 

Penny Pilot Options, (2) where the 

Participant has certified for the ISP as 

set forth in Rule 7014; and (3) where the 

Participant executed at least one order 

on NASDAQ’s equity market will 

receive the $0.40 per contract rebate. A 

member desiring to participate in the 

ISP must submit an application to the 

Exchange and designate one or more of 

its NASDAQ ports for ISP use.6 The 

Exchange’s proposal to qualify for 

newly named Tier 4 would not require 

the Participant to transact any ISP 

volume, however, the Participant would 

be required to execute at least one order 

on NASDAQ’s equity market.7 The 

Exchange provides a methodology by 

which members can demonstrate their 

compliance with the requirements of 

Rule 7014. A member shall certify to the 

reasonable satisfaction of the Exchange: 

(i) Its Baseline Participation Ratio; 8 and 

(ii) if requested by the Exchange, its 

compliance with any other sections or 

requirements of Rule 7014, but not more 

often than once a month during 

participation in ISP. The Exchange 

would permit a NOM Participant to 

qualify for newly named Tier 4 if that 

NOM Participant meets the Customer 

liquidity volume of 25,000 or more 

contracts per day in a month, has 

certified under Rule 7014 and has 

executed at least one order on 

NASDAQ’s equity market. Based upon 

current volume levels and past trading 

patterns, the Exchange anticipates that 

firms will contribute sufficient liquidity 

to receive an increased rebate in this 

tier. The Exchange believes the 

increased rebate would encourage 

participants in the Exchange’s equity 

markets to also participate in the 

Exchange’s options market. 

The Exchange also proposes to further 

incentivize those NOM Participants that 

qualify for proposed Tiers 2, 3 and 4 by 

offering to pay an additional $0.01 per 

contract rebate on each Customer order 

of 5,000 or more, displayed or nondisplayed contracts, which adds 

liquidity in a Penny Pilot Option, as 

long as that NOM Participant has 

qualified for a rebate in Tier 2, 3 or 4 

for that month. This would be in 

addition to the rebate for the qualifying 

tier.9

The Exchange is not otherwise 

amending the Customer Rebates to Add 

Liquidity. 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule changes are consistent with the 

provisions of Section 6 of the Act,10 in 

general, and with Section 6(b)(4) of the 


srobinson on DSK4SPTVN1PROD with NOTICES
2338 Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 

11 15 U.S.C. 78f(b)(4). 

12The Exchange adopted these monthly volume 

achievement tiers in September 2011. See Securities 

Exchange Act Release Nos. 65317 (September 12, 

2011), 76 FR 57778 (September 16, 2011) (SR– 

NASDAQ–2011–124) and 65317 (September 12, 

2011), 76 FR 61129 (October 3, 2011) (SR– 

NASDAQ–2011–127). 

Act,11 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 or system which 

NASDAQ operates or controls. 

The Exchange believes that the 

proposed new pricing tiers are 

reasonable, equitable and not unfairly 

discriminatory because they continue an 

existing program 12 to encourage brokerdealers acting as agent for Customer 

orders to select the Exchange as a venue 

to post Customer orders. The Exchange 

believes that its success at attracting 

Customer order flow benefits all market 

participants by improving the quality of 

order interaction and executions at the 

Exchange. The Exchange believes the 

existing monthly volume thresholds 

have incentivized firms that route 

Customer orders to the Exchange to 

increase Customer order flow to the 

Exchange. The Exchange desires to 

continue to encourage firms that route 

Customer orders to increase Customer 

order flow to the Exchange by offering 

greater Customer rebates for greater 

liquidity added to the Exchange. 

Specifically, the Exchange believes 

that the increased rebates would further 

incentivize firms to continue to send 

more Customer volume to the Exchange. 

Today, the Exchange pays any Customer 

order up to 24,999 contracts per day in 

a given month a rebate of $0.26 per 

contract for adding liquidity in Penny 

Pilot Options. The Exchange would 

continue to pay this same rebate, but 

would pay such a rebate for any 

Customer order up to 49,999 contracts 

per day in a given month that adds 

liquidity in Penny Pilot Options. This 

would result in a decreased rebate to 

certain Participants that currently 

qualify for Tier 2. The Exchange 

believes that this increase in the number 

of Customer orders that qualify for Tier 

1 is reasonable, equitable and not 

unfairly discriminatory because all 

Customer orders that add liquidity in 

Penny Pilot Options have the ability to 

earn the rebate; there is no minimum 

order requirement. Also, all NOM 

Participants transacting Customer orders 

in Penny Pilot Options are eligible to 

receive this rebate. The Exchange 

currently pays a higher rebate for Tier 

2 Customer orders in Penny Pilot 

Options between 25,000 and 59,999 

contracts per day in a given month of 

$0.36 per contract. The Exchange 

believes that offering the Tier 1 rebate 

up to 49,999 contracts per day and 

starting the Tier 2 rebate at 50,000 

Customer contracts per day would 

encourage NOM Participants to send a 

greater number of Customer orders to 

the Exchange to obtain the increased 

rebate of $0.42 per contract. 

The Exchange believes that amending 

Tier 2 from between 25,000 and 59,999 

Customer orders per day in a given 

month to 50,000 or more Customer 

contracts per day in a given month 

(capturing those Customer contracts 

between 50,000 and 59,999) is 

reasonable because the Exchange is also 

offering a higher rebate of $0.42 per 

contract, an increase from the current 

$0.36 per contract. The Exchange 

believes that simplifying the current 

Tiers 1, 2, 3 and 4, which have no other 

qualifier than Customer volume, down 

to two tiers and offering a higher rebate 

of $0.42 per contract for any Customer 

order volume over 50,000 contracts per 

day in a given month, in Penny Pilot 

Options, would allow a greater number 

of NOM Participants to obtain a higher 

rebate. Those NOM Participants that 

currently qualify for Tiers 3 and 4 

would be eligible for a higher rebate and 

a portion of those NOM Participants that 

currently qualify for Tier 2 would be 

eligible for the higher rebate. The 

Exchange believes that for these reasons, 

the proposal is equitable and not 

unfairly discriminatory. 

The Exchange also proposes to amend 

current Tier 5, which would be renamed 

Tier 3, to increase the number of 

Customer contracts from 60,000 to 

100,000 contracts per day in a given 

month and also decrease the second 

qualifier, concerning NOM Market 

Maker liquidity, from 60,000 to 40,000 

per day in a given month. The Exchange 

believes that this amendment is 

reasonable because the Exchange is 

seeking to incentivize NOM Participants 

to transact a greater number of Customer 

orders. By increasing the number of 

Customer orders to 100,000 per day and 

lowering the second qualifier on Market 

Maker liquidity to 40,000 per day the 

Exchange desires to further incentivize 

NOM Participants to send additional 

Customer order flow, in Penny Pilot 

Options, to the Exchange and provide 

incentives for Market Makers to increase 

liquidity on the Exchange for the benefit 

of all NOM participants. The Exchange 

believes that Broker Dealers that make 

markets and also route Customer order 

flow to the Exchange today, would be 

incentivized to meet the new criteria 

and qualify for Tier 3 because of the 

lower Market Maker liquidity volume 

and the increased rebate. The Exchange 

proposes to increase the rebate from 

$0.40 per contract to $0.43 per contract 

in order to incentivize NOM 

Participants that also route Customer 

order flow to register to make markets 

on the Exchange. The Exchange believes 

that this newly named Tier 3 is 

equitable and not unfairly 

discriminatory because Market Makers 

have obligations to the market and 

regulatory requirements, which 

normally do not apply to other market 

participants. The Exchange has set a 

reasonable goal of 40,000 or more 

contracts per day of Market Maker 

liquidity on NOM, an achievable goal 

that should encourage increased Market 

Maker registration and liquidity on the 

Exchange. The Exchange believes that 

paying an increased rebate of $0.43 per 

contract ($0.01 per contract higher than 

Tier 2) is equitable and not unfairly 

discriminatory because increased 

Market Maker liquidity would, in turn, 

improve the amount of liquidity 

available on the Exchange and improve 

the quality of order interaction and 

executions on the Exchange. 

The Exchange also proposes to amend 

current Tier 6, which would be renamed 

Tier 4, to increase the rebate from $0.37 

per contract to $0.40 per contract to 

incentivize NOM Participants to 

transact additional Customer orders in 

Penny Pilot Options and encourage 

participants in the Exchange’s equity 

markets to also participate in the 

Exchange’s options market. The 

Exchange believes that this proposed 

amendment is reasonable because the 

Exchange seeks to incentivize NOM 

Participants to transact a greater number 

of Customer orders in Penny Pilot 

Options. Furthermore, the Exchange 

believes that it is reasonable to allow 

NOM Participants with a certain amount 

of Customer orders, to qualify for a 

Customer rebate by allowing a related 

NASDAQ member, under common 

ownership, to qualify for the rebate as 

specified herein. The Exchange also 

believes that the amendments to the 

newly named Tier 4 criteria, namely 

25,000 or more Customer contracts, has 

certified for ISP and executed at least 

one order on NASDAQ’s equity market, 

are reasonable because, as stated above, 

the Exchange believes that this proposal 

would incentivize NOM Participants to 

transact additional Customer orders and 

encourage participants in the 

Exchange’s equity markets to also 

participate in the Exchange’s options 

market. The Exchange believes this 

would encourage participants in the 

Exchange’s equity markets to also 

participate in the Exchange’s options 

market particularly because the 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 2339 

13The Commission has expressed its concern that 

a significant percentage of the orders of individual 

investors are executed at over the counter (‘‘OTC’’) 

markets, that is, at off-exchange markets; and that 

a significant percentage of the orders of institutional 

investors are executed in dark pools. See Securities 

Exchange Act Release No. 61358 (January 14, 2010), 

75 FR 3594 (January 21, 2010) (Concept Release on 

Equity Market Structure, ‘‘Concept Release’’). In the 

Concept Release, the Commission has recognized 

the strong policy preference under the Act in favor 

of price transparency and displayed markets. The 

Commission published the Concept Release to 

invite public comment on a wide range of market 

structure issues, including high frequency trading 

and un-displayed, or ‘‘dark,’’ liquidity. See also 

Mary L. Schapiro, Strengthening Our Equity Market 

Structure (Speech at the Economic Club of New 

York, Sept. 7, 2010) (‘‘Schapiro Speech,’’ available 

on the Commission Web site) (comments of 

Commission Chairman on what she viewed as a 

troubling trend of reduced participation in the 

equity markets by individual investors, and that 

nearly 30 percent of volume in U.S.-listed equities 

is executed in venues that do not display their 

liquidity or make it generally available to the 

public). 

14NASDAQ Rule 7018(a) already provides 

incentives for firms to participate in both 

NASDAQ’s equity market and its options market. 15 15 U.S.C. 78s(b)(3)(A)(ii). 

Exchange’s proposal to qualify for 

newly named Tier 4 would not require 

the Participant to transact any volume, 

but only to certify for ISP. 

The Exchange believes that the 

requirement to certify in combination 

with requiring the Participant to execute 

at least one order on NASDAQ’s equity 

market would promote the submission 

of liquidity-providing orders to 

NASDAQ. The ISP encourages members 

to add targeted liquidity that is executed 

in the NASDAQ Market Center. The 

Exchange believes that the ISP promotes 

submission of liquidity-providing orders 

to NASDAQ, which would benefit all 

NASDAQ members and all investors. By 

allowing members to certify under Rule 

7014, while also meeting the volume 

criteria of 25,000 or more Customer 

contracts in Penny Pilot Options, the 

Exchange believes that the proposal 

would encourage greater participation 

in the options market. The Exchange 

believes that increased rebate and the 

amended criteria for newly named Tier 

4 are equitable and not unfairly 

discriminatory because together these 

amendments are intended to encourage 

increased activity in both the NASDAQ 

Options Market and in the ISP of the 

NASDAQ equity market. The goal of the 

ISP is to incentivize members 13 to 

provide liquidity from individual equity 

investors to the NASDAQ Market 

Center. The increased rebate in newly 

named Tier 4 would encourage firms 

that certify pursuant to Rule 7014 to 

increase the amount of Customer order 

liquidity provided to the NASDAQ 

Options Market. The addition of such 

liquidity, either through the ISP or 

through increased Customer order flow, 

would benefit all Exchange members 

that participate in those markets.14 The 

Exchange believes that amending newly 

named Tier 4 to require firms to be 

certified for ISP instead of qualifying for 

a credit would provide further incentive 

for firms to add volume to NOM and 

also participate in the equities market 

because the firm has to execute at least 

one order in the equity market. 

The Exchange believes that it is 

reasonable to offer a rebate of $0.01 per 

contract on each Customer order of 

5,000 or more displayed or nondisplayed contracts, which adds 

liquidity in a Penny Pilot Option, as 

long as that NOM Participant has 

qualified for a rebate in Tier 2, 3 or 4 

for that month. This $0.01 per contract 

rebate would be in addition to the rebate 

for the qualifying tier. The Exchange 

believes that this enhanced incentive 

will encourage NOM Participants to 

send larger orders to the Exchange, 

which in turn would also assist those 

Participants that send Customer orders 

in Penny Pilot Options to earn higher 

rebates by qualifying for a higher tier as 

well as bringing additional liquidity to 

the Exchange. The Exchange further 

believes that limiting the enhanced 

$0.01 per contract rebate to firms 

already qualifying for Tiers 3, 4 or 5 

(and not those that qualify for Tier 1) is 

equitable and not unfairly 

discriminatory because generally NOM 

Participants in Tier 1 today are not 

sending Customer orders of 5,000 or 

more contracts. If those Participants in 

Tier 1 sent ten Customer orders of 5,000 

or more per day in a given month to the 

Exchange, they would qualify for Tier 2 

and would be paid the additional 

enhanced rebate. The Exchange believes 

that it is equitable and not unfairly 

discriminatory to incentivize those 

NOM Participants that qualify for higher 

volume tiers as they are the most likely 

to obtain the enhanced rebate and 

continue to send larger orders, which 

provides more liquidity to the 

Exchange. Finally, the Exchange would 

pay the enhanced rebate uniformly to 

those NOM Participants that qualify for 

Tiers 2, 3 or 4 and meet the Customer 

order volume discussed herein for 

Penny Pilot Options. 

The Exchange operates in a highly 

competitive market comprised of nine 

U.S. options exchanges in which 

sophisticated and knowledgeable 

market participants can and do send 

order flow to competing exchanges if 

they deem fee levels at a particular 

exchange to be excessive or rebate 

opportunities to be inadequate. The 

Exchange believes that the proposed 

rebate scheme is competitive and 

similar to other rebates and tiers 

opportunities in place on other 

exchanges. The Exchange believes that 

this competitive marketplace materially 

impacts the rebates present on the 

Exchange today and substantially 

influenced the proposal set forth above. 

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. 

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 temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or 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–2012–003 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street NE., Washington, DC 

20549–1090. 


srobinson on DSK4SPTVN1PROD with NOTICES
2340 Federal Register / Vol. 77, No. 10 / Tuesday, January 17, 2012 / Notices 

16 17 CFR 200.30–3(a)(12). 

All submissions should refer to File 

Number SR–NASDAQ–2012–003. 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 Web site (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 Web site 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 

a.m. and 3 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; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2012–003 and should be 

submitted on or before February 7, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–685 Filed 1–13–12; 8:45 am] 

BILLING CODE 8011–01–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No. SSA–2012–0003] 

Occupational Information Development 

Advisory Panel 

AGENCY: Social Security Administration 

(SSA). 

ACTION: Notice of the Charter Renewal 

for the Occupational Information 

Development Advisory Panel. 

SUMMARY: Notice is hereby given that on 

January 6, 2012; our Commissioner 

renewed the Charter for the 

Occupational Information Development 

Advisory Panel (Panel). This 

discretionary Panel will provide 

independent advice and 

recommendations on plans and 

activities to create an occupational 

information system (OIS) tailored 

specifically for our disability programs 

and adjudicative needs. We require 

advice and recommendations on the use 

of occupational information in our 

disability programs and the research 

design of the OIS, including the 

development and testing of an OIS 

content model and taxonomy, work 

analysis instrumentation, sampling, and 

data collection and analysis. 

Membership includes professionals 

from academia, private sector, and 

public entities, (e.g., Department of 

Labor) with expertise in one or more of 

the following subject areas: (a) 

Occupational analysis, design and 

development of occupational 

classifications, instrument design, labor 

market economics, sampling, data 

collection and analyses; (b) disability 

evaluation, vocational rehabilitation, 

forensic vocational assessment, and 

physical or occupational therapy; (c) 

occupational or physical rehabilitation 

medicine, psychiatry, or psychology; 

and (d) disability claimant advocacy. 

The Panel will function solely as an 

advisory body and in compliance with 

the provisions of the Federal Advisory 

Committee Act. The charter was filed 

with the appropriate congressional 

committees. 

For further information contact, Ms. 

Leola S. Brooks, Designated Federal 

Officer, Occupational Information 

Development Advisory Panel, Social 

Security Administration, 6401 Security 

Boulevard 3–E–26 Richard Ball 

Building, Baltimore, MD 21235–0001. 

Fax to (410) 597–0825, or Email to 

OIDAP@ssa.gov. 

Leola S. Brooks, 

Designated Federal Officer, Occupational 

Information Development Advisory Panel. 

[FR Doc. 2012–678 Filed 1–13–12; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF STATE 

[Public Notice: 7719] 

Advisory Committee on International 

Postal and Delivery Services 

AGENCY: Department of State. 

ACTION: Notice of renewal of the 

Advisory Committee charter. 

Renewal of Advisory Committee: The 

Secretary of State announces the 

renewal of the charter of the Advisory 

Committee on International Postal and 

Delivery Services in fulfillment of the 

provisions of the 2006 Postal 

Accountability and Enhancement Act 

(Pub. L. 109–435) and in accordance 

with the Federal Advisory Committee 

Act. 

Purpose: The purpose of the Advisory 

Committee is to serve the Department of 

State in an advisory capacity with 

respect to the formulation, coordination, 

and oversight of foreign policy related to 

international postal services and other 

international delivery services. The 

Committee provides a forum for 

government employees, representatives 

of the industry sector and members of 

the public to present their advice and 

views directly to the Department of 

State. 

For further information, please 

contact Dennis Delehanty, Office of 

Global Systems (IO/GS), Bureau of 

International Organization Affairs, U.S. 

Department of State, at (202) 647–4197. 

Dated: January 10, 2012. 

Dennis M. Delehanty, 

Foreign Affairs Officer, Department of State. 

[FR Doc. 2012–741 Filed 1–13–12; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF STATE 

[Public Notice: 7757] 

Culturally Significant Objects Imported 

for Exhibition Determinations: 

‘‘Snapshot: Painters and Photography, 

Bonnard to Vuillard’’ 

SUMMARY: Notice is hereby given of the 

following determinations: Pursuant to 

the authority vested in me by the Act of 

October 19, 1965 (79 Stat. 985; 22 U.S.C. 

2459), Executive Order 12047 of March 

27, 1978, the Foreign Affairs Reform and 

Restructuring Act of 1998 (112 Stat. 

2681, et seq.; 22 U.S.C. 6501 note, et 

seq.), Delegation of Authority No. 234 of 

October 1, 1999, Delegation of Authority 

No. 236–3 of August 28, 2000 (and, as 

appropriate, Delegation of Authority No. 

257 of April 15, 2003), I hereby 

determine that the objects to be 

included in the exhibition ‘‘Snapshot: 

Painters and Photography, Bonnard to 

Vuillard’’ imported from abroad for 

temporary exhibition within the United 

States, are of cultural significance. The 

objects are imported pursuant to loan 

agreements with the foreign owners or 

custodians. I also determine that the 

exhibition or display of the exhibit 

objects at The Phillips Collection, 

Washington, DC, from on or about 

February 4, 2012, until on or about May 

6, 2012, the Indianapolis Museum of 

Art, Indianpolis, IN, from on or about 

June 8, 2012, until on or about 

September 2, 2012, and at possible 

additional exhibitions or venues yet to 


srobinson on DSK4SPTVN1PROD with NOTICES