Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 68319 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Customer’’ or (‘‘C’’) applies to any 

transaction that is identified by a Participant for 

clearing in the Customer range at The Options 

Clearing Corporation (‘‘OCC’’) which is not for the 

account of broker or dealer or for the account of a 

‘‘Professional’’ (as that term is defined in Chapter 

I, Section 1(a)(48)). 

4 Including BATS Exchange, Inc. (‘‘BATS’’), BOX 

Options Exchange LLC (‘‘BOX’’), the Chicago Board 

Options Exchange, Incorporated (‘‘CBOE’’), C2 

Options Exchange, Incorporated (‘‘C2’’), 

International Securities Exchange, LLC (‘‘ISE’’), the 

Miami International Securities Exchange, LLC 

(‘‘MIAX’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE 

MKT LLC (‘‘NYSE Amex’’) and ISE Gemini, LLC 

(‘‘Gemini’’). 

5See Securities Exchange Act Release No. 71419 

(January 28, 2014), 79 FR 6253 (February 3, 2014) 

(SR–NASDAQ–2014–007) (an immediately effective 

rule change to utilize NES for outbound order 

routing from NOM). 

6The Options Clearing Corporation (‘‘OCC’’) 

assesses $0.01 per contract side. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4), (5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73558; File No. SR– 

NASDAQ–2014–098)] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Routing 

November 7, 2014. 

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 October 

31, 2014, 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 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 

NASDAQ proposes to modify Chapter 

XV, entitled ‘‘Options Pricing,’’ at 

Section 2 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 

its Routing Fees. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated that the amendments be 

operative on November 3, 2014. 

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 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 this filing is to amend 

the Routing Fees in Chapter XV, Section 

2(3) to recoup costs incurred by the 

Exchange to route orders to away 

markets. 

Today, the Exchange assesses a NonCustomer a $0.97 per contract Routing 

Fee to any options exchange. The 

Customer 3 Routing Fee for option 

orders routed to NASDAQ OMX PHLX 

LLC (‘‘PHLX’’) is a $0.12 per contract 

Fixed Fee in addition to the actual 

transaction fee assessed. The Customer 

Routing Fee for option orders routed to 

NASDAQ OMX BX, Inc. (‘‘BX Options’’) 

is $0.12 per contract. The Customer 

Routing Fee for option orders routed to 

all other options exchanges 4 (excluding 

PHLX and BX Options) is a fixed fee of 

$0.22 per contract (‘‘Fixed Fee’’) in 

addition to the actual transaction fee 

assessed. If the away market pays a 

rebate, the Routing Fee is $0.12 per 

contract. 

With respect to the fixed costs, the 

Exchange incurs a fee when it utilizes 

Nasdaq Execution Services LLC 

(‘‘NES’’), a member of the Exchange and 

the Exchange’s affiliated broker-dealer 

exclusive order router.5 Each time NES 

routes an order to an away market, NES 

is charged a clearing fee 6 and, in the 

case of certain exchanges, a transaction 

fee is also charged in certain symbols, 

which fees are passed through to the 

Exchange. The Exchange currently 

recoups clearing and transaction charges 

incurred by the Exchange as well as 

certain other costs incurred by the 

Exchange when routing to away 

markets, such as administrative and 

technical costs associated with 

operating NES, membership fees at 

away markets, Options Regulatory Fees 

(‘‘ORFs’’), staffing and technical costs 

associated with routing options. The 

Exchange assesses the actual away 

market fee at the time that the order was 

entered into the Exchange’s trading 

system. This transaction fee is 

calculated on an order-by-order basis 

since different away markets charge 

different amounts. 

The Exchange is proposing to increase 

its Non-Customer Routing Fees from 

$0.97 to $0.99 per contract to any 

options exchange. The Exchange is 

proposing to increase its Customer 

Routing Fixed Fees to PHLX from $0.12 

to $0.13 per contract, in addition to the 

actual transaction fee assessed to recoup 

an additional portion of the costs 

incurred by the Exchange for routing 

these orders. The Exchange is proposing 

to increase its Customer Routing Fixed 

Fees to BX Options from $0.12 to $0.13 

per contract. The Exchange is proposing 

to increase its Customer Routing Fixed 

Fees to all other options exchanges 

(excluding PHLX and BX Options) from 

$0.22 to $0.23 per contract, in addition 

to actual transaction fees assessed. The 

Exchange would also increase the 

Customer Routing Fee to all other 

options exchanges if the away market 

pays a rebate from a fee of $0.12 to $0.13 

per contract, because the Exchange 

would continue to retain the rebate to 

offset the cost to route orders to offset 

the cost to route orders to these away 

markets. The Exchange desires to 

recoup additional costs at this time. 

2. Statutory Basis 

NASDAQ believes that its proposal to 

amend its fees is consistent with Section 

6(b) of the Act 7 in general, and furthers 

the objectives of Section 6(b)(4) and 

(b)(5) of the Act 8 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, and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that amending 

the Non-Customer Routing Fee for 

orders routed to any options exchange 

from a fee of $0.97 to $0.99 per contract, 

is reasonable because the Exchange 

desires to recoup an additional portion 

of the cost it incurs when routing NonCustomer orders. The Exchange is 

proposing to increase the Fixed Fee to 

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68320 Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 

9BX Options pays a Customer Rebate to Remove 

Liquidity as follows: Customers are paid $0.35 per 

contract in All Other Penny Pilot Options 

(excluding BAC, IWM, QQQ, SPY and VXX) and 

$0.70 per contract in Non-Penny Pilot Options. See 

BX Options Rules at Chapter XV, Section 2(1). 

10See NASDAQ Rules at Chapter VI, Section 

11(e) (Order Routing). 

11See Chapter VI, Section 11 of the BX Options. 

See also PHLX Rule 1080(m)(iii)(A). 

recoup additional costs that are incurred 

by the Exchange in connection with 

routing these orders on behalf of its 

members. 

The Exchange believes that amending 

the Customer Routing Fee for orders 

routed to PHLX from a Fixed Fee of 

$0.12 to $0.13 per contract, in addition 

to the actual transaction fee, is 

reasonable because the Exchange desires 

to recoup an additional portion of the 

cost it incurs when routing Customer 

orders to PHLX. Today, the Exchange 

assesses orders routed to PHLX a lower 

Fixed Fee for routing Customer orders 

as compared to the Fixed Fee assessed 

to other options exchanges. The 

Exchange is proposing to increase the 

Fixed Fee to recoup additional costs 

that are incurred by the Exchange in 

connection with routing these orders on 

behalf of its members. 

The Exchange believes that amending 

the Customer Routing Fee for orders 

routed to BX Options from a Fixed Fee 

of $0.12 to $0.13 per contract is 

reasonable because the Exchange desires 

to recoup an additional portion of the 

cost it incurs when routing Customer 

orders to BX Options, similar to the 

amount of Fixed Fee it proposes to 

assess for orders routed to PHLX. The 

Exchange is proposing to assess a Fixed 

Fee to recoup additional costs that are 

incurred by the Exchange in connection 

with routing these orders on behalf of its 

members. While the Exchange would 

continue to retain any rebate paid by BX 

Options,9 the Exchange does not assess 

the actual transaction fee that is charged 

by BX Options for Customer orders. 

The Exchange believes that 

continuing to assess lower Fixed Fees to 

route Customer orders to PHLX and BX 

Options, as compared to other options 

exchanges, is reasonable as the 

Exchange is able to leverage certain 

infrastructure to offer those markets 

lower fees as explained further below. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than PHLX and BX 

Options, from a Fixed Fee of $0.22 to 

$0.23 per contract, in addition to the 

actual transaction fee, is reasonable 

because the Exchange desires to recoup 

an additional portion of the cost it 

incurs when routing orders to these 

away markets. The Fixed Fee for 

Customer orders is an approximation of 

the costs the Exchange will be charged 

for routing orders to away markets. 

While each destination market’s 

transaction charge varies and there is a 

cost incurred by the Exchange when 

routing orders to away markets, 

including, OCC clearing costs, 

administrative and technical costs 

associated with operating NES, 

membership fees at away markets, ORFs 

and technical costs associated with 

routing options, the Exchange believes 

that the proposed Routing Fees will 

enable it to recover the costs it incurs to 

route Customer orders to away markets. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than PHLX and BX 

Options, if the away market pays a 

rebate, from $0.12 to $0.13 per contract 

is reasonable because the Exchange 

desires to recoup an additional portion 

of the cost it incurs when routing 

Customer orders to away markets, 

similar to the amount of Fixed Fee it 

proposes to assess for orders routed to 

PHLX and BX Options. The Exchange is 

proposing to assess a Fixed Fee to 

recoup additional costs that are incurred 

by the Exchange in connection with 

routing these orders on behalf of its 

members. While the Exchange would 

continue to retain any rebate paid by 

away markets, the Exchange does not 

assess the actual transaction fee that is 

charged by away markets for Customer 

orders. As a general matter, the 

Exchange believes that the proposed 

fees for Customer orders routed to 

markets which pay a rebate would allow 

it to recoup and cover a portion of the 

costs of providing optional routing 

services for Customer orders because it 

better approximates the costs incurred 

by the Exchange for routing such orders. 

The Exchange believes that amending 

the Non-Customer Routing Fee for 

orders routed to any options exchange 

from a fee of $0.97 to $0.99 per contract, 

is equitable and not unfairly 

discriminatory because the Exchange 

would assess the same $0.99 per 

contract fee to all market participants 

utilizing routing for Non-Customer 

orders. 

The Exchange believes that amending 

the Customer Routing Fee for orders 

routed to PHLX from a Fixed Fee of 

$0.12 to $0.13 per contract, in addition 

to the actual transaction fee, is equitable 

and not unfairly discriminatory because 

the Exchange would assess the same 

Fixed Fee to all orders routed to PHLX 

in addition to the transaction fee 

assessed by that market. 

The Exchange believes that increasing 

the Customer Routing Fee for orders 

routed to BX Options from a Fixed Fee 

from $0.12 to $0.13 per contract is 

equitable and not unfairly 

discriminatory because the Exchange 

would uniformly increase the Fixed Fee, 

similar to PHLX, for all orders routed to 

BX Options and would continue to 

uniformly not assess the actual 

transaction fee, as is the case today. 

The Exchange would uniformly assess 

a $0.13 per contract Fixed Fee to orders 

routed to NASDAQ OMX exchanges 

because the Exchange is passing along 

the saving realized by leveraging 

NASDAQ OMX’s infrastructure and 

scale to market participants when those 

orders are routed to PHLX or BX 

Options and is providing those savings 

to all market participants. Furthermore, 

it is important to note that when orders 

are routed to an away market they are 

routed based on price first.10 The 

Exchange believes that it is equitable 

and not unfairly discriminatory to 

assess a fixed cost of $0.13 per contract 

to route orders to PHLX and BX Options 

because the cost, in terms of actual cash 

outlays, to the Exchange to route to 

those markets is lower. For example, 

costs related to routing to PHLX and BX 

Options are lower as compared to other 

away markets because NES is utilized 

by all three exchanges to route orders.11

NES and the three NASDAQ OMX 

options markets have a common data 

center and staff that are responsible for 

the day-to-day operations of NES. 

Because the three exchanges are in a 

common data center, Routing Fees are 

reduced because costly expenses related 

to, for example, telecommunication 

lines to obtain connectivity are avoided 

when routing orders in this instance. 

The costs related to connectivity to 

route orders to other NASDAQ OMX 

exchanges are lower than the costs to 

route to a non-NASDAQ OMX 

exchange. When routing orders to nonNASDAQ OMX exchanges, the 

Exchange incurs costly connectivity 

charges related to telecommunication 

lines, membership and access fees, and 

other related costs when routing orders. 

The Exchange believes that amending 

the Customer Routing Fee to other away 

markets, other than PHLX and BX 

Options, from a Fixed Fee of $0.22 to 

$0.23 per contract is equitable and not 

unfairly discriminatory because the 

Exchange would assess the same Fixed 

Fee to all orders routed to away markets 

other than PHLX and BX Options in 

addition to the transaction fee, provided 

the away market does not pay a rebate. 

The Exchange’s proposal to increase 

the Customer Routing Fee to all other 

options exchanges that pay a rebate, 

other than PHLX and BX Options, from 

$0.12 to $0.13 per contract is equitable 

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Federal Register / Vol. 79, No. 220 / Friday, November 14, 2014 / Notices 68321 

12See NASDAQ Rules at Chapter VI, Section 

11(e) (Order Routing). 

13See Chapter VI, Section 11 of the BX Options 

and NOM Rules. 

14BATS assesses lower customer routing fees as 

compared to non-customer routing fees per the 

away market. For example BATS assesses ISE 

customer routing fees of $0.52 per contract and an 

ISE non-customer routing fee of $0.65 per contract. 

See BATS BZX Exchange Fee Schedule. 

15See CBOE’s Fees Schedule and ISE’s Fee 

Schedule. 

16See note 12. 

17See note 13. 

18 15 U.S.C. 78s(b)(3)(A)(ii). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

and not unfairly discriminatory because 

the Exchange would assess the same 

Fixed Fee that is proposed when routing 

Customer orders to a NASDAQ OMX 

exchange. All market participants that 

route an order to an away market, other 

than PHLX or BX Options, would be 

assessed a uniform fee of $0.13 per 

contract if the away market (nonNASDAQ OMX exchange) pays a rebate. 

These proposals would apply uniformly 

to all market participants when routing 

to an away market that pays a rebate, 

other than PHLX and BX Options. 

Finally, market participants may 

submit orders to the Exchange as 

ineligible for routing or ‘‘DNR’’ to avoid 

Routing Fees.12 Also, orders are routed 

to an away market based on price first.13

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ 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 does 

not believe that the proposal creates a 

burden on intra-market competition 

because the Exchange is applying the 

same Routing Fees to all market 

participants in the same manner 

dependent on the routing venue, with 

the exception of Customers. The 

Exchange will continue to assess 

separate Customer Routing Fees. 

Customers will continue to receive the 

lowest fees as compared to nonCustomers when routing orders, as is 

the case today. Other options exchanges 

also assess lower Routing Fees for 

customer orders as compared to noncustomer orders.14

The Exchange’s proposal would allow 

the Exchange to continue to recoup its 

costs when routing Customer orders to 

PHLX or BX Options as well as away 

markets that pay a rebate when such 

orders are designated as available for 

routing by the market participant. The 

Exchange continues to pass along 

savings realized by leveraging NASDAQ 

OMX’s infrastructure and scale to 

market participants when Customer 

orders are routed to PHLX and BX 

Options and is providing those savings 

to all market participants. Today, other 

options exchanges also assess fixed 

routing fees to recoup costs incurred by 

the exchange to route orders to away 

markets.15

Market participants may submit 

orders to the Exchange as ineligible for 

routing or ‘‘DNR’’ to avoid Routing 

Fees.16 It is important to note that when 

orders are routed to an away market 

they are routed based on price first.17

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.18 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–2014–098 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2014–098. 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 

10:00 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; 

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–2014–098 and should be 

submitted on or before December 5, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26946 Filed 11–13–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73557; File No. SR– 

NYSEArca–2014–131] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Amending the NYSE Arca 

Options Fee Schedule Relating to 

Qualified Contingent Cross (‘‘QCC’’) 

Transactions Fees, Effective November 

1, 2014 

November 7, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on October 

31, 2014, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) a 

mstockstill on DSK4VPTVN1PROD with NOTICES