Document ID: SEC-2012-0660-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2012-04-27T04:00Z

[Federal Register Volume 77, Number 82 (Friday, April 27, 2012)]
[Notices]
[Pages 25216-25218]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10160]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66848; File No. SR-NASDAQ-2012-052]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to SQF and BONO Port Fees and Account Fees

April 23, 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 April 18, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify Chapter XV, Options Pricing, 
Section 3, as well as to add an account fee (``Account Fee'') via 
Section 9, of the Options Rules portion of the NASDAQ Rulebook 
governing pricing for NASDAQ members using The NASDAQ Options Market 
(``NOM''), NASDAQ's facility for executing and routing standardized 
equity and index options.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
May 1, 2012.
    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 recoup some of the costs 
associated with SQF and BONO ports, as well as to assess a new fee to 
recoup some of the monthly billing and processing costs associated with 
participant accounts.
    With respect to the proposed SQF port fee (``SQF Port Fee''), 
initially for which there was no charge,\3\ the Exchange believes that 
it is now reasonable to assess the proposed fee because the Exchange is 
no longer seeking to specifically incentivize market makers to connect 
to NOM 2.0. Additionally, the proposed SQF Port Fee is less than the 
range of port fees that are assessed today by NOM,\4\ as well as within 
the range of Port Fees currently charged by NASDAQ OMX PHLX LLC 
(``PHLX'').\5\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 65180 (August 22, 
2011), 76 FR 53521 (August 26, 2011) (SR-NASDAQ-2011-111).
    \4\ See Chapter XV, Options Pricing, Section 3(b) of the Options 
Rules portion of the NASDAQ Rulebook.
    \5\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section VII B 
(Port Fees).

---------------------------------------------------------------------------

[[Page 25217]]

    With respect to the BONO \6\ port fee (``BONO Port Fee''), 
initially for which there was no charge, this port fee is priced 
identically to the fee currently being charged for the NASDAQ ITCH to 
Trade Options (``ITTO'') \7\ port, which is the other market data port. 
The increase will assist the Exchange in recouping costs associated 
with maintaining the BONO port.
---------------------------------------------------------------------------

    \6\ BONO is an option feed designed to provide the NASDAQ Best 
Bid and Offer and last sale information directly to NOM participant 
firms.
    \7\ ITTO is designed to provide full quote and order depth using 
the standard ITCH format. ITTO uses a series of messages to track 
the life of a quote or order through the NOM. ITTO supports NOM last 
sale data as well as Net Order Imbalance data for the opening 
auction.
---------------------------------------------------------------------------

    The Exchange also proposes to assess a monthly $50 Account Fee for 
each member account, which would allow the Exchange to recoup costs 
associated with monthly billing and processing. The Account Fee would 
cover any month, or any part of a month, during which an account is 
maintained by a member. The proposed rule change would also encourage 
members to discontinue holding trading accounts, which the Exchange 
believes should, in turn, eliminate the need to expend resources to 
create additional account fields. As a result, the staff time allocated 
to maintaining account records would be reduced, which would allow for 
a more efficient use of staff resources. The proposed Account Fee is 
substantially similar to the monthly account fee that the PHLX 
currently charges.\8\
---------------------------------------------------------------------------

    \8\ See PHLX Pricing Schedule, Section VI A (Membership Fees).
---------------------------------------------------------------------------

    Members currently have the option to request an unlimited number of 
trading accounts through the Exchange's Membership Department. In many 
instances, multiple accounts are assigned at the member's request to 
allow them to track their own activity using the Exchange's account 
numbers.\9\ Often, however, accounts are not released back to the 
Exchange when they are no longer required by the member or when a 
member may have requested more accounts than needed. This practice 
limits the number of available accounts and adds to increased staff 
time to maintain accurate records of active accounts and the retiring 
of inactive accounts.
---------------------------------------------------------------------------

    \9\ The proposed rule change does not limit the number of 
accounts a member organization may request.
---------------------------------------------------------------------------

    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
May 1, 2012.
2. Statutory Basis
    NASDAQ believes that its proposal to amend its schedule of fees is 
consistent with Section 6(b) of the Act \10\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \11\ in particular, in 
that it is an equitable allocation of reasonable fees and other charges 
among Exchange members and other persons using any facility or system 
which NASDAQ operates or controls.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the new SQF and BONO Port Fees 
(collectively, the ``Port Fees'') are reasonable because each will 
assist in recouping costs incurred by the Exchange for connectivity to 
NOM. Additionally, the proposed SQF Port Fee is reasonable because the 
fee is lower than the range of port fees that are assessed today by 
NOM, as well as within the range of port fees currently charged by 
PHLX.\12\ The BONO Port Fee is reasonable because it is the same as the 
fee currently being charged for ITTO, which is the other market data 
port. The Exchange believes that the Port Fees, for which the Exchange 
will assess NOM participants as of May 1, 2012, are equitable and not 
unfairly discriminatory because they are uniformly applied to all NOM 
participants that utilize these ports.
---------------------------------------------------------------------------

    \12\ Supra note 4.
---------------------------------------------------------------------------

    The Exchange also believes that the Account Fee is reasonable 
because it seeks to recoup costs incurred by the Exchange. Further, the 
Exchange is seeking to incentivize members to discontinue such inactive 
trading accounts. The Exchange also believes that the proposed Account 
Fee is equitable and not unfairly discriminatory because it would be 
uniformly applied to all members.

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 \13\ and paragraph (f)(2) of Rule 19b-4 \14\ 
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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2012-052 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-2012-052. 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

[[Page 25218]]

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-2012-052 and should be submitted 
on or before May 18, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10160 Filed 4-26-12; 8:45 am]
BILLING CODE 8011-01-P