Document ID: SEC-2011-1815-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2011-11-23T05:00Z

[Federal Register Volume 76, Number 226 (Wednesday, November 23, 2011)]
[Notices]
[Pages 72484-72486]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30191]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65768; File No. SR-NASDAQ-2011-151]

 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Routing Fees to BATS Exchange, Inc.

November 17, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2011, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange 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. In addition the Exchange is also proposing to make minor 
amendments to Rule 7053, entitled ``NASDAQ Options Market--Access 
Services.''
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on December 1, 2011.
    The text of the proposed rule change is set forth below. Proposed 
new text is in italics and deleted text is in brackets.
* * * * *

7050. NASDAQ Options Market

    The following charges shall apply to the use of the order 
execution and routing services of the NASDAQ Options Market for all 
securities.
* * * * *
    (4) Fees for routing contracts to markets other than the NASDAQ 
Options Market shall be assessed as provided below. The current fees 
and a historical record of applicable fees shall be posted on the 
NasdaqTrader.com Web site.

----------------------------------------------------------------------------------------------------------------
                            Exchange                              Customer     Firm        MM      Professional
----------------------------------------------------------------------------------------------------------------
BATS...........................................................      $0.36      $0.55      $0.55       $0.[36]48
BOX............................................................       0.06       0.55       0.55            0.06
CBOE...........................................................       0.06       0.55       0.55            0.26
CBOE orders greater than 99 contracts in NDX, MNX ETFs, ETNs &        0.24       0.55       0.55            0.26
 HOLDRs........................................................
C2.............................................................       0.50       0.55       0.55            0.51
ISE............................................................       0.06       0.55       0.55            0.24
ISE Select Symbols*............................................       0.18       0.55       0.55            0.34
NYSE Arca Penny Pilot..........................................       0.50       0.55       0.55            0.50
NYSE Arca Non Penny Pilot......................................       0.06       0.55       0.55            0.06
NYSE AMEX......................................................       0.06       0.55       0.55            0.26
PHLX (for all options other than PHLX Select Symbols)..........       0.06       0.55       0.55            0.26
PHLX Select Symbols**..........................................       0.30       0.55       0.55            0.46
----------------------------------------------------------------------------------------------------------------
* These fees are applicable to orders routed to ISE that are subject to Rebates and Fees for Adding and Removing
  Liquidity in Select Symbols. See ISE's Schedule of Fees for the complete list of symbols that are subject to
  these fees.
** These fees are applicable to orders routed to PHLX that are subject to Rebates and Fees for Adding and
  Removing Liquidity in Select Symbols. See PHLX's Fee Schedule for the complete list of symbols that are
  subject to these fees.

* * * * *

7053. NASDAQ Options Market--Access Services

    [Part A: The following charges are assessed by Nasdaq for 
connectivity to the NASDAQ Options Market for NOM 1.0:]
    [(a) Financial Information Exchange (FIX) ]

[[Page 72485]]

------------------------------------------------------------------------
           [Ports]                [Quantity]             [Price]
------------------------------------------------------------------------
[FIX Trading Port]...........  [First 25 ports]  [$500/port/month]
                               [Additional       [$250/port/month]
                                ports above 25].
[FIX Port for Services Other   [First 25 ports]  [$500/port/month]
 than Trading].
                               [Additional       [$250/port/month]
                                ports above 25].
------------------------------------------------------------------------

     [(b) TradeInfo]
    [ Members not subscribing to the Nasdaq Workstation 
using TradeInfo will be charged a fee of $95 per user per month.]
    [(c) Other Port Fees]
    [The following port fees shall apply in connection with the use 
of other trading telecommunication protocols:]

----------------------------------------------------------------------------------------------------------------
                  [Quantity]                                                 [Price]
----------------------------------------------------------------------------------------------------------------
[First 25 ports]..............................  [$500 per month for each port pair]
[Additional ports above 25]...................  [$250 per month for each port pair]
----------------------------------------------------------------------------------------------------------------

     [Part B: The following charges are assessed by Nasdaq for 
connectivity to the NASDAQ Options Market for NOM 2.0 as of August 
26, 2011 through September 30, 2011:]
    [(a) TradeInfo]
    [ Members not subscribing to the Nasdaq Workstation 
using TradeInfo will be charged a fee of $95 per user per month.]
    [(b) Port Fees, per port per month, as follows:]

 
 
 
[Order Entry Port Fee]......................................     [$0.00]
[CTI Port Fee]..............................................     [$0.00]
[OTTO Port Fee].............................................     [$0.00]
[ITTO Port Fee].............................................     [$0.00]
[Order Entry DROP Port Fee].................................     [$0.00]
[OTTO DROP Port Fee]........................................     [$0.00]
[SQF Port Fee]..............................................     [$0.00]
 

    [Part C:] The following charges[*] are assessed by Nasdaq for 
connectivity to the NASDAQ Options Market [as of October 3, 2011]:
    (a) TradeInfo
     Members not subscribing to the Nasdaq Workstation using 
TradeInfo will be charged a fee of $95 per user per month.
    (b) Port Fees, per port per month, as follows:

 
 
 
Order Entry Port Fee........................................     $500.00
CTI Port Fee................................................     $500.00
OTTO Port Fee...............................................     $500.00
ITTO Port Fee...............................................     $500.00
Order Entry DROP Port Fee...................................     $500.00
OTTO DROP Port Fee..........................................     $500.00
SQF Port Fee................................................       $0.00
 

     [* As of October 3, 2011, the fees in Parts A and B shall no 
longer apply. All NOM Participants will be assessed the fees in Part 
C.]
* * * * *
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is proposing to modify Rule 7050 governing fees assessed for 
option orders entered into NOM but routed to and executed on away 
markets (``Routing Fees''). Specifically, NASDAQ is proposing to amend 
the Professional Routing Fee for orders routed to the BATS Exchange, 
Inc. (``BATS'').
    The Exchange currently assesses the following Routing Fees to route 
orders to BATS: a Customer is assessed $0.36 per contract; a Firm is 
assessed $0.55 per contract; a Market Maker is assessed $0.55 per 
contract; and a Professional is assessed $0.36 per contract. The 
Exchange is proposing to amend the Professional Routing Fee to BATS 
from $0.36 per contract to $0.48 per contract. The other BATS Routing 
Fees for Customers, Firms and Market Makers would remain the same.
    BATS recently adopted a definition for a professional and amended 
its Fee Schedule to assess a fee of $.42 for professionals that remove 
liquidity from BATS Options.\3\ The Exchange is proposing to amend its 
Professional Routing Fee to BATS to recoup this fee. In addition, 
NASDAQ Options Services LLC (``NOS''), a member of the Exchange, is the 
Exchange's exclusive order router. Each time NOS routes to away markets 
NOS is charged a $0.06 clearing fee and, in the case of certain 
exchanges, a transaction fee is also charged in certain symbols, which 
are passed through to the Exchange. The Exchange is proposing this 
amendment in order to recoup clearing and transaction charges incurred 
by the Exchange when Professional orders are routed to BATS.\4\
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    \3\ See Securities Exchange Act Release No. 65694 (November 4, 
2011) (SR-BATS-2011-046).
    \4\ The Exchange is proposing to recoup the $.42 per contract 
professional taker fee for orders routed to BATS along with the 
$0.06 clearing fee which is incurred by the Exchange, as explained 
herein.
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    In addition, the Exchange proposes to amend Exchange Rule 7053 to 
remove outdated text. The Exchange previously filed a rule change to 
amend Exchange Rule 7053 in connection with trading system enhancements 
that were to take place on October 3, 2011.\5\ The rule change 
implemented new Access Services Fees for all NOM Participants as of 
October 3, 2011 at which time all NOM Participants were required to 
transition to the new trading platform. The effective fees as of 
October 3, 2011 are located in Part C of Rule 7053. At this time, the 
Exchange proposes to remove Parts A and B as they are no longer 
effective and also remove the reference to the words ``Part C'' and 
``as of October 3, 2011'' and the note which states ``As of October 3, 
2011, the fees in Parts A and B shall no longer apply. All NOM 
Participants will be assessed the fees in Part C.'' This language is no 
longer necessary with the deletion of

[[Page 72486]]

Parts A and B. The remaining text will reflect the existing fees.
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    \5\ See Securities Exchange Act Release No. 65180 (August 22, 
2011), 76 FR 53521 (August 26, 2011) (SR-NASDAQ-2011-111).
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2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\6\ in general, and with Section 
6(b)(4) of the Act,\7\ 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the amendment to the BATS Professional 
Routing Fee is reasonable because it seeks to recoup costs that are 
incurred by the Exchange when routing Professional orders to BATS on 
behalf of its members. Each destination market's transaction charge 
varies and there is a standard clearing charge for each transaction 
incurred by the Exchange. The Exchange believes that the proposed 
Professional Routing Fee would enable the Exchange to recover the 
professional taker fee assessed by BATS, plus clearing fees for the 
execution of Professional orders. The Exchange also believes that the 
proposed Routing Fee is equitable and not unfairly discriminatory 
because it would be uniformly applied to all Professionals.
    In addition, the Exchange believes that the proposed amendments to 
Exchange Rule 7053 are reasonable, equitable and not unfairly 
discriminatory because the amendments seek to remove outdated and 
unnecessary language from the Rule text. The amendments will clarify 
the current Rule for all NOM Participants.
    NASDAQ is one of nine options market in the national market system 
for standardized options. Joining NASDAQ and electing to trade options 
is entirely voluntary. Under these circumstances, NASDAQ's fees must be 
competitive and low in order for NASDAQ to attract order flow, execute 
orders, and grow as a market. NASDAQ thus believes that its fees are 
fair and reasonable and consistent with the Exchange Act.

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 \8\ and paragraph (f)(2) of Rule 19b-4 \9\ 
thereunder. 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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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-2011-151 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-NASDAQ-2011-151. 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-2011-151 and should 
be submitted on or before December 14, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30191 Filed 11-22-11; 8:45 am]
BILLING CODE 8011-01-P